MCQs For NCERT Class 12 Economics Chapter 7 Introduction to Macro Economics

Students can refer to the following Introduction to Macro Economics MCQ Questions Class 12 Economics with answers provided below. The Multiple Choice Questions have been designed by the best Economics teachers for Class 12. You should also refer to MCQ Questions for Class 12 Economics given on our website for all chapters.

Introduction to Macro Economics MCQ Questions Class 12 Economics

Please go through the below Introduction to Macro Economics MCQ Questions Class 12 Economics. Please put your questions in the comments section so that our teachers and provide you an answer.

Question. “ Inflation is always and everywhere a monetary phenomenon” these are the famous words of   
A. Milton Friedman
B. Adam Smith
C. David Ricardo
D. J M Keynes

Question. Wage price flexibility is the contribution of which of the following economist?   
A. J B Say
B . J M Keynes
C. J S Mill
D. A C Pigou

Question. Which among the following is not a tool of fiscal policy           
A. Government expenditure
B. Taxation
C. Transfer payments
D. Bank rate

Question. Which among the following does not have the application of multiplier           
a. Determination of income
b. Fiscal policy
c. Monetary policy
d. Foreign direct investment

Question. Under Keyne’s consumption function consumption is a _______ function of income           
a. Unstable
b. Inverse
c. Stable
d. Neutral

Question. Under Classical theory, demand for labour is the same as         
a. MP curve of labor
b. MRP curve of labor
c. MC curve of labor
d. MPP curve of labour

Question. The reason for existence of proportional relationship between money stock and price level is   
a. Money illusion
b. Inflation
c. Full employment
d. Wage price flexibility

Question. Under Keynesian theory employment and output is determined by   
A. Saving investment equality
B. Production function
C. Effective demand
D. Demand for money and supply of money

Question. The concept money illusion is firstly coined out by   
A. Irving Fischer
B. Milton Friedman
C. Alfred Marshall
D. J M Keynes

Question. Which of the following equation is not true?   
A. APC+APS=1
B. 1-APC=APS
C. 1-APS=APC
D. APC-1=APS

Question. An increase in output and employment in the economy which arise out of increasing consumption demand and rise in real wealth is called 
A. Demonstration effect
B. Keynes effect
C. Income effect
D. Pigou effect

Question. During great depression period unemployment in USA rose by 
A. 15%
B. 25%
C. 5%
D. 24%

Question. The two cornerstones of classical economics are   
A. The Phillips Curve and Say’s Law
B. Say’s Law and the Quantity Theory of Money
C. The Quantity Theory of Money and the Liquidity Preference Theory
D. Say’s Law and the Liquidity Preference Theory

Question. In the classical view, the price level is determined by 
A. aggregate supply
B. aggregate demand and supply
C. supply of money
D. aggregate demand

Question. Assume a consumption function of the following form: C = 50 + .8Y. If income is equal to $1,000, then consumption is 
A. $50
B. $1,050
C. $1,000
D. $850

Question. During period of recession 
A. aggregate output declines
B. price level starts rising
C. unemployment declines
D. aggregate output rises

Question. Average number of times a unit of money changes from one hand to another is called 
A. price level
B. Money supply
C. Value of money
D. Velocity of circulation

Question. Who is considered as the father of modern macroeconomics? 
A. Ragner Frisch
B. Adam smith
C. J M Keynes
D. Milton Friedman

Question. Under Keynesian theory of income determination, investment 
A. Depends on income
B. Endogenous
C. Exogenous
D. Depends on money supply

Question. In a three sector economy, Y equals 
A. C+I
B. C+I+G
C. C+I+G=(X-M)
D. None of these

Question. Under equation C= a+by, b=0.8, what is the value of expenditure multiplier   
A. 4
B. 2
C. 5
D. 1

Question. In equation C= a+by, a indicates 
A. consumption at zero level of income
B. Average propensity to consume
C. MPC
D. None of the above

Question. Those goods which are meant for final use of consumption are known as 
A. Consumer goods
B. Value added goods
C. Intermediate goods
D. All the above

Question. A laptop purchased by consumer is an example of   
A. An intermediate good
B. A consumer good
C. Intermediate consumption
D. None of the above

Question. 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

Question. Which of the following is an example of capital expenditure   
A. spending on laptops by consumers
B. spending on power-looms by business firms
C. spending on infrastructure by Government
D. Both B&C

Question. Under Simple Keynesian model the aggregate price level 
A. Vary for a short period
B. Fixed in long run
C. Fixed
D. None of the above

Question. The well known work formulated by j.m. Keynes:   
A general theory of employment interests and money
B principles of economics
C Principles of Modern Trade
D Modern Theory of Fiscal Policy

Question. Transaction demand for money is a function of:   
A income
B interest
C prince
C inflation

Question. The value of MPC in Keynesian model is:   
A greater than zero and less than one
B MPC=1
C MPC greater than one
D None of the above

Question. Keynes’s motivation in developing the aggregate output determination model from his concern with explaining;   
A) the hyperinflations of the 1920s.
B) why the Great Depression occurred.
C) the high unemployment in Great Britain before World War I.
D) the high unemployment in Great Britain after World War II

Question. An increase in planned investment spending causes aggregate output to;   
A) increase by an amount equal to the change in investment spending.
B) increase by an amount less than the change in investment spending.
C) increase by an amount greater than the change in investment spending.
D) decrease by an amount less than the change in investment

Question. Keynes assumed that the price level was fixed because   
A) inflation was not a serious problem during the Great Depression.
B) his primary focus was on output and employment.
C) his primary focus was on interest rates and investment spending.
D) of both (a) and (b) of the above.

Question. IS curve shows that when income increases   
A Interest rate must fall to restore equilibrium in the goods market
B Interest rate must fall to restore Equilibrium in the asset market
C Interest rate must rise to restore equilibrium in the asset market
D Interest rate must rise t restore equilibrium in the goods market

Question. A significant increase in public expenditure lead to: 
A Right ward shift in LM curve
B right ward shift in IS curve
C left ward shift in LM curve
D Left ward shift in IS curve

Question. Multiplayer is the ratio of   
A change in income to change in investment
B change in investment to change in income
C change in income to change in interest
D None of the above|

Question. according to Keynesian theory: 
statement 1: price are sticky
statement 2: after full employment change in aggregate demand lead to istatements
A Only statement 1 is correct
B only statement 2 are correct
C both are correct
D None of the above are correct

Question. The word Macro was first used in Economics by:   
a) Keynes
b)Marshall
c)Ragnar Frisch
d) J.R. Hicks

Question. Stock variable is measured :   
a)At a point of time
b) During a period of time
c) In an accounting year
d) None of these

Question. If a model has no equilibrium, it can be analysed only by : 
a) Static method
b) Dynamic method
c) Comparative static method
d) static and comparative static method

Question. Macro-static equilibrium implies:   
a)A complete absence of change
b) A change at an unchanged rate
c) A change in only absolute values
d) None of these

Question. Which of the following is a phase of Circular flow of income? 
a) Generation phase
b) Distribution phase
c) Disposition phase
d) All of these

Question. Real flow refers to the flow of factor services from —— to —–   
a)Firms to households
b) Households to firms
c) Firms to government
d)Households to government

Question. Net Factor Income from Abroad is:   
a) Export minus Imorts
b) Visible Exports minus Visible Imports
c) Factor Income Received From Abroad Minus Factor Income Paid Abroad
d) Factor income received from abroad

Question. Depreciation means:   
A) destruction of a plant in a fire accident
b) loss of fixed assets over tim due to wear and tear
c) loss of fixed assets in an earthquake
d) closure of the plant due to lockout

Question. Market price ad factor cost would be equal when there is: 
A) no direct tax
b) no indirect tax
c) no subsidy
d) no indirect tax and no subsidy

Question. Cororate tax is not a part of :   
a) Personal Income
b) Naional income
c) Domestic income
d) Private income

Question. In which type of economy, domestic income is equal to national income? 
a) OPen economy
b) Closed Economy
c) Both a and b
d) Neither a nor b

Question. ———–is the net amount available to households for consuption and saving 
A) national income
b) personal income
c) personal disposable income
d) government income

Question. GNP exceeds NNP by:   
a) Amount of total taxes
b) Government expenditure
c) Transfer payments
d) Difference between Gross investment and Net Investment

Question. ‘Distributed Profits’ is also known as:   
a)Corporate tax
b) Dividend
c) Retained Earnings
d) None of these