Business Economics Mock Test - 5


100 Questions MCQ Test Mock Tests & Past Year Papers for CA Foundation | Business Economics Mock Test - 5


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This mock test of Business Economics Mock Test - 5 for CA Foundation helps you for every CA Foundation entrance exam. This contains 100 Multiple Choice Questions for CA Foundation Business Economics Mock Test - 5 (mcq) to study with solutions a complete question bank. The solved questions answers in this Business Economics Mock Test - 5 quiz give you a good mix of easy questions and tough questions. CA Foundation students definitely take this Business Economics Mock Test - 5 exercise for a better result in the exam. You can find other Business Economics Mock Test - 5 extra questions, long questions & short questions for CA Foundation on EduRev as well by searching above.
QUESTION: 1

Which of the following markets closely resembles a perfectly competitive market?

Solution:

Markets for agricultural products like rice, wheat etc resemble perfectly competitive markets because there are a large number of producers, free entry and exit and products are identical.

QUESTION: 2

Q. Calculate the value added in the primary sector from the following data. Ignore units.

Solution:

Value added = Value of output in primary sector - Value of raw materials purchased by primary sector
= 800 - 400 
= 400

QUESTION: 3

Full-bodied money is that money whose money value and commodity value are:

Solution:

For full-bodied money, the money value and commodity value of the money are equal in the market. 

QUESTION: 4

The difference between gross domestic product and net domestic product is due to ___

Solution:

The difference between gross domestic product and net domestic product is due to depreciation.

QUESTION: 5

Diagrammatic presentation of consumer's indifference set is called

Solution:

An indifference curve is a locus of all such points, which show different combinations offering the same level of satisfaction to the consumer. It is always related to the choice and preference of the consumer.

QUESTION: 6

Wealth is an example of:

Solution:

Wealth is a stock variable.

QUESTION: 7

Find MPC when investment multiplier = 1.

Solution:

QUESTION: 8

An increase in the money supply will cause the AD curve to:

Solution:

An increase in the money supply increases the aggregate demand, as people now hold more money.

QUESTION: 9

Which of the following is NOT a non-tax receipt?

Solution:

Gift tax belonged to direct taxes which does not have much significance in terms of revenue yield. It is not a non-tax receipt.

QUESTION: 10

There are three sellers A, B and C in a market. Their supply curves are given by the following equations.
qA=5p−30, p≥8
qB=2p+20, p≥10
qC=3p+10, p≥15
What is the total quantity supplied at a market price of Rs 10?

Solution:

Note that the supply curve of C starts only above a price level of 15. Hence, at a price of Rs 10, only the supply curves of B and C are relevant.
q=qA+qB
⇒q=7p−10
At p=10, the quantity supplied is 60 units.

QUESTION: 11

What is the profit maximization rule for monopolistic competition?

Solution:

Profit maximization rule for a monopolistic competition is the same as that of a monopoly.
P >MC = MR

QUESTION: 12

If balance of trade is showing a deficit of Rs 200 crore and the value of exports is Rs 700 crore, then, the value of imports would be:

Solution:

Imports = Exports - Balance of Trade = 700 - (-200) = 900

QUESTION: 13

When onion price hits hard, the poor man simply stops buying it. Which one of these is the correct explanation for this?

Solution:

A consumer buys a commodity only when a rupee spent on it yields rupee worth of satisfaction (MUM). A poor man stops the consumption of onion when he finds that a rupee spent on it does not yield rupee worth of satisfaction (no matter what quantity of onions is purchases), so that, Mux/PX<MuM.

QUESTION: 14

Tax that is imposed on value added at the various stages of production is known as

Solution:

Tax that is imposed on value added at the various stages of production is known as value-added tax.

QUESTION: 15

Which of these is a side effect of deflation?

Solution:

Deflationary periods often see depression or recession.

QUESTION: 16

The economizing problem involves the allocation of resources among competing wants. There is an economizing problem because there are:

Solution:

Both A and B. Economic problem is the problem of choice. It arises because resources are scarce and have alternative uses.

QUESTION: 17

When C = 300 + 0.8Y and Y = 1,000, saving at zero income level will be

Solution:

C + S = Y
At zero income level,
C = -S
When Y = 0, C = 300 + 0.8(0) = 300
Therefore, S = -300

QUESTION: 18

Which of the following is not a determinant of a good's supply?

Solution:

Income of consumers who buy a good will only affects the demand for the good. All other factors will affect the supply.

QUESTION: 19

The act of holding money as insurance against cases of emergency gives rise to ______________ demand.

Solution:

The act of holding money as insurance against cases of emergency gives rise to precautionary demand.

QUESTION: 20

The marginal cost of the sixth unit of output is :

Solution:

QUESTION: 21

Study the supply curve given below and answer the following question.

Q. ​At what price is the producer surplus equal to $2?

Solution:

Producer surplus, II is the area above the supply curve and below the price line.
It can be seen that at a price of $3
II =1/2×(3−1)×2=$2,

QUESTION: 22

On account of an injection of aggregate demand, the equilibrium level of income

Solution:

On account of an injection of aggregate demand, the equilibrium level of income increases.

QUESTION: 23

The number of times a rupee is used in transactions is called:

Solution:

Velocity of circulation of money is the number of times a rupee is used in transactions.

QUESTION: 24

If borrowing and other liabilities are added to the budget deficits we get_______________ :

Solution:

Fiscal deficit estimates borrowings.

QUESTION: 25

The ability to choose between stocks in India and stocks in the US for investment is a part of ___linkage.

Solution:

This is part of a financial markets linkage.

QUESTION: 26

 Which of the following economists estimated per capita income during the colonial period?

Solution:

All of these economists made an attempt to estimate the per capita income during the colonial period.

QUESTION: 27

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: 28

Find incremental investment when equilibrium GDP increases by Rs 50,000 and half of additional income is always saved in the economy.

Solution:


QUESTION: 29

Borrowings belong to:

Solution:

Borrowings belong to the capital account.

QUESTION: 30

Why did US adopt the UK's technology readily?

Solution:

 

The UK technology was capital intensive and labour saving and made sense in a high wage US economy.

QUESTION: 31

Suppose your friend is indifferent to the bundles (4,6) and (6,6). Are the preferences of your friend monotonic?

Solution:

If a consumer has monotonic preferences, he would prefer the bundle (6,6) to the bundle (4,6), because the bundle (6,6) has more of Good-1 as compared to the bundle (4,6)

QUESTION: 32

Which of the following statements is correct?

Solution:

TC = TFC + TVC

QUESTION: 33

Which of the following is not a monetary tool?

Solution:

Out of the given options, deficit financing is not a monetary tool.

QUESTION: 34

A cut in direct taxes on households’ income:

Solution:

A cut in direct taxes causes a rightward shift of the AD curve.

QUESTION: 35

The difference between average total cost and average variable cost:

Solution:

The difference between average total cost and average variable cost is the average fixed cost.

QUESTION: 36

A firm encountering economies of scale over some range of output will have a

Solution:

A firm encountering economies of scale over some range of output will have a  falling long-run average cost curve. 

QUESTION: 37

The individual supply curves of two firms are


Q. The market supply curve is given by

Solution:

QUESTION: 38

Cartels are inherently unstable because ___

Solution:

All of the listed reasons contribute to the instability of cartels.

QUESTION: 39

In the value added method, we subtract the intermediate consumption from total value to avoid the problem of:

Solution:

In order to avoid double counting, we subtract the intermediate consumption from total value.

QUESTION: 40

National income refers to:

Solution:

National income refers to all the given options.

QUESTION: 41

If money supply is 5,00,000 and high-powered money is 2,00,000, what is the value of the multiplier?

Solution:

QUESTION: 42

If the money supply were decreased, what would happen to the price level?

Solution:

A decrease in the money supply will lead to a decrease in price levels.

QUESTION: 43

A tax, the burden of which can be shifted on to others, is called:

Solution:

A tax, the burden of which can be shifted on to others, is called indirect tax.

QUESTION: 44

The government budget of a hypothetical economy presents the following information, which of the following value represents Budgetary Deficit? (all fig. in crores of Rupees).

A. Revenue Expenditure = 25,000

B. Capital Receipts = 30,000

C. Capital Expenditure = 35,000

D. Revenue Receipts = 20,000

E. Interest Payments = 10,000

F. Borrowings = 20,000

Solution:

Budgetary Deficit = Total Expenditures - Total Receipts
= (Revenue Expenditure + Capital Expenditure) - (Revenue Receipts + Capital Receipts)
= (Rs 25,000 crore + Rs 35,000 crore) - (Rs 20,000 + Rs 30,000 crore)
= Rs 60,000 crore - Rs 50,000 crore
= Rs 10,000 crore

QUESTION: 45

In case of Giffen's Paradox, the slope of demand curve is:

Solution:

In case of Giffen's Paradox, the slope of demand curve is positive.

QUESTION: 46

Domestic product is equal to :

Solution:

Domestic product is "National product - Net factor income from abroad".

QUESTION: 47

Fiscal Deficit =

Solution:

Fiscal Deficit = Total expenditure - Total receipts other than borrowings

QUESTION: 48

Taxes like wealth tax and gift tax in India which carry their significance only on paper and have no significance in terms of revenue yield are called

Solution:

Taxes like wealth tax and gift tax in India which carry their significance only on paper and have no significance in terms of revenue yield are called paper taxes.

QUESTION: 49

Unilateral transfer payments are a source of:

Solution:

Unilateral transfers give rise to both demand and supply of foreign exchange.

QUESTION: 50

The point of inflection on the total product curve corresponds to the level of output where

Solution:

The point of inflection on the total product curve corresponds to the level of output where marginal product is at a maximum.

QUESTION: 51

The maximum limit of SLR is___

Solution:

The maximum limit of SLR is 40%.

QUESTION: 52

The efficient scale of production is the quantity of output that minimizes the ___ .

Solution:

The efficient scale of production is the quantity of output that minimizes the average total cost.

QUESTION: 53

Which of the following is true about GDP?

Solution:

Its value is indeterminate

QUESTION: 54

Savings are

Solution:

Savings are a leakage from the CFD.

QUESTION: 55

Which of the following is not part of the 'Standard Model of Development'?

Solution:

High internal tariffs is not a part of the standard model of economic development. Internal tariffs are actually removed for the creation of a national market.

QUESTION: 56

Imports of goods is included in the:

Solution:

Imports of goods appears in the current account.

QUESTION: 57

Substitution effect takes place when price of the commodity becomes:

Solution:

Substitution effect takes place when price of the commodity becomes either relatively cheap or relatively dear. 

QUESTION: 58

A 10% increase in the price of a good causes a 10% decrease in quantity supplied. The supply curve is a _______.

Solution:

QUESTION: 59

Which of the following statements is correct?

Solution:

Personal disposable income can be used at will by households.

QUESTION: 60

Find Fiscal Deficit from the information given below:

Items                                                        (Rs in lakh)

(i) Borrowing by the government                 600

(ii) Revenue receipts                                  100

(iii) Capital receipts                                     750

(iv) Interest payment                                   150

Solution:

Fiscal Deficit= Borrowings= 600 lakh 

QUESTION: 61

Companies hire ____ to circulate the prospectus to the public.

Solution:

Companies hire brokers to circulate the prospectus to the public.

QUESTION: 62

Which characteristic of management is signified by the following statement: In an organisation, employees are happy and satisfied.

Solution:

It signifies that management is an intangible force.

QUESTION: 63

A ___ provides much of the detail to the managers in directing subordinates by specifying the steps to be taken and the time and order of the performance.

Solution:

A procedure provides much of the detail to the managers in directing subordinates by specifying the steps to be taken and the time and order of the performance. 

QUESTION: 64

What does 'Gang Plank' in 'Scalar Chain' indicate about the nature of management principle?

Solution:

'Gang Plank' in 'Scalar Chain' indicates that management principles are flexible in nature. 

QUESTION: 65

The occupation where people work for others and receive a remuneration in return is known as _______________.

Solution:

The occupation where people work for others and receive a remuneration in return is known as employment.

QUESTION: 66

Ritu is the manager of the northern division of a large corporate house. At what level does she work in the organisation?

Solution:

Ritu works at the middle level.

QUESTION: 67

Just after declaration of Lok Sabha Elections in the year 2009, the results, the Bombay Stock Exchange's price index rose by 2100 points in a day. Identify the environmental factor which led to this rise.

Solution:

Political environmental factors led to the rise of the price index. 

QUESTION: 68

Firm that outsource seek to __________ their costs. The try to get the most efficient manpower available.

Solution:

Firm that outsources seek to lower their costs. The try to get the most efficient manpower available. 

QUESTION: 69

___ level of management work on framing policies.

Solution:

The top management work on framing policies.

QUESTION: 70

A public company requires a minimum of ___ members to form. 

Solution:

Public company to form requires a minimum of 7 members to form. 

QUESTION: 71

Risk are caused by ___, ___ or ___ causes

Solution:

Risk are caused by natural, human or economic causes. 

QUESTION: 72

Planning is a/an ___  process.

Solution:

Planning is a flexible,goal-oriented and time-bound process.

QUESTION: 73

All of the following are potential health effects associated with noise pollution except

Solution:

Low blood pressure is not a side effect of noise pollution.

QUESTION: 74

All the activities related to one type of product are grouped under one department only which brings integration and coordination in the activities. This is also called ___

Solution:

All the activities related to one type of product are grouped under one department only which brings integration and coordination in the activities. This is also called product specialisation.

QUESTION: 75

Which of the following function shows that a warehouse receives and consolidates, materials /goods from different production plants and dispatches the same to a particular customer on a single transportation shipment.

Solution:

Consolidation function shows that a warehouse receives and consolidates, materials /goods from different production plants and dispatches the same to a particular customer on a single transportation shipment. 

QUESTION: 76

Deforestation will decrease

Solution:

Deforestation is the conversion of forested areas to non-forest land use such as arable land, pasture, urban use, logged area, or wasteland. Generally, the removal or destruction of significant areas of forest cover has resulted in a degraded environment with reduced biodiversity. Deforestation results from removal of trees without sufficient reforestation, and results in declines in habitat and biodiversity, wood for fuel and industrial use, and quality of life. Due to deforestation, transpiration will be decreased, air temperature will be increased and water content will be decreased hence rainfall decreases.

QUESTION: 77

Give the name of environment that provides the framework, within which the business has to function?

Solution:

Legal environment provides the framework, within which the business has to function.

QUESTION: 78

Which of the following best indicates the importance of business environment?

Solution:

The following indicates the importance of business environment:
1. Identification
2. Improvement in performance
3. Coping with rapid changes

QUESTION: 79

___ sector enterprises are responsible for the development of the economy.

Solution:

Public sector enterprises are responsible for the development of the economy.

QUESTION: 80

Identify a factor that does not play an important role in attracting FDI.

Solution:

Language is a factor that does not play an important role in attracting FDI.

QUESTION: 81

What is the range of members for a private company? 

Solution:

The range of members is between 2 and 200, then it is called a private company. 

QUESTION: 82

While filling the form the insured should be ___________ and ________________ in giving information to the insurance company.

Solution:

While filling the form the insured should be truthful and honest in giving information to the insurance company. 

QUESTION: 83

___ is a method, information is broken into meaningful units and arranged in a logical and sequential learning package.

Solution:

Programmed instruction is a method, information is broken into meaningful units and arranged in a logical and sequential learning package.

QUESTION: 84

Public Sector Enterprises are organisations owned by _____________.

Solution:

Public Sector Enterprises are organisations owned by Government. 

QUESTION: 85

___________________ refers to a long-term contracting out generally the non-core activities and of late even some of the core activities of a captive or third-party specialist with a view of benefitting from their experience, expertise, efficiency and even investment.

Solution:

Outsourcing refers to a long-term contracting out generally the non-core activities and of late even some of the core activities of a captive or third-party specialist with a view of benefitting from their experience, expertise, efficiency and even investment.

QUESTION: 86

Which one of the following is not normally a pollutant?

Solution:

The common gaseous pollutants are oxides of carbon (CO and CO2), oxides of nitrogen (NO and NO2) oxides of sulphur (SO2 and SO3), all these together contribute 90% of the global air pollution. Out of all these CO2 is not a pollutant normally, the green plants, by photosynthesis balance the CO2 and O2 ratios in the air to a great extent, whereas others like carbon monoxide, NO2 etc. are poisonous gases.

QUESTION: 87

A company promoting 'tasty' fatty foods that might lead to consumers suffering from heart disease and obesity could be accused of

Solution:

False advertising is the use of false, misleading, or unproven information to advertise products to consumers or advertising that does not disclose its source. One form of false advertising is to claim that a product has a health benefit or contains vitamins or minerals that it in fact does not.

QUESTION: 88

To organize educational, health and vocational training programmes is a ___ objective.

Solution:

To organize educational, health and vocational training programmes is a social objective.

QUESTION: 89

Which principle of management focuses on specialisation?

Solution:

The principle that focuses on specialisation is 'Division of Work'. 

QUESTION: 90

Planning enables a manager to look ahead and anticipate changes. Identify, which benefit of planning is highlighted here?

Solution:

Planning reduces the risk of uncertainty. By deciding in advance, planning shows the way to deal with changes and uncertain events. Such changes, when anticipated can be handled in an effective manner to reduce uncertainties. 

QUESTION: 91

Two individuals want to start an organisation but have a limited liability. What form of business organisation is this?

Solution:

Two individuals want to start an organisation but have a limited liability can only form a company. 

QUESTION: 92

Which of these is an important characteristic of management?

Solution:

Important characteristics of maangement are pervasive and multidimensional. 

QUESTION: 93

_______ is that type of business unit which is carried out with the motive of earning profits.

Solution:

Private sector is that type of business units which are carried out with the motive of earning profits.

QUESTION: 94

Identify the type of training in which the trainee learns under the guidance of a master worker.

Solution:

Apprenticeship training is the type of training in which the trainee learns under the guidance of a master worker.

QUESTION: 95

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: 96

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. 

QUESTION: 97

The establishment of working relationships clarifies lines of communication and specifies who has to report to whom. In this way, organising establishes ___

Solution:

The establishment of working relationships clarifies lines of communication and specifies who has to report to whom. In this way, organising establishes clarity in working relations.

QUESTION: 98

_______________ are set up to protect the interest of farmers by providing better inputs at a reasonable rate.

Solution:

Farmers' cooperatives are set up to protect the interest of farmers by providing better inputs at a reasonable rate. 

QUESTION: 99

Which of the following is an indoor pollutant in classrooms?

Solution:

All of the above are indoor pollutants in classrooms

QUESTION: 100

Panchayats in our country have been given more powers to decide and spend funds granted to them by the government for the welfare of villages. This is ___ at a national level.

Solution:

Panchayats in our country have been given more powers to decide and spend funds granted to them by the government for the welfare of villages. This is decentralisation at a national level. 

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