The 20 one-mark questions from the March 2023 12th Standard Economics public exam, in paper order, with the correct option marked and a short explanation.
Q1
Finance Commission determines :
- A. The resources transfer to the StatesCorrect
- B. The resources transfer to the various departments
- C. The finances of Government of India
- D. None of the above
Explanation. The Finance Commission, constituted under Article 280, recommends how tax revenues and grants are transferred from the Union to the States.
Q2
Expansion of NITI Aayog :
- A. National Institute for Tomorrow's India
- B. National Institute for Transport in India
- C. National Institution for Transforming IndiaCorrect
- D. National Institute for Trade in India
Explanation. NITI Aayog, which replaced the Planning Commission in 2015, stands for National Institution for Transforming India.
Q3
According to Classical theory, rate of interest is a reward for ________.
- A. Capital
- B. Investment
- C. SavingCorrect
- D. Demand
Explanation. Classical economists held that interest is the reward for saving (abstinence or waiting); the interest rate brings saving and investment into equality.
Q4
Which of the following is not an example of Foreign Direct Investment ?
- A. the purchase of bonds or stock issued by a textile company overseas.Correct
- B. the construction of a new auto assembly plant overseas.
- C. the creation of a wholly owned business firm overseas.
- D. the acquisition of an existing steel mill overseas.
Explanation. Buying bonds or shares of a foreign company without gaining control is Foreign Portfolio Investment; the other three give ownership and control of productive assets abroad, which is FDI.
Q5
PQLI is the indicator of ________.
- A. Economic progress
- B. Economic growth
- C. Economic developmentCorrect
- D. Economic welfare
Explanation. The Physical Quality of Life Index (Morris D. Morris) combines literacy, infant mortality and life expectancy to measure economic development rather than mere growth of output.
Q6
The other name for "Macro Economics" is :
- A. Market Theory
- B. Price Theory
- C. Micro Theory
- D. Income TheoryCorrect
Explanation. Macro economics studies aggregates such as national income, output and employment, so it is also called Income Theory; Micro economics is called Price Theory.
Q7
Method of Repayment of Public Debt is ________.
- A. Sinking Fund
- B. Terminal Annuity
- C. Conversion of Loans
- D. All of the aboveCorrect
Explanation. Public debt can be redeemed through a sinking fund, terminal annuity (repayment in instalments), conversion of loans and other methods, so all the options are correct.
Q8
The core of the Classical theory of employment is ________.
- A. Law of MarketsCorrect
- B. Law of Diminishing Return
- C. Law of Consumption
- D. Law of Demand
Explanation. The Classical theory of employment rests on J.B. Say's Law of Markets: supply creates its own demand, so there can be no general overproduction or unemployment.
Q9
The country following Capitalism is ________.
- A. India
- B. Russia
- C. China
- D. AmericaCorrect
Explanation. The USA (America) is the classic example of a capitalist economy; India is a mixed economy, while Russia and China are associated with socialism.
Q10
The study of alternating fluctuations in business activity is referred to in Economics as :
- A. Recovery
- B. Boom
- C. Trade cycleCorrect
- D. Recession
Explanation. Recurring ups and downs in economic activity are called the trade (business) cycle; boom, recession and recovery are only its phases.
Q11
The word 'Statistics' is used as ________.
- A. Plural
- B. Singular and PluralCorrect
- C. Singular
- D. None of the above
Explanation. In the singular sense 'Statistics' means the science of statistical methods; in the plural sense it means numerical data. So it is used in both senses.
Q12
In 2016, Demonetization of currency includes denominations of ________.
- A. ₹ 1000 and ₹ 2000
- B. ₹ 200 and ₹ 500
- C. ₹ 500 and ₹ 1000Correct
- D. All the above
Explanation. On 8 November 2016, the old ₹ 500 and ₹ 1000 notes ceased to be legal tender.
Q13
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.
Q14
Environmental goods are ________.
- A. Market goods
- B. Non-market goodsCorrect
- C. Both (a) and (b)
- D. None of the above
Explanation. Environmental goods such as clean air and scenic beauty are not bought and sold in markets and have no market price, so they are non-market goods.
Q15
MV stands for :
- A. Supply of Bank money
- B. Demand for money
- C. Total Supply of money
- D. Supply of Legal Tender moneyCorrect
Explanation. In Fisher's equation PT = MV + M'V', MV is the supply of legal tender (currency) money and M'V' is the supply of bank (credit) money.
Q16
BENELUX is a form of :
- A. Common Market
- B. Free trade area
- C. Customs UnionCorrect
- D. Economic Union
Explanation. BENELUX (Belgium, the Netherlands and Luxembourg) began as a customs union: free trade among members with a common external tariff.
Q17
IBRD is otherwise called as :
- A. ASEAN
- B. International Monetary Fund
- C. International Finance Corporation
- D. World BankCorrect
Explanation. The International Bank for Reconstruction and Development (IBRD), set up after the Bretton Woods conference, is popularly known as the World Bank.
Q18
The basic philosophy behind long-term planning is to bring ________ changes in the economy.
- A. Industrial
- B. Financial
- C. StructuralCorrect
- D. Agricultural
Explanation. Long-term (perspective) planning aims at structural changes in the economy, such as shifting the composition of output and employment from agriculture to industry and services.
Q19
Sustainable Development Goals and Targets are to be achieved by :
- A. 2030Correct
- B. 2020
- C. 2050
- D. 2025
Explanation. The UN adopted the 17 Sustainable Development Goals in 2015 as the '2030 Agenda', to be achieved by 2030.
Q20
The Agricultural Refinance Development Corporation started functioning from :
- A. June 1, 1963
- B. June 3, 1963
- C. July 1, 1963Correct
- D. July 3, 1963
Explanation. The Agricultural Refinance Corporation (later ARDC) was set up by the RBI on July 1, 1963 to refinance long-term agricultural credit; it was merged into NABARD in 1982.
