True/False

Question 11 Mark

Giving reason, state whether the following statements are true or false.
Cirular flow of income takes place in case of open economy and close economy.

Answer

True.
Explanation:
Even in case of closed economy, circular flow of income takes place between households and firms.

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Question 21 Mark

Giving reason, state whether the following statements are true or false.
National Income of a country is a stock concept.

Answer

False.
Explanation:
It is a flow concept as it is measured over a period of time.

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Question 31 Mark

Giving reason, state whether the following statements are true or false.
Money flow is also known as physical flow.

Answer

False.
Explanation:
Real flow is known as physical flow. Money flow is known by the name of nominal flow.

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Question 41 Mark

Giving reason, state whether the following statements are true or false.
Books in a library are intermediate goods.

Answer

False.
Explanation:
Books used in a library are final goods as these are used by the end user.

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Question 51 Mark

Giving reason, state whether the following statements are true or false.
Transfer income is a part of factor income.

Answer

False.Explanation:
It is not a factor income, It is paid for without receiving any goods and services.

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Question 61 Mark

Giving reason, state whether the following statements are true or false.
In a two-sector economy, total production is always equal to total consumption.

Answer

True.
Explanation:
It happens because firms sell their entire output to the households.

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Question 71 Mark

Giving reason, state whether the following statements are true or false.
A good can be an intermediate goods in one case and a final goods in another case.

Answer

True.
Explanation:
A good can be an intermediate goods or final goods, depending upon its nature of use. For example, a car purchased by a household is a final good, whereas, it will be an intermediate good if it is purchased by a car dealer.

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Question 81 Mark

Giving reason, state whether the following statements are true or false.
The concept of normal resident applies to individuals only.

Answer

False.
Explanation:
The concept applies to institutions also, in addition to individuals.

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Question 91 Mark

Giving reason, state whether the following statements are true or false.
In final goods, no value is to be added.

Answer

True.
Explanation:
Because final goods have crossed the production boundary.

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Question 101 Mark

Main tools of Macroeconomics are demand and supply.

Answer

False.Explanation:
The main tools of macroeconomics are aggregate demand and aggregate supply.

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Question 111 Mark

Giving reason, state whether the following statements are true or false.
Macroeconomics deals with the problems of a consumer.

Answer

False.
Explanation:
It deals with problems of the economy.

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Question 121 Mark

Giving reason, state whether the following statements are true or false.
Use of raw material is a consumption good.

Answer

False.
Explanation:
Use of raw material helps in production process therefore it is a single use producer good. But it has no longer life.

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Question 131 Mark

Macroeconomics is the study of individual and small group of individuals.

Answer

False.Explanation:
As macroeconomics is that part of economics theory which study the economy as a whole.

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Question 141 Mark

Giving reason, state whether the following statements are true or false.
Capital formation is a flow.

Answer

True.
Explanation:
Capital formation is measured over a period of time.

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Question 151 Mark

Giving reason, state whether the following statements are true or false.
Can purchase of a new car be categorized as an intermediate good.

Answer

True.
Explanation:
Purchase of a new car can be categorized as an intermediate good, if purchased by a Government for military use or if it is purchased by a car dealer for resale.

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Question 161 Mark

Giving reason, state whether the following statements are true or false.
Television is a capital good.

Answer

False.
Explanation:
Television is a durable consumption good.

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Question 171 Mark

Microeconomics and Macroeconomics are not independent of each other.

Answer

True.
Explanation:
Microeconomics and Macroeconomics are not independent of each other and there is much common ground between the two. It means Microeconomics and Macroeconomics are interdependent.

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Question 181 Mark

Giving reason, state whether the following statements are true or false.
Foreign remittances are a stock concept.

Answer

False.
Explanation:
It is flow concept as these are assessed over a period of time and not at a point of time.

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Economics True/False

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