CA Foundation Exam June 2023 » CA MCQs » Macroeconomics

Macroeconomics

MCQs on "Macroeconomics": Find the multiple choice questions on "Macroeconomics", frequently asked for all competitive examinations.

Economic research is conducted both in short term and long term busyness cycles. Macroeconomics simply studies the economy as a whole and then studies different components of the economy such as inflation, unemployment and many more.

The conclusions of the study thereby are used by investors, companies and the government to formulate their own policies and get a better understanding of the economy as a whole and hence make profitable decisions for their respective domains.

Macroeconomics MCQs

Question 1) Transfer Payment is

    1. Payment for goods with money

    2. Payment for goods with goods

    3. Payment with no goods exchanged

    4. None of the above

Answer: C 

The government makes such payments to certain sections of society as financial aid and does not expect any returns. These transactions are known as transfer payments.

Question 2) An example of Transfer payment is

    1. Old Age Funds

    2. Disability Funds

    3. Unemployment Benefits

    4. All Of the Above

Answer: D

Transfer payments include examples like old age, disability and unemployment funds.

Questions 3) The reduction in the value of Plant and Machinery during the process of manufacturing is known as

    1. Net National Product

    2. Gross Domestic Product

    3. Depreciation

    4. Consumption

Answer: C 

The process of reducing the value of assets over the course of their life is called depreciation. This happens simply with the wear and tear an asset goes through with time or regular usage.

Question 4) Gross Domestic Product is a sum of

    1. Net National Product, Disposable Income and Gross National Product

    2. Investment, Consumption, Government Purchases and Net Exports

    3. Investment, Wages, Profits and Intermediate Production

    4. All of the Above

Answer: B

Gross domestic product is calculated as a sum of Investment, Consumption, Government Purchases and Net Exports.

Question 5) The sum of the market value of ____ sums up to be Gross Domestic Product

    1. Normal Goods and Services

    2. Final Goods or Services

    3. Intermediaries

    4. All of the Above

The total value of final goods and services adds up to become the gross domestic product of an economy.

Answer: B

Question 6) Which of the following comes under GDP?

    1. Illegal Drug Sales

    2. Housework

    3. An off from work

    4. Consulting Services

Answer: D 

The professional work of consulting services comes under the calculation of Gross Domestic Product.

Question 7) Which of these can be used to measure inflation?

    1. Producer Price Index

    2. Consumer Price Index

    3. Gross Domestic Product Deflator

    4. All of the above

Answer: D

The producer price index, consumer price index and gross domestic product deflator can be used to calculate the inflation in an economy.

Question 8) If inflation is at 3% and the Nominal Interest rate is at 8%. What is the real rate of interest?

    1. 1%

    2. 11%

    3. 5%

    4. None of the above

Answer: C

The real rate of interest is the difference between the nominal interest rate and inflation.

Question 9) With an increase in the salary, the standard of living is likely to

    1. Stay the same

    2. Rise

    3. Decline

    4. Not Related

Answer) B

As the salary of an individual rises, he is more likely to increase his spending as well, thus improving his standard of living.

Question 10) The consumer price index is based on 

    1. Consumer Production

    2. Total Current Production

    3. Products purchased by a typical consumer

    4. None of the above

Answer: C

Products which are purchased by the typical consumers are what is the basis of the consumer price index.

Question 11) In which condition would it be better to be the borrower?

    1. The nominal rate of interest is 12% and inflation is 9%

    2. The nominal rate of interest is 15% and inflation is 8%

    3. The nominal rate of interest is 20% and inflation is 25%

    4. The nominal rate of interest is 15% and inflation is 14%

Answer: C

Question 12) A logical measure of the Standard of Living in a country is?

    1. Real GDP per person

    2. Nominal GDP per person

    3. Real GDP

    4. Nominal GDP

Answer: A

A reasonable measure to estimate the standard of living of the people living in a country is to calculate the Real Gross Domestic Product per person.

Question 13) The opportunity cost of growth is?

    1.  Reduction in current saving

    2. Reduction in current consumption

    3. Reduction in Taxes

    4. None of the above

Answer: B

The opportunity cost of growth is a reduction in the current consumption.

Question 14) Which of the following is an example of equity bonds?

    1. Corporate Bonds

    2. Bank Loan

    3. Company Shares

    4. Government Bonds

Answer: C

Company shares are an excellent example of equity bonds.

Question 15)  A financial intermediary is a middleman between?

    1. Buyers and sellers

    2. Labour unions and firms

    3. Borrowers and firms

    4. None of the above

Answer: C

The middlemen between borrowers and firms are known as financial intermediaries.

Question 16) Credit risk refers to a bond’s

    1. Probability of default

    2. Price-earnings ratio

    3. Dividend

    4. Term to maturity

Answer: A

Credit risk is the risk that the person issuing it may not be able to make the payment whenever requested.

Question 17) When government spendings exceed the amount of tax collected, 

    1. There is a budget deficit

    2. There is a budget surplus

    3. Private saving is positive

    4. Public saving is positive

Answer) A

When the government spends more than it collects taxes, there occurs a budget deficit.

Question 18) Saving is equal to

    1. Investment + Consumption Expenditure

    2. Private Saving + Public Saving

    3. GDP + Consumption Exp. + Gvt Expenses

    4. None of the Above

Answer: B

The formula for savings is Private Saving + Public Saving.

Question 19) Keeping other factors constant, if the Public consumes Rs 50,000 amount less and Government spends Rs 50,000 amount more

    1. Savings are unchanged

    2. Increase in saving

    3. Decrease in saving

    4. Saving is finished

Answer: A

If the net change in spending and consumption remains zero, there is no change in savings.

Question 20)  What is it called when the prices rise at an exorbitant rate?

    1. Disinflation

    2. Deflation

    3. Stagflation

    4. Inflation

Answer: D

Inflation is a situation when prices rise at a very fast pace in an economy.

Question 21) If the price rate doubles

    1. The quantity demanded of money falls by half

    2. The value of money has been reduced by half

    3. Nominal income is unaffected

    4. None of the above

Answer: B

If the price rate doubles, the value of money gets reduced by half.

Question 22) The demand for money is most dependent upon?

    1. The level of prices

    2. The interest rate

    3. The availability of banking outlets

    4. The availability of credit card

Answer: A

In the long run, the most important factor for the demand for money is the level of prices in an economy.

Question 23) An economy that interacts with other economies is known as

    1. An export economy

    2. A friendly economy

    3. An open economy

    4. An import economy

Answer: C

An economy which interacts with other economies in the form of imports or exports is known as an open economy.

Question 24) Which of the following statements is true about a trade deficit country?

    1. Net Exports are negative

    2. Net Capital Outflow Must be Positive

    3. Exports exceed imports

    4. None of the above

Answer: A

If a country is in a trade deficit, then its net exports are negative.

Question 25) If a country exports more than it imports?

    1. Net exports are negative

    2. Running a trade deficit

    3. Net Capital outflow must be positive

    4. Net capital outflow must be negative

Answer: C

If a country exports more than it imports, its net capital outflow must be positive.

Question 26) Which of the following is NOT a reason why the aggregate demand curves slope downward?

    1. The exchange rate effect

    2. The wealth effect

    3. The classical monetary neutrality effect

    4. The interest rate effect.

Answer: C

The classical monetary neutrality effect states that the changes in the money supply can bring changes in the prices of goods, services and wages.

Question 27) Stagflation occurs when the economy experiences

    1. Rising prices and rising outputs

    2. Rising prices and falling outputs

    3. Falling prices and rising outputs

    4. Falling prices and falling outputs

Answer: B

The situation of stagflation occurs when the prices of commodities rise and the outputs of goods and services fall.

Question 28) Which event shifts the short-run aggregate supply curve to the right?

    1. A decrease in money supply

    2. A decrease in oil prices

    3. An increase in government spending on military equipment

    4. None of the above

Answer: B

A drop in oil prices shifts the short-run aggregate supply curve to the right as it goes right when the price of a key input falls or the productivity increases.

Question 29) The initial effect of an increase in money supply is to

    1. Increase the interest rate

    2. Increase the price level

    3. Decrease the price level

    4. Decrease the interest rate

Answer: D

The decrease in interest rate is what the initial effect of an increase in money supply does to an economy.

Question 30)The long-run effect of an increase in money supply

    1. Increase the interest rate

    2. Decrease the price level

    3. Increase the price level

    4. Decrease the interest rate

Answer: C

The long-run effect of an increase in money supply is an increase in the price level.