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1. Who was the father of Economics?

Marshall Adam Smith Robbins Keynes

2. Normative Economic theory deals with ____________.

What to produce How to produce Whom to produce How the problem should be solved

3. In economics goods includes material things which _____________.

can be transferred can be visible both A & B None

4. Nature of PPF curve is ____________.

convex to the origin concave to the origin both none

5. Point elasticity was propounded by:

Adam Smith Marshall Robbins Keynes

6. Luxury goods have ____ degree of elasticity.

High Low Moderate None

7. ___________ is the functional relationship between physical inputs (i.e. factors of production), and physical outputs (i.e. quantity of good / service produced).

Input-Output Function Demand – Supply Function Production Function Cost Function

8. At the point of Inflexion, TP will generally-

Show increases trend Show decreasing or increasing trends Equal to Zero be negative

9. Identify the correct statement.

Average product is at its maximum when Marginal Product is equal to Average Product. Law of Increasing Returns to Scale relates to the effect of changes in factor proportions. Economies of Scale arise only because of invisibilities of factor proportions. Internal Economies of scale can accrue only to the exporting sector.

10. Modes of production was propounded by __________.

Adam Smith Karl Marx David Ricardo Alfred Marshall

11. Which of the following is not a factor in market supply of a product?

Cost of production Number of buyers Market price of the product Price of related products

12. The demand for salt is inelastic, because __________________.

of low price absence of it makes food tasteless no substitutes All the three

13. Price elasticity demand of product will be more elastic if it __________________.

has no substitutes has number of substitutes is an item of necessity is life saving product

14. All factor of production become variable in –

Medium – run Short- run Long –run none of the above

15. What is the maximum point of TP?

When AP become zero When MP become zero At the intersecting point of AP & MP None of these

16. A Rational Producer will operate in –

Stage I Stage II Stage III All of the above

17. Capitalistic economy means where the wealth and income of the country are owned by the

state land owners state and public bourgeoises

18. In the primitive age the factors used in production were mainly

Capital Land Labour Both land and labour

19. If PPF is linear it implies_____________

constant opportunity cost diminishing apart cost Increasing opportunity cost none

20. Micro Economics theory deals with.

Economy as a whole Individual units Economic growth all the above

21. Human wants are ________.

limited unlimited undefined none

22. Any point beyond PPF is _________________.

attainable unattainable both none

23. If an economy is working at the point left to PPF curve that shows…

Full employment Unemployment Excess production none

24. If the price of burger rises from ₹12 per piece to ₹20 per piece as a result of which the daily sales decrease from 300 to 200 pieces per day. The price elasticity of demand can be estimated as:

0.5 0.8 0.25 2.1

25. An increase in price will result in an increase in total revenue if ________________.

percentage change in quantity demanded is greater than the percentage change in price percentage change in quantity demanded is less than the percentage change in price percentage change in quantity demanded is equal to the percentage change in price none

26. Which of these will have highly inelastic supply?

perishable goods consumer durables goods Items of elite class consumption All the three

27. The supply function of a product x is as Sx = 5px+3. Where px stand for price. The quantity supplied corresponding to price of ₹2 will be ………

18 13 15 23

28. Variable factor means those factors of production which can be changed in the short run?

Which can be only changed in the long run? Which can be changed in the short run? Which can be never be changed Both (a) & (b) correct

29. If the Marginal product of labour is below the Average product of Labour, it must be true that:

The Marginal product of Labour is negative The Marginal Product of Labour is Zero The Marginal Product of Labour is falling The Average product of Labour is negative

30. Why does the Law of Increasing Returns operate?

Full use of Fixed Indivisible Factors. Efficiency of Variable Factors Need to reach the right combination All of the above

31. Internal Economies and Diseconomies arise due to –

Overall industry-level changes Changes at the Firm Level Both (a) and (b) Neither (a) nor (b)

32. The labour surplus is the difference between value of output minus:

Values of materials used Values of fixed land used Values of capital used None

33. Socialistic nature of an economy means income and wealth are owned by the:

capitalists labour class state and public All

34. Which of the following is/are an essential feature of the market:

Buyers Sellers Price All the three

35. In the long run price is governed by:

Cost of Production Demand supply forces Marginal utility None

36. In the long run a firm in perfect competition earns:

Normal profit only Abnormal profit Average profit of past five years 12.33% profits on capital employed

37. A firm faces the shut down situation when:

Price is less than average variable cost Price is more than the average variable cost Price is equal to fixed cost Price is more than the average fixed cost

38. A firm that makes profit in excess of normal profit is earning:

Economic profit Costing profit Normal profit Super normal profit

39. The market state that satisfy all the essential features of a perfect competitive market except identity of product is known as:

Oligopoly Duopoly Monopoly Monopolistic competition

40. In the short run if the price is above the average total cost in a monopolistic competitive market, the firm makes:

Profits and new firms join the market Profit and bar entry to new firms Makes losses and exit the market Quick profit and disappears

41. Which of these is associated with a monopolistic competitive market –

Product differentiation Homogeneous Product Normal in short run Single buyer

42. In a competitive market_____________ is the price maker:

Firm Industry Consumer Trade association

43. A Monopoly demand curve is:

Same as its average revenue curve Same as its supply curve Same as marginal cost curve None of these

44. When the firm is in the long period equilibrium it gets only:

Normal profit No loss no profit Super normal profit Loss

45. Equilibrium of the firm under perfect Market means, when:

MR curve cuts the MC curve from below MC curve cuts the MR curve from below MC Curve and MR curve are Parallel to each other AR curve is Equal to MC curve

46. Penetration pricing means:

Price will reduced after gaining market share Reduce price when losing market share Price will be raised later after gaining market share None of these

47. One of the example of Oligopoly market is:

Cosmetic industry Cartel Automobile industry Technology

48. The forces of supply and demand determine the:

The quantity of the goods The price of the goods Different prices from different customers Demand of customers

49. Excess profits earned by each firm during short time would attract:

New firms to enter into the market Market share of each firm will be less There is no barrier on the entry into the market All of the above

50. In monopoly market there is:

A single firm, single product A single firm, many substitute identical product A single product, many firm None of the above

51. The concept of monopolistic competition market was introduced by:

Alfred Marshall Prof. Chamberlin Karl Marx John Robinson

52. Which of the following is near money?

Bill of exchange Saving bonds Gilt edged securities All the three

53. Optional money is a:

Legal tender money Non-legal tender money Limited legal tender money Full bodied money

54. Which of the following function does money serve when used to measure the prices of different goods and services?

Store of value Medium of exchange Standard of value Display of power

55. Which of these affects the demand for money?

Real income Price level Rate of interest Both (a) and (c)

56. Which of these would lead to fall in demand for money?

Inflation Increase in real income Increase in real rate of interest Increase in wealth

57. Supply of money refers to:

Total money held by the public Total money held by RBI Total money with all the commercial banks and RBI Total money in Government account

58. Which is the apex bank for agricultural credit in India?

RBI SIDBI NABARD IDBI

59. RBI check inflation by:

Increasing bank rate Increasing CRR Both None

60. If the country is passing through recession, the RBI would:

Buy bonds Reduce CRR Ease out bank rate All or any of the above three

61. Manipulation in CRR enables the RBI to _____________

Influence the lending ability of the commercial banks Check unemployment Check poverty Increase GDP

62. EXIM Bank is authorized to raise loan from:

RBI Government of India International market Trading activities

63. RBI was nationalized in:

June 1947 Jan. 1949 March 1954 April 1936

64. FERA has been replaced by:

FINA FEMA FENA MRTP

65. Repo transaction means:

Sale of securities by the holder to the investor with the agreement to purchase them at a predetermined rate and date Sale of securities by the holder to the investor with the agreement to resell them at a predetermined rate and date. Sale and purchase of securities by the holder to the investor with the agreement to purchase them at the prevailing rate and date. Sale of securities by the holder to the investor with the agreement to purchase them at market driven rate.

66. Reverse Repo transaction means:

Sale of securities by the holder to the investor with the agreement to purchase them at a predetermined rate and date. Sale or purchase of securities by the holder to the investor with the commitment to sell or purchase them at a predetermined rate and date. Sale and purchase of securities by the holder to the investor with the agreement to purchase them at the prevailing rate and date. Sale of securities by the holder to the investor with the agreement to purchase them at market driven rate.

67. Given a reserve ratio of 20% in initial deposit of ₹1000 in a banking system would create secondary deposit of ₹________________.

₹3,000 ₹5,000 ₹4,000 ₹6,000

68. Money market deals with the ____________.

Short term credit Long term credit Both A & B None

69. Money market includes _________________.

Government securities Treasury bill Bills of exchange All the above

70. In Indian money market, who are the main borrowers of short term funds?

Central government State government Local bodies All the above

71. Money market is controlled by ________________.

Government R.B.I S.B.I All the above

72. In April 1999 the government of India introduced the bills for the period of ________________.

91 days 182 days 364 days None

73. In call money market funds are borrowed of rent without any security for the period of _____________.

One day 14 days a & b NONE

74. If buyer of the goods is called ___________.

Drawer Drawee Payee None

75. Certificate of deposits are issued by the banks to___________.

Individual Companies P.S.U.S All the above

76. Which are unsecured promissory notes?

Commercial paper Certificate of deposits Treasury bills All the above

77. Commercial banks provide collateral loans against ______________.

Bonds Govt. security Both A & B None

78. Profit is the difference between________________.

Total cost and total revenue Total revenue and total cost Both A & B None

79. The internal business environment includes factors such as:

Business philosophy & business priorities Management structure Capital structure All

80. The term ‘T’ in SWOT Analysis is:

Transparency Total revenue Threat Transaction

81. The components of micro business environment are-

Firms and consumers Market & competitors Organization All

82. The term ‘S’ in PESTEL stands for-

Strength Socio-economic Sustainability None

83. VUCA is an acronym, first used in:

1984 1987 1997 1992

84. In PESTEL Analysis, government policy, political stability or instability, corruption, foreign trade policy, tax policy, labour law, trade restrictions etc. are related to:

Political factors Economic factors Environmental factors Legal factors

85. The term ‘W’ in SWOT Analysis is:

Wealth Wellness Waste Weakness

86. NPCI has been pivotal to the emergence of the digital payment ecosystem in India. NPCI stands for:

National Payments Corporation of India National Public Corporation of India National Payments Cell of India Nature Public Corporation of India

87. Which of the following is not a component of VUCAFU?

Uncertainty Ambiguity Clarity Volatility

88. Who considered co-ordination as a permeating function of management passing through the managerial functions of planning, organizing, staffing, leading and controlling?

George Terry and Theo Haimann Henry Fayol Haynes and Massie Hicks and Gullet

89. Which is inherent in managerial job and embodied in all the functions of management?

Planning Organising Control Co-ordination

90. According to Mary Parker Follett which one is not the principle for achieving effective coordination?

Continuity Early beginning Self-coordination Managerial Audit

91. Who emphasized harmony of objectives is crucial to the success of direction?

F.W. Taylor Henry Fayol Peter Drucker George Terry

92. A manager has to exhibit the style of leadership depending on the:

Performance Time Situation Period

93. Which of the following statements is not correct?

Management is a goal-oriented process Management is a universal process Management is a continuous process Management is a rigid process

94. Which of the following is not a function of managers?

Designing Organizing Leading Planning

95. Which of the following does not corroborate the concept of ‘Management as a Science’?

Cause & Effect Relationship Test of Validity Personal Skill Experimentation & Observation.

96. ___________ involves missions and objectives.

Organizing Planning Staffing Coordination

97. Management is the art and science of decision making and leadership.

Harold Koontz Donald J. Clough Louis Allan Terry

98. Agency theory suggests that managers (the agents), particularly those of large, publicly-owned firms, may have different objectives from those of the:

Workers Subordinates Shareholders Employees

99. The view that sees profit maximization as the main objective is known as:

Shareholder theory Agency Theory Stakeholder theory Stewardship theory

100. Which one of the following represents the best effort to reduce the agency problem?

Paying senior managers a cash bonus each year based on the number of people employed by the company Giving senior managers bonuses consisting of shares of company share whenever the company improves its production efficiency Increasing the salary of the company president every time the company opens a new store Providing company cars to all managers employed by the firm for more than one year

101. Agency Theory developed by:

Alchian and Demsetz Jensen and Meckling Jensen and Fama All of the above

102. Who had said that leader’s stewardship choice can motivate and facilitate reciprocal stewardship behavior from the employee?

Pearson and Marler Alchian and Demsetz Davis, Schoorman and Donaldson Jensen and Meckling

103. According to Davis, Schoorman and Donaldson (1997), the managers being a steward of the company will try to protect and maximize __________ through firm performance.

Shareholder’s wealth Stakeholder’s wealth Both (a) and (b) None of the above

104. Which of the following regarding residual loss is correct?

Bonding costs do not have an effect on residual loss. Residual loss is incurred by the agent because an agency relationship exists. A reduction in residual loss is likely to be the result of an increase in monitoring costs. Under agency theory, residual loss can be reduced to zero by good governance.

105. Which of the following regarding agency theory is correct?

Agency theory only applies to large entities. Agents are assumed to be in a position of power. Agents act in the best interest of the principal. Agency theory defines the relationship between agents and directors.

106. Which of the following is not an agency cost?

Residual loss. Bonding costs. Concurrent loss. Monitoring costs.

107. _____ is defined as the process of obtaining and maintaining the capable and competent people to fill all positions from top to operative level.

Staffing Selection Recruitment Training

108. _____ is concerned with providing the organization with the right number of people at the right place, and at the right time so that the organization would be able to achieve its goals effectively.

Recruitment Staffing Selection Development

109. Selection is a process of rejection and hence it is called a _____ process:

Positive Negative Either (a) or (b) None of the above

110. T-group training is also known as:

Classroom Training Apprenticeship Training Internship Training Sensitivity Training

111. Training conducted away from the actual work setting is called:

On-the-Job Training Off-the-Job training Step-by-Step Training Job-Instruction Training

112. Which of the following are the methods of off-the-job training?

Role playing Case studies Lectures, classroom instruction All of the above

113. External sources of recruitment include:

Employment Exchanges Advertisements Employee walk-ins All of the above

114. _____ refers to the introduction of a person to the job and the organization.

Induction Placement Orientation None of the above

115. Which activity brings the job-seeker and employer in contact with one another?

Recruitment Selection Induction Placement

116. Who contends that “Training is an act of increasing the knowledge and skill of an employee for doing a particular job”?

Edwin Flippo Michael J. Jucius O. Jeff Harris Andrew Carnegie

117. The premises over which a firm has no control are known as:

Controllable premises Semi-Controllable premises Uncontrollable premises None of the above

Foundation Question bank Economics

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