Important MCQs on basic concepts of Macroeconomics Class 12 Economics -

MCQs on Basic Concepts of Macroeconomics

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We, here on cbsestudent.com, are providing you a chance to become an expert of MCQs in CBSE Class 12 Economics by offering you most important MCQs on different chapters of both the books – Indian Economic Development and Introductory Macroeconomics.

Now in this post, we are providing you most important MCQs on basic concepts of Macroeconomics. These MCQs are well crafted by subject expert with years of experience in teaching students of Class 12. All MCQs contain brief explanation of the correct answer. This will help students to understand the concepts more clearly and have an idea how to attempt the MCQs.

These MCQs have primarily made for CBSE Class 12 Economics students for their upcoming exam on 19 March, 2025. However, they are also useful for CUET Economics Domain. In addition, aspirants of competitive exams like SSC, UPSC and other state exams can also get benefit by understanding basic concepts of Macroeconomics.

Q.1 Which one is true regarding final goods and services?

(a) They have crossed the production boundary line.

(b) More value is added to them

(d) Both (a) and (c)

Answer

Answer: Option (a) is correct option

Brief explanation: Final goods and services are those goods and services which have crossed production boundary line and are ready to be used by the end user. They are not purchased for further sale or transformation into other goods and services. So, no further value is added to them. Ex- a watercooler used by a household.

Q.2 Ram started a bag making company. He got order of supply of 200 hundred bags. To deliver the order, Ram purchased 200 mtr bag cloth and other raw material by making payment of Rs. 20,000/-. He sold the bags in the market for Rs. 50,000/-.

In view of the above information, 200 mtr bag cloths and Rs. 20,000/- represent.

(a) Final goods and final expenditure

(b) Final goods and intermediate expenditure

(d) Intermediate goods and intermediate expenditure

Answer

Answer: Option (d) is correct option

Brief Explanation: 200 mtrs bag cloths is raw material for making bag. Hence, it an intermediate good. Expenditure made on intermediate goods/raw material is called intermediate consumption expenditure. So, Rs. 20,000/- intermediate expenditure.

Q.3 Read the following statements carefully:

Statement 1: Final goods are used only by the household sector.

Statement 2: Machines purchased by firms are always considered capital goods.

In the light of the given statements, choose the correct alternative from the following:

(A) Statement 1 is true and Statement 2 is false.

(B) Statement 1 is false and Statement 2 is true.

(D) Both Statements 1 and 2 are false.

Answer

Answer: (D) Both Statements 1 and 2 are false.

Brief Explanation: Final goods are used by both the household sectors and producer sectors/firms. Example – Machines used by producer sector for producing other goods are also final goods as Producer sector is the end user of such machines.

If machines are purchased by firms for the purpose of sale, then they are intermediary goods not the final goods.

Q.4 Read the following statements carefully:

Statement 1: A good can be both be the final good or the intermediate good.

Statement 2: A good can be both the consumer good and the capital good.

In the light of the given statements, choose the correct alternative from the following:

(A) Statement 1 is true and Statement 2 is false.

(B) Statement 1 is false and Statement 2 is true.

(D) Both Statements 1 and 2 are false.

Answer

Answer: (C) Both Statements 1 and 2 are false.

Brief Explanation: A good is final good when it used by its end used while the same good can be intermediate good if used as raw material or for resaling purpose. Example – A refrigerator with household is final good. However, if the refrigerator is in a shop which sells it, then it is an intermediate good.

Suppose a good for example Sewing machine is used by household sector, then it is a consumer good. However, it is used by a tailor for stitching cloths and earning money by its use, then it is a capital good.

Q.5 Please consider characteristics of consumer goods:

I.Durable Consumer goods are of high value and last for longer period of time.

II.Non-durable goods cannot be used multiple times and are of low value

III.Services are considered material goods

IV.Semi-durable goods have a life span of 5 years or more

Which one of the above is correct about consumer goods?

(a) Only I,II and III

(b) Only I,III and IV

(d) Only I and II

Answer

Answer: Option (d) is correct option

Brief Explanation: Goods can be categorized into 4 categories –

Durable goods – long life span & high value
Semi-Durable goods – life span of 1 year or slightly more & mid –value
Non-durable goods – single use & low value
Services – also called non-material goods

Q.6 Consider the following and select the right option:

(a) Nut and bolts are example of capital goods.

(b) Bananas are example of semi-durable goods

(d) None of the above

Answer

Answer: Option (d) is correct option.

Brief Explanation: Nuts and bolts are just single producer goods which are used up in production of other goods. Example – Nut and bolts used in making a table.

Capital goods are used repeatedly in production process for years, not for a single time like nut and bolts

Bananas are non-durable consumer/consumption goods while cars owned by households are just durable consumer goods not the capital goods.

Q.7 Which one among the following is not a correct option:

(a) Producer sector is the main sector doing consumption expenditure.

(b) Consumption goods are those goods which directly satisfy human wants.

(d) Capital goods facilitates production of other goods.

Answer

Answer: Option (a) is correct option.

Brief Explanation: Household sector, not the producer sector, is main sector doing consumption expenditure. Other entities like government and non-government organizations (NGOs) are contributors in total consumption expenditure in an economy.

Producer Sector is the main doing expenditure on capital goods called investment expenditure. Capital goods indirectly satisfy human wants by making consumption goods which directly satisfy human wants.

Q.8 Consider the following regarding concepts of investment in economics.

I.Investment refers to increase in the stock of capital.

II.Investment is also called capital formation.

III.Only the increase in fixed assets like plants and machinery considered as investment.

IV.Fixed investment increases production capacity in an economy

Choose the correct option from the below:

(a) Only I,II and IV are correct

(b) Only II and IV are correct

(d) All are correct

Answer

Answer: Option (a) is correct option

Brief Explanation: Investment can be categorized into fixed investment and inventory investment. Fixed investment is investment on fixed assets/capital goods like machinery and plants which increases production capacity in an economy. On the other hand, inventory investment is change in stock of finished goods, semi-finished goods and raw material over a period of time.