Multiple Choice Questions (30)
Q1
MCQ
EasyCauses of Inflation
According to the text, what are the two main factors that can cause inflation?
AGovernment spending and central bank actions.
✓Demand pull factors and cost push factors.
CHigh savings and low investments.
DExports and imports.
💡 The text states: 'Inflation can be caused by demand pull factors or cost push factors. An increase in the price of goods and services because demand being more than available supply, is called demand pull inflation. An increase in prices because of an increase in input costs is called cost-push inflation.'
Q2
MCQ
MediumMacroeconomic Policies
According to the text, what are the two major influencers of public policies in an economy, and what are their respective policy types?
AIndividuals (personal policy) and Corporates (corporate policy).
✓Government (fiscal policy) and the Central Bank (monetary policy).
CConsumers (demand-side policy) and Producers (supply-side policy).
DInternational organizations (trade policy) and domestic businesses (industry policy).
💡 The text states: 'Two major influencers of the public policies in an economy are the government and the central bank. Decisions of the government, known collectively as fiscal policy and actions of the central bank, known collectively as monetary policy...'
Q3
MCQ
HardInflation Causes
The text identifies two main types of factors that can cause inflation. What are these two types?
ASupply-side factors and fiscal factors.
BMonetary factors and interest rate factors.
✓Demand-pull factors and cost-push factors.
DGovernment spending factors and central bank intervention factors.
💡 The text explicitly states, 'Inflation can be caused by demand pull factors or cost push factors.'
Q4
MCQ
MediumNational Income Methods
Which of the following is NOT listed as a method for measuring Gross Domestic Product (GDP) in the provided text?
AProduct Method
BIncome Method
✓Consumption Method
DExpenditure Method
💡 The text explicitly lists 'Product Method', 'Income Method', and 'Expenditure Method' as the three ways to measure Gross Domestic Product.
Q5
MCQ
EasyInflation
How is inflation defined in the provided text?
AA general decrease in price levels of goods and services.
✓An erosion of purchasing power of money due to a general increase in prices.
CAn increase in the supply of goods and services without a change in demand.
DA stable state where the purchasing power of money remains constant.
💡 The text defines inflation as 'the general increase in price levels of goods and services in the economy leading to an erosion of purchasing power of money.'
Q6
MCQ
EasyMicroeconomics Focus
Which of the following best describes the focus of microeconomics as per the text?
AThe study of aggregate supply and demand in an economy.
BThe study of the 'big picture' in the economy, including GDP and inflation.
✓The study of the behavior of individuals and firms, and their decisions on what to buy and consume.
DThe study of public policies such as fiscal and monetary policies.
💡 The text states: 'Microeconomics is the study of the behaviour of individuals and their decisions on what to buy and consume based on prevalent prices...' and 'microeconomics is the study of economics on a smaller (micro), firm level'.
Q7
MCQ
MediumNational Income Measurement
What is the key difference between Gross Domestic Product (GDP) and Gross National Product (GNP) as defined in the text?
AGDP measures goods and services produced by nationals, while GNP measures those produced within frontiers.
✓GDP is the market value of goods and services produced within a country’s frontiers, while GNP is produced by a country's residents, irrespective of location.
CGDP includes net factor income from abroad, while GNP does not.
DGDP focuses on consumption, while GNP focuses on investment.
💡 The text defines GDP as 'the market value of goods and services produced within a country’s frontiers, irrespective of the nationality of the owner who produces.' And GNP as 'the market value of goods and services produced by a countries resident (nationals), irrespective of wherever they are in the world.'
Q8
MCQ
EasyDefinition of Economics
According to the provided text, what is the primary focus of economics?
AThe study of how governments manage budgets.
BThe study of human behavior in social settings.
✓The study of how people make choices under conditions of scarcity.
DThe study of historical economic events.
💡 The text states: 'Economics is the study of how people make choices under conditions of scarcity and the impact of those choices...'
Q9
MCQ
MediumMacroeconomic Principles
In an economy, decisions of the government are collectively known as what, according to the text?
AMonetary policy
✓Fiscal policy
CTrade policy
DInvestment policy
💡 The text states, 'Decisions of the government, known collectively as fiscal policy and actions of the central bank, known collectively as monetary policy, affect the overall economy activity to a large extent.'
Q10
MCQ
MediumInflation Causes
What are the two main types of factors identified in the text that can cause inflation?
AFiscal policy adjustments and monetary policy changes.
✓Demand-pull factors and cost-push factors.
CIncreased exports and decreased imports.
DHigher savings rates and lower investment rates.
💡 The text explicitly states: 'Inflation can be caused by demand pull factors or cost push factors.'
Q11
MCQ
MediumPer Capita Income
Why is Per Capita Income considered a better measure of the standard of living in a country than National Income, according to the text?
ABecause National Income only reflects the total wealth, not its distribution.
✓Because Per Capita Income accounts for population changes, meaning an increase in National Income coupled with faster population growth could reduce the standard of living.
CBecause Per Capita Income is easier to calculate and less prone to errors.
DBecause National Income does not consider the impact of inflation.
💡 The text explains: 'Per Capita Income (not the National Income) is better measure of standard of living in a country, because, while National Income may increase, faster increase in population may reduce the per capita income; which means standard of living in the country has gone down.'
Q12
MCQ
MediumInterest Rates and Economic Impact
According to the text, what is a general effect of higher interest rates on an economy?
AThey typically lead to increased consumption and higher levels of investment.
✓They motivate people to save more, reduce investments due to higher capital costs, and can slow down the overall economy.
CThey primarily make exports more competitive in international markets.
DThey tend to directly cause an increase in demand-pull inflation.
💡 The text explains: 'Higher inflation demands higher rates for people to get motivated to save. As they save more and consume less, consumption goes down. On the other hand, higher rates reduce the investments (high cost of capital) and may slow down the overall economy.'
Q13
MCQ
MediumNational Income Uses
Why is Per Capita Income considered a better measure of the standard of living in a country than National Income, according to the text?
ABecause National Income only includes corporate profits.
✓Because it accounts for population changes, which can reduce standard of living even if National Income increases.
CBecause Per Capita Income is easier to calculate than National Income.
DBecause it directly measures the distribution of income among constituents.
💡 The text states, 'Per Capita Income (not the National Income) is better measure of standard of living in a country, because, while National Income may increase, faster increase in population may reduce the per capita income; which means standard of living in the country has gone down.'
Q14
MCQ
MediumSavings and Investments
According to the text, what is the primary role of efficient and effective Financial Markets in relation to savings and investments?
ATo ensure that governments always run budget deficits.
✓To facilitate the conversion of savings into investments for productive activities.
CTo limit the range of financial products available to savers.
DTo discourage individuals and corporates from saving their income.
💡 The text mentions, 'Government and Central Bankers continuously focus on facilitating the conversion of savings into investments through creation of efficient and effective Financial Markets...'
Q15
MCQ
MediumSavings vs. Investment
The text emphasizes that 'savings does not mean investment.' What is the crucial step required for savings to become investments, as described?
ASavings must be used directly by individuals for immediate consumption.
BSavings must be hoarded as cash to increase personal wealth.
✓Savings are to be channelized towards productive venues, taking the shape of financial instruments like equity or bonds, to transfer funds from savers to users.
DSavings must be converted into physical assets like gold or real estate without involving financial markets.
💡 The text states: 'Savings are to be channelized towards productive venues called investments – given to corporates or government to invest to generate further earnings. When savings are turned into investments, they take the shape of some financial instrument – Equity, Bonds, Government Securities, and others to transfer the funds from the savers to users (issuers of securities)...'
Q16
MCQ
EasyMacroeconomic Influencers
Which two entities are identified in the text as major influencers of public policies in an economy?
AIndividual households and private firms.
BConsumers and producers.
✓The government and the central bank.
DInternational trade organizations and foreign investors.
💡 The text states, 'Two major influencers of the public policies in an economy are the government and the central bank.'
Q17
MCQ
EasyMicroeconomics vs. Macroeconomics
Which of the following best describes the scope of microeconomics as per the provided text?
AThe study of the 'big picture' in the economy, including unemployment rates and GDP.
✓The study of the behaviour of individuals and their decisions on what to buy and consume.
CThe analysis of government fiscal policies and central bank monetary policies.
DThe understanding of international trade dynamics and exchange rates.
💡 The text states, 'Microeconomics is the study of the behaviour of individuals and their decisions on what to buy and consume based on prevalent prices...' It also mentions 'theory of the firm.'
Q18
MCQ
EasyEconomic Analysis Introduction
According to the text, what is the primary assumption about human behavior that economic analysis begins with?
APeople are emotional and unpredictable.
✓People are rational, having well-defined goals and trying to achieve them.
CPeople always prioritize collective good over individual goals.
DPeople rarely face trade-offs due to abundant resources.
💡 The text states, 'Economic analysis of human behaviour begins with the assumption that people are rational - they have well-defined goals and try to achieve them as best they can.'
Q19
MCQ
EasyEconomic Analysis Basics
What is the primary assumption about human behavior that economic analysis begins with?
APeople are emotional and often make irrational decisions.
✓People are rational, possess well-defined goals, and strive to achieve them optimally.
CPeople consistently prioritize collective welfare over individual aspirations.
DPeople make choices without facing any significant resource constraints or trade-offs.
💡 The text states, 'Economic analysis of human behaviour begins with the assumption that people are rational - they have well-defined goals and try to achieve them as best they can.'
Q20
MCQ
MediumMacroeconomic Principles
Which of the following is NOT explicitly mentioned as a factor that macroeconomics focuses on when influencing aggregate supply and demand?
AUnemployment rates
BGross Domestic Product (GDP)
✓Individual firm-level input and output decisions
DOverall price levels
💡 Macroeconomics focuses on aggregate factors like unemployment rates, GDP, and overall price levels. Individual firm-level input and output decisions are part of microeconomics' 'theory of the firm'.
Q21
MCQ
EasyNational Income Definitions
According to the text, what is Gross Domestic Product (GDP) defined as?
AThe market value of goods and services produced by a country's residents, irrespective of their location.
BThe aggregate income earned by all individuals within an economy.
✓The market value of goods and services produced within a country’s frontiers, regardless of the producer's nationality.
DThe sum of private consumption, government spending, and net exports.
💡 The text states: 'GDP is the market value of goods and services produced within a country’s frontiers, irrespective of the nationality of the owner who produces.'
Q22
MCQ
HardNational Income Measurement Methods
Which of the following statements about the methods of computing Gross Domestic Product (GDP) is INCORRECT based on the text?
AThe Product Method measures GDP as an aggregated flow of final goods and services from different economic sectors.
BThe Income Method aggregates the earnings of Employees, Professionals, Entrepreneurs, and Investors for a specified period.
CThe Expenditure Method calculates GDP as the sum of private consumption, government spending, gross capital formation, and net exports.
✓All three methods (Product, Income, Expenditure) are expected to produce vastly different results due to inherent statistical errors.
💡 The text explicitly states: 'In practice, all three counting methods produce similar results with minor differences for several reasons including errors in the statistics.' This contradicts option D.
Q23
MCQ
HardScope of Microeconomics
Which of the following aspects is NOT primarily dealt with by Microeconomics, according to the provided text?
AHow firms adopt different strategies to increase their profits.
BThe decision-making process at the level of inputs, outputs, and prices of individual firms.
CThe understanding and working of consumers, producers, and resource markets under various market structures.
✓The factors influencing aggregate supply and demand, such as unemployment rates and Gross Domestic Product (GDP).
💡 The text clearly states that 'the focus of macroeconomics is on factors that influence aggregate supply and demand in an economy such as unemployment rates, gross domestic product (GDP)...' Options A, B, and C are explicitly mentioned as areas Microeconomics deals with.
Q24
MCQ
HardEconomic Welfare Indicators
Why is Per Capita Income considered a better measure of the standard of living in a country than National Income, according to the text?
APer capita income is less affected by inflation compared to National Income figures.
BNational Income only reflects total economic output, not the average individual's share.
✓An increase in National Income might not reflect an improved standard of living if population growth outpaces it, leading to a reduced per capita income.
DPer capita income directly accounts for the country's balance of trade and foreign investments.
💡 The text explains: 'Per Capita Income (not the National Income) is better measure of standard of living in a country, because, while National Income may increase, faster increase in population may reduce the per capita income; which means standard of living in the country has gone down.'
Q25
MCQ
EasyBranches of Economics
Which of the following best describes the primary focus of microeconomics?
AThe study of aggregate economic factors such as national unemployment rates and GDP.
✓The study of the behavior of individuals and firms, and their decisions regarding consumption and production.
CThe analysis of government fiscal policies and central bank monetary actions on a national scale.
DThe understanding of international trade, balance of payments, and exchange rate dynamics.
💡 The text defines microeconomics as 'the study of the behaviour of individuals and their decisions on what to buy and consume' and also deals with the 'theory of the firm.'
Q26
MCQ
EasyInflation Definition
How is inflation defined in the provided text?
AA general decrease in price levels of goods and services.
BA specific increase in the price of a single commodity.
✓The general increase in price levels of goods and services leading to an erosion of purchasing power of money.
DThe process of converting savings into investments.
💡 The text states: 'Inflation is defined as the general increase in price levels of goods and services in the economy leading to an erosion of purchasing power of money.'
Q27
MCQ
HardSavings and Investment Relationship
The text emphasizes that 'savings does not mean investment.' What is the critical process described for savings to transform into investments?
ASavings are automatically converted into investments through direct consumption of goods and services.
✓Savings must be channelized towards productive ventures, taking the form of financial instruments to transfer funds from savers to users for productive activities.
CSavings are primarily held as liquid cash by individuals and corporations until market conditions are ideal for spending.
DSavings are distributed as dividends to shareholders, which then become investments.
💡 The text states: 'Savings are to be channelized towards productive venues called investments – given to corporates or government to invest to generate further earnings. When savings are turned into investments, they take the shape of some financial instrument...'
Q28
MCQ
EasyMacroeconomic Policy Influencers
Which two entities are identified in the text as the major influencers of public policies in an economy?
AConsumers and producers
BIndividual households and corporate firms
✓The government and the central bank
DInternational trade organizations and foreign investors
💡 The text clearly states: 'Two major influencers of the public policies in an economy are the government and the central bank.'
Q29
MCQ
HardNational Income
What constitutes the 'Net Factor Income from Abroad' (NFIA) which differentiates Gross Domestic Product (GDP) from Gross National Product (GNP)?
AIncome paid to non-residents minus income received by residents.
BMarket value of goods and services produced by a country's residents minus those produced within its frontiers.
✓Income received by residents minus income paid to non-residents.
DThe total sum of private consumption, government spending, and gross capital formation.
💡 The text states, 'The difference between GDP and GNP is the “Net Factor Income from Abroad” (NFIA). NFIA is the income received by the residents minus income paid to non-residents.'
Q30
MCQ
MediumNational Income Measurement
Which method of National Income computation is specifically highlighted as helping to understand how income is distributed among constituents such as Employees, Professionals, Entrepreneurs, and Investors?
AProduct Method
BExpenditure Method
✓Income Method
DConsumption Method
💡 The text clearly states: 'Income method of National Income computation helps us understand how the National Income is distributed among the various constituents in the economy - Employees, Professionals, Entrepreneurs and Investors.'
Case-Based Questions (1 sets)
Case 1
Case-Based
Macroeconomic Analysis and Policy Response
The Republic of Veridia is currently grappling with a challenging economic landscape. Recent data released by the National Statistics Office indicates that the annual Consumer Price Index (CPI) has surged to 8.5%, significantly above the central bank's target of 4%. This persistent inflation is largely driven by both demand-pull factors, such as robust government spending in the prior year, and cost-push factors, including rising global commodity prices. Concurrently, the Gross Domestic Product (GDP) growth rate has decelerated to 3.2% for the last fiscal year, down from 5.5% in the previous year. This slowdown is primarily attributed to subdued private consumption, as higher prices erode purchasing power, and a noticeable decline in corporate investments, given the uncertainty. The government's fiscal deficit has also widened due to increased social spending and lower tax revenues. Against this backdrop, the Central Bank of Veridia is under pressure to take decisive action, while the Ministry of Finance is evaluating its policy options to stimulate growth without exacerbating inflationary pressures. Research analysts are closely monitoring these developments to assess the potential impact on various industries and the overall market, particularly how savings are being channelized and the distribution of income among economic constituents.
Medium Sub-question 1
The scenario mentions that GDP growth has decelerated. Which of the following methods, if applied to measure Veridia's National Income, would best highlight the contribution of different economic sectors (e.g., agriculture, industry, services) to this GDP figure?
AIncome Method
BExpenditure Method
✓Product Method
DNet Factor Income from Abroad (NFIA) Method
💡 The text explains that the 'Product method deals with the economy sector-wise. The total output in the economy is computed as the sum of the outputs of various sectors.' This method directly shows sectoral contributions.
Hard Sub-question 2
The government's widened fiscal deficit due to increased social spending and lower tax revenues, coupled with high inflation and decelerating GDP, presents a complex challenge. Which branch of economics would primarily focus on analyzing the impact of such government decisions (fiscal policy) on aggregate economic activity, unemployment rates, and overall price levels?
AMicroeconomics
BBehavioral Economics
✓Macroeconomics
DEconometrics
💡 Macroeconomics is defined as the study of 'the big picture' in the economy, focusing on factors like aggregate supply and demand, unemployment rates, GDP, overall price levels, and the influence of government (fiscal policy) and central bank actions.
Easy Sub-question 3
What does the 8.5% annual Consumer Price Index (CPI) primarily indicate in the context of Veridia's economy?
✓A general increase in the price levels of goods and services, leading to an erosion of purchasing power.
BThe total market value of all final goods and services produced within Veridia's borders.
CThe aggregate income earned by individuals and corporates in Veridia.
DA decrease in the overall unemployment rate in the country.
💡 CPI measures the general increase in price levels, which is the definition of inflation provided in the text, indicating an erosion of purchasing power.
Medium Sub-question 4
Given the current economic situation in Veridia, if the Central Bank decides to raise interest rates significantly, what is a likely immediate effect on the economy, according to macroeconomic principles?
AAn increase in corporate investments due to cheaper borrowing costs.
BA stimulation of private consumption as savings become less attractive.
✓A reduction in inflation by discouraging borrowing and consumption, but potentially slowing down the overall economy.
DAn increase in government spending to offset private sector slowdown.
💡 The text states that higher interest rates reduce investments (due to higher cost of capital) and can slow down the overall economy. This action typically aims to reduce inflation by curbing demand.
About this content: These practice questions are based on the
NISM-Series-XV: Research Analyst Certification Examination Workbook (February 2026)
published by the National Institute of Securities Markets (NISM), Mumbai.
NISM is a SEBI-established institution. Questions cover Economic Analysis with verified answers and explanations.
BullWiser is an independent exam preparation platform — not affiliated with NISM or SEBI.
Last updated: .
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