Business Economics Mock Test - 4


100 Questions MCQ Test Mock Tests & Past Year Papers for CA Foundation | Business Economics Mock Test - 4


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This mock test of Business Economics Mock Test - 4 for CA Foundation helps you for every CA Foundation entrance exam. This contains 100 Multiple Choice Questions for CA Foundation Business Economics Mock Test - 4 (mcq) to study with solutions a complete question bank. The solved questions answers in this Business Economics Mock Test - 4 quiz give you a good mix of easy questions and tough questions. CA Foundation students definitely take this Business Economics Mock Test - 4 exercise for a better result in the exam. You can find other Business Economics Mock Test - 4 extra questions, long questions & short questions for CA Foundation on EduRev as well by searching above.
QUESTION: 1

The costs (LRAC) and prices (P) for four firms are given in the options below. Which of these cannot lie on the long-run supply curve of a firm?

Solution:

A firm does not supply when the market price is less than the average cost. For option B, P < LRAC.

QUESTION: 2

If automobile manufacturers are producing cars faster than people want to buy them,

Solution:

If automobile manufacturers are producing cars faster than people want to buy them, there is an excess supply and price can be expected to decrease.

QUESTION: 3

The summation of the total production of all firms and industries in the economy gives us the ____________ method.

Solution:

The Value-added and the Production method are the same. 

QUESTION: 4

If the price is Rs 10, quantity supplied is 20 and the average total cost is Rs 3, then calculate profit.

Solution:

Profit =(P-ATC) q

=7×20=Rs140

QUESTION: 5

Concavity of PPC implies:

Solution:

Concavity of PPC always implies increasing slope.

QUESTION: 6

Study the supply curve given in the figure.

Q. If the market price is $8, what is the quantity supplied?

Solution:

From the supply curve, it can be seen that corresponding to a price of $8, the quantity supplied is 40 units.

QUESTION: 7

The supply curve for a monopolist is

Solution:

Monopolists are price makers i.e. they decide the price at which to sell a product. Hence, the concept of the supply curve is not applicable for a monopolist.

QUESTION: 8

If income increases from 3,000 to 4,000, and autonomous investment increases by 200, the MPC should be

Solution:

QUESTION: 9

The Central Bank in India is called:

Solution:

The Reserve Bank of India is India’s central bank.

QUESTION: 10

Adil and Kratu are joining a master's program in management. Adil has freshly graduated out of college and has a job offer worth Rs 5 lakhs from a company. Kratu quit his job which earned him Rs 4 lakhs per year. Whose opportunity cost is more?

Solution:

The opportunity cost for Adil is Rs 5 lakhs and for Kratu it is 4 lakhs.

QUESTION: 11

The supply curve is upward sloping because __________.

Solution:

The supply curve is upward sloping because as price increases, suppliers can justify producing at higher marginal costs as long as MC < P.

QUESTION: 12

 In the context of government budget, which of the following statements is correct?

Solution:

Budget is a statement of expected annual receipts and expenditures of the government.

QUESTION: 13

Which of the following is not concerned with the problem of choice

Solution:

The problem of choice is concerned with how limited resources are rationally allocated to alternative uses when consumers and producers have unlimited wants.

QUESTION: 14

Which of the following is a commonly accepted definition of money?

Solution:

Any commodity that is accepted as a medium of exchange is money. 

QUESTION: 15

A borrower comes into the bank and pays off 10,000 Rupees of his loan. This was a cash payment by the borrower to the bank. What was the immediate effect on the nation’s money supply?

Solution:

The money supply decreased by 10,000 Rupees. While the cash was in the borrower’s possession, it was part of the nation’s money supply. As a reserve in a bank, it is not included in the money supply.

QUESTION: 16

The limits imposed on household choices by income, wealth, and product prices are captured by the 

Solution:

Budget constraint captures the limits imposed on household choices by income, wealth, and product prices.

QUESTION: 17

Differences between closing stock and opening stock during an accounting year are known as: 

Solution:

Change in stock refers to the difference between opening and closing stock. 

QUESTION: 18

The positively sloped (i.e. rising) part of the long run average total cost curve is due to which of the following?

Solution:

The positively sloped (i.e. rising) part of the long run average total cost curve is due to diseconomies of scale

QUESTION: 19

Q. Refer to the table mentioned above. What is the real GDP in year 3?

Solution:

Real GDP = Nominal GDP/GDP deflator
=(5,000/125)×100=4,000

QUESTION: 20

___ is that period of time in which some factors are fixed and some are variable.

Solution:

In the short run, there are both fixed and variable factors.

QUESTION: 21

The market price of a pizza is Rs 300. Corresponding to an output of 120 units, the average total cost of producing a pizza is Rs 250. Calculate his total profit at this output level.

Solution:

Profit=(P−SAC)×q
=(300−20)×120
= Rs 6000

QUESTION: 22

Value-added method measures the contribution of which of the following within the domestic territory of a country?

Solution:

The producing enterprises owned by the non-residents of the country and he producing enterprises owned by residents of the country are included in the value-added method. 

QUESTION: 23

A higher GDP per capita may not mean that the quality of life has really improved because

Solution:

It measures the income generated but not the quality of the products; items may be better quality but cheaper to produce so GDP would fall.

QUESTION: 24

Which of the following does not come under quantitative methods of monetary policy?

Solution:

Moral suasion is a qualitative method, and other options are quantitative methods of monetary policy.

QUESTION: 25

Which of the following statement is true?

Solution:

Borrowing by a government represents a situation of fiscal deficit. 
Borrowing by a government represents a situation of fiscal deficit. 

QUESTION: 26

Fiscal Responsibility and Budget Management Act (FRBMA) ACT 2003 concerns:

Solution:

The FRBMA was adopted to ensure complete fiscal stability in the economy.

QUESTION: 27

A fall in own price of the commodity leads to:

Solution:

A fall in own price of the commodity leads to increase in real income of the consumer and a consquent increase in purchasing power of the consumer.

QUESTION: 28

Consumption of all goods and services in the economy during the period of an accounting year is known as :

Solution:

Consumption of all goods and services in the economy during the period of an accounting year is called aggregate consumption. 

QUESTION: 29

In case of a natural calamity such as an earthquake, money can be withdrawn from the:

Solution:

In case of a natural calamity such as an earthquake, money can be withdrawn from the Contingency Fund of India. 

QUESTION: 30

Companies pay Corporate Tax on their:

Solution:

Corporate taxes are levied on company’s profits.

QUESTION: 31

The shape of transformation curve is changed by

Solution:

The shape of transformation curve is changed by marginal opportunity cost.

QUESTION: 32

In the ___,changes in all the  factors of production is possible.

Solution:

In the long run, all factors are variable.

QUESTION: 33

If MPS is 0.6, what will be ΔS when income increases by Rs 100?

Solution:

MPS = ΔS/ΔY
ΔS= MPS * ΔY
= 0.6 * 100
= Rs. 60

QUESTION: 34

Which of the following is(are) indirect instruments of Monetary Policy?

Solution:

All the given options are direct insturments of monetary policy. 

QUESTION: 35

Which among the following statement is INCORRECT?

Solution:

If the two straight line demand curves in­tersect, then, of them, the steeper line would be less elas­tic and the flatter line would be more elastic.

QUESTION: 36

At the point of inflexion:

Solution:

Point of inflexion is the point where the slope of the TP curve reaches the maximum and starts decreasing. At this point, MP is maximum.

QUESTION: 37

At the break-even point

Solution:

At the break-even point, TR=TC and profits are zero.

QUESTION: 38

When the prices of a good increases, ______

Solution:

When the prices of a good increases, the quantity demanded decreases and the quantity supplied decreases.

QUESTION: 39

At a price of INR 444.95, a pulp fiction novel is expected to sell 9,000 copies. If the novel is offered for sale at a price of INR 333.95, then the publisher can expect to sell

Solution:

When the price falls, demand rises. 

QUESTION: 40

See the MC and MR curves for a firm given below and identify the profit-maximizing level of output.

Solution:

Profit maximization occurs when MC=MR. This occurs at an output level of 10 units where the MC and MR curves intersect.

QUESTION: 41

The opposite to a stock variable is called:

Solution:

The opposite to a stock variable is flow variable, which is dynamic is nature.

QUESTION: 42

If MPC = MPS, the value of multiplier will be:

Solution:

If MPC = MPS, then, MPC = MPS = 0.5. Multiplier = 1/1−0.5
=2

QUESTION: 43

Find out the value of the multiplier, if MPC is zero.

Solution:

Multiplier = 1/1−MPC
= 1.

QUESTION: 44

The value of a cow today is the same as its value one year from now. Which of the following functions does the cow serve?

Solution:

As a store of value, the cow maintains its value over time.

QUESTION: 45

If production possibility frontier is linear it implies

Solution:

If the shape of the PPF curve is a straight-line, the opportunity cost is constant as production of different goods is changing.

QUESTION: 46

If a rise in supply exceeds a rise in demand, then we should expect

Solution:

The equilibrium price will fall while the equilibrium quantity will rise.

QUESTION: 47

Open market operations as an instrument of credit control are performed by:

Solution:

Open market operations as an instrument of credit control are performed by RBI.

QUESTION: 48

The primary function of money is:

Solution:

Money must serve as a measure of value and a medium of exchange. 

QUESTION: 49

Which of these is the one-for-all tax that replaced every other indirect tax?

Solution:

GST ( Goods and Services Tax) is the indirect tax that replaced every other indirect tax.

QUESTION: 50

The price decreases from INR 2,000 to INR 1,800. Quantity demanded per year increases from 5000 to 6000 units. Which of the following is correct?

Solution:

The percentage change in demand is +20%; the percentage change in price is -10% so the price elasticity of demand is -2.

QUESTION: 51

If MPC increases, the value of multiplier will

Solution:

If MPC increases, the value of multiplier will increase. 

QUESTION: 52

In short period there is no change in ___factors.

Solution:

The short run is defined in terms of fixed factors i.e. factors which can't be changed immediately.

QUESTION: 53

Which of the following will help a country become an exporter of a product (assume that the product is a normal good given the median consumer income)?

Solution:

An increased productivity of domestic labor will leads to increase in supply of the product. 

QUESTION: 54

Real national income means:

Solution:

Real national income is measured at constant prices, adjusted for inflation.

QUESTION: 55

An ad valorem duty is a tax on the basis of:

Solution:

Ad valorem depends on the price of the commodity.

QUESTION: 56

Which of the following are the objectives of government budget?

Solution:

All of the options are objectives of the government budget.

QUESTION: 57

Which of the following pairs represent substitute goods?

Solution:

Juice and cold drink are substituted goods, as one could be substituted for the other.

QUESTION: 58

What is the average product of the first three hours of labour?

Solution:

TP = sum of all MPs
=100+80+60 = 240
AP for three hours = TP/3
= 240/3
=80

QUESTION: 59

The demand curve for a monopoly firm is p= 80-0.5q. If the MC is constant at Rs 10, find the profit-maximizing level of output.

Solution:

Given that demand curve is p= 80-0.5 q
The slope of demand curve = 0.5
Slope of MR curve = 2 ×0.5= 1
The equation of the MR curve is MR = 80-q Equating MR=MC, we get 80 -q = 10
Hence, the profit-maximizing output is 70

QUESTION: 60

If the CRR is 5%, what is the value of money multiplier?

Solution:

Money Multiplier =1/CRR
=1/(5/100)=20

QUESTION: 61

Which of the following can explain the need for pollution control?

Solution:

Reduction of health hazards explains the need for pollution control.

QUESTION: 62

'Finding the right people for the right job'. State the function of management.

Solution:

'Finding the right people for the right job'. This falls under the management function 'staffing'.

QUESTION: 63

In India, Liberalisation & Privatisation began from?

Solution:

In India, Liberalisation & Privatisation began from 1991.

QUESTION: 64

What does 'mental revolution' mean on the part of management and workers? 

Solution:

It means that management and workers should transform their thinking. 

QUESTION: 65

Raj Pal is a hardworking man, he is putting a lot of efforts in his new startup company. What kind of economic activity is he following? 

Solution:

Raj Pal is a businessman. The economic activity that he is following is business. Business refers to those economic activities, which are connected with the production or purchase and sales of goods or supply of services with the objective of making profits. 

QUESTION: 66

Which of the following is a method of viewing management?

Solution:

Management can be viewed as magic, art, science, and politics.

QUESTION: 67

___ consists of the factors and forces concerning with means of production and distribution of wealth.

Solution:

Economic environment consists of the factors and forces concerning with means of production and distribution of wealth.

QUESTION: 68

In traditional business, opportunity for physical pre-sampling of a product is ______________ to that of e-business.

Solution:

In traditional business, opportunity for physical pre-sampling of a product is much more to that of e-business. 

QUESTION: 69

Global agreement in specific control strategies to reduce the release of ozone depleting substances, was adopted by

Solution:

The Kyoto Protocol focuses on reducing the release of ozone depleting substances.

QUESTION: 70

Which of the following factors is a disadvantage to a partnership firm?

Solution:

Lack in continuity

QUESTION: 71

Mr.Ronald owns a shoe store. He has 50 employees working for him. He buys the leather from suppliers, gets them stitched and designed from outside, and sells them at his store. The customers were happy with the quality of shoes they purchased and visited the store frequently.
Q. What are the characteristics that can be seen from the above passage?

Solution:

From the above passage, the following business activities can be seen: 

1. An economic activity

2. Production or procurement of goods and services

3. Sale or exchange of goods and services for the satisfaction of human needs

QUESTION: 72

Which of these following steps did the government take to solve economic problem?

Solution:

Reducing inequalities of income and wealth would help in solving economic problems.

QUESTION: 73

If business is to operate in a society which is full of diverese and complicated problems, it may have 

Solution:

If business is to operate in a society which is full of diverese and complicated problems, it may have little chance of success. 

QUESTION: 74

No matter how efficient a manager is, he cannot manage to do every task on his own. Suggest a remedy by stating a concept used to share the workload

Solution:

Delegation of authority is the concept used to share the workload.

QUESTION: 75

Some individuals like to clear the payment once the goods have been received, which was purchased online. What kind of payment method is it? 

Solution:

Some individuals like to clear the payment once the goods have been received, which was purchased online.This is known as cash-on-delivery. 

QUESTION: 76

A trade association of software and service companies has come up with some major reasons behind India’s success in IT outsourcing industry is known as _______________________________. 

Solution:

A trade association of software and service companies has come up with some major reasons behind India’s success in IT outsourcing industry is known as  National Association of Software and Services Companies

QUESTION: 77

Which one is not the main objective of Fiscal Policy in India?

Solution:

To increase liquidity in economy is not the main objective of Fiscal Policy in India.

QUESTION: 78

What would be the effect of no delegation of work?

Solution:

Both A and B. In case of no delegation, there will be a delay in work and managers would be overburdened.

QUESTION: 79

___ is the oldest and traditional form of organising public sector enterprises.

Solution:

Departmental undertaking is the oldest and traditional form of organising public sector enterprises. 

QUESTION: 80

Nowadays, we can book tickets through the internet. Identify the dimension.

Solution:

Technological environment means forces relating to scientific improvement and innovation. Booking tickets online is a result of improvement in communication technology with the advent of the internet.

QUESTION: 81

Sita's mother takes care of the household errands. What kind of activity is she performing? 

Solution:

Sita's mother takes care of the household errands. She is performing a non-economic activity. 

QUESTION: 82

Public sector banks are those in which the government has a major stake and they usually need to emphasise on ___________ objectives than on profitability.

Solution:

Public sector banks are those in which the government has a major stake and they usually need to emphasise on social objectives than on profitability.

QUESTION: 83

The two stages of the evolution of human resource management.

Solution:

The two stages of the evolution of human resource management are: 

1. Industrial Revolution 

2. Emergence of Trade Union 

QUESTION: 84

Mr. Pavan has two accounts one in Delhi and the other in Mumbai. The accounts are linked with the same bank. He wants to transfer funds from one branch to another. How is it possible?

Solution:

Mr. Pavan has two accounts, one in Delhi and the other in Mumbai. The transfer of funds from one branch to another can be done with the help of demand draft. 

QUESTION: 85

The cost of setting up an E-business is ___.

Solution:

The cost of setting up an E-business is low. 

QUESTION: 86

Use of the internet has considerably _________ dependence on paperwork and the attendant 'red tape'.

Solution:

Use of the internet has considerably reduced dependence on paperwork and the attendant 'red tape'. 

QUESTION: 87

Carbon monoxide emitted by automobiles directly contributes to

Solution:

Carbon monoxide emitted by automobiles directly contributes to air pollution.

QUESTION: 88

Which of the following is NOT a measure of a manager's effectiveness?

Solution:

The speed of promotion through the organisation is NOT a measure of a manager's effectiveness.

QUESTION: 89

Factory owners or manager relied on their personal judgment in attending problems they confronted in the course of managing their work. Which principle of Taylor is it referring to? 

Solution:

The principle of 'science not rule of thumb'. 

QUESTION: 90

National Vritech Ltd. has grown in size. To cope up with the situation CEO delegates some of his authority to the General Manager. The General Manager, who also felt overburdened and with the approval of CEO, disperses some of his authority to various levels throughout the organisation. Identify the concept of management discussed above

Solution:

Decentralisation is the concept of management discussed above.

QUESTION: 91

What is the full form of PPP?

Solution:

PPP - Public Private Partnerships

QUESTION: 92

Which of these is a function of top management?

Solution:

Organizing, Framing of policies and Key appointments are all functions of the top management.

QUESTION: 93

Service  ___ for future use. 

Solution:

Service can be cannot be stored for a future use. 

QUESTION: 94

The process which is the most suitable candidate is placed to fill the vacant job position.

Solution:

Selection refers to selecting the most suitable candidate to perform the job.

QUESTION: 95

Name the kind of service that the banks provide which include locker facilities, a collection of dividends, buying and selling of shares, bill of payments.

Solution:

Allied services provided by the banks include locker facilities, a collection of dividends, buying and selling of shares, bill of payments. 

QUESTION: 96

Two points, which depict the features of management principles.

Solution:

1. Management principles are universal. 
2 . Management principles are flexible. 

QUESTION: 97

Delay in action, ignores the social needs of employees and emphasis on work only are disadvantages of ___ organisation.

Solution:

Delay in action, ignores the social needs of employees and emphasis on work only are disadvantages of formal organisation.

QUESTION: 98

The government gives money to a company to build the roads for efficient and smooth transport. What kind of partnership is it?

Solution:

The government gives money to a company to build the roads for efficient and smooth transport is a public private partnership. 

QUESTION: 99

That an enterprise must behave as a good citizen is an example of its responsibility towards

Solution:

That an enterprise must behave as a good citizen is an example of its responsibility towards community.

QUESTION: 100

Under the planning incharge, he/ she is responsible to specify the route of production. 

Solution:

Under the planning incharge, route clerk is responsible to specify the route of production. 

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