NCFM Model Test Paper

Macroeconomics for Financial Markets Module

Maximum Marks: 100 Test Duration: 120 minutes Pass Marks: 60 Time Left: 119:24 minutes

Correct answers are shown in green. Attempted answers, if wrong, are in red.

______ implies adjusted for inflation. [ 1 Mark ] (a) """Positive""" (b) """Unreal""" (c) ?Real? (d) """Negative""" Q1 (e) I am not attempting the question The ________ measures economic activity by adding all the incomes received by all the producers of output. [ 3 Marks ] (a) expenditure approach' (b) ?income approach? Q2 (c) I am not attempting the question "There have however been exceptions, when there have been sustained decline in the price level of goods and services. This phenomenon is called ______. " [ 1 Mark ] (a) counter inflation (b) inflation (c) hyper-inflation (d) deflation Q3 (e) I am not attempting the question A paper currency note does not have any intrinsic value or value of its own. Such type of money is called ______. [ 2 Marks ] (a) """cash money""" (b) """flat money""" Q4 (c) ?fiat money?

(d) "real money""" (e) I am not attempting the question ______ analyzes and studies decisions of individual economic agents and how they interact in specific markets and allocate their limited resources to optimize their own wellbeing. [ 2 Marks ] (a) Macroeconomics (b) Microeconomics Q5 (c) I am not attempting the question Gift tax is an example of ______. [ 2 Marks ] (a) Direct tax (b) Indirect tax Q6 (c) I am not attempting the question Governments raise resources mostly using ______. [ 1 Mark ] (a) incentives (b) coersion (c) dictats (d) taxes Q7 (e) I am not attempting the question ____ is conventionally thought of in terms of branch plant or subsidiary company operations that are controlled by parent companies based in another country. [ 2 Marks ] (a) FDI (b) FPI (c) ECB (d) ECP Q8 (e) I am not attempting the question ______ is a comprehensive measure of a country's overall economic output. [ 1 Mark ] Q9

(a) GDP (b) ADP (c) MDP (d) LDP (e) I am not attempting the question "_______ directly adds to production capacity in the host country and, other things remaining the same, contributes to capital formation and employment generation in the host country." [ 2 Marks ] (a) Greenfield ECP (b) Greenfield FPI (c) Greenfield ECB (d) Greenfield FDI Q10 (e) I am not attempting the question "To know whether there has been a genuine increase in economic activity and by how much, GDP measures need to be taken at _____ prices (that is, the price level of a particular year). " [ 1 Mark ] (a) maximum (b) fluctuating (c) constant (d) minimum Q11 (e) I am not attempting the question One of the important characteristics of the financial markets is that it is a source of _______. [ 1 Mark ] (a) zero risk (b) systemic risk (c) known risk (d) absolute risk Q12 (e) I am not attempting the question Q13 "Resources are scarce, while human wants are _______. " [ 1 Mark ]

(a) unlimited (b) limited (c) I am not attempting the question Every business enterprise involves _____. [ 1 Mark ] (a) risk (b) assured profits (c) sure losses (d) windfall gains Q14 (e) I am not attempting the question The essence of ________ is to explore ways to optimize the use of scare resources and to organize the society in a way that leads to the most efficient use of those resources. [ 1 Mark ] (a) Maths (b) History (c) Economics (d) Geography Q15 (e) I am not attempting the question Using GDP estimates at ______ prices helps us eliminate the effects of price level changes on the GDP. [ 1 Mark ] (a) minimum (b) fluctuating (c) maximum (d) constant Q16 (e) I am not attempting the question "Labour, capital and land are considered to be __________. " [ 2 Marks ] (a) ?factors of production? Q17 (b) ?factors of products?

(c) ?factors of productivity? (d) ?factors of produce? (e) I am not attempting the question Share capital is a source of funds for commercial banks. [ 1 Mark ] (a) TRUE (b) FALSE Q18 (c) I am not attempting the question Usages of commodities as the medium of exchange in the early days and measure of value correspond to what we presently call ______. [ 1 Mark ] (a) Cash' (b) Exchange' (c) ?Money? (d) Coins' Q19 (e) I am not attempting the question _______ receipts include tax and non-tax revenue received by the government. [ 1 Mark ] (a) Fiscal (b) Revenue (c) Internal (d) External Q20 (e) I am not attempting the question "When a country sells its domestically produced goods and services abroad, the country is said to be ______. " [ 1 Mark ] (a) ?exporting? (b) importing' Q21 Q22 (c) I am not attempting the question M1 + saving deposits with Post office savings banks = [ 1 Mark ]

(a) M5 (b) M3 (c) M4 (d) M2 (e) I am not attempting the question "No single commodity will give us correct picture of the general price increase in the economy. So, we must create a ______ by taking into account either all the commodities in the economy or a basket of sufficiently large number of commodities that broadly represent the economy. " [ 1 Mark ] (a) deflation index (b) stock price index (c) price index (d) inflation index Q23 (e) I am not attempting the question FDI stands for ______. [ 2 Marks ] (a) Foreign Derived Income (b) Foreign direct investment (c) Foreign Derivatives Investment (d) Foreign Disposable Investment Q24 (e) I am not attempting the question A country is said to be running a positive trade balance when its exports ______ its imports. [ 1 Mark ] (a) exceed (b) is less than Q25 (c) I am not attempting the question "Trade among developed countries could not be explained by absolute advantage. To explain this, David Ricardo propounded the law of _______." [ 1 Mark ] Q26 (a) recovarable advantage

(b) relative advantage (c) theoritical advantage (d) comparitive advantage (e) I am not attempting the question _____ is the rate at which the central bank offers refinance to the commercial banks. [ 3 Marks ] (a) Level rate (b) Interest rate (c) Duration (d) Bank rate Q27 (e) I am not attempting the question The financial market for securities with maturities of less than one year is known as _______. [ 1 Mark ] (a) derivatives market (b) cash market (c) money market (d) Rupee market Q28 (e) I am not attempting the question A well functioning legal and a stable political system is essential for markets to operate efficiently. [ 1 Mark ] (a) FALSE (b) TRUE Q29 (c) I am not attempting the question _______means that the country is buying goods and services that have been produced abroad. [ 1 Mark ] (a) Exporting (b) Importing Q30 (c) I am not attempting the question

"The Reserve Bank of India was established on April 1, 1935 under the _______, which was passed in the year 1934. " [ 1 Mark ] (a) Reserve Bank of India Act (b) Bank of India Act (c) Finance Act (d) Banking Regulator Act Q31 (e) I am not attempting the question "A _____ refers to a situation when an unusually large number of depositors rush in to withdraw their deposits, fearing that the bank may fail." [ 2 Marks ] (a) bank run (b) bank fall (c) bank slowdown (d) bank implosion Q32 (e) I am not attempting the question Capital goods tend to have a ______ lifetime. [ 2 Marks ] (a) finite (b) infinite Q33 (c) I am not attempting the question "________ expenditure involves routine government expenditure, which does not create any asset for the government. " [ 3 Marks ] (a) Recurring (b) Capital (c) Depreciation (d) Revenue Q34 (e) I am not attempting the question "In economics, the resources which are used to produce goods and services are called _______. " [ 2 Marks ] Q35 (a) ?factors of products?

(b) ?factors of production? (c) ?factors of productivity? (d) ?factors of produce? (e) I am not attempting the question "Under the Banking Regulation Act, 1949, the RBI has been vested with extensive powers of supervision and control over banks." [ 1 Mark ] (a) TRUE (b) FALSE Q36 (c) I am not attempting the question _______ is a measure of the extent to which the creation of money in the banking system causes the growth in the money supply to exceed growth in the monetary base. [ 2 Marks ] (a) Cash multiplier (b) Money multiplier (c) Finance multiplier (d) Income multiplier Q37 (e) I am not attempting the question "When interest rates go down, prices of fixed interest bonds ?" [ 2 Marks ] (a) Remain unchanged (b) Go down (c) Go up Q38 (d) I am not attempting the question The Forward Markets Commission (FMC) regulates ______ markets. [ 2 Marks ] (a) equity (b) cash (c) finance (d) commodities Q39 (e) I am not attempting the question

The ________ is measured at regular intervals and changes in the index are an indicator of the average price movement of a fixed basket of goods and services (that represent the entire economy). [ 1 Mark ] (a) inflation index (b) stock price index (c) deflation index (d) price index Q40 (e) I am not attempting the question The wholesale price inflation is also called the ______ inflation [ 2 Marks ] (a) advanced (b) basic (c) headline (d) timeline Q41 (e) I am not attempting the question A ______ system will only work only if two persons can be found whose disposable possessions mutually suit each other's wants. [ 1 Mark ] (a) payout (b) trade (c) transfer (d) barter Q42 (e) I am not attempting the question M1 + time deposits with the banking system = [ 1 Mark ] (a) M3 (b) M2 (c) M1 (d) M4 Q43 (e) I am not attempting the question Q44 _______ expenditure results in creation of assets in the economy. [ 3 Marks ]

(a) Depreciation (b) Revenue (c) Capital (d) Recurring (e) I am not attempting the question "The ______ revenue of the Union Government includes administrative receipts, net contribution of public sector undertakings including railways, posts, currency and mint and other revenues." [ 2 Marks ] (a) tax (b) non-tax Q45 (c) I am not attempting the question "While wheat becomes an ingredient for producing the bread, the oven is only a tool to produce it. Such goods are called _____ Goods." [ 2 Marks ] (a) Producing (b) Revenue (c) Production (d) Capital Q46 (e) I am not attempting the question The Inflation at any given time is measured by computing the percentage changes in the _______ at that point of time over the index prevailing one year previously. [ 1 Mark ] (a) price index (b) stock price index (c) deflation index (d) inflation index Q47 (e) I am not attempting the question "By taxing the income of the rich at a much higher rate than the income of the poor, the government attempts to reduce income inequality." [ 1 Mark ] Q48

(a) TRUE (b) FALSE (c) I am not attempting the question _____ are sales and purchases of government securities or bonds. [ 2 Marks ] (a) IMOs (b) SMOs (c) OMOs (d) LMOs Q49 (e) I am not attempting the question "While _______ price inflation is more popular in India, the Consumer Price Index is a popular measure in developed nations like USA, UK. " [ 3 Marks ] (a) food (b) consumer (c) market (d) wholesale Q50 (e) I am not attempting the question The overall _______ for a country in a given year is the sum of the surplus/ deficits of current and capital accounts. [ 2 Marks ] (a) Balance on revenue account (b) Balance on capital account (c) Balance of Payments (d) Balance of recurring account Q51 (e) I am not attempting the question _______ typically refers to the use of borrowed funds to increase returns on any given investment. [ 2 Marks ] (a) """Float""" (b) """Deleverage""" Q52 (c) """Margins"""

(d) ?Leverage? (e) I am not attempting the question "__________ tells us about what determines level of output in an economy, how are employment and prices determined; how money supply affects rate of interest" [ 2 Marks ] (a) Macroeconomics (b) Microeconomics Q53 (c) I am not attempting the question Commercial banks through their fractional reserve system also help create _____ in the economy. [ 2 Marks ] (a) buffer (b) money (c) liquidity (d) positivity Q54 (e) I am not attempting the question Inflation is the _____ of price increase. [ 2 Marks ] (a) difference (b) rate (c) sum (d) dispersion Q55 (e) I am not attempting the question Demand-pull inflation simply means that aggregate demand has been _______ above what the economy is capable of producing in the short run. [ 3 Marks ] (a) pushed' (b) ?pulled? (c) transcended' (d) shot' Q56 (e) I am not attempting the question

The issuer of Currency in India is the ________. [ 2 Marks ] (a) IRDA (b) SEBI (c) FMC (d) RBI Q57 (e) I am not attempting the question _______ are instruments used by foreign investors not registered with the Indian regulators for taking an exposure in the domestic market. [ 3 Marks ] (a) International Notes (INs) (b) Participatory notes (PNs) (c) Credit Notes (CNs) (d) Promissory Notes (PNs) Q58 (e) I am not attempting the question Household savings is composed of both _______ and _______ savings. [ 3 Marks ] (a) "real, financial" (b) "financial, physical" (c) "cash, real" (d) "liquid, physical" Q59 (e) I am not attempting the question The insurance sector regulator in India is the ______. [ 2 Marks ] (a) IRDA (b) FMC (c) SEBI (d) RBI Q60 (e) I am not attempting the question