Question:

The MC curve cuts the AC curve at

A.

the maximum point

B.

the initial point

C.

the minimum point

D.

any point

Answer» b. the initial point

Question:

The major primary function of money in modern Economics is to serve as:

A.

A store of value

B.

A medium of exchange

C.

A transfer of value

D.

A standard fordeferred payments

Answer» b. A medium of exchange

Question:

If labour is the only variable resource and its marginal physical product falls as moreworkers are hired:

A.

The law of diminishing marginal returns is at work.

B.

Marginal cost is rising.

C.

Average cost may still be declining.

D.

Average physical product may still be rising.

Answer» a. The law of diminishing marginal returns is at work.

Question:

In the case of an indifference curve

A.

dU/dX>dU/dY

B.

dU/dX = dU/dY

C.

dU/dX<dU/dY

D.

dU/dX≤dU/Dy

Answer» b. dU/dX = dU/dY

Question:

A fall in the price of the commodity holding everything else constant results in:

A.

Increase in demand

B.

Decrease in demand

C.

Increase in quantity demanded

D.

Decrease in quantity demanded

Answer» c. Increase in quantity demanded

Question:

An increase in supply means:

A.

Movement down given supply curve

B.

Movement upward given supply curve

C.

Leftward shift in supply curve

D.

Rightward shift in supply curve

Answer» d. Rightward shift in supply curve

Question:

In the Cambridge equation of M = kPR, the value of k is:

A.

M/V

B.

1/V

C.

V in Fisher’s equation

D.

None of these

Answer» b. 1/V

Question:

Economies of scale exist if:

A.

As the amount of capital increases, the cost of producing per unit rises

B.

As the amount of capital increases, the cost of producing per unit falls

C.

As the amount of capital increases, the marginal cost rises

D.

As the amount of capital increases, the marginal physical product falls

Answer» b. As the amount of capital increases, the cost of producing per unit falls

Question:

Marginal propensity to consume means:

A.

Inclination to conspicuous consumption

B.

Low income group spending more

C.

Rate of income spend on consumption

D.

The rate of extra income that will be spent on consumption

Answer» d. The rate of extra income that will be spent on consumption

Question:

According to classical economists, variations in savings are due to:

A.

Level of investment

B.

Rate of interest

C.

Level of employment

D.

None of the above

Answer» b. Rate of interest