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(MCQ) NCERT Books Class-9 : Macro Economics (New)

1. As a result of the Great Depression of 1929, the unemployment rate in USA rose from 3 percent to 25 percent. Unemployment rate is defined as:
a) Ratio of number of people who are not working and looking for jobs to the total population of the country
b) Ratio of number of people who are working to the number of people who are not working and looking for jobs
c) Ratio of number of people who are not working and looking for jobs to the number of people who are working
d) Ratio of the total population of the country to the number of people who are not working
Answer. C

2. Which of the following is/are characteristics of capitalist economy?
1. Private and Public ownership of means of production
2. Production takes place for selling the output in the market
3. There is a sale and purchase of labour services at a price called wage rate
Code:
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3
Answer. C

3. Which among the following is/are an example of investment expenditure?
1. Part of the revenue paid out as rent for the services rendered by land
2. Part of the revenue paid to capital as interest
3. Part of the revenue paid to labourers as wages
4. Part of revenue used to buy new machinery or to build new factories to expand production
Code:
a) 1, 2 and 4 only
b) 3 and 4 only
c) 4 only
d) 1, 2 and 3 only
Answer. C

4. Consider the following statements:
1. Consumption goods or consumer goods does not include services
2. Capital goods are those, that are of durable character and are used in the production processes
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
Answer . B

5. National Income in India measured in terms of
a) Gross National Product
b) Gross Domestic Product
c) Net National Product at Market Price
d) Net National Product at Factor Cost
Answer. D

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6. Net National Product at factor cost is calculated by
a) GNP – Depreciation
b) NNP at market price – Indirect taxes
c) NNP at market price – Indirect taxes + Subsidies
d) GNP + Net factor Income from abroad
Answer. C

7. Which of the following is/are not included in the Personal Disposable Income (PI) earned by the households?
1. Undistributed profits
2. Corporate tax
3. Transfer payments by the governments
4. Income Tax
Code:
a) 1, 2 and 4 only
b) 1 and 2 only
c) 2, 3 and 4 only
d) 1, 2, 3 and 4
Answer. A

8. Consider the following statements about real GDP:
1. It is calculated in such a way that the goods and services are evaluated at some constant set of prices
2. It is calculated in such a way that the goods and services are evaluated at current prices
3. An increase in the value of real GDP indicates an increase in the volume of production
4. An increase in the value of real GDP indicates an increase in the prices of goods and services
Which of the statements given above is/are correct?
a) 1 and 3 only
b) 2 and 4 only
c) 1 only
d) 2 only
Answer. A

9. Which of the following statement is NOT correct about Consumer Price Index (CPI)?
a) This is the index of prices of a given basket of commodities bought by the representative consumer
b) This is the index of prices of all the goods and services produced in the country
c) It is calculated in percentage terms
d) It is expressed as the percentage of the prices of commodities in the current year to the prices of commodities in the base year

Answer. B

10. GDP of a country is:
a) Sum total of value of goods and services created within the geographical boundary of a country in a particular year
b) Sum total of value of goods and services created by the nationals of a country within the geographical boundary of a country in a particular year
c) Sum total of value of goods and services created by the nationals of a country within or outside the country in a particular year
d) Sum total of value of goods only created within the geographical boundary of country in a particular year

Answer. A

11. GDP of a country cannot be taken as an index of the Welfare of the people of a country. Why?
1. Rise in the GDP may be concentrated in the hands of very few individuals or firms
2. Many activities in an economy are not evaluated in monetary terms
3. Other externalities which refers to the benefits or harms a firm or an individual causes to another for which they are not paid or penalised
Code:
a) 1 and 2 only
b) 1 and 3 only
c) 3 only
d) 1, 2 and 3
Answer. D

12. Which of the following is/are the functions of Money?
1. It acts as a medium of exchange.
2. It acts as a convenient unit of account.
3. It acts as a store of value for individuals.
Code:
a) 1 only
b) 1 and 3 only
c) 1 and 2 only
d) 1, 2 and 3
Answer : D

13. Consider the following statements about bonds:
1. These are papers bearing the promise of a future stream of monetary returns over a certain period of time.
2. Bond papers are issued by Government only
3. These are tradable in the market.
Which of the statements given above is/are correct?
Code:
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3
Answer : B

14. If the supply of money in the economy increases and people purchase bonds with this extra money, what will happen?
1. The bond prices will rise
2. Rate of interest will decline
Code:
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
Answer : C

15. Which of the following statement given below is correct?
a) In India, currency notes and coins are issued by the Reserve Bank of India.
b) Currency notes are issued by Government of India while coins are issued by RBI.
c) Currency notes and coins are issued by Government of India.
d) Currency notes are issued by Reserve Bank of India, while coins are issued by Government of India.
Answer : D

16. Consider the following statements given below:
1. Currency notes and coins do not have intrinsic value like a gold or silver coin.
2. Currency notes and coins are called legal tenders as they cannot be refused by any citizen of the country for settlement of any kind of transaction.
3. Similar to currency notes and coins, cheques drawn on savings or current accounts can never be refused by anyone as a mode of payment.
Which of the statements given above is/are not correct?
a) 1 and 3 only
b) 3 only
c) 1 and 2 only
d) None of the above
Answer : B

17. RBI publishes figures of four alternative measures of money supply, viz. M1, M2, M3 and M4.
M3 is the most commonly used measure of money supply. It consists of:
a) Money held by the public and net demand deposits held by commercial banks.
b) Money held by the public and net demand as well as time deposits held by the commercial banks.
c) Money held by public + Net demand deposits with banks + Savings deposits with Post office
d) Money held by Public + Net time and term deposits with commercial banks + Total deposits with Post Office Savings Organisation.

Answer : B

18. Consider the following statements:
1. The Currency Deposit Ratio is the proportion of the total deposits commercial banks keep as reserves.
2. The Reserve Deposit Ratio is the money held by the public in currency to that they hold in bank deposits.
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
Answer : D

19. RBI uses various policy instruments to bring forth a healthy Reserve Deposit Ratio in commercial banks. Consider the following statements in this regard.
1. Cash Reserve Ratio is the fraction of their deposits that banks must keep with RBI.
2. Statutory Liquidity Ratio (SLR) requires the banks to maintain a given fraction of their demand deposits in the form of specified liquid assets.
Which of the statement given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
Answer: A

20. Consider the following statements about Bank Rate and choose the correct ones.
1. The rate at which commercial banks borrow money from RBI when they run short of reserves is called Bank Rate.
2. The rate at which interest is given to the commercial banks on the money they deposit with RBI is called Bank Rate.
3. A high bank rate encourages the commercial banks to maintain a Healthy Reserve Deposit Ratio.
Code:
a) 1 only
b) 1 and 3 only
c) 2 and 3 only
d) 2 only
Answer. B

21. Consider the following statements about the activities of the Commercial Banks and choose the correct ones:
1. The rate of interest offered by the bank to deposit holders is called lending rate
2. The rate at which investors borrow money from commercial banks is called borrowing rate
3. The difference between the above two rates is called ‘spread’, which is the profit appropriated by banks
Code:
a) 1 and 2 only
b) 1 and 3 only
c) 3 only
d) 1, 2 and 3
Answer. C

22. The total liability of the monetary authority of the country, RBI, is called the monetary base or high powered money. It consists of:
1. Currency notes and coins in circulation with the public
2. Vault cash of commercial banks
3. Deposits held by Government of India and Commercial banks with RBI
Code:
a) 1 only
b) 1 and 2 only
c) 2 and 3 only
d) 1, 2 and 3
Answer. D

23. Consider the following statements:
1. RBI is known as the lender of last resort
2. RBI acts as a banker to the commercial banks, Government of India and also to the State Governments
3. Financing of budget deficits by the governments through Central Bank Borrowing is called Deficit Financing
Which of the statements given above is/are correct?
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3
Answer. D

24. Open Market Operations (OMO) are done by RBI to:
1. Increase or decrease the money supply in the economy
2. Raise money for the Government from the market
3. To rein in the depreciation in the value of domestic currency
Code:
a) 1 only
b) 1 and 2 only
c) 2 and 3 only
d) 1, 2 and 3
Answer. A

25. The government affects the personal disposable income of households by making transfer payments and collecting taxes and therefore, can alter the income distribution. This function of government is termed as:
a) Allocation function
b) Stabilisation
c) Distribution function
d) Sterilisation
Answer. C

26. Which of the following taxes appropriated by Government of India are termed as ‘Paper taxes’?
1. Wealth tax
2. Gift tax
3. Corporate tax
4. Custom duty
5. Excise duty
Code:
a) 1, 3 and 5 only
b) 1 and 2 only
c) 2 only
d) 1, 2, 4 and 5 only
Answer. B

27. Which of the following is/are included in the non-tax revenue of the central government.
1. Dividends
2. Profits on investment made by the government
3. Fees and other receipts for services rendered by the government
4. Cash grants-in-aid from foreign countries and international organisations
Code:
a) 1 only
b) 1, 2 and 3 only
c) 2, 3 and 4 only
d) 1, 2, 3 and 4
Answer. D

28. Consider the following statement about the Revenue Expenditure and choose the correct ones:
1. It is the expenditure incurred for purposes of creation of physical or financial assets of the Central Government
2. It includes the expenses incurred for the normal functioning of the government departments and various services, interest payments and grants given to state governments and other parties
Code:
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
Answer. B

29. Service Tax in India was introduced in the year
a) 1994-95
b) 1995-96
c) 1998-99
d) 1999-2000
Answer. A

30. Budget documents classify total expenditure into plan and non-plan expenditure. Which of the following come under non-plan expenditure?
1. Interest payments
2. Defence services
3. Subsidies
4. Salaries and pensions
Code:
a) 1, 3 and 4 only
b) 1 and 3 only
c) 1, 2 and 3 only
d) 1, 2, 3 and 4
Answer. D

31. Consider the following statements and choose the correct ones:
1. All those receipts of the government which result in creation of physical or financial assets or reduction in financial liabilities are called Capital Receipts
2. Those expenditures of the government which create liability or reduce financial assets are termed as Capital Expenditure
3. Capital expenditure is also categorised as plan and non-plan in the budget documents
Code:
a) 1 and 2 only
b) 1 and 3 only
c) 3 only
d) 1, 2 and 3
Answer. C

32. When a government spends more than it collects by way of revenue, it incurs a budget deficit. Consider the following statements in this regard:
1. Fiscal deficit is the difference between the government’s total expenditure and its total receipts including borrowing
2. The revenue deficit includes only such transactions that affect the current income and expenditure of the government
3. Primary deficit is calculated by reducing Net interest liabilities from Gross fiscal deficit

Which of the statement given above is/are correct?
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3
Answer. C

33. Which of the following were the main features of FRBM Act, 2003
1. To reduce the fiscal deficit to not more than 3 percent of GDP
2. To reduce the revenue deficit to zero by March 2009
3. It required the reduction in fiscal deficit by 0.3 percent of GDP each year and the revenue deficit by 0.5 per cent
Code:
a) 1 and 2 only
b) 1 and 3 only
c) 2 and 3 only
d) 1, 2 and 3
Answer. D

34. Consider the following statements and choose the correct ones:
1. The balance of payments (BoP) record the transactions in goods, services and assets between residents of a country with the rest of the world in a year
2. The current account records the import and exports of goods only
3. Trade in services is denoted as invisible trade
Code:
a) 1 only
b) 1 and 2 only
c) 1 and 3 only
d) 1, 2 and 3
Answer. C

35. Consider the following statements:
1. Nominal Effective Exchange Rate (NEER) is a multilateral rate representing the price of a representative basket of foreign currencies, each weighted by its importance to the domestic country in international trade
2. Nominal Exchange rate is often taken as a measure of a country’s international competitiveness
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
Answer. A

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(MCQ) NCERT Books Class-9 : Macro Economics (New)