All the Best for Exams ! May God Bless You All !
CA Foundation May 2025
Economics
Top 250 MCQs
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All the Best for Exams ! May God Bless You All !
CA Foundation May 2025
Economics- Top 250 MCQs
Chp. No. Chp Name No. of MCQs
1 Nature & Scope of B.E. 15
2 Demand & Supply 40
3 Production & Cost 17
4 Markets 45
5 Business Cycles 16
6 National Income 22
7 Public Finance 33
8 Money Market 22
9 International Trade 15
10 Indian Economy 25
Total 250 MCQs
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Chapter 1
NATURE & SCOPE OF BUSINESS
ECONOMICS
Important MCQs
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MTP April-25
Inequality and Exploitation is minimal
1
under:
a)Mixed economy
b)Capitalism
c)Socialism
d)None of these
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2 Normative economics can be explained through:
a)Fairness to tax
b)Incidence to tax
c)Effect of tax on incentives to work
d)None of these
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3 Business Economics in its approach is
a)Pragmatic
b)Idealistic
c)Normative
d)None of these
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Which of these country is a purely socialist
4
economy?
a)USSR
b)China
c)Vietnam
d)None of these
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5 The Nature of Business Economics:
a)Business Economics is a Science
b)Incorporate elements of Macro Analysis
c)Interdisciplinary in Nature
d)All the above
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6 Microeconomics deals primarily with:
a)comparative statics, general equilibrium, and positive
economics
b)comparative statics, partial equilibrium, and normative
economics
c)dynamics, partial equilibrium, and positive economics
d)comparative statics, partial equilibrium, and positive
economics.
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7 What is the merit of Capitalism?
a)It promotes self-interest & economic growth.
b)It leads economic balance in the country
c)It leads to equitable distribution of wealth.
d)It leads to income equality
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In a free market economy, the allocation of
8
resources is determined by
a)Consumer Preferences
b)Voting done by consumers
c)The level of profit
d)None of these
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Which of the following is not
9
studied in microeconomics?
a)Factor pricing
b)Location of Industry
c)Consumer Behaviour
d)External value of currency
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The regulatory mechanism of the market
10
system is-
a)Self interest
b)Private property
c)Competition
d)Specialization
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Which of the following are within the scope of
11
business economies?
a)Capital Budgeting
b)Risk Analysis
c)Business cycles
d)All of the Above
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12 Consumer is sovereign under:
a)Free Economy
b)Mixed Economy
c)Controlled Economy
d)Both (a) and (b)
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13 _______ is concerned with welfare proposition.
a)Normative Economics
b)Positive Economics
c)Both (a) and (b)
d)None of these
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14 Capitalist system offers incentives for ______
a)Efficient business decisions
b)Efficient government decisions
c)Efficient non-governmental decisions
d)Efficient economic decisions
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“If Americans today, for example were to content
to live at the level of the Indian middle class
people, all their wants would be fully satisfied with
15
their available resources and capacity to produce.”
On the basis of the above statement, which of the
following conclusion can be made?
a)The possession of goods and services by USA has
enormously increased to exceed their wants.
b)The affluent and developed countries of USA and Western
Europe face the problem of scarcity even today as their
present wants remain a head of their increased resources
and capacity to produce.
c)The affluent and developed countries are not facing the
problem of scarcity.
d)None of these
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Chapter 2
Important MCQs
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MTP April-25
If the price elasticity of demand of a product
1 is (-) 3, what should be the price of the
product for its MR to be Rs.20?
a)Rs. 10/unit
b)Rs. 20/unit
c)Rs. 30/unit
d)Rs. 40/unit
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While drawing budget line of a consumer
consuming Nachos chips and Pepsi, if the
2 quantity of Nachos taken on Y-axis and
quantity of Pepsi on X-axis. The slope of
budget line will be-
a)PP/ PN
b)PN /PP
c)M/ PN
d)M /PP [Where, Pp – Price of Pepsi, PN - Price of
Nachos & M – Money income of consumer]
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The Indian Government imposed heavy taxes
on commodity to reduce its consumption by
3 the public. Such heavy taxes will
decrease the demand of the commodity
only when:
a)ed = 0
b)ed > 1
c)Ed<1
d)ed = 1
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A vertical supply curve parallel to Y axis implies
4 that the elasticity of supply is:
a)Infinity
b)Zero
c)Greater than zero but less than infinity
d)Equal to one
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5 Comfort lie between:
a)inferior goods and necessities
b)luxuries and inferior goods
c)necessities and luxury
d)None of these
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6 Demand for Electricity is elastic because
a)it is very expensive
b)it has alternative uses
c)it has a number of close Substitute.
d)None of these
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The market demand curve for a perfectly
competitive industry is: Qd = 12 – 2P and
7
the market supply curve is: Qs = 3 + P. The
market will be in equilibrium if
a)P =6 and Q = 9
b)P =5 and Q = 2
c)P =4 and Q = 4
d)P =3 and Q = 6
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8 For Giffen good the engel Curve is:
a)Vertical
b)Horizontal
c)Negatively Sloped
d)Positively Sloped
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Demand for a commodity with negative
9 income elasticity indicates that as income falls
the amount of the commodity purchased
a)falls
b)rises
c)remain unchanged
d)None of these
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There is an inverse relation between price
10
and demand for the products of a firm under:
a)Monopoly only
b)Monopolistic Competition only
c)Both Monopoly and Monopolistic Competition
d)Perfect competition
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11 Contraction of demand is the result of
a)Decrease in the number of Consumers
b)Increase in the price of the good concerned
c)Price of related products
d)None of these
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The rate at which the consumer is prepared
12
to exchange-good x and y is :
a)Marginal rate of substitution
b)Elasticity of Substitution
c)Diminishing Marginal Utility
d)None of these
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Indifference Curve Analysis was proposed by
13
…………….
a)J. R Hicks and R.G.D Allen
b)Alfred Marshall
c)Jeremy Bentham
d)None of these
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The marginal utility from last unit consumed of
commodity Y = 50 Units and MUm = 10. The
14 consumer is in equilibrium and consuming
commodity y only.
Find the Price of Commodity Y—
a)5
b)10
c)40
d)None of these
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15 The substitution effect will be stronger when:
a)the goods are closer substitute
b)there is lower cost of switching to the substitute
good.
c)there is lower inconvenience while switching to
the substitute good.
d)all the above
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16 Rational decision making requires that:
a)one’s choice be arrived at logically and without error.
b)one’s choice be consistent with one’s goal.
c)one’s choice never vary.
d)the consumer plan’s to attain the highest possible level
of satisfaction.
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17 Market demand is the sum total of:
a)All quantities that producers can produce
b)All quantities actually sold in the market
c)All quantities demanded by individual household and
consumers
d)None of these
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The demand for Scooter and petrol is an
18
example of demand :
a)Joint
b)Composite
c)Competitive
d)Market
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In the case of relatively elastic demand,
19
the money burden of tax is on:
a)More on seller
b)More on buyer
c)Entirely on seller
d)Entirely on buyer
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20 Law of demand is violated when:
a)Income effect is negative
b)Substitution effect is negative
c)Negative income effect is greater than the
substitution effect
d)None of these
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21 Elasticity is greater than utility for:
a)Luxuries
b)Necessaries
c)Complementary good
d)None of these
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In spite of the fact that the price of the
television sets refrigerators, air conditions etc.
22 have been continuously rising their demand
does not stand any tendency to fact because
they are
a)Conspicuous goods
b)Giffen goods
c)Speculative goods
d)Conspicuous necessities.
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23 What are the determinants of price elasticity?
a)Availability of substitutes
b)Price range
c)Position of a Commodity in the Consumer’s budget.
d)All the above
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The substitution effect for a fall in the price
24
of a commodity (ceteris paribus) is given by:
a)a movement up a given indifference curve,
b)A movement from a higher to a lower indifference
curve,
c)A movement down a given indifference curve, or
d)any of the above.
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25 Total utility is maximum when:
a)marginal utility is zero
b)Marginal utility is at its highest point
c)marginal utility is equal to average utility
d)average utility is maximum
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The consumer is in equilibrium at a point where
26
the budget line :
a)is above an indifference curve
b)is below an indifference curve
c)is tangent to an indifference curve
d)cuts an indifference curve
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An indifference curve slopes down towards right
27 since more of one commodity and less of
another result in:
a)same satisfaction
b)greater satisfaction
c)maximum satisfaction
d)decreasing expenditure
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The consumer is in equilibrium when the
28
following condition is satisfied:
a)𝑀𝑈𝑋 > 𝑃𝑋
𝑀𝑈𝑌 𝑃𝑌
b)𝑀𝑈𝑋 < 𝑃𝑋
𝑀𝑈𝑌 𝑃𝑌
c)𝑀𝑈𝑋 = 𝑃𝑋
𝑀𝑈𝑌 𝑃𝑌
d)None of the above
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In the case of a Giffen good, the demand curve
29
will be:
a)horizontal
b)downward-sloping to the right
c)upward-sloping to the right
d)Vertical
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Consumer's surplus left with the consumer under
30
price discrimination is:
a)maximum
b)minimum
c)zero
d)not predictable
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RTP May 2025
The share of the tax borne by seller will be
31
larger
a)If the demand for the product is less elastic.
b)If the demand for the product is inelastic.
c)If the demand for the product has greater elasticity.
d)If the elasticity of supply of the product is larger.
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32 What is the limitation of Consumer Surplus:
a)Consumer surplus cannot be measured precisely
b)The Consumer surplus derived from a commodity is
affected by availability of substitute
c)Both (a) & (b)
d)None of these
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33 The quantity demanded of money rises:
a)As the interest rises
b)As the interest falls
c)As the supply of money falls
d)As the number of banks rises
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If the organizers of an upcoming cricket match
decide to increase the ticket price in order to
34
raise its revenues, what they have learned from
past experience is;
a)The percentage increase in ticket rates will be always
equal the percentage decrease in tickets sold
b)The percentage increase in ticket rates will be always
greater than the percentage decrease in tickets sold
c)The percentage increase in ticket rates will be less
than the percentage decrease in tickets sold
d)(a) and (c) above are true
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If the price of a commodity raised by 12% and
35 Ed is (-) 0.63, the expenditure made on the
commodity by a consumer will ____
a)Decrease
b)Increase
c)Remain same
d)Can’t Say
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A decrease in the demand for cameras, other
36
things remaining the same will
a)Increase the number of cameras bought
b)Decrease the price but increase the number of
cameras bought
c)Decrease in quantity of camera demanded
d)Decrease the price and decrease in the number of
cameras bought.
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The supply curve shifts to the right because of
37
———————
a)improved technology
b)increased price of factors of production
c)increased excise duty
d)all of the above
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If this consumer is spending her entire income
and consuming at point B, what advise will you
give her?
38
a)No advise needed, as she is maximizing her utility at B
b)Consume more of Good X and less of Good Y
c)Consume more of X and less of Y and reach point K
d)Consume same quantity of Good Y and more of Good X
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In the case of inferior goods, the expansion in
39 demand due to a price fall will take place only
if the
a)Income effect outweighs the substitution effect
b)Substitution effect outweighs the income effect
c)substitution effect equals the income effect
d)None of the above
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40 The objective of advertisement is to
a)Shift demand Curve to left & Reduce elasticity of
demand
b)Shift demand Curve to right & increase elasticity of
demand
c)Shift demand Curve to left & increase elasticity of
demand
d)Shift demand Curve to right & Reduce elasticity of
demand
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Clear CA Foundation & then study Paper 6 – FM & SM of CA Inter
on online mode (live/recorded) from MVSIR on “Ultimate CA” platform.
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Chapter 3
Important MCQs
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MTP April-25
The cost which is never zero even when
1
production is stopped is known as:
a)Supplementary Cost
b)Prime Cost
c)Explicit cost
d)Implicit cost
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2 At the Point of Inflexion:
a)Total Product is maximum
b)Average Product is maximum
c)Marginal Product is maximum
d)Marginal Product is zero
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When the Output of the firm increases in
3
the Short run, its average fixed cost :
a)Decreases
b)Increases
c)First decline and then rise
d)remains constant
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Which of the following is not a
4
determinant of the firm’s cost function?
a)Taxes
b)The Production Function
c)The Price of the firm’s output
d)None of these
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5 Which of the following in incurred first?
a)Historical Cost
b)Replacement Cost
c)Realized Value
d)None of these
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6 Isoquant in the relevant range are:
a)Convex to the Origin
b)Negatively Sloped
c)Cannot cross
d)All of the Above
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Which of the following statement is correct
7 concerning the relationship among the firm’s
cost function:
a)TC = TVC-TFC
b)TFC = TC- TVC
c)TC = TFC – TVC
d)TVC = TFC- TC
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8 Goodwill, patent right, etc. are example of:
a)Tangible capital
b)Real capital
c)Intangible capital
d)None of these
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9 U Shaped average cost curve is based on:
a)Law of variance proportions
b)Law of increasing cost
c)Law of decreasing cost
d)None of these
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The reason behind the upward sloping portion
10
of the long run cost curve is:
a)economy of scale
b)diseconomy of scale
c)diminishing marginal rate of substation
d)None of these
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The Distinction between Selling Cost and
11
Production cost was made by :
a)Chamberlin
b)Sweezy
c)Mrs. Joan Robinson
d)None of these
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A firm’s average total cost is Rs.300 at 5 units
12 of output and Rs.320 at 6 units of output. The
marginal cost of producing the 6th unit is:
a)Rs.20
b)Rs.120
c)Rs.320
d)Rs.420
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13 The slope of Isocost line is
a)w/r
b)r/w
c)r x w
d)None of these
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Production function:
14
Q = 4. L(1/2) . K(2/3)
a)increasing returns to scale
b)decreasing returns to scale
c)constant returns to scale
d)increasing returns to a factor
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A mfg. company has TFC = 120 lakhs,
15 TVC = 100Q + 7Q² + 0.25Q³
Calculate the MC?
a)100 + 14Q + 0.75Q²
b)120 + 7Q² + 0.25Q³
c)100 + 7Q² + 0.25Q³
d)107.25
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Suppose the short run cost function can be
16 written as TC = 300 + 20Q. Average Fixed
cost equals:
a)300/Q
b)300
c)20
d)300/Q + 20
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Economies and diseconomies of scale explain
17
why the
a)short run average fixed cost curve declines so long
as output increases.
b)marginal cost curve must intersect the minimum point
the firm’s average variable cost curve.
c)long run average cost curve is typically U-shaped.
d)short run average total cost curve is U- shaped.
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Chapter 4
Important MCQs
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MTP April-25
When actual price of a commodity is less than
1
equilibrium price, its price:
a)starts rising
b)starts falling
c)starts fluctuating
d)remains constant
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2 When e > 1 the MR is
a)One
b)Negative
c)Positive
d)Zero
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MTP April-25
Price discrimination will be profitable only
3 if the elasticity of demand in different sub
market is :
a)different
b)uniform
c)zero
d)less
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4 Which of the following is correct about Cartel?
a)There are few firms
b)All of which are similar in size
c)Most Cartels have only a Subset of producers
d)All of the above
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5 Secular Period is also known as :
a)Short Period
b)Very Long Period
c)long Period
d)Very short Period
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MTP April-25
Price Rigidity explained by Sweezy’s model is
6
related to which market form:
a)Monopoly
b)Oligopoly
c)Monopolistic competition
d)None of these
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Agricultural goods markets depict
7
characteristics close to:
a)Perfect competition.
b)Oligopoly.
c)Monopoly.
d)Monopolistic competition.
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8 Monopsony means ……………
a)Where there are large firms
b)There is a single buyer
c)Small number of large buyers
d)Single seller and single buyer
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Which of the following is a differentiated
9
product?
a)A hamburger
b)A shirt
c)An automobile
d)All of the above
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If the market demand curve for a commodity
10 has a negative slope then the market structure
must be:
a)Perfect competition
b)Monopoly
c)Imperfect competition
d)The market structure cannot be determined as the
information is insufficient
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The short run supply curve of a perfectly
11
competitive firm is equal to
a)That portion of the short run marginal cost curve
that is above the average variable cost curve
b)That portion of the short run marginal cost curve
that is above the average total cost curve
c)That portion of the short run average total cost
curve that is above the average variable cost curve
d)None of the above is correct.
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12 Marginal revenue is equal to the price under
a)Monopoly market structure
b)Oligopoly form of market
c)Monopolistically competitive market
d)Perfect competition
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13 When demand increases and supply decreases,
a)the equilibrium price and quantity both rise
b)the equilibrium price and quantity both fall
c)the equilibrium price rises but nothing certain can
be said about the change in equilibrium quantity.
d)the equilibrium quantity rises but nothing certain
can be said about the change in equilibrium price.
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14 Entry of new firm is monopoly is:
a)Possible only in the long run
b)Possible only in the short run
c)Restricted at all times
d)Both (a) and (b)
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The market price cannot be influenced by a
15
seller under :
a)Monopolistic Competition
b)Monopoly
c)Perfect Competition
d)All the above
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16 Price elasticity of demand under monopoly is
a)Infinity
b)Equal to one
c)Less than one
d)None of these
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17 The price in collusive oligopoly is decided by:
a)firm
b)price leader
c)industry
d)none of these
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MTP May-25
The basic behavioural principle which applyto
18
all market conditions:
a)A firm should product only if its TR ≥ TVC
b)A firm should produce at a level where its MC= MR
c)MC curve cuts the MR curve from below
d)All the above
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Short run marginal cost of the firm will be
19
increasing when:
a)average cost is decreasing
b)total fixed cost is increasing
c)average fixed cost is decreasing
d)None of these
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20 Demand curve under Oligopoly is:
a)Less Elastic
b)Perfectly Elastic
c)Highly Elastic
d)Indeterminate
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21 Who gave the theory of price discrimination?
a)Marshall
b)Pigou
c)Cournot
d)Simon
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22 At the shut-down point:
a)P = AVC
b)TR = TVC
c)the total losses of the firm equal TFC
d)all of the above.
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MTP May-25
Which of the following is not an essential
23
condition of pure competition ?
a)large number of buyers and sellers
b)homogeneous product
c)freedom of entry
d)absence of transport cost
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MTP May-25
Which is the first order condition for the
24
profit of a firm to be maximum?
a)AC = MR
b)MC = MR
c)MR = AR
d)AC = AR
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MTP May-25
In which form of the market structure is
25 the degree of control over the price of its
products by a firm very large?
a)monopoly
b)imperfect competition
c)Oligopoly
d)perfect competition
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MTP May-25
Under which of the following forms of
26 market structure does a firm have no control
over the price of its product?
a)monopoly
b)monopolistic competition
c)oligopoly
d)perfect competition
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MTP May-25
The demand curve facing an industrial firm
27
under monopoly is a/an
a)horizontal straight line
b)indeterminate
c)downward sloping
d)upward sloping
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MTP May-25
The degree of monopoly power is measured in
28
terms of difference between:
a)Marginal cost and the price
b)Average cost and average revenue
c)Marginal cost and average cost
d)Marginal revenue and average cost
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MTP May-25
A monopoly producer usually earns _________
29
even in the long run.
a)super normal profits
b)only normal profits
c)losses
d)none of the above
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30 Price discrimination is not possible:
a)under monopoly situation
b)under any market form
c)under monopolistic competition
d)under perfect competition
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MTP May-25
Discriminating monopoly is possible if two
31
markets have:
a)rising cost curves
b)rising and declining cost curves
c)different elasticities of demand
d)equal elasticities of demand
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MTP May-25
A firm under monopolistic competition
32
advertises:
a)as it has no control over the price of its product
b)to lower its cost of production
c)to increase its sales and profit
d)because it cannot raise price
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33 In short run, a firm in monopolistic competition:
a)always earns profits
b)incurs losses
c)earns normal profit only
d)may earn normal profit, super normal profit or incur
losses
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In long run, all firms in monopolistic
34
competition:
a)earn super normal profits
b)earn normal profits
c)incur losses
d)may earn super normal profit, normal profit or in
incur losses
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RTP May 2025
The Price in Collusive Oligopoly is decided
35
by :
a)The Firm
b)Price leader
c)The Industry
d)None of these
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RTP May 2025
Which one of the following is not an internal
36
economies of scale?
a)Technical economies
b)Financial economies
c)Economies due to localization of industries
d)Marketing economies
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RTP May 2025
37 Excess capacity is not found under ________
a)Monopoly
b)Monopolistic competition
c)Perfect competition.
d)Oligopoly
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RTP May 2025
38 Example of Third-Degree Price Discrimination:
a)Dumping
b)Charging different prices for domestic and commercial
uses
c)Lower prices in railways for senior citizen
d)All of the above
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Assume that when price is Rs. 20, the quantity
demanded is 15 units, and when price is Rs. 18,
the quantity demanded is 16 units. Based on
39
this information, what is the marginal revenue
resulting from an increase in output from 15
units to 16 units?
a)Rs. 18
b)Rs. 16
c)-Rs. 12
d)Rs. 28
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When _________, we know that the firms
under perfect competition must be producing
40
at the minimum point of the average cost curve
and so there will be productive efficiency.
a)AC = AR
b)MC = AC
c)MC = MR
d)AR = MR
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41 At price P1, the firm in the figure would
produce
a)Zero output
b)Q3.
c)Q5.
d)Q6.
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Price varies by attributes such as location or by
42 Customer Segment is ____ degree of Price
Discrimination.
a)First
b)Second
c)Third
d)Fourth
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If the price of a product is Rs.20/unit and its
43 price elasticity of demand is (-) 0.25. Its MR
will be
a)60
b)100
c)- 60
d)None of these
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Unique supply curve in monopoly is
44
not due to ___________
a)P > MC
b)P < MC
c)P = MC
d)None of these
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______ is not an objective of price
45
discrimination
a)To enjoy economics of scale
b)To dispose of surplus stock
c)To escape foreign market
d)To secure equity through pricing
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Chapter 5
Important MCQs
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MTP April-25
Which of the following statements is correct
1
regarding business cycles?
a)Business cycles always affect all sectors uniformly.
b)Business cycles may affect all sectors uniformly.
c)Business cycles do not affect all sectors uniformly.
d)None of these
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2 Business cycle emerge in ……….
a)Socialist economy
b)Free market economy
c)Mixed economic system
d)None of the above
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MTP April-25
In business cycle peaks and troughs are
3
collectively known as:
a)Turning Points
b)Equilibrium Points’
c)Real business cycle events’
d)None of these
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4 The Great Depression occurred during:
a)1919-23
b)1929-33
c)1949-53
d)1901-05
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MTP April-25
Which of the following statements is
5
correct regarding business cycles?
a)Business cycles are contagious and international in
character.
b)Business cycles begin in one country and spread to
other countries through trade relations.
c)Business cycles have serious consequences on well-
being of the societies.
d)All of the above
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6 Decrease in input demand ………
a)Doesn’t affect inputs prices
b)Pushes inputs prices up
c)Pulls inputs prices down
d)Either (b) or (c)
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MTP April-25
During business cycles the opposite of a
7
peak is ………….
a)an inflation
b)a hyperinflation
c)a trend
d)a trough
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8 Nicholas Kaldor propounded ……
a)Nocholas theory
b)Kaldor Theory
c)Cobweb theory
d)Cobb-Douglas theory
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Repercussions of business cycles get ……………
9
felt on nearly all economic variables.
a)alternatively
b)simultaneously
c)one by one
d)All of the above
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Different business cycles ………. in duration
10
and intensity.
a)differ
b)similar
c)consistent
d)Can’t say
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11 Peak is the ………… stage of expansion.
a)Later
b)Earlier
c)Either (A) or (B)
d)None of the above
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Which one of the following is not an internal
12
cause of business cycles?
a)Money supply
b)Technology shocks
c)Psychological factors
d)Fluctuations in investment
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13 What are the internal causes of business cycle?
a)fluctuations in effective demand.
b)macroeconomic policies
c)money Supply
d)All the above
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MTP May-25
When growth rate becomes negative & the
14 level of National Income & expenditure declines
rapidly, we observe:
a)Recovery
b)Expansion
c)Trough
d)None of these
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MTP May-25
The turning point of business cycle is produced
15
by when economic indicates :
a)Coincident
b)Lagging indicates
c)leading Indicates
d)All of the above
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RTP May 2025
Information Technology bubble burst of 2000
16
is an example of :
a)Business Cycle
b)Consumer Sovereignty
c)Freedom of choice
d)None of these
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Clear CA Foundation & then study Paper 6 – FM & SM of CA Inter
on online mode (live/recorded) from MVSIR on “Ultimate CA” platform.
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Chapter 6
Important MCQs
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MTP April-25
EVA digital assistance Robot of HDFC Bank
1
is:
a)An intermediate good
b)A consumer good
c)A capital good
d)None of these
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MTP April-25
Which of the following statement Keynesian
2
model, -
a)MPC+MPS=1
b)APC+ APS=1
c)Both (a) and (b)
d)Neither (a) nor (b).
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National income accountants can avoid multiple
3
counting by:
a)MPC+MPS=1
b)APC+ APS=1
c)Both (a) and (b)
d)Neither (a) nor (b).
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MTP April-25
4 Gross investment refers to:
a)private investment minus public investment.
b)net investment plus replacement investment.
c)net investment after it has been "inflated" for
changes in the price level.
d)net investment plus net exports.
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5 The largest component of national income is:
a)compensation of employees.
b)rents.
c)interest.
d)corporate profits.
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6 Transfer payments are:
a)excluded when calculating GDP because they only
reflect inflation.
b)excluded when calculating GDP because they do not
reflect current production.
c)included when calculating GDP because they
are a category of investment spending.
d)included when calculating GDP because they
increase the spending of recipients.
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Keynesian economics emphasizes the
7
importance of:
a)Market self-regulation
b)Government intervention
c)International trade
d)Laissez-faire policies
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Fluctuation in economic activities according to
8
Keynes are due to :
a)Innovations
b)changes in money supply
c)Fluctuation in aggregate effective demand
d)Fluctuation in government spending
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9 GDP includes:
a)neither intermediate nor final goods.
b)both intermediate and final goods.
c)intermediate, but not final, goods.
d)final, but not intermediate, goods.
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10 If depreciation exceeds gross investment:
a)the economy's stock of capital may be either growing
or shrinking.
b)the economy's stock of capital is shrinking.
c)the economy's stock of capital is growing.
d)net investment is zero.
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MTP May-25
By summing the values added at each
11 stage in the production of some good we
obtain:
a)the price of that good.
b)the total income generated by that good's production.
c)the total cost (including profits) of that product.
d)all the above.
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12 Balance of trade is a:
a)Flow concept
b)Stock concept
c)Both (A) and (B)
d)None of the above
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MTP May-25
Which item is excluded from the estimation
13
of national income?
a)Rent from property
b)Salary of public servants
c)Illegal income
d)Profits of corporations
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MTP May-25
If the investment increases by Rs.50 crores
14
and the multiplier is 4, the change in income is:
a)Rs. 200 crores
b)Rs. 100 crores
c)Rs. 250 crores
d)Rs. 150 crores
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MTP May-25
The best indicator of economic
15
development of any country is:
a)Its agriculture
b)Its transport
c)Its gross production
d)Its per capital income.
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MTP May-25
The net value-added method of measuring
16
national income is also known as:
a)net output method
b)production method
c)industry of origin method
d)all of the above.
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17 Which of the following is incorrect?
a)GDP at market price = GDP at factor cost plus net
indirect taxes
b)NNP at factor cost = NNP at market price minus
indirect taxes
c)GNP at market price = GDP at market price
plus net factor income from abroad
d)None of the above
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RTP May 2025
According to Keynes, inflationary gap is caused
18
by
a)excess supply
b)excess demand
c)deficiency of demand
d)deficiency of supply
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Find nominal GDP if real GDP = 450 and price
19
index = 120
a)500
b)450
c)540
d)None of these
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From the following data, calculate “Gross value
added at factor cost”.
S. No. Particulars Rs. In Crore
1. Sale 180
20 2. Rent 5
3. Subsidy 10
4. Change in Stock 15
5. Purch. of Raw Mat. 100
6. Profits 25
a)105
b)210
c)185
d)None of these
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21 Find out the equilibrium of income and the value
of expenditure multiplier.
For an Economy
Consumption, C = 50+0.75 Yd
Investment, I = 100
Government Expenditure, G = 200
Transfer Payments, R= 110
Income Tax = 0.2Y
a)Y = 432.5 Crores, Expenditure Multiplier = 1.67
b)Y = 1081.25 Crores, Expenditure Multiplier = 2.5
c)Y = 1081.25 Crores, Expenditure Multiplier = 1.67
d)Y = 432.5 Crores, Expenditure Multiplier = 2.5
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Assume you built a new house, bought a used
22 car, and bought some government bonds. Which
of the following is true?
a)consumption and government purchases went up since
you bought a used car and government bonds
b)consumption and investment went up since you bought a
used car and government bonds
c)investment and government purchases went up since
you built a new house and bought government bonds
d)investment went up since you built a new house
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Chapter 7
Important MCQs
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MTP April-25
Price Floor is the price fixed by the
1
government, which is:
a)Equal to Equilibrium Price
b)Below the Equilibrium Price
c)Above the Equilibrium Price
d)None of these
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MTP April-25
What does the term "cascading effect" in
2
taxation refer to?
a)Tax on tax, leading to increased costs
b)Double taxation of the same income
c)A uniform tax rate across all commodities
d)A system where indirect taxes are completely avoided
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MTP April-25
3 What is the purpose of a capital budget?
a)Funding day-to-day government operations
b) Financing long-term investments and projects
c) Managing short-term financial needs
d) Controlling inflatio
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MTP April-25
According to Keynes, what is the role of the
4
government in maintaining full employment?
a)Limited role, as the market will self- adjust
b)Active role through fiscal and monetary policies
c)Passive role, focusing on international trade
d)No role, as unemployment is a natural part of the
business cycle
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MTP April-25
Which of the following budget types
specifically aims to reduce the deficit by
5
either increasing taxes or reducing
government spending?
a)Balanced budget
b)Expansionary budget
c)Contractionary budget
d)Surplus budget
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MTP April-25
Which of the following situations best
6 demonstrates a market failure due to
asymmetric information?
a)A monopolist exploiting market power by reducing
supply
b)Consumers buying substandard products because
they lack information about quality
c)The government providing public goods like
street lighting
d)A natural monopoly where economies of scale
drive market concentration
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MTP April-25
When a market fails to allocate resources
7 efficiently, leading to overproduction or
underproduction of goods, it is called:
a)Monopoly
b)Externalities
c)Public Goods
d)Market Equilibrium
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MTP April-25
8 The effectiveness of fiscal policy is limited by:
a)Time lags in implementation
b)Lack of flexibility in government expenditure
c)Political constraints
d)All of the above
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MTP April-25
9 Internal public debt refers to:
a)Loans taken from international financial
institutions
b)Government borrowing from domestic sources
c)Borrowing from foreign investors
d)Foreign direct investment (FDI)
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MTP April-25
Redistribution of income by the government
10
is primarily done through:
a)Progressive taxation and social welfare programs
b)Privatization of public enterprises
c)Increase in indirect taxes
d)Encouraging monopolistic practices
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MTP April-25
11 The Finance Commission is responsible for:
a)Allocating financial resources between the Union and
the States
b)Preparing the Union Budget
c)Controlling the Reserve Bank of India
d)Regulating stock markets
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MTP April-25
Under Article 112, the Annual Financial
12 Statement is presented in which house of
Parliament first?
a)Lok Sabha
b)Rajya Sabha
c)Joint Session of Parliament
d)Finance Committee
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MTP April-25
13 The burden of long-term public debt fall on:
a)Present generation
b)Past generation
c)Future generation
d)All
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MTP April-25
The Government offer minimum assured
14 price to the farmers to purchase their
output is called:
a)market Price
b)support Price
c)equilibrium Price
d)ceiling Price
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MTP May-25
The fiscal deficit excluding the interest
15
liabilities for a year is called as ;
a)Revenue deficit
b)Capital deficit
c)Budget deficit
d)Primary deficit
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MTP May-25
16 Pump Priming is related with:
a)Monetary policy
b)Income policy
c)Price policy
d)Fiscal policy
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17 The modern state is:
a)Laissez –faire state
b)Welfare state
c)Aristocratic state
d)Police state
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18 Public Debt Management refers to :
a)Terms of new bonds
b)Proportion of different components of public debt
c)Maturity
d)All the above
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MTP May-25
19 Education is an example of :
a)Private good
b)Public good
c)Merit good
d)Mixed good
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MTP May-25
20 The World bank normally gives:
a)Short term loans
b)Medium term loans
c)Long term loans
d)medium- and long-term loans
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MTP May-25
Which source of revenue is shared between the
21
Centre and the States in India?
a)Excise duty
b)Corporation tax
c)Income tax
d)None of these
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MTP May-25
Which of the following is a capital receipt in
22
the government budget?
a)Income tax
b)Interest on loans
c)Borrowings
d)None of these
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MTP May-25
Which policy tool can the government use
23
to correct negative externalities?
a)Subsidies
b)Taxes
c)Tariffs
d)None of these
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MTP May-25
Which of the following combinations is
24
correct?
a)NABARD – Industrial Loan
b)IDBI – Short term Loans
c)RBI – Long term Loans
d)RRB – Agricultural Finance
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MTP May-25
25 Rolling plan is a plan for:
a)One year
b)Two year
c)Three year
d)Five year
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MTP May-25
A market for borrowing and lending funds
26
for a period exceeding 14 days:
a)Term money market
b)Call money market
c)Commercial bill market
d)None of these
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MTP May-25
27 Finance Commission:
a)Is a Statutory Body
b)Recommends the distribution of taxes between Union
and States
c)Cannot decide on principles related to Grants in Aid
given by Union to States
d)All of the above
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MTP May-25
Which of the following Budget documents is
28 mandated by Fiscal Responsibility and Budget
Management Act, 2003?
a)Annual Financial Statement (AFS)
b)Demand for Grants
c)Finance Bill
d)Macro-Economic Framework Statement
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MTP May-25
According to Musgrave the major functions of
29
public finance are:
a)Allocative function
b)Distributive function c
c)Stabilisation function
d)All the above
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MTP May-25
One negative effect of high public expenditure
30
is:
a)Decrease in government control
b)Increase in budget deficits and public debt
c)Increase in private sector growth
d)Reduction in social welfare
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RTP May 2025
31 Fiscal federalism primarily deals with:
a)Distribution of financial resources among different
levels of government
b)Distribution of power between Legislature and
Executive
c)Relationship between Judiciary and Legislature
d)Conduct of elections in a federal country
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RTP May 2025
Under Article 112, the Annual Financial
32 Statement is presented in which house of
Parliament first?
a)Lok Sabha
b)Rajya Sabha
c)Joint Session of Parliament
d)Finance Committee
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RTP May 2025
The Government offer minimum 3 assured price
33 to the farmers to purchase their Output is
called
a)Market Price
b)Support Price
c)Equilibrium Price
d)Ceiling Price
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Chapter 8
Important MCQs
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MTP April-25
Which characteristic of money refers to its
1
ability to hold value over time?
a)Divisibility
b)Durability
c)Portability
d)Store of value
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MTP April-25
Which of the following factors does NOT
2
directly affect the demand for money?
a)Interest rates
b)The level of income or output
c)The price level in the economy
d)The government’s fiscal deficit
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MTP April-25
In an economy, a change in the reserve
3
ratio will directly affect the:
a)Level of interest rates in the market
b)Supply of money in circulation
c)Demand for money at different income
levels
d)Government’s budgetary balance
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MTP April-25
According to the Quantity Theory of Money,
if the money supply increases while the
4
velocity of money and output remain
constant, the general price level will:
a)Decrease
b)Increase proportionately
c)Stay the same
d)Increase, but unpredictably
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MTP April-25
The transaction motive for holding money
5 implies that money is held to:
a)Make speculative investments in financial markets
b)Provide liquidity for daily transactions and purchases
c)Protect wealth against inflationary risks
d)Save for future investment in assets
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MTP May-25
The value of money in Fisher’s equation is
6 determined by:
a)Demand for money
b)Supply of money
c)Demand and supply of money
d)None of the above
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MTP May-25
7 Value of money is
a)Directly related to the price level
b)Inversely related to the price level
c)Proportionately related to the price level
d)All the above
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MTP May-25
8 Bank rate policy is not very effective because-
a)It requires a well-developed money market
b)It cannot operate effectively
c)All banks are not under the control of central bank
d)All the above
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MTP May-25
9 Inflation can be controlled by applying:
a)Monetary and fiscal policies
b)Monetary and labour policy
c)Fiscal and Commercial Policies
d)All of the above
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MTP May-25
10 What is Currency Deposit Ratio (CDR)?
a)Ratio of money held by the public in currency to that
of money held in bank deposits
b)Ratio of money held by the public in bank deposits to
that of money held by public in currency
c)Ratio of money held in demand drafts to that of
money held in treasury bonds
d)None of the above
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MTP May-25
11 Open Market Operation is :
a)Buying and selling of government
b)securities
c)Sale of government securities
d)Buying and selling of government cheques
e)All of the above
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MTP May-25
Which of the following is a qualitative or
12 selective method of credit control by the
central bank?
a)Bank rate or Discount Rate Policy
b)Open market operations
c)Cash Reserve Ratio
d)None of the above
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MTP May-25
Which of the following is included in M1 in
13
India?
a)Time deposits
b)Currency with the public and demand deposits
c)Bonds and shares
d)Treasury bills
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MTP May-25
Which of the following is a quantitative
14
instrument of monetary policy?
a)Moral suasion
b)Credit rationing
c)Bank Rate
d)None of these
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MTP May-25
If the RBI increases the Cash Reserve Ratio
15
(CRR), it will lead to:
a)Increase in money supply
b)Decrease in money supply
c)No effect on money supply
d)Increase in inflation
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MTP May-25
Which of the following are the instruments of
16
money market?
a)Call money
b)Certificate of deposits
c)Trade bills
d)All of the above
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MTP May-25
17 Statutory Liquidity Ratio is:
a)Banks have to keep deposits with RBI
b)Certain percentage of deposits are to be kept by the
bank in form of liquid assets
c)It is the discount rate of the banks
d)None of the above
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RTP May 2025
Which of the following statements is true about
18
the Indian monetary system?
a)The Indian monetary system is based on the gold
standard
b)The Indian monetary system is based on the credit
money standard
c)The Indian monetary system is based on the paper
standard
d)None of these
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RTP May 2025
Which of the following statements is true about
19
the money supply?
a)It is the total volume of money that is held by the
government of a country
b)It is the total volume of money that is held by the
general public of a country over a time period
c)It is the total volume of money that is held by the
general public of a country at a particular point in time
d)All of the above
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RTP May 2025
Which of the following statements is true about
20
credit creation by banks?
a)Banks create credit on the basis of their total assets
b)Banks create credit on the basis of their total
deposits
c)Banks create credit on the basis of their total
securities
d)None of these
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RTP May 2025
Open market operation will become successful if
21
there is a:
a)free-market economy
b)developing economy
c)well-developed bill and security market
d)All of the above
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RTP May 2025
22 What is Currency Deposit Ratio (CDR)?
a)Ratio of money held by the public in currency to that
of money held in bank deposits
b)Ratio of money held by the public in bank deposits to
that of money held by public in currency
c)Ratio of money held in demand drafts to that of
money held in treasury bonds
d)None of the above
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Chapter 9
Important MCQs
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MTP April-25
1 Theory of Mercantilism propagates
a)Encourage exports and imports
b)Encourage exports and discourage imports
c)Discourage exports and imports
d)Discourage exports and encourage imports
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MTP April-25
In international trade negotiations, which of the
following is the most common objective for
2
countries involved in multilateral trade
talks?
a)To increase tariffs and protect domestic industries
b)To reduce trade barriers and promote free trade
c)To restrict foreign competition through quotas
d)To enhance domestic subsidies for agricultural sectors
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MTP April-25
Which of the following is NOT a key assumption
3
of Ricardo's theory of comparative advantage?
a)Two countries, each specializing in the good it can
produce most efficiently, will both gain from trade.
b)Resources are immobile between countries but mobile
within a country.
c)Trade occurs only due to differences in technology
between countries.
d)Both countries in trade can benefit even if one country
is less efficient in producing both goods.
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MTP April-25
Which of the following is a potential benefit of
4 Foreign Direct Investment (FDI) for the host
country?
a)Increased inflation due to higher government
expenditure
b) Reduction in technological transfer to local industries
c) Creation of employment opportunities and skill
development
d) Increased dependence on foreign companies for
resources
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MTP April-25
According to the Heckscher-Ohlin theory, a
5 country will have a comparative advantage in the
production of goods that:
a)Require labour-intensive techniques if the country has
a surplus of capital.
b) Utilize abundant factors of production that the
country has in large supply.
c) Require advanced technology in which the country is
technologically superior.
d) Require high labor costs in a country with low wages.
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MTP April-25
Which of the following is the primary
6
objective of bilateral trade agreements?
a)To create trade barriers between the two countries
involved
b)To establish free trade between two countries by
eliminating tariffs and restrictions
c)To focus on mutual military cooperation between the
countries
d)To standardize monetary policies between two
countries
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MTP April-25
In the context of trade negotiations,
7 the term “Most- Favoured-Nation (MFN)”
status refers to:
a)A preferential treatment granted to one country over
others in trade agreements.
b)The obligation to trade exclusively with a particular
country.
c)A policy that allows countries to impose tariffs on
imports from specific nations.
d)A requirement to offer the same trade terms to all
trading partners.
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MTP May-25
Which is not an advantage of International Trade
8
?
a)Export of surplus production
b)Import of defence material
c)Dependence on foreign countries
d)Availability of cheap raw material
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MTP May-25
9 Dumping refers to:
a)Reducing tariffs
b)Sale of goods abroad at a lower price, below their
cost and price in their home market
c)Buying goods at low prices abroad and selling at higher
prices locally
d)Expensive goods selling for low prices
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MTP May-25
Trade between two countries can be useful if
10
cost ratios of goods are:
a)Undetermined
b)Decreasing
c)Equal
d)Different
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11 Import quota is:
a)Tariff
b)Non-Tariff barrier
c)Concession
d)International Obligation.
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The Heckscher-Ohlin model differs from the
12 Ricardian model of Comparative Advantage in
that the former:
a)has only two countries.
b)has only two products.
c)has two factors of production.
d)None of these
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RTP May 2025
13 FII helps to improve:
a)Capital market
b)How of equity capital
c)Financial innovation and development
d)All the above
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The effects of inflation on the price
14 competitiveness of a country’s products may be
offset by:
a)An appreciation of the currency
b)A revaluation of the currency
c)A depreciation of the currency
d)None of the above
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Which of the following is an example of a
15
multilateral trade agreement?
a)North American Free Trade Agreement (NAFTA)
b)European Union (EU) Trade Policies
c)World Trade Organization (WTO) agreements
d)Bilateral Trade Agreement between two countries
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Chapter 10
Important MCQs
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MTP April-25
Which of the following is the most important
1
source of India’s foreign exchange earnings?
a)Industrial exports
b)Remittances from Indians working abroad
c)Tourism
d)Services exports, especially IT and software
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MTP April-25
The Green Revolution in India focused primarily
2
on increasing the production of:
a)Oilseeds
b)Food grains, especially wheat and rice
c)Fruits and vegetables
d)Cash crops like cotton and sugarcane
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MTP April-25
Which of the following is a primary objective of
3
India’s Five-Year Plans?
a)To regulate and control foreign trade
b)To promote balanced economic growth across all
regions
c)To discourage the private sector in favor of public
enterprises
d)To ensure foreign aid and capital inflows into the
country
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MTP April-25
Which of the following is NOT a function of
4
NITI Aayog?
a)Policy formulation and coordination
b)Allocation of financial resources to states
c)Promoting cooperative federalism
d)Serving as a think tank for the government
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5 Production of milk is included in which sector?
a)Tertiary sector
b)Service sector
c)Primary sector
d)Secondary sector
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MTP April-25
The strategy of agricultural development in
6
India before green revolution was
a)High yielding varieties of seeds and chemical
fertilizers to boost productivity
b)Institutional reforms such as land reforms
c)Technological up gradation of agriculture
d)All the above
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MTP April-25
Which of the following is the most
7 important source of India’s foreign exchange
earnings?
a)Industrial exports
b)Remittances from Indians working abroad
c)Tourism
d)Services exports, especially IT and software
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MTP April-25
8 Economic Survey is published by:
a)Ministry of finance
b)Planning commission
c)Govt. of India
d)Indian statistical institute
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MTP May-25
Unemployment in a developing country is
9
generally take place due to
a)Switch over from one job to another.
b)Lack of effective demand
c)Seasonal factors.
d)Lack of complementary factors of production.
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10 Disguised unemployment is common in :
a)Agricultural sector
b)Industrial sector
c)Service sector
d)Non of these
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The regulatory body of mutual funds in
11
India is ---------------.
a)RBI
b)SEBI
c)IRDA
d)Government
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Nearly percent of working population is
12
engaged in the service sector:
a)23 per cent
b)45 per cent
c)80 per cent
d)50 per cent
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The industrial sector depends on the
13
agricultural sector because:
a)the agricultural sector provides food and other
products for the consumption purposes of industrial
sector
b)the agricultural sector provides raw materials for the
development of agro-based industries of the
economy
c)the agricultural sector provides market for the
industrial products
d)all of the above
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MTP May-25
The Indian industry faced the process of
14
retrogression and deceleration because of:
a)Unsatisfactory performance of agriculture
b)slackening of real investment in public sector
c)narrow market for industrial goods, especially in rural
areas
d)all of the above.
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MTP May-25
15 Which of the following statements is incorrect?
a)About 80 percent of agricultural area has irrigation
facilities
b)About two third area is rain-fed in India
c)Productivity per worker in agriculture is much lower
than that in industry
d)Cropping pattern is quite skewed in India.
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MTP May-25
We can say Indian agriculture has become
16
modern since:
a)there has been an increase in the use of high yielding
varieties of seeds, fertilizers pesticides etc.
b)there has been noticeable positive change in the
attitude of farmers towards new techniques of
production
c)farmers are increasingly resorting to intensive
cultivation, multiple cropping, scientific water
management
d)all of the above.
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MTP May-25
Generally, an economy is considered
17
underdeveloped if:
a)The standard of living of people is low and productivity
is also considerably low.
b)agriculture is the main occupation of the people and
productivity in agriculture is quite low
c)the production techniques are backward
d)all of the above
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MTP May-25
__________ is the apex bank for agriculture
18
credit in India.
a)RBI
b)SIDBI
c)NABARD
d)ICICI
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MTP May-25
The major cause of unemployment in India is
19
:
a)underdevelopment
b)defective manpower planning
c)rapid population growth
d)all of the above
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The largest share of foreign aid in India has
20
been used in the programme of :
a)agriculture development
b)industrial development
c)education
d)health
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Before financial reforms, the banking system
21 was characterised by all of the following
except:
a)administered interest rate structure
b)Quantitative restrictions on credit flow
c)high revenue requirements
d)keeping very less lendable resources for the priority
sector
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MTP May-25
In terms of Ease of Doing Business in 2020
22
India ranks:
a)63
b)75
c)45
d)None of these
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RTP May 2025
Which of the following is NOT a function
23
of NITI Aayog?
a)Policy formulation and coordination
b)Allocation of financial resources to states
c)Promoting cooperative federalism
d)Serving as a think tank for the government
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RTP May 2025
What activity is termed as activity of tertiary
24
sector?
a)Wheat production
b)Mobile production
c)Construction of a dam
d)Fishing
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Devaluation of Indian Rupee in terms of US
25
Dollar was in the year.
a)2019
b)2000
c)1981
d)1991
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Clear CA Foundation & then study Paper 6 – FM & SM of CA Inter
on online mode (live/recorded) from MVSIR on “Ultimate CA” platform.