UGC NET Economics Mock Test-8

Test Preparation on UGC NET Economics Practice Set-8

1.

If MPS rises then the equilibrium level of outputwill

1rise
2fall
3remain constant
4be indeterminate

2.

With the introduction of the money market, thebalanced-budget multiplier would be

1unity
2less than unity
3more than unity
4zero

3.

According to classical theory, a 10 per centincrease in money supply will

1increase money wage rates by 10 per cent,but have no effect on real wages
2increase real wage rates by 10 per cent
3decrease real wage rates by 10 per cent
4increase both money wage rates and realwage rates by 10 per cent

4.

The equation 0.5Y + 50i ? 240 = 0 (where Ydenotes national income and i the real ofinterest), is that of a/an

1consumption function
2investment function
3IS function
4LM function

5.

An increase in the money supply results in

1a change in the slope of the LM curve
2rightward shift of the LM curve
3no change in the LM curve
4leftward shift of the LM curve

6.

According to Keynes, which one of thefollowing is the basic cause of involuntaryunemployment?

1A general deficiency in the demand forgoods and services
2The reluctance of workers to move to otherparts of the country where there is work
3The inability to change occupationsbecause of lack of the necessary skills
4Workers ignorance of opportunities ofemployment in other occupations anddistricts

7.

Speculative demand for money wouldincrease in

1prices of securities are expected to rise
2prices of goods are expected to fall
3the interest rate is expected to be constant
4the interest rate is expected to rise

8.

Consider the following liquids assets:1. Demand deposits with the banks2. Time deposits with the banks3. Savings deposit with the banks4. CurrencyThe correct sequence of these assets in thedecreasing order of liquidity is

11, 4, 3, 2
22, 3, 4, 1
32, 3, 1, 4
44, 1, 3, 2

9.

An instrument of qualitative credit control inIndia is

1open market operation
2credit rationing
3change in reserve ratio
4bank rate policy

10.

Which one of the following represents prioritysector lending by commercial banks in India?

1Lending to heavy industries
2Lending to agriculture, small scaleindustries and the weaker sections of thepopulation
3Lending to foreign companies
4Lending to state governments in emergencysituations like floods and droughts

11.

If the Reserve Bank of India sells securities inthe market, it will result in

1an immediate change in the bank rate
2a fall in the market rate of interest
3an increase in loans to banks customers
4a reduction in bank deposits

12.

Consider the following statements:The Reserve Bank of India1. acts as a Bankers? Bank2. acts as a controller of capital issues3. issues currency notes of variousdenominations4. acts as a lender of the last resort for the sickindustrial unitsWhich of the above statements are correct?

11, 2, 3 and 4
21, 2 and 3
32 and 4
41 and 3

13.

Assertion (A): Primary Financial Market dealsin new financial claims.Reason (R): It mobilises savings and suppliesnew capital to the business units.

1Both A and R are individually true and R isthe correct explanation of A
2Both A and R are individually true but R isnot the correct explanation of A
3A is true but R is false
4A is false but R is true

14.

The relationship between Fisher?s V and K inCambridge Equation of Exchange is

1VK= 1
2VK=+11
3V = 1 + K
4V = 1 ? K

15.

Under the ?liquidity trap? situation the liquiditypreference curve

1is perfectly inelastic
2is perfectly elastic
3intersects the horizontal axis
4intersects the vertical axis

16.

The Bank Rate means the rate which the

1commercial banks offer on savings deposits
2commercial banks offer on current accountsdeposits
3commercial banks charge on short-termloans
4Central Bank charges in rediscounting firstclassbills of exchange

17.

Consider the following items included in aBalance Sheet:1. Demand deposits2. Borrowings from the other banks3. Cash kept with other banks4. Endorsement of bills of exchangeWhich of these are shown in the liability columnof the Balance Sheet of a commercial bank?

11, 2 and 3
21, 2 and 4
31 and 3
42 and 4

18.

All other factors being held constant, therelationship between liquidity and profitabilityof a bank is that these two are

1positively linearly related
2positively non-linearly related
3not related at all
4inversely related

19.

The incidence of a sales tax will be on the sellerswhen

1the demand for the commodity is perfectlyelastic
2the demand for the commodity is perfectlyinelastic
3the demand curve is a rectangularhyperbola
4the demand for the commodity is moderatelyelastic

20.

Which one of the following is the exemptionlimit of personal income tax (for noncorporateassesses) in the budget estimatesof 1999-2000?

1Rs. 40,000
2Rs. 45,000
3Rs. 50,000
4Rs. 60,000

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