A recessionary gap measures the

A recessionary gap measures the :

(1) Amount by which autonomous spending is below to that needed to achieve a full employment equilibrium.

(2) Amount by which aggregate spending exceeds to that needed to achieve full employment.

(3) Difference in real output between the classical model and the keynesian depression model.

(4) Extent of paradox of thrift.


Answer: (1) Amount by which autonomous spending is below to that needed to achieve a full employment equilibrium.

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How many countries are members of European Union ?

How many countries are the members of European Union ?

(1) 25

(2) 28

(3) 26

(4) 15


Answer: (2) 28

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Identify the factors which are likely to pose risk to India’s external economic situation

Identify the factors which are likely to pose risk to India’s external economic situation :

(a) U.S. Federal Reserve monetary tightening expected later this year (2015).

(b) Viability of the Euro zone in the event of a Greek exit

(c) Spike in oil prices

(d) Increase in India’s share in global exports.

Find the correct combination from the given codes :

(1) (a) and (b)

(2) (a), (b) and (c)

(3) (b) (c) and (d)

(4) (a) and (d)


Answer: (2) (a), (b) and (c)

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Monetary policy in India now aims at targeting

Monetary policy in India now aims at targeting :

(1) Growth of money supply

(2) Consumer price inflation

(3) Neither (1) nor (2)

(4) Both (1) and (2)



Answer: (2) Consumer price inflation

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Match List - I with List - II and show the relation between trade cycle and profit by selecting correct codes given below

Match List - I with List - II and show the relation between trade cycle and profit by selecting correct codes given below.

List - I List - II
(a) Recession (i) Low
(b) Boom                (ii) Positive
(c) Recovery (iii) Highest level
(d) Depression (iv) Negative

Codes :

     (a) (b) (c) (d)

(1) (iii) (iv) (i) (ii)

(2) (i) (iii) (ii) (iv)

(3) (iv) (iii) (ii) (i)

(4) (i) (ii) (iii) (iv)


Answer: (2)    (i) (iii) (ii) (iv)

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In relative income hypothesis consumption is related to

In relative income hypothesis consumption is related to :

(1) Peak past consumptions

(2) Median current consumption of peer group

(3) Neither (1) nor (2)

(4) Both (1) and (2)




Answer: (4) Both (1) and (2)

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Monetary expansion can still be effective in getting out of liquidity trap if it’s combined with

Monetary expansion can still be effective in getting out of liquidity trap if it’s combined with :

(1) Restrictions on bank loans

(2) Increased taxes

(3) Contractionary fiscal policy

(4) Expansionary fiscal policy


Answer: (4) Expansionary fiscal policy

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If a linear consumption function passes through the origin it means

If a linear consumption function passes through the origin it means :

(1) APC > MPC

(2) APC < MPC

(3) APC=MPC

(4) APC=MPC=0



Answer: (3)  APC=MPC

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According to Keynes the Aggregate suppy curve during depression

According to Keynes the Aggregate suppy curve during depression :

(1) is horizontal

(2) is Vertical

(3) tilts downward to the right

(4) tilts upward to the right



Answer: (1) is horizontal

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Identify the transfer payments in the following and answer from the codes below

Identify the transfer payments in the following and answer from the codes below :

(a) Annual increment in salary

(b) Payment of bonus to employees

(c) Interest payment on public debt

(d) Pension payment

Codes :

(1) (c) and (d)

(2) (b), (c) and (d)

(3) (a) and (b)

(4) (a) and (c)


Answer: (1) (c) and (d)

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