Bank Promotion Mock Test-09

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11. According to the law of diminishing marginal utility

a) the utility of a particular commodity decreases over time

b) the utility of a particular commodity goes down as income of the consumer increases

c) as consumption of a commodity increases the marginal utility i.e additional utility for consumption of the extra unit decreases

d) the marginal utility of a commodity decreases as more and more substitutes come to the market

e) None of the above

12. An Indifference Curve can be described as

a) a curved line that shows the degree of indifference of consumers to price changes

b) a mechanism that traces all indifferent customers in the market

c) the locus of all points showing a combination of two commodities in such a manner that the consumer is indifferent to which particular combination he chooses

d) a tool through which it is possible to determine the degree of indifference in the market to changes in the market

e) All of the above

13. Tick the statement that is correct vis-à-vis the properties of an Indifference curve

a) Indifference curves are convex to the origin

b) Indifference curves are parallel to each other

c) Higher Indifference curve signifies higher satisfaction to the customer

d) All of the above

e) None of the above

14. The Budget Line or the price line can be described as

a) the maximum amount a consumer can spend on purchasing commodities given his budget

b) An imaginary line that shows the dependence of prices national budget

c) An imaginary line showing the maximum the government can re-deploy given to budget constraint.

d) A line showing the combination of commodities which can be purchased by the consumer if there is no saving and the entire income is spent on them

e) None above

15. A consumer is said to be in equilibrium when he chooses that combination of commodities which give him maximum satisfaction within the income constraint. Diagramatically this is represented by the point where

a) the indifference curve cuts the price line from below

b) the lowest point of the intersection of the price line and the indifference curve

c) the indifference curve is tangent to the price line

d) the farthest indifference curve ends

e) All of the above

16. Read the following statements carefully and answer the question that follows: The Marginal Cost (MC) of a commodity means the additional cost to be incurred for producing an additional unit of the commodity. 1. The Marginal revenue (MR) of a commodity refers to the additional accrual to total revenue due to increase in one unit of the commodity 2. A producer will go on producing till such time that MC=MR 3. MC=MR equality is not enough to ensure equilibrium. The MC curve must cut the MR from below Tick the correct answer from the following options

a) Only Statement 1 is true

b) Statements 1 and 3 are correct

c) Statements 2 and 3 are correct

d) All the statements are correct

e) None of the statements are correct

17. Read the following questions carefully and answer the question that follow (1) The Gross Domestic Product (GDP) is the measure of the total flow of final goods and services produced within the domestic territory of a country over a particular time period , normally a year. (2) The Gross National Product (GNP) is the income /output produced by the residents of the country whether located within or outside its territory and is derived by adjusting net-factor income from abroad (3) The Net Domestic Product (NDP) is arrived at by adjusting depreciation to GDP and Net National Product (NNP) is arrived at by adjusting depreciation to GNP. Please indicate which of the following statements is true

a) Only Statement 1 is correct

b) Only Statement 2 is correct

c) Only Statement 3 is correct

d) None of the above Statements are true

e) All the Statements are true

18. Please indicate which of the following statements are correct:

a) There are two major ways to measure National Income – the ‘output method’ and the ‘income method’

b) In the output method the ‘value added’ approach is adopted where the value added is equal to the value of goods minus the cost of production. The sum total of all these value additions give the National Income.

c) In the income method the net income of each factor of production, wages, profits etc are totalled to arrive at the National Income figure

d) In India both a combination of the output and the income method is used for measurement of National Income. The output method has been largely used in commodity producing sectors like agriculture and manufacturing. The Income method has been used in the tertiary and service sector like trade, public administration etc.

e) All of the above

19. Demand Pull inflation occurs when

a) there is an excess demand for money in the economy resulting in increased money supply and hence prices

b) prices rise due to increase in cost of production

c) prices rise due to increase in wages and a consequent increase in purchasing power

d) when prices rise as a result of excess demand for goods and services

e) All of the above

20. Cost Push inflation is said to occur when

a) the value of money decreases with increase in its supply in the economy without compensating increase in production

b) when the increased overhead costs of the govt leads to an increase in prices

c) the prices rise due to an increase in the cost of production

d) when cost increases due to increase in the cost of imports

e) none of the above

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