The 20 one-mark questions from the March 2024 12th Standard Economics public exam, in paper order, with the correct option marked and a short explanation.
Q1
The sum of the MPC and MPS is :
- A. 0.1
- B. 1Correct
- C. 1.1
- D. 2
Explanation. Every extra unit of income is either consumed or saved, so ΔC/ΔY + ΔS/ΔY = 1, i.e. MPC + MPS = 1.
Q2
GST is equivalence of :
- A. Income tax
- B. Sales taxCorrect
- C. Local tax
- D. Corporation tax
Explanation. GST is an indirect tax on the supply (sale) of goods and services, so it is equivalent to a sales tax, not a direct tax like income or corporation tax.
Q3
Structural unemployment is a feature in a __________.
- A. Dynamic societyCorrect
- B. Static society
- C. Mixed economy
- D. Socialist society
Explanation. Structural unemployment arises from changes in the structure of the economy (technology, demand patterns), which happen in a dynamic, changing society.
Q4
Identify the economic system, where only private ownership of production exists.
- A. Globalist Economy
- B. Capitalist EconomyCorrect
- C. Mixed Economy
- D. Socialist Economy
Explanation. In a capitalist economy the means of production are owned and controlled by private individuals; a mixed economy has both public and private sectors and a socialist economy has state ownership.
Q5
If the values of two variables move in the same direction, it is said to be __________ correlation.
- A. multiple
- B. negative
- C. simple
- D. positiveCorrect
Explanation. When both variables increase together or decrease together, the correlation is positive; movement in opposite directions is negative correlation.
Q6
Foreign Direct Investments not permitted in India is :
- A. Pharmaceutical
- B. Banking
- C. Insurance
- D. Atomic energyCorrect
Explanation. Atomic energy is a strategic sector reserved for the government, so FDI is prohibited in it, while pharmaceuticals, banking and insurance allow FDI within limits.
Q7
Central Bank is __________ authority of any country.
- A. Wage
- B. MonetaryCorrect
- C. National Income
- D. Fiscal
Explanation. The central bank issues currency and controls money supply and credit, so it is the monetary authority; fiscal policy is handled by the government.
Q8
Inflation means :
- A. Value of money is increasing
- B. Prices are risingCorrect
- C. Prices are remaining the same
- D. Prices are falling
Explanation. Inflation is a persistent rise in the general price level, which reduces the value of money; falling prices is deflation.
Q9
The average propensity to consume is measured by :
- A. Y/C
- B. C/YCorrect
- C. C+Y
- D. CY
Explanation. APC is the ratio of total consumption to total income: APC = C/Y.
Q10
Which of the following does not come under 'Six dialogue partners' of ASEAN ?
- A. India
- B. China
- C. North KoreaCorrect
- D. Japan
Explanation. ASEAN's six dialogue partners are India, China, Japan, South Korea, Australia and New Zealand; North Korea is not one of them.
Q11
Planning Commission was set up in the year __________.
- A. 1947
- B. 1950Correct
- C. 1948
- D. 1951
Explanation. The Planning Commission of India was set up in March 1950; the First Five Year Plan began in 1951.
Q12
Hearing loss is the effect of __________ pollution.
- A. water
- B. noiseCorrect
- C. land
- D. air
Explanation. Prolonged exposure to loud noise damages the ear, so hearing loss is an effect of noise pollution.
Q13
Who is regarded as "Father of Modern Macro Economics" ?
- A. Ragnar Frisch
- B. Adam Smith
- C. Karl Marx
- D. J.M. KeynesCorrect
Explanation. J.M. Keynes, through his General Theory (1936), founded modern macroeconomics; Adam Smith is the father of economics.
Q14
Exchange rates are determined in :
- A. Stock market
- B. Money market
- C. Capital market
- D. Foreign Exchange marketCorrect
Explanation. The exchange rate is the price of one currency in terms of another, determined by demand and supply in the foreign exchange market.
Q15
Income method is measured by summing up of all forms of __________.
- A. Expenditure
- B. Production
- C. IncomeCorrect
- D. Taxes
Explanation. Under the income method, national income is the sum of all factor incomes: rent, wages, interest and profit.
Q16
Econometrics is the word coined by :
- A. Karl Pearson
- B. Francis Galton
- C. Spearman
- D. Ragnar FrischCorrect
Explanation. The term "econometrics" was coined by Ragnar Frisch in 1926.
Q17
The other name for Special Drawing Rights is :
- A. Voluntary export restrictions
- B. Paper goldCorrect
- C. Patents
- D. Quotas
Explanation. SDRs, created by the IMF in 1969 as an international reserve asset, are popularly called "paper gold".
Q18
Short-term plan is also known as __________.
- A. Rolling plansCorrect
- B. Controlling plans
- C. De-rolling plans
- D. De-controlling plans
Explanation. Short-term (annual) plans are revised every year as part of a rolling plan, so they are known as rolling plans.
Q19
__________ flexibility brings equality between savings and investment.
- A. Capital
- B. Demand
- C. Rate of InterestCorrect
- D. Supply
Explanation. In classical theory, if savings exceed investment the rate of interest falls (and vice versa) until savings equal investment, so interest-rate flexibility ensures equality.
Q20
Irving Fisher's Quantity Theory of Money was popularized in :
- A. 1911Correct
- B. 1908
- C. 1914
- D. 1910
Explanation. Irving Fisher popularised the quantity theory of money (MV = PT) in his book "The Purchasing Power of Money" in 1911.
