1. Which of the following is an indirect tax?
A. Income Tax B. Corporate tax C. Entertainment tax. D. None of these
Correct Answer: C
2. Capital budget consist of:
A. Revenue Receipts and Revenue Expenditure
B. Capital Receipts and Capital Expenditure
C. Direct and Indirect Tax
D. None of these
Correct Answer: B
3. Which of the following is a direct tax?
A. VAT B. GST C. Both A and B D. Income tax
Correct Answer: D
4. Which type of expenditure is made in road construction?
A. Capital Expenditure B. Revenue Expenditure
C. Both A. and B. D. None of the above
Correct Answer: A
5. Which of the following budget is suitable for developing economies?
A. Deficit Budget B. Balanced Budget C. Surplus Budget D. None of these
Correct Answer: A
6. Which of the following is included in fiscal policy?
A. Public Expenditure B. Tax
C. Public Debt D. All of these
Correct Answer: D
7. Which of the following is the capital expenditure of the government?
A. Interest Payment B. Purchase of House
C. Expenses on Machinery D. All of the above
Correct Answer: A
8. The budget may include:
A. Revenue Deficit B. Fiscal Deficit C. Primary Deficit D. All of these
Correct Answer: D
9. Which of the following statement is true?
A. Fiscal deficit is the difference between total expenditure and total receipts
B. Primary deficit is the difference between total receipt and interest payments
C. Fiscal deficit is the sum of primary deficit and interest payment
D. All of these
Correct Answer: C
10. Budget:
A. is a description of income-expenditure of government
B. is a document of the economic policy of the government
C. is a description of non-programs of the government
D. All of these
Correct Answer: D
11. In an unbalanced budget:
A. Income is greater than expenditure
B. Expenditure is higher relative to income
C. Deficit is covered by loans or printing of notes
D. Only B. and C.
Correct Answer: D
12. Which is included in indirect tax?
A. Income tax B. Wealth tax C. Excise Duty D. Gift tax
Correct Answer: C
13. Which one of the following is a pair of direct tax?
A. Excise duty and Wealth Tax B. Service Tax and Income Tax
C. Excise Duty and Service Tax D. Wealth Tax and Income Tax
Correct Answer: D
14. Which of the following is not a revenue receipt?
A. Recovery of Loans B. Foreign Grants
C. Profits of Public Enterprise D. Wealth Tax
Correct Answer: A
15. Which of the following is a correct measure of the primary deficit?
A. Fiscal deficit minus revenue deficit
B. Revenue deficit minus interest payments
C. Fiscal deficit minus interest payments
D. Capital expenditure minus revenue expenditure
Correct Answer: C
16. The duration of the Government budget is:
A. 5 years B. 2 years C. 1 year D. 10 years
Correct Answer: C
17. Budget is presented in the Parliament by:
A. Prime Minister B. Home Minister C. Finance Minister D.Defence Minister
Correct Answer: C
18. From the following which is included in the direct tax:
A. Income Tax B. Gift Tax C. Both A. and B. D. Excise Tax
Correct Answer: C
19. Name the policy that accords with expenditure and taxation policies decisions of the government?
A. Monetary Policy B. Fiscal Policy
C. Labor Market Policies D. Trade Policy
Correct Answer: B
20. See the following names of taxes and tell which one is not included in the Goods and Services Tax?
A. Corporate Tax B. Service Tax
C. Custom Duty D. Value Added Tax
Correct Answer: C
21. If the grants for the creation of capital Assets are deleted from the revenue deficit, then what will be the scenario?
A. Fiscal Deficit B. Effective Revenue Deficit
C. Primary Deficit D. Budget Deficit
Correct Answer: B
22. which among the following can be considered an instance of Direct taxes?
A. Sales Tax B. Wealth Tax C. Entertainment Tax D. Value Added Tax
Correct Answer: B
23. Identify the following, budget is an important part of whom
A. Fiscal Policy of Government B. Legislature
C. Commercial Policy of Government D. Monetary Policy of Government
Correct Answer: A
24. What is the process called when the total revenue of government without borrowing is less than the total expenditure
A. Fiscal Deficit B. Monetary Deficit C. Deficit Financing D. Budget Shortfall
Correct Answer: A
25. Which one among the following is a tool of Fiscal Policy?
A. Government Research B. Election
C. Taxation D. None of the above
Correct Answer: C
26. Which criteria among the following will help in showing the fiscal condition of an economy for the current year?
A. Revenue Deficit B. Fiscal Deficit
C. Effective Revenue Deficit D. Primary Deficit
Correct Answer: B
27. Which one among the following is the correct definition of capital gains tax in Nepal?
A. Tax on benefit from the sale of the capital asset during a particular year
B. Tax encountered on profit from the sale of shares held for more than a year
C. Tax levied on interest received from the fixed deposit of bank
D. Tax on dividends earned from corporate bonds
Correct Answer: A
28. Trade among 2 nations can be helpful if the price ratios of products are:
A. Equal B. Decreasing C. Undetermined D. Different
Correct Answer: D
29. The word Euro Exchange rate refers to
A. The foreign exchange market is an international one.
B. The countries that use the Euro as their money.
C. The exchange market where the Euro is traded for other currencies, such as the dollar.
D. The market where the borrowing and lending of currencies take place outside the country of issue
Correct Answer: D
30. This question is about one of the following theories: Which one says firms try to get into new markets over time?
A. Theory of Comparative Advantage B. Product cycle theory
C. Imperfect Market Theory D. None of the above
Correct Answer: D
31. The Dumping word refers to
A. Tariffs should be cut to make more money.
B. A lower-priced sale of goods abroad is below the cost and price of their home market.
C. Buying goods at low prices in another country and selling them at a higher price here.
D. Expensive goods are being sold at low prices.
Correct Answer: D
32. Domestic trade and International trade differ because of:
A. Trade restrictions B. Immobility of factors
C. Different government policies D. All of the above
Correct Answer: D
33. The margin for a currency long term must be retained with the repository by
A. The buyer B. The seller
C. Both the buyer and the seller D. None
Correct Answer: C
34. Which one of the following sentences with regard to the currency option is wrong.
A. An American option can be bought or sold on any day of the week or month during its currency.
B. Foreign currencies can be exchanged for Nepaln rupees in Nepal.
C. The put option allows you to sell the foreign currency if you don’t want to keep it.
D. The call option will be used by exporters.
Correct Answer: D
35. Government. strategy regarding exporters and importers is called:
A. Commercial policy B. Monetary policy
C. Fiscal policy D. Finance policy
Correct Answer: A
36. Which one of the following is international trade?
A. Trade between regions B. Trade between countries
C. Trade between provinces D. Both A and C
Correct Answer: B
37. Market wherein exchange rates sell and buy and one ‘s prices resolve on is called the
A. International capital market B. International bond market
C. Foreign exchange market D. None
Correct Answer: C
38. Made several rounds of bargaining through which tariffs have been reduced.
A. GATT B. NAFTA C. IMF D. IBRD
Correct Answer: A
39. What occurs once Imported products are more than exported goods.
A. Trade deficit B. Trade barrier C. Trade surplus D. None
Correct Answer: A
40. Trade between countries can indeed be useful if the price ratios of products are:
A. Different B. Decreasing C. Undetermined D. Equal
Correct Answer: A
41. Which one of the following ideas implies that businesses seek to penetrate new marketplaces over time?
A. Product cycle theory B. Imperfect Market Theory
C. Theory of Comparative Advantage D. All of the above
Correct Answer: A
42. Term Dumping called
A. Tariffs should be cut to make more money.
B. Buying goods at low prices in another country and selling them at a higher price here.
C. Expensive goods are being sold at low prices.
D. Sale of goods abroad at low a price, below their cost and price in the home market
Correct Answer: D
43. Global commerce and domestic trade differ because of:
A. Different government policies B. Trade restrictions
C. Immobility of factors D. All of the above
Correct Answer: D
44. The margin for just a currency future should be retained with the clearing house by
A. The buyer B. The seller
C. Both the buyer and the seller D. None
Correct Answer: D
45. Which one of the following options is incorrect
A. People who buy put options can sell the foreign currency at a certain price.
B. It is possible to buy and sell American options on any day during its currency.
C. Foreign currencies can be exchanged for Nepali rupees in Nepal.
D. The call option will be used by exporters.
Correct Answer: D
46. What is the total size of federal budget of Nepal for 2024/25?
A. Rs.1860.30 billion B. Rs.1793.32 billion
C. Rs.1751.31 billion D. Rs. 1832.93 billion
Correct Answer: A
47. Trade around two or more different countries is called ________.
A. International Trade B. External Trade
C. Internal Business D. Unilateral Trade
Correct Answer: A
48. Which one of the following is not an objective of commercial trade policy?
A. To preserve foreign exchange reserves
B. To determine the rate of interest
C. To protect domestic industries from foreign competition
D. To maintain favourable balance of payments
Correct Answer: A
49. Which one of the following is an argument for free trade?
A. Protects domestic industries
B. Promotes self sufficiency
C. Helps diversification of industries
D. Promotes efficient allocation of world resources
Correct Answer: D
50. Which of the following is an argument against the policy of free trade?
A. Does not always benefit less developed countries
B. Protects inefficient industries
C. Causes unemployment in the export sector
D. Harms domestic consumers
Correct Answer: A
51. Which of the following is also known as thoery of income determination?
A. Microeconomics B. Macroeconomics
C. Statistics for economics D. None of the above
Correct Answer: B
52. When an individual saves a part of his income, then this is considered as a way to meet uncertainties of future but national savings leads to economic slowdown.
A. True B. False C. Partially True D. Income Statement
Correct Answer: A
53. In deciding ‘How to produce’, the economy should consider:
A.Labour intensive techniques B. Capital intensive techniques
C. Both A. and B. D. Neither A. nor B.
Correct Answer: C
54. Out of the following, macroeconomics focuses on:
A. Allocation of resources B. Jute industry
C. Aggregate demand D. Both A. and B.
Correct Answer: D
55. Which of the following is an example of a positive economy?
A. Nepal is taking steps to control rising prices
B. There are inequalities of income in our economy
C.Nepal should not be an overpopulated country
D. Both A. and B.
Correct Answer: D
56. Theories of microeconomics and macroeconomics are interdependent.
A. True B. False
C. Partially True D.Incomeplete Statement
Correct Answer: A
57. Opportunity cost refers to which of the following?
A. Accounting cost minus the marginal benefit
B. Monetary costs of an activity
C. Highest valued alternative forgone
D. Accounting cost minus the marginal cost
Correct Answer: C
58. The statements like ‘Economy should control pollution’ or ‘Unemployment in the economy ought to be reduced’ fall within the scope of:
A. Normative Statements B. Positive Statements
C. Both A. and B. D. None of these
Correct Answer: C
59. Hari decided to join a NCC camp this year which required an entry fee of Rs 1,500 during the summer vacation by not opting for usual part time job which he used to do in other years and earn Rs 5,000. What will be the opportunity cost in this case?
A.Rs 1500 B.Rs 5,000
C.Rs 6,500 D. Can’t be determined
Correct Answer: C
60. An entrance examination has 200 questions in total. Each correct ANSWER gives 1 Mark with a negative mark of 1/4 for each incorrect ANSWER. What is the opportunity cost of 30 incorrect questions?
A. 7.5 B. 30
C. 37.5 D. Can’t be determined
Correct Answer: C
61. Positive economic analysis is concerned with:
A. Opinions B. Value judgements
C. Facts and Figures D. Ideals
Correct Answer: C
62. Out of the following, which one is macro-variable?
A. Production of food grains in Nepal B. Pricing decision by Chaudhary Group
C. Measurement of general price level D. Fall in petrol prices
Correct Answer: C
63. Which of the following is the salient feature of resources?
A. These are limited as compared to wants B. They have alternative uses
C. Both A. and B. D. They are unlimited
Correct Answer: C
64. Which of the following is true for microeconomics paradox?
A. Something which is true in microeconomics does not hold true in macroeconomics
B. Something which does not holds true in either microeconomics or macroeconomics
C. Something which holds true both in microeconomics or macroeconomics
D. None of the above
Correct Answer: A
65. Choose the correct statement from the given below.
A. In a centrally planned economy, economic decisions are governed by profit motive as per decision of central Bank of the country
B. Normative statements are those which pass value judgement and economic problems as they are
C. There is limited degree of aggregation present in microeconomics has greater degree of aggregation.
D. Central Problems of an economy and problem of choice are two different issues that only mixed economics faces
Correct Answer: B
66. Which of these is a central problem of an economy?
A. Deficit demand B. Equilibrium of an economy
C. For whom to produce D. Decreasing return to a factor
Correct Answer: C
67. Which of these is normative economics?
A. 25 percent population of Nepal is below the poverty line.
B. Increase in FDI (Foreign Direct Investment) has increased the GDP of Nepal
C. Equal distribution of income will make Nepal poverty free
D. Higher welfare spending by the government increases the Aggregate Demand
Correct Answer: C
68. When was 16th plan of Nepal endorsed by Council of Ministers?
A. 2081/01/02 B. 2080/02/01 C.2081/02/01 D. None of these
Correct Answer: C
69. Which of the following is/are not a feature of a mixed economy?
A. Modern and traditional industries working together
B. Public takes the leading role in the economic activity
C. Foreign and domestic industries working together
D. All of the above
Correct Answer: D
70. Which of the following is defined as the study of individual units in an economy?
A. Microeconomics B. Macroeconomics
C. Income and employment theory D. None of the above
Correct Answer: B
71. What would be the overall effect on aggregate output if there is an increase in the planned investment spending?
A. The aggregate output will increase by an amount that is less than the change in investment spending
B. The aggregate output will increase by an amount that is greater than the change in investment spending
C. The aggregate output will increase by an amount that is equal to the change in investment spending
D. The aggregate output will decrease by an amount that is less than the change in investment spending
Correct Answer: C
72. Which of the following is the reason for the downward shape of the production possibility curve?
A. Opportunity cost is negative B. Opportunity cost is increasing
C. Opportunity cost is decreasing D. None of the above
Correct Answer: C
73. Which of the following statements gives a true picture of the central problem of an economy?
A. How to produce B. How to distribute the produced goods
C. What to produce D. All of the above
Correct Answer: D
74. Which of the following statements is accurate about the free market in a nation’s economy?
A. It is an economy with minimal intervention from the government in trade and minimal regulations
B. It is an economy with maximum intervention from the government in trade and maximum regulations
C. It is an economy with maximum intervention from the government in trade and minimal regulations
D. It is an economy with minimal intervention from the government in trade and maximum regulations
Correct Answer: A
75. Which of the following statements is true about a Laissez-Faire economy?
A. It is a branch of socialism that focuses exclusively on welfare economics
B. It involves economic transactions between private parties without any intervention from the state or government
C. It is a term which denotes the economic transactions that are carried out by the state or government
D. None of the above
Correct Answer: B
76. Which of the following activities is not included in the calculation of the national income of a country?
A. A maid working for a family on a full-time basis
B. A lawyer conducting their law practice
C. A housewife performing housework chores
D. A dispensary rendering medical services
Correct Answer: C
77. Which of the following is the correct meaning of a ‘good’ in economics?
A. A good is an item that satisfies the needs and wants of customers
B. A good is an item that looks appealing to the customers
C. A good is an item that does not look appealing to the customers
D. None of the above
Correct Answer: A
78. Which of the following is true about the rate of interest under classical theory?
A. The rate of interest is based on the demand of investment and the supply of money
B. The rate of interest is based on the demand of investment and the price level
C. The rate of interest is based on the demand for capital and the supply of savings
D. The rate of interest is based on the demand for money and the supply of money
Correct Answer: C
79. Which of the following statements is accurate about the two-sector economy?
A. The two-sector economy consists of firms and the government
B. The two-sector economy consists of firms and foreign sector
C. The two-sector economy consists of households and government
D. The two-sector economy consists of households and firms
Correct Answer: D
80. Which of the following statements is accurate about the relation between indirect taxes and subsidies?
A. If the factor cost is greater than the market price, then indirect taxes are less than subsidies
B. If the factor cost is greater than the market price, then indirect taxes are greater than subsidies
C. If the factor cost is greater than the market price, then indirect taxes are equal to subsidies
D. None of the above
Correct Answer: A
81. Which of the following measures are adopted to take care of inflation in an economy?
A. Decrease in transfer payments along with a reduction in taxation
B. Increase in transfer payments along with an increase in taxation
C. Decrease in government expenditure along with an increase in taxation
D. Increase in government expenditure along with a decrease in taxation
Correct Answer: C
82. Which of the following methods must be adopted to tackle the problem of recession within an economy?
A. Reduce the public borrowing and increase taxation
B. Increase the public borrowing and reduce taxation
C. Reduce the spending on government welfare projects and increase taxation
D. Increase the spending on government welfare projects and reduce taxation
Correct Answer: D
83. Which of the following statements are true about the study of macroeconomics?
A. It is a study of economics that deals with households, government, firms and demand-supply
B. It is a study of economics that deals with households, government, firms and the external sector
C. It is a study of economics that deals with price levels, profit, expenditure and cost
D. None of the above
Correct Answer: B
84. Which of the following statements reflects the true meaning of gross investment?
A. Gross investment is the total of net investment and depreciation
B. Gross investment is the difference between the net investment and depreciation
C. Both a and b are correct
D. Both a and b are incorrect
Correct Answer: A
85. What is the main cause of all economic problems?
A. Abundance B. Convenience C. Scarcity D. None of these
Correct Answer: C
86. Study of aggregates is known as _________
A. Macroeconomics B. Microeconomics
C. Price theory D. Factor price determination
Correct Answer: A
87. What is the name of the book written by J.M. Keynes?
A. Wealth of Nation
B. Political economy
C. The General Theory of Employment, Interest and Money
D. None of these
Correct Answer: C
88. When was the famous book of Prof. Keynes published?
A. 1930 B. 1931 C. 1936 D. 1940
Correct Answer: C
89. When did the great depression occur?
A. 1929-30 B. 1934-35 C. 1938-39 D. 1941-42
Correct Answer: A
90. Who is known as the father of modern macroeconomics?
A. Adam Smith B. J.M. Keynes C. Samuelson D. Hicks
Correct Answer: B
91. Mr. Raj Kumar wants to study the national income. Which branch of economics will he have to study?
A. Microeconomics B. Price theory
C. Factor price determination D. Macroeconomics
Correct Answer: D
92. The price of one currency in terms of another is known as _________
A. Foreign exchange rate B. Trade rate
C. Interest rate D. Balance of Payment
Correct Answer: A
93. The market where the national currencies are traded for one another is known as ___.
A. Domestic exchange market B. Foreign exchange market
C. Bazaar D. Shop
Correct Answer: B
94. Increase in the value of foreign commodities is known as _________
A. Revaluation B. Devaluation C. Inflation D. None of these
Correct Answer: B
95. Decrease in the value the foreign commodities is known as _________
A. Revaluation B. Devaluation C. Deflation D. All of these
Correct Answer: A
96. What is the cause of the devaluation of any country’s currency?
A. Increase in the domestic inflation rate
B. Domestic real interest rates are less than foreign interest rates
C. Much increase in the income
D. All of these
Correct Answer: D
97. The operation of daily nature in the foreign exchange market is known as ________
A. Spot market B. Forward market
C. Domestic market D. International market
Correct Answer: A
98. The operation of future delivery in the foreign exchange market is known as ________
A. Spot market B. Current market
C. Forward market D. Domestic market
Correct Answer: C
99. Hybrid in management of fixed and flexible exchange rate is known as ________
A. Managed to float B. Crawling Peg C. Wider Bands D. None of these
Correct Answer: A
100. When was the gold standard abandoned?
A. 1930’s B. 1920’s C. 1940’s D. 1950’s
Correct Answer: B
101. Trade of visible items between the countries is known as ________
A. Balance of Payment B. Balance of Trade
C. Deficit Balance D. All of these
Correct Answer: B
102. When the import and export of visible items are equal, the situation is known as _____
A. Balance of Trade B. Balance of Payment C. Trade Surplus D. Trade Deficit
Correct Answer: A
103. When there is a favorable balance of trade?
A. X > M B. X = M C. X < M D. None of these
Correct Answer: A
104. When there is unfavorable balance of trade?
A. X > M B. X = M C. X < M D. None of these
Correct Answer: C
105. The trade of visible and invisible items is known as _________
A. Balance of Payments B. Balance of Trade
C. Deficit of interest D. Profit
Correct Answer: A
106. Other things remaining unchanged, when in a country the price of foreign currency rises, national income is:
A. Likely to rise B. Likely to fall
C. Likely to rise and fall both D. Not affected
Correct Answer: A
107. Other things remaining the same, when in a country the market price of foreign currency falls, national income is likely:
A. To rise B. To fall
C. To rise or to fall D. To remain affected
Correct Answer: B
108. Which one is the king of the exchange rate?
A. Fixed Exchange Rate B. Flexible Exchange Rate
C. Both A. and B. D. None of the above
Correct Answer: C
109. Which of the following is true?
A. Fixed exchange rate is determined by the government
B. Flexible exchange rate is determined by market forces (Demand and supply of foreign exchange)
C. Both A. and B.
D. None of the above
Correct Answer: C
110. Which one is a kind of fixed exchange rate?
A. Gold Standard System of Exchange Rate B. Bretton Woods System of Exchange Rate
C. Both A and B D. None of the above
Correct Answer: C
111. Which one is a merit of the fixed exchange rate?
A. Promotes Foreign Trade B. Induces Foreign Capital
C. Increases Capital Formation D. All the above
Correct Answer: D
112. Which one is a demerit of the fixed exchange rate?
A. Ignores National Interests B. Restricted Movement of Capital
C. Sudden Fluctuations in Exchange Rates D. All the above
Correct Answer: D
113. Which one is a merit of the flexible exchange rate?
A. Simple System B. Continuous Adjustments
C. Improves Balance of Payments D. All the above
Correct Answer: D
114. Which one is a demerit of the flexible exchange rate?
A. Bad Results of Low Rate B. Uncertainty
C. Instability in Foreign Exchange D. All the above
Correct Answer: D
115. Which one is a source of the demand for foreign exchange?
A. Imports of Goods and Services from Abroad B. Investment in Foreign Nations
C. Gift Scheme to Foreign Nations D. All the above
Correct Answer: D
116. Foreign exchange is determined by:
A. Demand for foreign currency
B. Supply of foreign currency
C. Demand and supply in the foreign exchange market
D. None of the above
Correct Answer: C
117. The forms of foreign exchange market is/are:
A. Spot market B. Forward market C. Both A. and B. D. None of these
Correct Answer: C
118. The foreign exchange rate is determined by:
A. Government B. Bargaining
C. World Bank D. Demand and Supply forces
Correct Answer: D
119. By exchange rate we mean:
A. How much local currency we have to pay for a foreign currency
B. How much of a foreign currency we have to pay for another foreign currency
C. The rate at which foreign currency is bought and sold
D. All of these
Correct Answer: D
120. Balance of Trade =?
A. Export of Visible Items – Imports of Visible Items
B. Export of both Visible and Invisible Items – Import of both Visible and Invisible Items
C. Import of Visible Items – Export of Visible Items
D. None of the above
Correct Answer: A
121. Which items are included in the Balance of Payments?
A. Visible Items B. Invisible Items C. Capital Transfers D. All the above
Correct Answer: D
122. Which one is the visible item of Balance of Payments?
A. Machine B. Cloth C. Cement D. All of these
Correct Answer: D
123. Which one is the invisible item of Balance of Payment?
A. Banking B. Shipping C. Communication D. All of these
Correct Answer: D
124. Which one is the feature of Balance of Payment?
A. Systematic Accounts B. Fixed Time Period
C. Comprehensiveness D. All the above
Correct Answer: D
125. Which account is included in the composition of the Balance of Payments?
A. Current Account B. Capital Account
C. Both A. and B. D. None of the above
Correct Answer: C
126. Which one is the item of the Current Account?
A. Import of Visible Items B. Expenses of Tourists
C. Exports of Visible Items D. All the above
Correct Answer: D
127. Which one is the item of Capital Account?
A. Government Transaction B.Priva Transactions
C. Foreign Direct Investment D. All the above
Correct Answer: D
128. The component(s) of Balance of Payment is/are:
A. Current Account B. Capital Account
C. Both A. and B. D. None of these
Correct Answer: C
129. Which items are included in the balance of trade?
A. Invisible Item B. Capital Transfer C. Visible Item D. All of these
Correct Answer: C
130. Inflation is measured by _______.
A. Consumer price index B. Wholesale price index
C. Marshall’s index D. None of the above
Correct Answer: A
131. When inflation is a result of an increase in the price of factors of production, the result is ________.
A. Stagflation B. Cost-push inflation
C. Demand-pull inflation D. None of the above
Correct Answer: B
132. The combination of stagnation and inflation is known as _____.
A. Stagflation B. Cost-push inflation
C. Demand-pull inflation D. None of the above
Correct Answer: A
133. When the central government reduces the value of the domestic currency in terms of foreign currency, this phenomenon is called ______.
A. Depreciation B. Appreciation C. Devaluation D. None
Correct Answer: C
134. In the context of inflation control, what does one mean when they say sterilization of foreign inflow?
A. Withdrawing an equivalent local currency to maintain the desired rate of exchange
B. Complying with the regulations for import and export
C. Filtering of the black money within an economy
D. None of the above
Correct Answer: A
135. The Nepal Rastra Bank can take the measure of _________ to control inflation within the country.
A. Rationing of credit B. Introducing a progressive tax system
C. Improving profits of the public sector D. Controlling public expenditure
Correct Answer: A
136. The purchasing power of money varies ______.
A. Directly with the volume of employment B. Inversely with the price level
C. Directly with the interest rate D. Directly with the price level
Correct Answer: B
137. How does inflation help in the redistribution of income?
A. Disproportional change in prices B. Proportional changes in prices
C. Falling prices D. Rising prices
Correct Answer: A
138. The item with the maximum weightage in the Wholesale Price Index is _______.
A. Food items B. Manufactured products
C. Fuel and power D. None of the above
Correct Answer: B
139. The Consumer Price Index helps to measure the degree to which ___________.
A. Consumer prices have risen relative to the wage level in the economy
B. Distribution of income between two different sets of income recipients at the same point in time
C. Distribution of income between two different sets of income recipients during different periods
D. None of the above
Correct Answer: C
140. Balance of Payments is an accounting statement that records monetary transactions between ________.
A. Residents of a nation and the rest of the world
B. Non-residents and the rest of the world
C. Residents of a nation and non-residents
D. None of the above
Correct Answer: A
141. Which of the following is another term for the Net National Product at factor cost?
A. Personal Income B. National Income
C. Gross National Product D. Net Domestic Product
Correct Answer: B
142. Which of the following is true for Disposable Income?
A. Disposable Income is the difference between Private Income and Indirect Taxes
B. Disposable Income is the difference between Personal Income and Indirect Taxes
C. Disposable Income is the difference between Private Income and Direct Taxes
D. Disposable Income is the difference between Personal Income and Direct Taxes
Correct Answer: D
143. Which of the following is the correct definition for the Gross Domestic Product (GDP) of a country?
A. The Gross Domestic Product is the total monetary value of the economic transactions within a country in a given year
B. The Gross Domestic Product is the total value of both monetary and non-monetary goods and services in a country within a given year
C. The Gross Domestic Product is the total value of tradable goods produced in a country within a given year
D. None of the above
Correct Answer: D
144. Which of the following is true for Inflation?
A. The value of money increases during Inflation
B. The value of money decreases during Inflation
C. The value of money stays the same during Inflation
D. None of the above
Correct Answer: B
145. Which of the following is true for Net National Income?
A. The Net National Income is the total of Gross National Product and Depreciation
B. The Net National Income is the difference between Gross National Product and Depreciation
C. The Net National Income is the difference between Gross Domestic Product and Depreciation
D. The Net National Income is the difference between Net Domestic Product and Depreciation
Correct Answer: B
146. Which of the following is true for the National Income of a country?
A. If the savings exceed the investment within a country, the National Income will rise
B. If the savings exceed the investment within a country, the National Income will fall
C. If the savings exceed the investment within a country, the National Income will fluctuate
D. If the savings exceed the investment within a country, the National Income will remain constant
Correct Answer: D
147. Which of the following is the definition of a closed economy?
A. A closed economy is a type of economy where the money supply is totally controlled by the government
B. A closed economy is a type of economy where neither exports nor imports take place
C. A closed economy is a type of economy where deficit financing takes place
D. A closed economy is a type of economy where there are no exports to other countries
Correct Answer: B
148. Which of the following is not needed while considering the Gross National Product?
A. The net investment made by foreigners within a given period
B. The total of private investments made within a given period
C. The total purchase of goods made by the government within a given period
D. The total per capita income of the citizens of a country within a given period
Correct Answer: D
149. The primary sector within a country for the calculation of National Income includes __.
A. Small scale industries B. Retail trading
C. Agriculture D. All of the above
Correct Answer: D
150. Which of the following is included in the National Income of a country?
A. Rent B. Interest
C. Wages D. Rent, Interest, Wages, Salary, Profits
Correct Answer: D
151. What is the consumption of Fixed Capital known as?
A. Depreciation B. Capital Formation
C. Investment D. All of the above
Correct Answer: A
152. Which of the following statements accurately describes the consumption function?
A. The consumption function is a relation between income, savings, price and consumption
B. The consumption function is a relation between income and consumption
C. The consumption function is a relation between price, savings and consumption
D. The consumption function is a relation between income, price and savings
Correct Answer: B
153. Which of the following statements is an accurate description of propensity to consume?
A. It is the additional income that gets spent on consumption
B. It denotes the ratio of the consumption to income
C. It defines the tendency of a consumer to consume more than usual
D. It denotes the actual level of income at which is it equal to the consumption expenditure
Correct Answer: B
154. Which of the following statements is the correct description of propensity to save?
A. It is the additional income that does not get saved
B. It denotes the ratio of the savings to income
C. It denotes the actual level of income at which is it equal to the savings
D. None of the above
Correct Answer: B
155. Which of the following statements is true about the consumption function?
A. The consumption function is a functional relationship between aggregate demand and aggregate supply
B. The consumption function is a functional relationship between consumption and national income
C. The consumption function is a functional relationship between national income and private income
D. The consumption function is a functional relationship between consumption and aggregate demand
Correct Answer: B
156. Which of the following statements is not true about average demand in a two-sector economy?
A. The average demand is the total of consumption and savings
B. The average demand curve commences from some point that is above the origin
C. The average demand is the total of consumption and investment
D. The average demand curve has a positive slope
Correct Answer: A
157. Which of the following statements about the consumption curve is correct?
A. The consumption curve lies above the forty-five degrees line at the break-even point
B. The consumption curve lies below the forty-five degrees line at the break-even point
C. The consumption curve intersects the forty-five degrees line at the break-even point
D. None of the above
Correct Answer: C
158. Which of the following statements is accurate about the average propensity to consume?
A. The average propensity to consume can never be less than one
B. The average propensity to consume can never be more than one
C. The average propensity to consume can never be zero
D. The average propensity to consume can never be positive
Correct Answer: C
159. Which of the statements is correct about the relationship between the average propensity to save (APS) and average propensity to consume (APC.?
A. Both APS and APC rise in case of an increase in the national income
B. Both APS and APC fall in case of an increase in the national income
C. APC rises, but APS falls in case of an increase in the national income
D. APS rises, but APC falls in case of an increase in the national income
Correct Answer: D
160. Which of the statements is true about the relationship between planned savings and planned investment?
A. When planned investment is more than planned savings, the national income may increase
B. When planned investment is more than planned savings, the national income may decrease
C. When planned investment is more than planned savings, there is no effect on the national income
D. None of the above
Correct Answer: A
161. Which of the statements is not true in the case of underemployment equilibrium?
A. The aggregate supply is equal to the aggregate demand
B. The resources are fully utilised in an efficient manner
C. The resources are not fully utilized in an efficient manner
D. There is an existence of an excessive production capacity in the economy
Correct Answer: B
162. Which of the following statements is true about the cash reserve ratio?
A. An increase in the cash reserve ratio will lead to a rise in the aggregate demand
B. An increase in the cash reserve ratio will lead to a fall in the aggregate demand
C. An increase in the cash reserve ratio will not lead to any change in the aggregate demand
D. None of the above
Correct Answer: B
163. Which of the following statements is true about excess demand?
A. Excess demand can lead to a rise in employment and price levels
B. Excess demand can lead to a fall in employment and price levels
C. Excess demand does not affect the employment and price levels
D. Excess demand does not affect employment but leads to a rise in the price level
Correct Answer: D
164. Which of the following steps can be taken to increase the aggregate demand?
A. Increasing the bank rate
B. Increasing the cash reserve ratio
C. Selling of the government securities by the Nepal Rastra Bank (NRB)
D. None of the above
Correct Answer: D
165. Which of the following statements is true about the monetary policy of a country?
A. The main aim of this policy is to ensure price stability in the economy
B. The policy aims to achieve stable policy relations
C. The main objective of this policy is to ensure higher tax collections
D. The policy seeks to improve the employment generation situation in the country
Correct Answer: A
166. What measures can be used to correct the inflationary gap under the monetary policy?
A. Reducing the availability of credit B. Cutting the government expenditure
C. Increasing taxation D. None of the above
Correct Answer: A
167. Which of the following statements accurately describes the consumption function?
A. The consumption function is a relation between income, savings, price and consumption
B. The consumption function is a relation between income and consumption
C. The consumption function is a relation between price, savings and consumption
D. The consumption function is a relation between income, price and savings
Correct Answer: B
168. Which of the following statements is an accurate description of propensity to consume?
A. It is the additional income that gets spent on consumption
B. It denotes the ratio of the consumption to income
C. It defines the tendency of a consumer to consume more than usual
D. It denotes the actual level of income at which is it equal to the consumption expenditure
Correct Answer: B
169. Which of the following statements is the correct description of propensity to save?
A. It is the additional income that does not get saved
B. It denotes the ratio of the savings to income
C. It denotes the actual level of income at which is it equal to the savings
D. None of the above
Correct Answer: B
170. Which of the following statements is true about the consumption function?
A. The consumption function is a functional relationship between aggregate demand and aggregate supply
B. The consumption function is a functional relationship between consumption and national income
C. The consumption function is a functional relationship between national income and private income
D. The consumption function is a functional relationship between consumption and aggregate demand
Correct Answer: B
