The 20 one-mark questions from the March 2020 12th Standard Economics public exam, in paper order, with the correct option marked and a short explanation.
Q1
Who is regarded as the Father of Modern Macro Economics?
- A. Karl Marx
- B. Adam Smith
- C. J.M. KeynesCorrect
- D. Ragnar Frisch
Explanation. J.M. Keynes, through his General Theory (1936), laid the foundation of modern macro economics and is regarded as its father.
Q2
Macro economics is a study of __________.
- A. AggregatesCorrect
- B. Individuals
- C. Firms
- D. a nation
Explanation. Macro economics studies the economy as a whole through aggregates such as national income, total employment and the general price level.
Q3
Primary Sector is __________.
- A. Construction
- B. Industry
- C. Trade
- D. AgricultureCorrect
Explanation. The primary sector uses natural resources directly: agriculture, forestry, fishing and mining. Construction and industry are secondary; trade is tertiary.
Q4
J.B. Say is a __________.
- A. New Economist
- B. Neo classical Economist
- C. Classical EconomistCorrect
- D. Modern Economist
Explanation. J.B. Say, the French economist who gave Say's Law of Markets (supply creates its own demand), belongs to the classical school.
Q5
Lower interest rates are likely to:
- A. Increase borrowing and spendingCorrect
- B. Decrease in consumption
- C. Increase cost of borrowing
- D. Encourage saving
Explanation. A lower interest rate reduces the cost of borrowing, so people and firms borrow more and spend more on consumption and investment.
Q6
The Multiplier is calculated as:
- A. 1/(1 − MPC)
- B. 1/MPS
- C. 1/MPC
- D. (a) and (b)Correct
Explanation. k = 1/(1 − MPC). Since MPC + MPS = 1, 1 − MPC = MPS, so k = 1/MPS as well; both (a) and (b) are correct.
Q7
The term Super Multiplier was first used by:
- A. Keynes
- B. J.R. HicksCorrect
- C. R.G.D. Allen
- D. Kahn
Explanation. J.R. Hicks combined the multiplier and the accelerator and first used the term 'super multiplier'. Kahn gave the employment multiplier and Keynes the investment multiplier.
Q8
The RBI Headquarters is located at:
- A. Bengaluru
- B. Delhi
- C. Chennai
- D. MumbaiCorrect
Explanation. The Reserve Bank of India, set up in 1935, has had its central office in Mumbai since 1937.
Q9
Which one is Primary Function of Money?
- A. Basis of the Credit System
- B. Medium of ExchangeCorrect
- C. Store of Value
- D. Standard of Deferred Payments
Explanation. The primary functions of money are medium of exchange and measure of value. Store of value and standard of deferred payments are secondary functions; basis of credit is a contingent function.
Q10
NABARD was set up in:
- A. July 1992
- B. July 1962
- C. July 1972
- D. July 1982Correct
Explanation. The National Bank for Agriculture and Rural Development (NABARD) was established on 12 July 1982.
Q11
Expansion of RRBs:
- A. Regional Residual Banks
- B. Regional Reserve Banks
- C. Regional Rural BanksCorrect
- D. Regional Railway Banks
Explanation. RRBs are Regional Rural Banks, set up from 1975 to provide credit to small farmers, artisans and rural poor.
Q12
Exchange rates are determined in:
- A. Capital Market
- B. Money Market
- C. Foreign Exchange MarketCorrect
- D. Stock Market
Explanation. The exchange rate is the price of one currency in terms of another, and it is determined by demand and supply of currencies in the foreign exchange market.
Q13
Balance of Payment includes:
- A. Merchandise trade only
- B. Visible items only
- C. Invisible items only
- D. Both visible and invisible itemsCorrect
Explanation. The balance of payments records all transactions with the rest of the world: visible items (goods) and invisible items (services, transfers) as well as capital flows.
Q14
Find out the non-Tax Revenue:
- A. Surcharge
- B. Income Tax
- C. Cess
- D. FeesCorrect
Explanation. Surcharge, income tax and cess are all taxes. Fees are paid in return for a specific service, so they are non-tax revenue.
Q15
The Modern State is:
- A. Police State
- B. Laissez-Faire State
- C. Aristocratic State
- D. Welfare StateCorrect
Explanation. The modern state goes beyond maintaining law and order (police/laissez-faire state) and undertakes activities for the welfare of the people, so it is a welfare state.
Q16
Which one of the following causes global warming?
- A. Increasing temperatureCorrect
- B. Earth gravitational force
- C. Oxygen
- D. Centripetal force
Explanation. Global warming is the rise in the earth's average temperature caused by greenhouse gases; among the given options only 'increasing temperature' relates to it (strictly it is the effect, but it is the intended answer).
Q17
Expansion of NITI Aayog:
- A. National Institution for Transforming IndiaCorrect
- B. National Institute for Transport in India
- C. National Institute for Trade in India
- D. National Institution for Tomorrow's India
Explanation. NITI Aayog, which replaced the Planning Commission on 1 January 2015, stands for National Institution for Transforming India.
Q18
Planning Commission was set up in the year:
- A. 1948
- B. 1950Correct
- C. 1951
- D. 1947
Explanation. The Planning Commission of India was set up in March 1950; the First Five Year Plan began in 1951.
Q19
The data collected by questionnaire:
- A. Grouped data
- B. Primary dataCorrect
- C. Secondary data
- D. Published data
Explanation. Data collected first-hand by the investigator, e.g. through a questionnaire, is primary data; secondary data is taken from already published sources.
Q20
Short-term plan is also known as __________.
- A. De-rolling plans
- B. Controlling plansCorrect
- C. De-controlling plans
- D. Rolling plans
Explanation. In the classification of plans by time, short-term (annual) plans are used to control and adjust the economy within the long-term framework, so they are called controlling plans.
