3RD TERM ECONOMICS SS2
  • 1. The market where long-term securities are traded is called the ________.
A) Capital market
B) Commodity market
C) Money market
D) Labour market
  • 2. Inflation caused by excess demand over supply is known as ________.
A) Demand-pull inflation
B) Creeping inflation
C) Cost-push inflation
D) Deflation
  • 3. Tax avoidance refers to ________.
A) Smuggling goods
B) Non-payment of customs duty
C) Legal reduction of tax liability
D) Illegal refusal to pay tax
  • 4. Gross National Product (GNP) is GDP plus ________.
A) Tax revenue
B) Depreciation
C) Government expenditure
D) Net income from abroad
  • 5. A budget in which revenue equals expenditure is called ________.
A) Supplementary budget
B) Balanced budget
C) Deficit budget
D) Surplus budget
  • 6. The desire to hold money in liquid form is known as ________.
A) Liquidity preference
B) Inflation
C) Investment
D) Capital formation
  • 7. Which of the following is a source of government revenue?
A) Inflation
B) Budget
C) Taxation
D) Deflation
  • 8. Net Domestic Product (NDP) is obtained by subtracting ________ from GDP.
  • 9. One advantage of direct taxes is that they are ________.
A) Progressive
B) Regressive
C) Inflationary
D) Optional
  • 10. Which institution issues Treasury Bills?
A) Central Bank
B) Commercial Bank
C) Insurance Company
D) Stock Exchange
  • 11. Hyperinflation is also called ________.
A) Disinflation
B) Runaway inflation
C) Reflation
D) Deflation
  • 12. Per capita income is calculated by dividing national income by the ________.
A) Number of firms
B) Total population
C) Labour force
D) Government revenue
  • 13. A tax levied directly on personal income is known as ________.
A) Direct tax
B) Import duty
C) Excise duty
D) Purchase tax
  • 14. A deficit budget occurs when ________.
A) Revenue exceeds expenditure
B) Revenue equals expenditure
C) Expenditure exceeds revenue
D) Revenue is zero
  • 15. The quantity theory of money was propounded by ________.
A) Irving Fisher
B) David Ricardo
C) J.M. Keynes
D) Adam Smith
  • 16. Which method of measuring national income adds wages, rent, interest and profits?
A) Product method
B) Income method
C) Output method
D) Expenditure method
  • 17. One reason for imposing taxes is to ________.
A) Raise government revenue
B) Increase inflation
C) Reduce exports
D) Encourage smuggling
  • 18. The market where short-term securities are traded is called the ________.
  • 19. Deflation refers to a persistent ________.
A) Rise in wages
B) Fall in output
C) Fall in prices
D) Rise in prices
  • 20. Which of the following is an example of recurrent expenditure?
A) Construction of bridges
B) Building roads
C) Purchase of machinery
D) Payment of salaries
  • 21. In the equation MV = PT, V stands for ________.
  • 22. Disposable income equals personal income minus ________.
A) Consumption
B) Personal tax
C) Imports
D) Savings
  • 23. The principle of taxation which requires fairness is called ________.
  • 24. One major reason government borrows money is to finance a ________.
A) Trade surplus
B) Deficit budget
C) Budget surplus
D) Tax holiday
  • 25. Inflation reduces the ________ of money.
A) Supply
B) Circulation
C) Quantity
D) Purchasing power
  • 26. Which of the following is a security traded in the capital market?
A) Call Money Fund
B) Share
C) Bill of Exchange
D) Treasury Bill
  • 27. National income is usually measured over a period of ________.
A) One month
B) Ten years
C) One week
D) One year
  • 28. Tax evasion is ________.
A) Illegal
B) Constitutional
C) Legal
D) Voluntary
  • 29. Which type of inflation is characterized by a slow but steady rise in prices?
  • 30. Government expenditure on roads and bridges is known as ________.
A) Transfer payment
B) Recurrent expenditure
C) Capital expenditure
D) Revenue expenditure
  • 31. Which of the following is an instrument of the money market?
A) Treasury Bill
B) Debenture
C) Bond
D) Share
  • 32. A budget surplus is desirable during periods of ________.
A) Recession
B) Inflation
C) Deflation
D) Unemployment
  • 33. GDP stands for ________.
  • 34. The item upon which tax is calculated is called the ________.
A) Tax incidence
B) Tax burden
C) Tax base
D) Tax rate
  • 35. Which of the following is a cause of inflation?
A) High savings
B) Budget surplus
C) Excessive bank lending
D) Reduced demand
  • 36. National debt refers to debts owed by the government ________.
A) By companies only
B) Internally and externally
C) Externally only
D) Internally only
  • 37. The principle that tax should be easy to understand is called ________.
A) Simplicity
B) Flexibility
C) Neutrality
D) Convenience
  • 38. Holding money for unforeseen emergencies is known as the ________ motive.
  • 39. One reason for measuring national income is to determine the ________.
A) Political party strength
B) Growth rate of the economy
C) Religious composition
D) Climate condition
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