CA CPT - Session 2nd Part A – General Economics

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01. Under perfect competition a firm is described as
(a) A price maker & not price taker,
(b) Price taker & not price maker
(c) Neither price maker nor price taker
(d) None of these

02. Which of the following statements is incorrect?
(a) Under monopoly there is no difference between a firm and an industry
(b) A monopolist may restrict the output and raises the price
(c) Commodities offered for sale under a perfect competition will be heterogeneous
(d) Product differentiation is peculiar to monopolistic competition

03. For a firm to become profitable it should expand output whenever?
(a) Marginal revenue is equal to marginal cost
(b) Marginal revenue is less than marginal cost
(c) Marginal revenue is greater than marginal cost
(d) Average revenue is greater than average cost

04. In oligopoly, when the industry is dominated by one large firm which is considered
as leader of the group. This is called:
(a) Open oligopoly (b) Collusive oligopoly
(c) Partial oligopoly (d) Pure oligopoly

05. Under which of the following forms of market structure does a firm have no control
over the price of its product?
(a) Monopoly (b) Monopolistic competition
(c) Oligopoly (d) Perfect competition

06. Which of the following is not the objective of price discrimination?
(a) Maintaining Huge stocks
(b) To earn maximum profits
(c) Enjoying the economies of scale
(d) Securing equity through pricing

07. Which of the following pairs of goods is an example of substitutes?
(a) Tea and sugar (b) Tea and coffee
(c) Pen and ink (d) Shirt & trouser

08. Which of the following is not a part of effective demand?
(a) Desire
(b) Ability to purchase
(c) Willingness to use the resource for that purpose
(d) Supply of commodity

09. If there is 50% rise in price and there is no change in Quantity demanded, then the
elasticity of demand is ?
(a) Zero (b) Infinity
(c) Equal to one (d) Greater than one

10. If a good is luxury, its income elasticity of demand is:
(a) Positive and less than 1. (b) Negative but greater then-1
(c) Positive and greater then 1 (d) Zero

11. In case of an inferior good, the income elasticity of demand is
(a) Positive (b) Negative
(c) Zero (d) Infinite

12. Which of the following is not an assumption of Law of DMU?
(a) Different units of commodities are standardized
(b) Continuous consumption
(c) Different units of commodities must be similar
(d) The assumption is that consumer is not normal and rational

13. Indifference curve is convex to the origin due to
(a) Increasing Marginal rate of substitution
(b) Diminishing Marginal Rate of Substitution
(c) Constant Marginal Rate of Substitution
(d) None of the above

14. When the price of a commodity increases from Rs. 200 to Rs. 250 and consequently
the quantity supplied increases from 1000 units to 1100 units. What is the co- efficient of elasticity of supply

(a) 4.0 (b) 0.4
(c) 5.0 (d) 0.5

15. Which of the following is not a determinant of supply?
(a) Price of good concerned (b) Price of related goods
(c) Technology improvements (d) Customs & Traditions

16. In economics ____ refers to creating utility for goods & services?
(a) Consumption (b) Production
(c) Distribution (d) None of the above

17. C.W. cob and Douglas of the U.S.A. studied the production function of the American
________ industries:
(a) Manufacturing (b) Construction
(c) Agriculture (d) None of these

18. When supply increases, the supply curve shifts towards right. The increase in supply
denotes a shift in the supply curve to the right. If there is an increase in supply
without change in demand equilibrium price will ____ and the equilibrium quantity
will increases:
(a) Falls (b) Constant
(c) Rise (d) None of these

19. Which of the following markets are classified on the basis of nature of transactions?
(a) Local and Regional markets
(b) Retail & Wholesale
(c) Regulated and Un-regulated
(d) Spot market and Future market

20. At present what is the multi-dimensional poverty index?
(a) 0.384 (b) 0.253
(c) 0.554 (d) 0.283

21. Most of the unemployment in India is ______
(a) Voluntary (b) Structural
(c) Frictional (d) Technical

22. If in a population of 1000 people, 400 people are in the labour force, 392 are
employed, what is the unemployment rate?
(a) 2% (b) 8%
(c) 6% (d) 4%

23. Which of the following method is based on collection and analysis of facts?
(a) Inductive (b) Deductive
(c) Scientific (d) Experimental

24. Production possibilities curve is also known as:
(a) Demand curve (b) Supply curve
(c) Indifference curve (d) Transformation curve

25. Which economic system is described by Schumpeter as “capitalism in the oxygen
tent”?
(a) Laissez faire economy (b) Command economy
(c) Mixed economy (d) Agrarian economy

26. NNPFC plus ____ is equal to NNP MP
(a) Subsides (b) Indirect taxes plus subsidies
(c) Indirect taxes minus subsides (d) Indirect taxes

27. Now a days, in the long run the modern firms faces ______ cost curve when technology
changes.
(a) U- Shaped (b) Boat Shaped
(c) L Shaped (d) J Shaped

28. The average Cost of Producing 9 units of a Commodity is Rs. 200 and the fixed cost is
Rs. 630. What amount of average total cost is made up of variable cost?
(a) 130 (b) 120
(c) 300 (d) 220

29. ________ Cost remain fixed over certain range of output, but suddenly jump to a new
higher level when output goes beyond a given limit.
(a) Semi- Variable Cost (b) Variable Cost
(c) Fixed Cost (d) Stair – Step Variable Cost

30. The cost of one thing in terms of the alternative given up is known as:
(a) Production cost (b) Physical cost
(c) Real cost (d) Opportunity cost

31. Find out AVC of 3 units:
Unit 0 1 2 3
TC 140 180 280 380
(a) 80 (b) 200
(c) 300 (d) 240

32. Which of the following statement is correct?
(a) In India the tertiary sector contributes maximum to the GDP.
(b) India is basically a socialist economy
(c) The distribution of income and wealth in India is quite equitable
(d) None of the above

33. Water supply and construction comes under which sector?
(a) Primary (b) Secondary
(c) Tertiary (d) Social

34. Which programme was launched in rural India to provide accessible, affordable and
quality health services in 2005.
(a) National health programme
(b) Pradhana Mantri Swasthiya Yojana
(c) National Rural Health Mission
(d) National programme for Health care of the Elders

35. In order to enhance access to secondary education and improve its quality ____ was
introduced in 2009
(a) Rashtriya Madhyamik Shiksha Abhiyan
(b) Rashtriya Uchchatar Shiksha Abhiyan
(c) Sarva Shiksha Abhiyan
(d) National Literacy Mission

36. Which of the following is not a function of RBI?
(a) Publication of statistical data related to banks
(b) Custodian of foreign exchange reserves
(c) Supervising the commercial banks
(d) Creation of credit for development

37. An increase in Reverse Repo rate causes?
(a) Banks transfer more funds to RBI
(b) It can cause money drawn out of banking system
(c) Both a & b
(d) None of these

38. Commercial banks in India included
(a) Schedule banks which are included in second schedule of RBI Act 1934
(b) Non schedule banks which are not included in second schedule of RBI Act 1934
(c) Both a & b
(d) None of these

39. Money in dynamic sense means:
(a) It directs economic trends
(b) It encourages division of labour
(c) It smoothens transformation of savings into investments
(d) All of the above

40. What is base year considered for WPI?
(a) 2004-05 (b) 2005-06
(c) 2006-07 (d) 2007-08

41. Which of the following objectives are taken to promote globalization ?
(a) Convertibility of rupee and import liberalization
(b) Import substitution & export promotion
(c) Import & export promotion policies
(d) Demonetisation of Rs. 500 & Rs. 1000 notes

42. Which is not included in the World Bank?
(a) Asian Development Bank
(b) International Development Association
(c) Multilateral investment Guarantee Agency
(d) International Center for Settlement of Investment Disputes

43. Which of the following committee modified direct and Indirect taxes?
(a) Chellaiah committee
(b) Booth Lingam committee
(c) Booth Lingam committee and Chelliah committee
(d) C. Rangarajan committee

44. Debt service ratio means
(a) Principal and interest to external exports
(b) Principal to net trade
(c) Total external borrowings to net foreign trade
(d) Interest to loans

45. _____ measures that part of government expenditure which is financed by borrowings
(a) Budget deficit (b) Fiscal deficit
(c) Public debt (d) Induced expenditure

46. Problem of agricultural system in India:
(a) Over irrigation facilities
(b) Over dose of fertilizers
(c) Slow & uneven growth
(d) Less people are employed in agriculture

47. Which of the following may be attributed for fast growth of service sector in India?
I. Technical, structural changes have made it more efficient to outsource certain
services being they were once produce within the industry.
II. It has been noticed elasticity of income for services is greater than 1.
III. Revolution in IT has become more possible to deliver services over long distance
at reasonable cost.
IV. Reform in certain segments in infrastructural services has been contributed to
growth of services:

(a) i, ii (b) i, iii
(c) i, ii, iii (d) i, ii, iii, iv

48. Infrastructural development will be due to development of which industries:
(a) Electricity, Mining & Manufacturing (b) Electricity & Mining
(c) Electricity & Manufacturing (d) Manufacturing & Mining

49. Supply curve will shift towards right due to:
(a) Improvement in technology (b) Increase in population
(c) Increase in price of factors of production (d) None of these

50. What is the central problem of economics?
(a) To allocate scarce resources in such a manner that society’s unlimited needs are
satisfied as well as possible.
(b) To allocate unlimited resources in such a manner that society’s limited needs are
satisfied as well as possible.
(c) Both (a) and (b)
(d) None of these

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