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B Com Exam  >  B Com Test  >  Macro Economics  >  Test: Macro Economic Framework- 1 - B Com MCQ

Macro Economic Framework- 1 - Free MCQ Practice Test with solutions, B


MCQ Practice Test & Solutions: Test: Macro Economic Framework- 1 (10 Questions)

You can prepare effectively for B Com Macro Economics with this dedicated MCQ Practice Test (available with solutions) on the important topic of "Test: Macro Economic Framework- 1". These 10 questions have been designed by the experts with the latest curriculum of B Com 2026, to help you master the concept.

Test Highlights:

  • - Format: Multiple Choice Questions (MCQ)
  • - Duration: 10 minutes
  • - Number of Questions: 10

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Test: Macro Economic Framework- 1 - Question 1
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Marginal Efficiency of Capital (MEC) is defined as:

Detailed Solution: Question 1

MEC represents the expected rate of return on an extra unit of capital investment. It is the rate of return anticipated from investing in a newly produced asset. This concept helps entrepreneurs decide whether to undertake a particular investment project based on its expected returns compared to its supply price.

Test: Macro Economic Framework- 1 - Question 2
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What is the primary factor that determines whether an investment project should be undertaken, according to Keynes?

Detailed Solution: Question 2

Keynes suggested that the decision to invest in a project is based on comparing its Marginal Efficiency of Capital (MEC) with the market rate of interest. If MEC is higher than the interest rate, the investment would be considered favorable.

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Test: Macro Economic Framework- 1 - Question 3
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Which of the following factors affects the Marginal Efficiency of Capital (MEC) in the short run?

Detailed Solution: Question 3

The current rate of investment in a specific industry can influence MEC. If an industry has already seen significant investment, the MEC for that industry may decrease due to diminishing returns.

Test: Macro Economic Framework- 1 - Question 4
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In the context of the LM curve, if the demand for money for transactions motive increases, what happens to the rate of interest?

Detailed Solution: Question 4

An increase in the demand for money for transactions motive, due to higher income levels, would lead to a higher rate of interest in order to restore money market equilibrium.

Test: Macro Economic Framework- 1 - Question 5
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What is the relationship between the Marginal Efficiency of Capital (MEC) curve and investment in an asset, as described by Keynes?

Detailed Solution: Question 5

According to Keynes, the Marginal Efficiency of Capital (MEC) curve is negatively sloped. As investment in an asset increases, the MEC progressively diminishes due to diminishing returns.

Test: Macro Economic Framework- 1 - Question 6
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In the IS-LM model, what causes the LM curve to shift to the right?

Detailed Solution: Question 6

An increase in money demand shifts the LM curve to the left, as it leads to higher interest rates for a given level of income.

Test: Macro Economic Framework- 1 - Question 7
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What does the slope of the LM curve represent in the IS-LM model?

Detailed Solution: Question 7

The slope of the LM curve reflects the responsiveness of money demand (liquidity preference) to changes in the rate of interest, which affects the equilibrium interest rate and income levels.

Test: Macro Economic Framework- 1 - Question 8
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Which of the following factors leads to a flatter LM curve in the IS-LM model?

Detailed Solution: Question 8

A higher interest elasticity of money demand results in a flatter LM curve, indicating that changes in interest rates have a relatively larger impact on money demand.

Test: Macro Economic Framework- 1 - Question 9
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What happens to the LM curve when the money supply is increased, all else being equal?

Detailed Solution: Question 9

An increase in the money supply, while holding other factors constant, causes the LM curve to shift to the right, resulting in lower interest rates for a given level of income.

Test: Macro Economic Framework- 1 - Question 10
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How does a decrease in the money demand function affect the LM curve in the IS-LM model?

Detailed Solution: Question 10

A decrease in the money demand function lowers the amount of money demanded at a given interest rate and income level, causing the LM curve to shift to the right. This results in lower interest rates at the same income level.

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About this B Com Practice Test

This test contains 10 MCQs on Macro Economic Framework- 1 with detailed solutions for each question. It is part of the Macro Economics course on EduRev, designed to align with the current B Com syllabus. Each solution explains not just the correct answer but also gives you an understanding of the topic — not just to attempt the question but also help you prepare for the exam with practice.

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