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Macro CH 9
Macro CH 9
Macro CH 9
Q60 Revenue and expenditure policy of the government to correct the situations of excess
and Deficit demand is known as:
a) Monetary policy
b) Fiscal policy
c) Both (A) and (B)
d) None of these
Q61 Which of the following components of fiscal policy can be used to correct Deficit
demand?
a) Increase in government expenditure
b) Cut in tax rates
c) Cut in public borrowing
d) All of these
Q62 Which of the following components of monetary policy can be used to correct excess
demand?
a) Increase in SLR
b) Increase in CRR
c) Increase in margin requirement
d) All of these
Q63 To correct the situation of deflationary gap, the central bank:
a) Increases margin requirement
b) Decreases margin requirement
c) Increases cash reserve ratio
d) Both (A) and (B)
Q64 Which of the following leads to increase in AD?
(A) Fall in imports
(B) Increase in investment expenditure
(C) Increase in government expenditure
(D) All of these
Q65 A situation when AS=AD along with fuller utilisation of resources in the economy is
called
Question No Answer
Q1 (a) Deficit Demand
Q2
(C) Both (a) and (b)
Q3 (C)Inflationary gap
Q4 a) Deficit demand
Q5
(a) Under employment equilibrium
Q6 (b) Central bank
Q7 (B) Increase
Q8 (a) Fall in the propensity to consume
Q9 (d) All the above
Q10 (a) Inflationary gap
Q11 (d) All the above
Q12 (d) All of these
Q13 (c) both a & b
Q14 (c) both a & b
Q15 (d) All of these
Q16 (b) Excess demand
Q17 (d) All the above
Q18 (b) Surplus Demand
Q19 (b) Buying of Securities in Open Market
Q20 (b) Under Full Employment Equilibrium
Q21 (b) Decrease
Q22 (b) Excess supply
Q23 (d) None of the above
Q24 (a) Increasing the level of government expenditure.
Q25 (c) Decreasing CRR and SLR.
Q26 (d) All of them
Q27 (d) All the above
Q28 b) AD > AS
Q29 d. Increase in government income
Q30 c) When people are not getting work,even when they are
willing to work at the existing wage rate
Q31 c) Decrease in taxes
Q32 d)Increase in public debt
Q33 b) Fiscal policy
Q34 d. Tax
Q35 d) All of these
Q36 a. Moral suasion
Q37 d) both b and c
i. ………….. (Central bank/Commercial bank) help to correct the situation of deflationary shock in a
country through its credit control policy.
ii. Which of the following steps should be taken by the Central Bank to boost demand in the
economy during the deflationary gap?
A. Decrease tax rate
B. Deficit financing
C. Decrease legal reserve requirements
D. Increase foreign exchange reserve
iii. Which of the following statements stands true during the deflationary gap?
A. Actual output falls short of potential output
B. Potential output falls short of actual output
C. Actual demand is less than expected demand
D. Expected demand is less than actual demand
iv. What will be the impact on money supply during the deflationary gap?
A. Decrease
B. Increase
C. Remain constant
D. Can't be predicted
Q4 India’s wholesale inflation accelerated for the third consecutive month and firmed up to an eight-
month high of 1.48% in October, driven by manufactured items, data released by the commerce
and industry ministry showed on 16 Nov. The WPI had increased 1.32% in September, The annual
rate of inflation based on the WPI Food Index, which comprises ‘food articles’ from the primary
articles group and ‘food product’ from the manufactured products group, decreased to 5.78% in
October from 6.92% in September. The government also revised the wholesale inflation for
August to 0.41% from 0.16% earlier.
Food inflation cooled to 6.37% in October from 8.17% in September, led by decline in meat, egg
and fish inflation that slowed to 1.65% in October from 4.15% the previous month.
Inflation in vegetables and potatoes was 25.23% and 107.70% respectively.
In the manufactured products category, inflation was 2.12% compared with 1.61% in September.
i, India’s wholesale inflation accelerated for the third consecutive month in October 2020, driven
by ________item(food/manufactured).
ii. Increase in core inflation implies improvement in _______(demand/supply) condition after
covid 19 related lockdown was lifted.
iii. Inflation is a situation of excess demand i.e., when aggregate demand is in excess of aggregate
Q5 CASE STUDY:
Amidst indications of an economic slowdown in the beginning of year 2020 came the challenge of
CoronaPandemic in Feb-Mar 2020, forcing the Government to impose a strict lock down leading
to near cessation of Major economic activities across all sectors. The Finance Minister on 13th,
14th, 15thMay’20 announced an Economic package of ₹20 Lakh Crore for revival of Indian
economy. Government of India’s ₹20 lakh crore ‘AatmaNirbhar Bharat’ package which aimed at
reviving the economy, includes major fiscal measures like free food for the poor, direct cash
transfer, money for rural job guarantee scheme, MGNREGA and credit guarantees to MSMEs.RBI
has also taken steps to slash lending rates and add more liquidity into the markets.
1: Due to weakening of global economic activity, level of aggregate demand in the economy:
(A) increases
(B) decreases
(C) fluctuate
(D) constant
2: The impact of above situation under Keynesian theory of income and employment, in an
economy is:
(A) Decrease in income, output and employment.
(B) Decrease in nominal income, but no change in real output.
(C) Increase in income, output and employment.
(D) No change in output and employment but increase in general price level.
3: Decrease in government expenditure is required to combat:
(A) inflation
(B) deflation
Q10 The Reserve Bank of India (RBI), cut Repo Rate to 4.4%, the lowest in at least 15 years. Also, it
reduced the Cash Reserve Ratio (CRR) maintained by the banks for the first time in over seven
years. CRR for all banks was cut by 100 basis points to release ₹ 1.37 lakh crores across the
banking system. RBI governor Dr. Shaktikanta Das predicted a big global recession and said India
will not be immune. It all depends how India responds to the situation. Aggregate demand may
weaken and ease core inflation. The Economic Times; March 27th, 2020
1. Cut in Repo rate by RBI is likely to……….. (Increase/decrease) the demand for goods and
ANSWER
CBQ NO Answer
Q1 i) Excess demand
ii) Net exports
iii) Under full employment
iv)False.
Q2 1. increase
2. (iii) rise in aggregate demand
3. Inflationary gap
4. (iv) No change in output/employment but increase in general price level.
Q3 i. Central bank
ii. C. Decrease legal reserve requirements
iii. C. Actual demand is less than expected demand
iv. A. Decrease
Q4 i. manufactured
ii. demand
iii. c) full employment
iv. d) all of these
Q5 1. Rise in Aggregate Demand
2. Reduced Repo Rate
3. Decrease in income, output, employment and general price level
4. Expansionary, Expansionary
ANSWER
Question Answer
No
Q1 False
Q2 False
Q3 True
Q4 False
Q5 False
Q6 True
Q7 True
Q8 False
Q9 False
Q10 False
Q11 True
Q12 True
Q13 False
Q14 True
Q15 False
Q16 True
Q17 True
Q18 False
Q19 True
Q20 True
Q21 False
Q22 True
Q23 False
Question No Answer
Q1 (a) Both Assertion and reason are true and reason is the correct explanation of the
assertion.
Q2 (b) Assertion and reason both are true but reason is not the correct explanation of
assertion.
Q3 (a) Both Assertion and reason are true and reason is the correct explanation of the
assertion.
Q4 (b) Assertion and reason both are true but reason is not the correct explanation of
assertion.
Q5 (b) Assertion and reason both are true but reason is not the correct explanation of
assertion.
Q6 (d) Assertion is false, reason is true.
Q7 (b) Assertion and reason both are true but reason is not the correct explanation of
assertion.
Q8 (a) Both Assertion and reason are true and reason is the correct explanation of the
assertion.
Q9 (a) Both Assertion and reason are true and reason is the correct explanation of the
assertion
Q10 (d) Assertion is false, reason is true.
Q11 (b) Assertion and reason both are true but reason is not the correct explanation of
assertion.
Q12 (b) Assertion and reason both are true but reason is not the correct explanation of
assertion.
Q13 (b) Assertion and reason both are true but reason is not the correct explanation of
assertion.
Q14 (a) Both Assertion and reason are true and reason is the correct explanation of the
assertion.
Q15 (c) Assertion (A) is true but Reason (R) is false.
Q16 (a) Both Assertion and reason are true and reason is the correct explanation of the
assertion.
Q17 (a) Both Assertion and reason are true and reason is the correct explanation of the
assertion.
Q18 (d) Assertion is false, reason is true.
Q19 (a) Both Assertion and reason are true and reason is the correct explanation of the
assertion.
Q20 (d) Assertion is false, reason is true.
Q21 (d) Assertion is false, reason is true.
Q22 (a) Both Assertion and reason are true and reason is the correct explanation of the
assertion.
Q23 (d) Assertion is false, reason is true.
Q24 (a) Both Assertion and reason are true and reason is the correct explanation of the
assertion.
Q25 (a) Both Assertion and reason are true and reason is the correct explanation of the
assertion.
Q26 (d) Assertion is false, reason is true.