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Which of The Following Is Not The Feature of Business Cycle? (A) Business Cycle Follow Perfectly Timed Cycle

The document contains 30 multiple choice questions related to concepts in macroeconomics including monetary policy, fiscal policy, inflation, deflation, business cycles, and recession. The questions cover tools used by central banks like the RBI to influence the money supply and achieve macroeconomic goals like controlling inflation through monetary policy instruments like bank rate, CRR, and open market operations. Fiscal policy tools like taxation, government expenditure, and borrowing are also addressed. Causes and effects of inflation, deflation, and economic recession are discussed.

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144 views5 pages

Which of The Following Is Not The Feature of Business Cycle? (A) Business Cycle Follow Perfectly Timed Cycle

The document contains 30 multiple choice questions related to concepts in macroeconomics including monetary policy, fiscal policy, inflation, deflation, business cycles, and recession. The questions cover tools used by central banks like the RBI to influence the money supply and achieve macroeconomic goals like controlling inflation through monetary policy instruments like bank rate, CRR, and open market operations. Fiscal policy tools like taxation, government expenditure, and borrowing are also addressed. Causes and effects of inflation, deflation, and economic recession are discussed.

Uploaded by

Mohammad Waris Rahman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CA III ECO518

1. Which of the following are the most effective “quantitative methods” to control inflation
in the economy?
a. Bank rate
b. Selective credit control
c. Cash reserve ratio
d. Both bank rate and CRR

2. Controlling the money supply to achieve desired macroeconomic goals is called….

a. Monetary policy.

b. Cyclical policy.

c. Fiscal policy.

d. Industrial policy.

3. Which of the following is not the feature of business cycle?


(a) Business cycle follow perfectly timed cycle
(b) Business cycle vary in intensity
(c) Business cycle vary in length
(d) Business cycle have no set pattern
4. The economy is said to be overheated at the _____ phase of business cycle.
(a) Expansion
(b) Peak
(c) Contraction
(d) Depression
5. During deflation which of the following will be implemented by Government in Fiscal
Policy.

(a) Rise in repo rate

(b) Rise in CRR

(c) Fall in taxation

(d) None of these

6. In order to control the supply of money during the inflation what is will be done by RBI?

(a) Rise in repo rate

(b) Rise in CRR

(c) Rise in bank rate


(d) All of these

7. What is a stagflation?

a. A situation in which the economy experiences recession


b. A situation in which the economy have inflation and recession altogether

c. An economy where unemployment is high


d. None of the above
8. Which of the following is not an instrument of monetary policy?
a. CRR
b. SLR
c. Open market operations
d. Taxation

9. The policy relates to the taxation, expenditure and borrowing of the government is
known as…….

a. Monetary policy

b. Fiscal policy

c. Taxation policy

d. None of the above

10. Which of the following is a tool of fiscal policy?


a. Repo rate
b. SLR
c. CRR
d. Taxation
11. In order to control recession the monetary policy will……..

a. Increases CRR

b. Decreases CRR

c. Increases Taxation

d. Decreases Taxation

12. Deflation is.....

a) An increase in the overall level of economic activity

b) An increase in the overall price level


c) A decrease in the overall level of economic activity

d) A decrease in the overall price level

13. In order to control inflation the central bank will:


a. Increase CRR
b. Decrease CRR
c. Both A and B
d. None of these

14. Which of the following can be a cause of the demand pull inflation in the economy
…………
A. Rise in income
B. Fall in income
C. Rise in taxation
D. All of these

15. Which of the following is directly associated with component of cost-push inflation?

a. Rise in Wages

b. Government expenditure

c. Rise in Income

d. Rise in investment

16. Understanding the business cycle is important for business managers because _____
(a) they affect the demand for their products
(b) they affect their profits
(c) to frame appropriate policies and forward planning
(d) all the above

17. Economic recession is characterized by all of the following except _____


(a) Decline in investments, employment
(b) Increase in the price of inputs due to increased demand for inputs
(c) Investor’s confidence is shaken
(d) Demand for goods, services decline

18. Cost of living increases when business cycle is _____


(a) expanding
(b) contracting
(c) at peak
(d) at lowest point

19. Which of the following measures is helpful in controlling inflation?


a. Raising the bank rate
b. Price control and rationing of essential goods
c. Reduction of government expenditure
d. All of the above
20. Open market operations are
a. the processes by which money enters into circulation.
b. reserves greater than the required amounts
c. the buying and selling of government securities to alter the supply of money
d. rates of interest banks charge on short-term loans to their best customers.
21. The portion of total deposits of a commercial bank has to keep with RBI in the form of
cash reserves in termed as:
a. CRR
b. SLR
c. Bank Rate
d. Repo Rate

22. When the government is running a budget deficit, then……….


a. Government revenues exceed government expenditures.
b. Government expenditures exceed government revenues.
c. The economy must be in an economic boom.
d. The government will pay off the national debt.

23. Which of the following would cause the money supply in the Indian economy to
expand?
a. an increase in reserve requirements
b. an increase in the discount rate
c. purchase of securities by RBI in open market
d. sale of securities by RBI in open market

24. The Phillips curve depicts the relationship between………..


a. change in the money supply and change in unemployment.
b. wage rates and aggregate demand.
c. the equilibrium level of income and the employment rate.
d. inflation and unemployment

25. An example of expansionary fiscal policy would be……….


a. Reducing direct taxes
b. Reducing government spending.
c. Reducing Transfer payments
d. None of these
26. A plan to reduce aggregate demand and slow the economy……..
a. Contractionary Fiscal Policy
b. Expansionary Fiscal Policy
c. Expansionary Monetary Policy
d. All of these
27. The purpose of fiscal policy is to:
a. Alter the direction of the economy.
b. Change people's attitudes toward government.
c. Offer insight into the way things work in the economy.
d. None of these
28. All of the following are variables that can be manipulated to affect fiscal policy except:
a. Personal income taxes.
b. Government expenditures on goods and services.
c. Government expenditures on unemployment benefits.
d. The rate of interest.
29. Which of the following were the objectives of the fiscal policy?
a. Full employment
b. Price stability
c. Economic growth
d. All of these
30. To help fight a recession, the government could:
a. Lower interest rates by decreasing the cash rate.
b. Decrease taxes to increase aggregate demand.
c. Conduct contractionary fiscal policy by raising taxes.
d. Decrease government spending to balance the budget.

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