Class 12 Economics MCQ Chapter 4 Problems of Deficient Demand and Excess Demand Question Answer English Medium to each chapter is provided in the list so that you can easily browse through different chapters Class 12 Economics MCQ Chapter 4 Problems of Deficient Demand and Excess Demand and select need one. AHSEC Class 12 Economics Objective Type Solutions As Per AHSEC New Book Syllabus Download PDF. AHSEC Economics MCQ Class 12.
Class 12 Economics MCQ Chapter 4 Problems of Deficient Demand and Excess Demand
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Problems of Deficient Demand and Excess Demand
Chapter: 4
| PART – A: INTRODUCTORY MICROECONOMICS |
1. Deficient demand occurs when:
(i) AD > AS at full employment.
(ii) AD < AS at full employment.
(iii) AD = AS at full employment.
(iv) AS < AD at under-employment.
Ans: (ii) AD < AS at full employment.
2. Excess demand refers to a situation where:
(i) Current AD equals full-employment AD.
(ii) Current AD is less than full-employment AD.
(iii) Current AD exceeds full-employment AD.
(iv) AS rises faster than AD.
Ans: (iii) Current AD exceeds full-employment AD.
3. The deflationary gap measures:
(i) Excess of current AD over full-employment AD.
(ii) Shortfall of current AD from full-employment AD.
(iii) Excess of potential output over actual AD.
(iv) Excess of AS over potential output.
Ans: (ii) Shortfall of current AD from full-employment AD.
4. The inflationary gap is also called a:
(i) Negative output gap.
(ii) Cyclical gap.
(iii) Positive output gap.
(iv) Structural gap.
Ans: (iii) Positive output gap.
5. Under-employment equilibrium is one where:
(i) Employment is above full employment.
(ii) Prices are at their maximum.
(iii) Output and employment are below full employment.
(iv) Wages are fully flexible.
Ans: (iii) Output and employment are below full employment.
6. Over-full employment equilibrium is characterized mainly by:
(i) Rising unemployment.
(ii) Rising inventories.
(iii) Higher price level without sustainable output gain.
(iv) Falling money supply.
Ans: (iii) Higher price level without sustainable output gain.
7. Negative output gap means:
(i) Actual output > potential output.
(ii) Actual output < potential output.
(iii) Actual output = potential output.
(iv) Potential output is falling below AD.
Ans: (ii) Actual output < potential output.
8. A primary fiscal tool to remove a deflationary gap is:
(i) Reduce government expenditure.
(ii) Increase tax rates.
(iii) Increase government expenditure.
(iv) Sell government securities.
Ans: (iii) Increase government expenditure.
9. To reduce excess demand, the central bank should:
(i) Buy securities in open market.
(ii) Lower the bank rate.
(iii) Reduce CRR/SLR.
(iv) Sell securities in open market.
Ans: (iv) Sell securities in open market.
10. Raising CRR/SLR will generally:
(i) Increase banks’ lending capacity.
(ii) Decrease banks’ lending capacity.
(iii) Leave lending unchanged.
(iv) Raise government expenditure.
Ans: (ii) Decrease banks’ lending capacity.
11. An open market purchase by the central bank tends to:
(i) Drain liquidity.
(ii) Increase deposits and lending.
(iii) Raise taxes.
(iv) Reduce disposable income.
Ans: (ii) Increase deposits and lending.
12. Margin requirement refers to:
(i) Interest rate charged on loans.
(ii) Difference between security value and loan amount.
(iii) Maximum tenure of a loan.
(iv) Compulsory reserve with the central bank.
Ans: (ii) Difference between security value and loan amount.
13. Moral suasion means the central bank:
(i) Changes reserve ratios.
(ii) Persuades banks to adjust lending behavior.
(iii) Fixes loan interest rates by law.
(iv) Rations credit by quotas.
Ans: (ii) Persuades banks to adjust lending behavior.
14. A common cause of deficient demand is:
(i) Export boom.
(ii) Credit expansion.
(iii) Fall in private investment due to pessimism.
(iv) Tax cuts.
Ans: (iii) Fall in private investment due to pessimism.
15. A common cause of excess demand is:
(i) Higher taxes.
(ii) Contraction of money supply.
(iii) Deficit financing/expansion of money supply.
(iv) Cut in government spending.
Ans: (iii) Deficit financing/expansion of money supply.
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