Practice Test on Macroeconomics
In this practice test for class XII, Macroeconomics, CBSE. Here, you will find topics like money and banking, the balance of payment, and the government budget.
At the end of this post, you can download the file of the practice test for self-practice.
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1. The Government can achieve its budget objective of ‘Redistribution of Income’ by _________
a. managing the General Price Level in the economy to the desired level.
b. increasing the GDP of the economy
c. bringing the production of goods and services under its direct and absolute control.
d. rationalization of taxes in a pro-poor direction.
Solution. d. rationalization of taxes in a pro-poor direction.
2. Balance of Payments of an economy records ______ for a fiscal year.
a. income and expenditure of the government
b. inflow and outflow of funds of the government
c. inflow and outflow of foreign exchange to/from the economy
d. inflow and outflow of loans to/from the rest of the world
Solution. c. inflow and outflow of foreign exchange to/from the economy
3. Identify which of the following bank does not interact directly with the general public?
a. Bank of India
b. State Bank of India
c. Central Bank of India
d. Reserve Bank of India
Solution. d. Reserve Bank of India
4. Identify which of the following is not an example of ‘invisible item’ under Current account of the BOP transactions
a. Air and sea transport
b. Postal and courier services
c. Education-related travel
d. Merchandise linked transactions
Solution. d. Merchandise linked transactions
5. Ms. Anjali kaur, an economics teacher, was explaining the concept of ‘minimum percentage of the total deposits to be kept by any commercial bank with the Central bank of the country, as per norms and statute prevailing in the country’. From the following, choose the correct alternative which specifies towards the concept explained by her?
- Cash Reserve Ratio
- Repo rate
- Bank rate
- Statutory Liquidity ratio
Solution. 1. Cash Reserve Ratio
6. Two friends Palak and Samreet were discussing the exchange rate systems. ‘Under this system, the exchange rates are determined by the market forces of demand and supply. However, delibrate efforts are made by the competent authority to keep the exchange rates within a specific range’. This statement was given by Samreet, identify the type of exchange rate system was she talking about?
- Fixed exchange rate
- Floating exchange rate
- Managed floating exchange rate
- Managed fixed exchange rate
Solution. 3. Managed floating exchange rate
7. If the Federal Reserve sets the minimum reserve ratio for private banks at 25%, then the money multiplier is_______
Solution. Money Multiplier (MM or K) = 1/ CRR times
Money Multiplier = 100/25 = 4 times.
8. Fill in the information for Country B, also find current account balance
Balance of trade in goods = Exports of goods – Imports of goods
-40 = ?? -(-425)
-40 = Exports of goods + 425
Exports of goods = -465
Balance of trade in services = Exports of services – Imports of services
?? = 165 – (-185)
Balance of trade in services = 350
9. From the given information, determine the following:
a. Capital Expenditure
b. Total Expenditure
c. Interest Payments
Solution: Before going through the solution, revise all the formulas here:
Primary Deficit = Fiscal Deficit – Interest Payment
5000 = 12000 – Interest Payment
c. Interest Payment = 7000
Revenue Deficit = Revenue Expenditure – Revenue Receipts
9000 = Revenue Expenditure – 6000
Revenue Expenditure = 15000
Total Receipts = Revenue Receipts + Non debt creating Capital Receipts
Total Receipts = 6000 + 10000 = 16000
Fiscal Deficit = Total Expenditure – Total Receipts
12,000 = Total Expenditure – 16,000
b. Total Expenditure = 28,000
Total Expenditure = Revenue Expenditure + Capital Expenditure
28000 = 15000 + Capital Expenditure
a. Capital Expenditure = 13,000
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