MCQs - Problem & Measure To Correct Excess and Deficient Demand Commerce Notes | EduRev

Crash Course of Macro Economics -Class 12

Commerce : MCQs - Problem & Measure To Correct Excess and Deficient Demand Commerce Notes | EduRev

The document MCQs - Problem & Measure To Correct Excess and Deficient Demand Commerce Notes | EduRev is a part of the Commerce Course Crash Course of Macro Economics -Class 12.
All you need of Commerce at this link: Commerce

Q.1 Which of the following is/are the qualitative tool of Central Bank ? 

(a) Moral suasion
(b) Margin requirement

(c) Bank rate

(d) Both (a) and (b)
Ans: D

Q.2 In a situation of ‘Inflationary Gap’ at the full employment level of income: 

(a) AD < AS
(b) AD > AS
(c) AD = AS

(d) None

Ans: B

Q.3 Which of the following measures of meeting deficit in a budget, leads to an increase in money supply in the economy. (Choose the correct alternative)

(a) Disinvestment
(b) Loan from World Bank

(c) Deflict Financing
(d) All of these
Ans: C

Q.4 “Change in government revenue” is part of

(a) Fiscal policy

(b) Monetary policy

(c) Either (a) or (b)
(d) Neither (a) nor (b)
Ans: A


Q.5 When the government prints and circulates more currency in the economic system,it must

(a) bring down the general price level.
(b) push up the general price level.

(c) increase the supply of goods in the economy.

(d) None of the above.

Ans: C

Q.6 To fight deflation, the government should

(a) increase income tax rate.
(b) cut back its own expenditure

(c) increase investment by giving monetary and fiscal incentives
(d) increase bank rate.
Ans: C


Q.7 He responsibility of fiscal policy lies with

(a) the government
(b) the central government

(c) the commercial bank
(d) the stock exchanges
Ans: B


Q.8 Identify the correct statement 

(a) Excess demand leads to decrease in output.

(b) Increase in CRR increases the lending capacity of the banks.

(c) Reduction in government spending leads to fall in income.

(d) Monetary policy is the policy of the government to control credit and money supply.
Ans: C

Q.9 _____ is exercised through discussions, letters and speeches to banks.

(a) Moral suasion
(b) Selective Credit Control
(c) Margin Requirements

(d) OMO
Ans: A

Q.10 Which of these of fiscal policy can be used to correct deficient  demand ? 

(a) Increase in government expenditure
(b) Cut in tax rates

(c) Cut in public borrowing
(d) All of these
Ans: D

Q.11 Wage-price spiral is a consequence of:

(a) inflationary gap

(b) deflationary gap
(c) stagflation

(d) both (a) and (c)
Ans: A

Q.12 Which of the these of monetary policy can be adopted to correct excess demand ?

(a) Increase in repo rate
(b) Increase in CRR

(c) Increase in margin requirement

(d) All of these
Ans: D


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