Question Bank

Economics: Question Bank for 2nd Semester B.Com


Fundamental of Business Economics – 2
                         Semester – 2
·      Essay type Questions
1       Discuss the concept of gross domestic product ( GDP)
Meaning of GDP.
Calculation of GDP.
Characteristics of GDP.
Limitations of GDP.
2       Discuss the concept of Net Domestic Product (GNP).
Meaning of net domestic product.
-         NDP= GDP – Depreciation
-         Suppose in an economy, the monetary value of final goods and services produced within the country by domestic and foreign factor is Rs.100 crores. Therefore GDP is Rs.100 crore rupees.The amount of depreciation of equipments is supposeRs.10crore rupees. According to this equation.
-         GDP = RS.100 – 10
         = RS.90
3       Explain the structure of  Indian national income.
Structure of national income.
-         Primary sector
-         Industries sector
-         Service sector
4       Write a short note: Gross National Product (GNP).
Meaning of GNP.
5       Explain the calculating methods of national income
Calculating methods of GNP
-         Production method
-         Income method
-         Expenditure method
6       Write a short note : Per capita income.
Equation of Per capita income.
                                            Total National Income
Per capita income  =         Total Population
7       Explain the difficulties in measuring of national income.
(A) Conceptual difficulties.
1 Imputed values.
2 Different Practices.
3 Problem of services not marketed.
4 Problem of double counting.
5 Harmful side-effects.
6 Illegal activities
(B) Practical difficulties.
1 Non monetised sector.
2 Illiteracy.
3More than one occupation.
4Unreliable data.
5 Limitation of sample method.
·        Objective Question
1 What does GDP mean ?
    Gross domestic product.
2 What does GNP mean ?
    Gross national product.
3 What does NNP mean ?
    Net national product.
4 What does NDP mean ?
    Net domestic product.
5 Give formula for obtaining per capita income.
                                             National income
    Per capita income =   - ----------------------
                                            Total population       
6       Gross domestic product include_______investment.
7       National income is a______ concept.
(Micro, Individual, Family, Macro
8        Gross domestic product includes _____________.
a)     National output within national boundaries
b)    Personal income.
C) Net value of import and export.
 d) Foreign income.                      
       9    Give meaning of national income.
     10    Per capita  income is _________income.
a)     Per head average.
b)    Total income.
c)     Average.
d)    Rental income.
     11  Share is primary sector in india’s national income is ________
a)     Increasing.
b)    Constant.
c)      Falling.
d) Decreasing
 12     After 1991 contribution of service sector to GDP is _________.
(Increasing, Falling, Same, Decreasing)
 13    Which sector has highest share in GDP of India in current time.
(Industry, Primary, service, None)
14    In 1950 contribution of agriculture to GDP was_____%
(5.8%, 58%, 62%,80%)
 15    In present time contribution of service sector to India GDP is _____%.
           (57.7%, 45%, 35%, 75%)
 16    Since 1954 in India, Who give the all data of national income.
a)     Reserve bank of India.
b)    Planning commission.
c)     CSO.
d)    Finance department.


·     Essay type Questions
1       What is Barter system ? explain the limitation of barter system.
Meaning of barter system.
Limitations of barter system.
-         Lack of mutual confidence.
-         Lack of common measurement.
-         Problem of division of a commodity.
-         Problem of store of value.
-         Problem of differed payment.
-         Problem of maintaining account
2       Discuss the type of money.
Type of money.
-         Commodity money.
-         Animal money.
-         Metal money.
-         Paper money.
-         Bank money.
Invisible money.
3       What is money ? Explain the function of money.
Introduc tion.
Definition of money.
Functions of money.
a)     Primary functions.
1 Medium of Exchange.
2 Measure of value.
b)    Secondary functions.
1 Standard of deferred payment.
2 Store of value.
      3 Transfer of money.
c)     Contingent functions.
1    Liquidity.
2       Basis of credit system.
3       Measurement and distribution of national income.
4       Equalizer of marginal utility.
 4   Explain the Fisher’ Equation of money.
1 Supply of money (MS) = Demand of money (MD)
2      MV + M’V’                =         PT
                    MV + PT               
        P = MV
 Explanation of Equation with example.
5  Explain the limitations of Fishser’s  equation.
Full employment is not possible.
   Velocity is not constant.
  Relationship of M/M’ is changeable.
  T is not constant
 Money as a store of value.
 Each variable is interdependent.
Price level is not properly explained.
 Historically wrong.
6 Explain the cash balance equation given by Cambridge.
    Meaning & Definition.
   Purpose of cash balance.
      1     Transaction motive.
2       Precautionary motive.
3       Speculative motive
(A) Prof. Pigou’s equation.
P =     M   In which P = value of money. If P is defined as price level, then the equation is P = M
          P = Average price level of the consumer goods.
      M = Total proportion of money.
       R = Real income of society.
       K = part of real income kept in cash balance.
(B) Prof. Keynes equation.
P =     K
N = Total proportion of money.
P = Price of a unit which present the average price.
K = Part of consumer good unit kept in cash form.
7       Comparison of Fisher’s and Cambridge equation.
Fisher’s equation.
Cambridge equation.
8       what is money supply ? Discuss the measures and components of money
Meaning and definition of money supply
M1 = Coins and currency notes.
M2 = M1+Saving deposit of the post office savings bank.
M3 =M1+Time deposit of the public with banks.
M4 = M3+Total deposit of the post office savings banks.
Components of money supply.
1       Currency money.
2       Bank money.
3       Velocity of money.
4       Near money.
5       Liquidity approach.
9       Write a short note : High powered money.
Components of high powered money.
1       Currency money.
2       Bank deposits.
3       Cash reserve of the bank.
10 What is finance ? explain the types of finance.
Meaning of finance.
Types of finance.
1       On the basis of form.
2       On the basis of time period.
3       On the basis of purpose.
4       Classification on the basis of source.
5       Finance with or without security.
11 Discuss the methods of finance.
Direct finance methods.
1       cash credit.
2       Overdraft.
3       Finance through loan.
Indirect finance method.
1       Discounting of commercial bill.
2         Purpose of securities.
3       Underwriting.
4       Bankers acceptance.
5       Leasing.
6       Purchase and discounting of hundis.
12 discuss the instrument of credit control.
Quantitative credit control means.
1       Bank rate.
2       Open market policy.
3       Cash reserve ratio(CRR).
4       Statutory liquidity  ratio(SLR).
       Qualitative credit control means.
1       Regulation of credit to customer.
2       The change in margin.
3       Credit rationing.
4       Publicity.
5       Moral pressure.
6       Direct measures.
13 Write a short note.
1       Bank rate.
2       Repo rate and reverse repo rate.
3       CRR & SLR.
·      Objective questions.
1       Give the Prof. Sidgwick’s definition of money.
“Money is what money does.”
2       which is the pigou’s equation of cash balance.
P =     M
3       Give the meaning of SLR.
Statutory liquidity ratio.
4       Give the meaning of barter system.
The barter system in which goods were exchange for goods or
5       According to quantity theory of money, if the quantity of money is    double then what is the value of money.
(Double, Three times, One and half times, Half)
6      Money is a medium of __________.
(exchange, saving, store, transport)
7       ________ is the first stage of evolution of money.
(commodity money, metallic money, fiat money, paper money)
8       In barter transaction there was _______ exchange.
(direct, fixed, stable, indirect)
9       Currency notes and coins are ________ tender money.
(legal, liquidity, physical, illegal)
10 Classical approach of demand for money is known as ______approach.
(transaction, speculative, liquidity, precautionary)
11 Cambridge approach of demand for money is known as_________.
(cash balance, liquidity, cash transaction, speculative)
12 Supply of money is a_________ concept.
(static, stable, fixed, dynamic)
13 Credit money is created by_______.
(Central bank, Exim bank, Commercial bank, Foreign bank)
14 Bank rate is an _______ instrument of credit control.
(quantitative, selective, qualitative, non-monetary)
15 Bank rate is the rate at which _______ bank gives loan to
Commercial bank.
(central bank, state bank, foreign bank, national housing bank)
16 Give the meaning of CRR.
Cash Reserve Ratio.
17 Credit money refer to:
(bank money, Coins, legal tender money, commodity money)
                                 Unit : 3
·         Essay Type Questions
1       Discuss the J.B.Say’s Law of market.
Explanation of law.
(A) Barter system.
(B) Monetary economy.
(C) Saving economy.
2       Discuss the Wage cut theory of Pigou.
Meaning of Unemployment.
Explanation of theory.
Criticism of wage cut policy.
3       Explain the Keynes theory of employment.
Employment theory.
(A) Aggregate demand function curve.
(B) Aggregate Supply curve.
(C) Determination of employment through figure.
4       Explain the Keynes theory of income determination.
Explanation of theory.
(A)Aggregate demand.
(B) Aggregate supply.
(C)Explanation through the graph.
5       Discuss the consumption function.
Consumption function.
(A)Explanation through graph.
(B)Explanation through table.
6       Discuss the Investment multiplier.
Meaning of multiplier.
7       Explain the factors affecting of marginal efficiency of capital.
Factors affecting of MEC.
(2)Stock of capital goods.
(3)Invention and Innovation.
(4)New product.
(5)Population growth.
(6)State policy.
(7)Political climate.
·      Objective Questions.
1       Who has given the law of market.
(Pigou, J.B.Say, Keynes, Friedman)
2       Name of the author of the book “The General Theory of Employment,
Interest and Money”.                                                                                               
(Ricardo, J.B.say,Pigou, Keynes)
3       Who has given the concept of employment multiplier ?
(R.F.Khan, Keynes, Pigou, Hicks)
 4 According to J.B.Say every supply creates it’s own _______.
         (demand, price, cost, supply)
 5 Classical theory of employment assumes _______ employment.
        (full, under, disguised, open)
 6 The classical theory of employment is based on ______ competition.
       (perfect, Pure, monopolist, imperfect)
7The concept of effective demand is advocated by _________.
   (J.M.Keynes, Marshall, Pigou, Ricardo)
 8  Consumption is a function of _______.
    (income, saving, expenditure, investment)
 9 Investment depends up on _______.
     (saving, income, price, production)
10 There is ______ relationship between investment and the
       Rate of interest.
       (direct, same, proportionate, inverse)
11 Marginal efficiency of capital is an important determinant of ____.
      (investment, sell, purchase, demand)
12 If marginal efficiency of capital is higher investment will be______.
      (higher, same, less, lower)
13 Investment depends on _________.
(rate of interest, rate of buying, rate of deposit, rate of spending)
14 Who is not classical economist in the list of given below.
(J.S.Mill, Marshall, J.B.Say, Keynes)
15 Keynes model of income known as_________.
     full employment model,
      long run model,
    under employment model,
               Unit : 4
Essay type questions.
1       What is business cycle ? discuss the four phases of business cycle.
   Meaning & definition.
(2) Recession.
(3) Contraction.
(4) Revival.
    2   What is interest ? Explain the factors affecting rates of interest.
             Meaning of interest.
            Factors affecting.
(1)Nature of the security offered against loan.
(2)Character of the borrower.
(3)Period of loan.
(4)Amount of loan.
(5)Degree of competition in the capital market.
(6)Degree of mobility.
(7)Productivity of capital.
2       Discuss the Loan able Fund theory of interest.
Demand for loan able funds.
Supply of loan able funds.
Determination of rate of interest.
(1)Assumption regarding stability of income.
(2)Effect of income on the rate of interest.
(4)Insufficient explanation.
4       Discuss the liquidity preference theory of Keynes.
Demand for money.
(1)The transaction motive.
(2)Precautionary motive.
(3)Speculative motive.
           Supply of money.
Determination of rate of interest.
(1)Neglect of realistic factors.
(2)Neglect of true factors.
(3)Regarding income level.
(4)Unrealistic assumptions.
(5)Imperfect concept.
(6)Savings cannot be ignored.
5       What is inflation ? Explain the types of inflation.
Meaning & Definition of inflation.
Types of inflation.
(1)From the point of view of nature.
(2)From the point of view of scope.
(3)Frome the point of view of time.
(4)Inflation based on speed.
(5)From point of view of expectation.
(6)From the point of view of reason.
6       Explain the causes of inflation.
Causes of Inflation.
(1)Demand pull inflation.(Diagram)
(2)Cost push inflation.(Diagram)
7       Explain the effects of inflation.
Effects of inflation.
(1)Effects on real income.
(2)Effects on distribution of income and wealth.
(3)Effects on economic development.
(4)Effect on employment.
8       Write a short note : Anti Inflationary Policy.
(A) Monetary policy of RBI.
(B) Fiscal policy of government.
·       Objective Questions.
1       Interest is paid for _______use of capital.
    (productive, stable, unproductive, unstable)
3       Loan able fund theory of interest is given by ________.
(Marshall, neo classical economist, Keynes, J.B.Say)
4       Liquidity preference theory of interest given by _________.
(Keynes, Pigou,Marshall, Ricardo)
5       Liquidity refer to desire to hold _______.
(cash, bank money, share certificate, cheque)
6       Which economist say that interest is a pure monetary phenomenon ?
(Marshall, Keynes, Fisher, Robertson)
7       In which principle of interest, both real and monetary factors are considered ?
(Classical, Keynes, Loan able fund, None)
8       What is the relation between rate of interest and demand for money ?
(straight, inverse, equal, unequal)
9       Inflation is a situation of continuous rising ______.
(prices, production, goods, income)
10 In the period of inflation value of money _______.
(declines, remain same, appreciates, evaluated)
11 Increase in the bank rate is ____ measure to control inflation.
(monetary, technical, fiscal, non monetary)
12 How many phases of business cycle ?
(Two, Three, Four, Five)
13 Interest is reward for saving. Whose view is this ?
(Keynes, Modern economist, Classical economist, Hicks)
14 What happens to exports during inflation ?
(increase, decrease, remain constant, uncertain)



Fundamental of business economics – 1
                        Semester – 1
                    Unit : 1                
·      Essay type questions.
1  Discuss the concept of utility.
    Meaning of utility.
2       Writ a sort note : Goods and services.
Meaning of goods.
Meaning of services.
3       Write a short note : Money and Wealth.
Meaning of Money.
Meaning of Wealth.
4       Discuss the concept of Value and Price.
5       Write a short note : Monetary income and Real income.
Monetary income.
Real income.
6       Explain the difference between micro economics and macro economics.
Micro economics.
Macro economics.
Difference between micro and macro.
7       Discuss the concept of Consumer Surplus.
Explanation through table.
Explanation through graph.
8       Critically discuss Prof. Robbins definition of economics.
Prof. Robbins definition.
“Economics is a science which studies human behaviours as a relationship Between ends and means which have alternative uses.”
(1) Unlimited wants.
(2) Limited means.
(3) The means with alternative uses.
(1) Narrow definition.
(2) Regarding economic development.


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