List of practice Questions

Explain the circular flow of income in a two-sector economy.
Explain with diagram the effect of time element on equilibrium price.
Define investment multiplier. What is the relation between investment multiplier and marginal propensity to consume?
Explain the law of demand with the help of diagram. Describe any five factors that affect the demand for a commodity.
Define marginal rate of substitution.
Why does the budget line slope downward?
What is the difference between inflationary gap and deflationary gap?
What is the reason for the backward bending labour supply curve?
Explain any two objectives of government budget.
What is ordinal utility?
What is meant by complementary goods?
Give the formula for measuring price elasticity of demand according to percentage method.
What is meant by determination of price ceiling?
Explain the two main functions of central bank.
What is deficit budget?
Show the AR and MR curves in monopolistic competition through a diagram.
Which items are included in balance of trade?
Out of the three concepts of revenue, which is also known as price?
What are the shapes of AR and MR curves, when each unit is sold at the same price?
What is market equilibrium?
Define normative economics with a suitable example.
Why does demand curve slope downward?
What is statutory liquidity ratio (SLR) called?
State two important reasons by which excess demand is generated.
What is marginal propensity to consume?