CPT General Economics Online Test:
Ques. Loss on issue of debentures is treated as ____________.
(a) Intangible asset
(b) Current asset
(c) Current liability
(d) Miscellaneous expenditure
Ques. Abhishek & Bhawna are partners sharing profits and losses in the ratio 5:3. On admission, Chandan brings Rs. 70,000 cash and Rs. 48,000 against goodwill. New profit sharing ratio between Abhishek, Bhawna and Chandan are 7:5:4. The sacrificing ratio among Abhishek : Bhawna will be
(a) 3:1
(b) 4:7
(c) 5:4
(d) 2:1
Ques. Scarcity means that
(a) we cannot have everything that we might want.
(b) we have to make choices between the things we desire.
(c) there are costs to just about any activity we undertake.
(d) all of the above are correct.
Ques. In the production of wheat, all of the following are variable factors that are used by the farmer except:
(a) the seed and fertilizer used when the crop is planted.
(b) the field that has been cleared of trees and in which the crop is planted.
(c) the tractor used by the farmer in planting and cultivating not only wheat but also corn and barley.
(d) the number of hours that the farmer spends cultivating the wheat fields.
Ques. What implication does resource scarcity have for the satisfaction of wants?
(a) Not all wants can be satisfied.
(b) We will never be faced with the need to make choices.
(c) We must develop ways to decrease our individual wants.
(d) The discovery of new natural resources is necessary to increase our ability to satisfy wants.
Ques. The unsustainable levels of government deficits in the late 80’s can be attributed to:
(a) high levels of government expenditures.
(b) insufficient revenues.
(c) poor returns on government investments.
(d) all of the above.
Question: The economic analysis expects the consumer to behave in a manner which is:
(a) Rational
(b) Irrational
(c) Emotional
(d) Indifferent
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Question: In order to control credit:
(a) CRR should be increased, and bank rates should be decreased.
(b) CRR should be reduced, and bank rates should be reduced.
(c) CRR should be increased, and bank rates should be increased.
(d) CRR should be reduced, and bank rates should be increased.
Question: Which one of the following is the best example of agreement between oligopolists?
(a) GATT
(b) OPEC
(c) WTO
(d) UNIDO
Question: Which of the following is a positive economic statement?
(a) Reducing the speed limit on U. S. highways to 55 m.p.h. would waste people’s time, and thus is a stupid idea.
(b) Higher gasoline prices will have no effect on the amount of gasoline that consumers want to buy.
c) Protecting the environment is more important than protecting jobs or preserving some greedy notion of people’s standard of living.
(d) In a free society, unemployment of workers is undesirable.
Question: Larger production of ____ would lead to higher production in the future.
(a) Consumer goods
(b) Capital goods
(c) Agricultural goods
(d) Public goods
Question: Consumer surplus is highest in the case of:
(a) Necessities
(b) Luxuries
(c) Comforts
(d) Conventional necessities
Question: ____ is the apex bank for agriculture credit.
(a) RBI
(b) SIDBI
(c) NABARD
(d) SBI
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Question: Price taker firms:
(a) Advertise to increase the demand for their products.
(b) Do not advertise because most advertising is harmful for society.
(c) Do not advertise because they can sell as much as they want at the current price.
(d) advertisers will get more profits than those who do not.
Question: ______ pair of commodities is an example of substitutes.
(a) Coffee and Milk
(b) Diamond and Cow
(c) Pen and Ink
(d) Mustard oil and coconut oil
Question: Stagflation means _____.
(a) Inflation with recession
(b) Recession with stagnation
(c) Inflation galloping like a stag
(d) Inflation and increasing output
Question: Excess capacity is not found under ______
(a) Monopoly
(b) Monopolistic competition
(c) Perfect competition
(d) Oligopoly
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Question: When _______, we know that the firms are earning just normal profits.
(a) AC = AR
(b) MC = MR
(c) MC = AC
(d) AR = MR
Question: Marginal revenue will be negative if elasticity of demand is _____.
(a) Less than one
(b) More than one
(c) Equal to one
(d) Equal to zero
Question: A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is ______
(a) zero
(b) infinite
(c) equal to one
(d) greater than zero but less than one
Question: ______ unemployment may result when some workers are temporarily out of work while changing job.
(a) Cyclical
(b) Voluntary
(c) Frictional
(d) Seasonal
Question: Which of the following pairs of goods is an example of substitutes?
(a) Tea and sugar
(b) Tea and coffee
(c) Pen and ink
(d) Shirt and trousers
Read the following paragraph and answer next 2 questions.
In 1940, Hitler’s air force bombed Rotterdam, a beautiful city in Holland. Twenty-five thousand homes, 1200 factories, 69 schools and 13 hospitals were destroyed. Nearly 75,000 people became homeless and 1000 people died. 35 % of the port was gutted by the German army.
Question: The above destruction would mean:
(a) A complete wipe off of the Production Possibilities Curve (PPC) of Rotterdam.
(b) An outward shift of the PPC of Rotterdam.
(c) An inward shift of the PPC of Rotterdam.
(d) A downward movement on the same PPC of Rotterdam.
Question: If immediately after the war, Rotterdam rebuilt its port with the help of most up to date cranes, docks and cargo handling technology. By the end of the reconstruction, ships were loading and unloading faster and at lower cost than anywhere in the world. It became more efficient than it was before the destruction. This me
Rotterdam has come back to its original PPC.(b) Rotterdam has shifted to a higher PPC.
(c) Rotterdam has shifted to a lower PPC.
(d) Nothing can be said
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Question: Which of the following statements is correct?
(a) The public sector was given a dominant position in the newly Independent India.
(b) The foreign trade policy post Independence allowed free trade of all goods and services.
(c) Monetary policy post Independence sought to keep the CRR at a very low level.
(d) None of the above
Direction: The following data give the production possibilities frontier of an economy that produces two types of goods, guns and bread. Read the following table and answer next 3 questions.
Production Posibilities
| Production Possibilities | A | B | C | D | E | F | G | H |
| Guns | 0 | 10 | 20 | 30 | 40 | 50 | 60 | 30 |
| Bread | 105 | 100 | 90 | 75 | 55 | 30 | 0 | 45 |
Question: According to Table, the opportunity cost of increasing gun’s production from 20 to 30 units is equal to
(a) 10 units of bread
(b) 15 units of bread
(c) 25 units of bread
(d) 24 units of bread.
Question: Given the data in Table, one moves successively from point A to points B, C, D,E and F, the opportunity cost of guns:
(a) Increases as more of guns are produced.
(b) Decreases as more of guns are is produced.
(c) Remains constant as more of guns are produced.
(d) Nothing can be said
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Question: Point D is efficient while point H (30 guns and 45 loaves of bread) is inefficient. Why?
(a) Point D is outside the PPF while point H is on the PPF.
(b) Point D is inside the PPF while point H is on the PPF.
(c) Point D is on the PPF while point H is inside the PPF.
(d) nothing can be said
Question: As a result of the New Industrial Policy, 1991:
(a) the public sector has been stripped off all its power.
(b) the public sector has been given the commanding heights of the economy.
(c) the public sector’s portfolio will be reviewed with greater realism. The focus will be on strategic high tech and essential infrastructure industries.
(d) the public sector’s management has been passed over to the private sector.
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Direction: In Econoville, there is one grocery shop, Eco-convenience. It used to sell fresh milk at Rs.20 per litre, at which price 400 litres of milk were sold per month. After some time, the price was raised to Rs 30 per litre. Following the price rise:
- Only 200 litres of milk was sold every month.
- The number of boxes of cereal customers bought went down from 280 to 240.
- The number of packets of powdered milk customers bought went up from 90 to 220 per month.
Now answer next 7 Questions.
Question: The price elasticity of demand when fresh milk’s price increases from Rs. 20 per litre to Rs 30 per litre is equal to:
(a) 2.5
(b) 1.0
(c) 1.66
(d) 2 .66
Question: The cross elasticity of monthly demand for powdered milk when the price of fresh milk increases from Rs 20 to Rs 30 per litre is equal to:
(a) + 1.05
(b) -1.05
(c) -2.09
(d) + 2.09
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Question: The cross elasticity of monthly demand for cereal when the price of fresh milk increases from Rs 20 to Rs.30 is equal to:
(a) – 0.38
(b) + 0.25
(c) – 0.19
(d) + 0.38
Question: We can say that fresh milk in economics sense is a/an:
(a) luxury good
(b) inferior good
(c) normal good
(d) nothing can be said
Question: Find the tax which is direct tax among the following:
(a) Personal income tax
(b) Excise duty
(c) Sales tax
(d) Service tax
Question: Suppose that a sole proprietorship is earning total revenues of Rs.2,00,000 and is incurring explicit costs of Rs.1,50,000. If the owner could work for another company for Rs.60,000 a year, we would conclude that:
(a) the firm is incurring an economic loss.
(b) implicit costs are Rs.50,000.
(c) the total economic costs are Rs.2,00,000.
(d) the individual is earning an economic profit of Rs.50,000.
Question: Suppose income of the residents of Ecoville increases by 50% and the quantity of fresh milk demanded increases by 30%. What is income elasticity of demand for fresh milk?
(a) 0.5
(b) 0.6
(c) 1.25
(d) 1.50
Question: What can be said about the price elasticity of demand for fresh milk?
(a) It is perfectly elastic
(b) It is elastic
(c) It is perfectly inelastic
(d) It is inelastic
Question: Which method of rationing (distributing) passing grades in economics courses is most
likely to lead to students trying to learn the subject?
(a) The highest grades are assigned to those students who pay the most money to get them.
(b) The highest grades are assigned to students who do the most personal chores or favors for the professor.
(c) The highest grades are assigned to students whom the professor likes the most.
(d) The highest grades are assigned to students who can answer the most questions correctly on exams covering course material.
Use this data to answer next 3 questions.
| Output (O) | 0 | 1 | 2 | 3 | 4 | 5 | 6 |
| Total Cost (TC) | Rs. 240 | Rs. 330 | Rs. 410 | Rs. 480 | Rs. 540 | Rs. 610 | Rs. 690 |
Question: The marginal cost of the sixth unit of output is:
(a) Rs.133
(b) Rs.75
(c) Rs.80
(d) Rs.450
Question: Diminishing marginal returns starts to occur between units:
(a) 2 and 3
(b) 3 and 4
(c) 4 and 5
(d) 5 and 6
Question: The average fixed cost of 2 units of output is :
(a) Rs.80
(b) Rs.85
(c) Rs.120
(d) Rs.205
Ques. Revenue from sale of products, is generally, realized in the period in which
(a) Cash is collected
(b) Sale is made
(c) Products are manufactured
(d) None of the above.
Ques. Wipro Ltd. issued 20,000, 8% debentures of Rs.10 each at par, which are redeemable after 5 years at a premium of 20%. The amount of loss on redemption of debentures to be written off every year will be
(a) Rs.40,000
(b) Rs.10,000
(c) Rs.20,000
(d) Rs.8,000
Ques. Goods sent out on consignment Rs. 2, 00,000. Consignor’s expenses Rs. 5,000. Consignee’s expenses Rs. 2000. Cash sales Rs. 1,00,000 credit sales Rs. 1,10,000. Consignment stock Rs.40,000 Ordinary commission payable to consignee Rs. 3,000. Del-credere commission Rs. 2000. The amount irrecoverable from customer Rs.2,000. What will be the profit on consignment?
(a) Rs.38,000
(b) Rs.40,000
(c) Rs.36,000
(d) Rs.43,000
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Ques. What implication does resource scarcity have for the satisfaction of wants?
(a) Not all wants can be satisfied
(b) We will never be faced with the need to make choices
(c) We must develop ways to decrease our individual wants
(d) The discovery of new natural resources is necessary to increase our ability to satisfy wants
Ques. In the production of wheat, all of the following are variable factors that are used by the farmer except:
(a) the seed and fertilizer used when the crop is planted
(b) the seed and fertilizer used when the crop is planted
(c) the tractor used by the farmer in planting and cultivating not only wheat but also corn and barley
(d) the number of hours that the farmer spends cultivating the wheat fields
Ques. Future Ltd. purchased Machinery from Gupta & Company for a book value of Rs.4,00,000. The consideration was paid by issue of 10% debentures of Rs.100 each at a discount of 20%. The debenture account was credited with
(a) Rs.4,00,000
(b) Rs.5,00,000
(c) Rs.3,20,000
(d) Rs.4,80,000
Ques. Per capita national income means
(a) NNP / population
(b) Total capital / population
Ques. In describing a given production technology, the short run is best described as lasting
(a) up to six months from now
(b) up to five years from now
(c) as long as all inputs are fixed
(d) as long as at least one input is fixed
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Ques. A firm encounters its “shutdown point” when:
(a) average total cost equals price at the profit-maximizing level of output
(b) average variable cost equals price at the profit-maximizing level of output
(c) average fixed cost equals price at the profit-maximizing level of output
(d) marginal cost equals price at the profit-maximizing level of output
Ques. Who expressed the view that “Economics should be neutral between ends”?
(a) Robbins
(b) Marshall
(c) Pigou
(d) Adam Smith
Ques. Which of the following pairs of goods is an example of substitutes?
(a) Tea and sugar
(b) Tea and coffee
(c) Pen and ink
(d) Shirt and trousers
Ques. Noting charges are paid at the time of _______of a bill.
(a) Retirement
(b) Renewal
(c) Dishonour
(d) None of these
Ques. As a result of the Industrial Policy,1991:
(a) the public sector has been stripped off all its power
(b) the public sector has been given the commanding heights of the economy
(c) the public sector’s portfolio will be reviewed with greater realism. The focus will be on strategic high tech and essential infrastructure industries
(d) the public sector’s management has been passed over to the private sector
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Ques. Which is of the following statements is correct?
(a) Gini coefficients are often used for measuring poverty in relative sense.
(b) When poverty is related to the distribution of income or consumption expenditure, it is absolute poverty
(c) In India, we mainly use the concept of relative poverty for measuring poverty
(d) None of these
Ques. Find the tax which is direct tax among the following:
(a) Personal income tax
(b) Excise duty
(c) GST
(d) Customs Duty
Ques. Raman and Gopal are partners sharing profits and losses in the ratio of 2:1. Gopal gave a loan of Rs.12,000 to the firm. They did not have any specific agreement about interest on loan mentioned in the partnership deed. Gopal claims interest on loan @ 10% p.a. The interest on loan as per rules of Partnership Act, 1932 will be:
(a) Rs.840
(b) Rs.820
(c) Rs.720
(d) Rs.960
Ques. In order to control credit:
(a) CRR should be increased and Bank rate should be decreased
(b) CRR should be reduced and Bank rate should be reduced
(c) CRR should be increased and Bank rate should be increased
(d) CRR should be reduced and Bank rate should be increased
Ques. At the time of admission of a new partner, if the value of goodwill is overstated in the books, it is written back by ________
(a) Old partners in old profit/loss sharing ratio
(b) All the partners including the new partner in new profit/loss sharing ratio.
(c) Old partners in sacrificing ratio
(d) New partner in gaining ratio.
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Ques. Find the correct match:
(a) An enquiry into the nature and causes of the wealth of the nation- A.C.Pigou.
(b) Science which deals with wealth- Alfred Marshall
(c) Economics is the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses- Robbins
(d) The range of our enquiry becomes restricted to that part of social welfare that can be brought directly or indirectly into relation with the measuring rode of money- Adam Smith
Ques. Which of the following statements is correct?
(a) The public sector was given a dominant position in the newly Independent India
(b) The foreign trade policy post Independence allowed free trade of all goods and services
(c) Monetary policy post Independence sought to keep the CRR at a very low level
(d) None of these
Ques. The unsustainable levels of government deficits in the late 80’s can be attributed to:
(a) high levels of government expenditures
(b) insufficient revenues
(c) poor returns on government investments
(d) all of these
Ques. Indigo and Vistara are examples of:
(a) private schools
(b) private airlines
(c) private ships
(d) private railways
Ques. Which of the following statements is incorrect?
(a) The Indian road network is one of the longest in the world
(b) The rural road network connects around 65 percent of all weather roads
(c) Most of the State Road Transport Corporations are running on profits
(d) The National highways carry more than 40 percent of the total road traffic
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Ques. Under _____ market condition, firms make normal profits in the long run.
(a) Perfect Competition
(b) Monopoly
(c) Oligopoly
(d) None of these
Ques. Larger production of ____ goods would lead to higher production in future.
(a) Consumer goods
(b) Capital goods
(c) Agricultural goods
(d) Public goods
Ques. Suppose the demand for meals at a medium-priced restaurant is elastic. If the management of the restaurant is considering raising prices, it can expect a relatively:
(a) large fall in quantity demanded
(b) large fall in demand
(c) small fall in quantity demanded
(d) small fall in demand
Ques. Work force refers to that part of:
(a) labour force which is employed
(b) population which is unemployed
(c) population which is forced to work
(d) labour force which is unemployed
Ques. FRBM Act stands for:
(a) Fiscal Revenue and Budget Management
(b) Foreign Revenue and Business Management
(c) Fiscal Responsibility and Budget Management
(d) Foreign Responsibility and Budget Management
Ques. The pre-condition for privatization to be successful requires:
(a) liberalization and de-regulation of the economy
(b) capital markets should be sufficiently developed
(c) None of these
(d) both of these
Ques. According to the NSS:
(a) unemployment rates on the basis of current daily status were same as those on the basis of usual status
(b) unemployment rates on the basis of current daily status were higher than those on the basis of usual status
(c) unemployment rates on the basis of current daily status were lower than those on the basis of usual status
(d) none of these
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Ques. Which of the following statements about banks is incorrect?
(a) Banks encourage saving habits among people
(b) Banks mobilize savings and make them available for production
(c) Banks mobilize savings and make them available for production
(d) None
Ques. Sunflower Oil Ltd. issued 5,000, 15% Debentures of Rs.100 each at a premium of Rs.10 each. These debentures were to be redeemed at a premium of Rs.4 each after 5 years. The amount to be credited to the debenture premium account will be
(a) Rs.25,000
(b) Rs.50,000
(c) Rs.40,000
(d) Rs.60,000
Ques. The accounting convention under which items in the accounts are adjusted by reference to the Retail Price Index is known as
(a) Current cost accounting
(b) Historical cost accounting
(c) Alternative accounting rules
(d) Current purchasing power accounting
Ques. Fiscal policy means:
(a) policy relating to money and banking in a country
(b) policy relating to public revenue and public expenditure
(c) policy relating to non banking financial institutions
(d) None
Ques. Money in traditional sense:
(a) serves as a medium of exchange
(b) serves as a store of value
(c) serves as both medium of exchange and store of value
(d) serves as both medium of exchange and store of value
Ques. In the theory of demographic transition in the last stage
(a) birth rate rises, death rate rises
(b) birth rate falls, death rate rises
(c) birth rate falls, death rate rises
(d) birth rate falls, death rate falls
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Ques. Depreciation is best described as
(a) A means of spreading the payment for non-current assets over a period of years
(b) A decline in the market value of the assets
(c) A means of spreading the net cost of non-current assets over their estimated useful life
(d) A means of estimating the amount of money needed to replace the assets
Ques. FIFO, LIFO and average cost are inventory valuation methods. Which of the following statements is correct?
(a) When prices are rising FIFO will produce the higher profit figure of all these methods.
(b) When prices are rising LIFO will produce the higher profit figure of all these methods.
(c) LIFO is a permissible valuation method under IAS 2.
(d) Average cost is recomputed following every dispatch or issue of inventory.
Ques. It is easy to detect ______than to ______.
(a) Frauds, Errors
(b) Mistakes, Frauds
(c) Errors, Frauds
(d) Errors, Mistakes
Ques. When money is withdrawn from the bank, the bank ________ the account of the customer.
(a) Credits
(b) Debits
(c) Either (a) or (b)
(d) None of the three
Ques. Raman sells goods for Rs.1,00,000 to Harish on 1st January, 2006 and on the same day draws a bill on Harish at three months for the amount. Harish accepts it and returns it to Raman, who discounts it on 4th January, 2006 with his bank at 12% per annum.
The discounting charges are:
(a) Rs.12,000
(b) Rs.4,000
(c) Rs.3,000
(d) Nil
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Ques. Rs.5,000 was spent by Mrs. Saroj for addition to machinery in order to increase the production capacity. The amount is:
(a) Revenue in nature
(b) Deferred revenue in nature
(c) Capital in nature
(d) Liability in nature
Ques. An error of principle would occur if
(a) Plant and machinery purchased was credited to a non-current assets account
(b) Plant and machinery purchased was debited to the purchases account
(c) Plant and machinery purchased was debited to the equipment account
(d) Plant and machinery purchased was debited to the correct account but with the wrong amount
Ques. A business can make a profit and yet have a reduction in its bank balance. Which ONE of the following might cause this to happen?
(a) The sales of non-current assets at a loss
(b) The charging of depreciation in the income statement
(c) The lengthening of the period of credit given to customers
(d) The lengthening of the period of credit taken from suppliers
Ques. Which ONE of the following does NOT form part of the equity capital of a limited company?
(a) Preference share capital
(b) Share premium
(c) Revaluation reserve
(d) Ordinary share capital
Ques. The prime cost of goods manufactured is the total of
(a) All factory costs before adjusting for work-in progress
(b) All factory costs of goods completed
(c) All materials and labour
(d) Direct factory costs
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Ques. Which of the following items is not an asset?
(a) Salary paid to manager
(b) Accounts payable
(c) Sales
(d) Debtors
Ques. Which is the single most important attribute of an auditor (external or internal)?
(a) Professional skills and training
(b) Good communication skills
(c) Independence
(d) Accuracy
Ques. Which of the following internal control procedures will not help to detect fictitious employees on the payroll of a large company?
(a) Identification of employees by an independent official at the distribution of wages
(b) Paying employees by bank transfer
(c) Ensuring that all employees have contracts of employment prepared by the personnel department
(d) Ensuring that changes to the company payroll system (eg starters and leavers) are authorized
