CA Foundation Business Economics Important Question - Jan 26

  • By Team Koncept
  • 24 December, 2025
CA Foundation Business Economics Important Question - Jan 26

CA Foundation Business Economics Important Question - Jan 26

Most Expected Questions | CA Foundation Business Economics

Gear up for the CA Foundation Business Economics exam in January 2026 with our carefully curated list of important practice questions for each chapter. From Microeconomics principles like demand and supply to Macroeconomics topics such as national income, our comprehensive question bank ensures you develop a strong conceptual foundation and exam readiness. Focus on high-yield areas, tackle challenging concepts, and reinforce your knowledge to excel in the Business Economics paper. Start practicing now to build your confidence, enhance problem-solving skills, and secure success in your upcoming CA Foundation exam

Table of Content

    1. Nature & Scope of Business Economics
    2. Theory of Demand and Supply
    3. Theory of Production and Cost
    4. Price Determination in Diffrent Markets
    5. Buisness Cycles
    6. Determination of National Income 
    7. Public Finance 
    8. Money Market
    9. International Trade 
    10. Indian Economy

CA Foundation Jan 26 Important Question Other Subjects Blogs :

  1. Important Question Jan 26 Paper 1 : Accounting
  2. Important Question Jan 26 Paper 2 : Business Laws 
  3. Important Question Jan 26 Paper 3 : Quantitative Aptitude 
  4. CA Foundation Syllabus (New Updates)

CA Foundation Business Economics Important Question - Jan 26 - 5

Chapter 1: Nature & Scope of Business Economics

Question : 1

Which of the following best describes the pre-British Indian economy?

  1. Dependent on imports for goods
  2. Self-sufficient villages and cities which were centers of commerce
  3. Focus on industrial production
  4. Dominated by foreign trade

Solution:

Question : 2

The early liberalization and reforms started in India in ______.

  1. 1980s
  2. 1970s
  3. 1960s
  4. 1990s

Solution:

Question : 3

Which of the following best describes the pre-British Indian economy?

  1. Dependent on imports for goods
  2. Self-sufficient villages and cities which were centers of commerce
  3. Focus on industrial production
  4. Dominated by foreign trade

Solution:

Question : 4

Suppose that a sole proprietor is earning total revenue of ₹ 1,20,000/- and is incurring explicit cost of ₹ 95,000/-. If the owner could work for another company for ₹ 30,000/- a year, which of the following statement is false?

  1. The firm incurred an economic loss of ₹ 5,000/-
  2. The firm is having accounting profit of ₹ 25,000/-
  3. Total economic costs are ₹ 30,000/-
  4. The total accounting costs are ₹ 95,000/-

Solution:

Question : 5

Which of the following does not describe the nature of business economics?

  1. It is normative in nature.
  2. It is abstract and purely theoretical.
  3. It is an art.
  4. It incorporates elements of Macro Analysis.

Solution:

Question : 6

Which of the following is an example of normative statement?

  1. The demand for a good will increase if its price decreases.
  2. The government should increase taxes on liquor to reduce its consumption.
  3. A decrease in interest rates will lead to an increase in investment.
  4. An increase in government spending will reduce the unemployment rate.

Solution:

Question : 7

Which of the following is not one of the four basic economic problems of an economy?

  1. What to produce?
  2. Where to produce?
  3. For whom to produce?
  4. What provisions are to be made for economic growth?

Solution:

Question : 8

“Buyers ultimately determine which goods and services will be produced and in what quantities.” The given statement is the meaning of:

  1. Planned economy
  2. Consumer Sovereignty
  3. Freedom of economic choice
  4. Freedom of enterprise

Solution:

Question : 9

Rational decision making requires that:

  1. one’s choice be arrived at logically and without error.
  2. one’s choice be consistent with one’s goal.
  3. one’s choice never vary.
  4. the consumer plan’s to attain the highest possible level of satisfaction. 

Solution:

Question : 10

The Nature of Business Economics: 

  1. Business Economics is a Science
  2. Incorporate elements of Macro Analysis
  3. Interdisciplinary in Nature
  4. All the above

Solution:

Question : 11

The Book “The Wealth of Nations “is written by:

  1. Adam Smith
  2. Arthur Pigou
  3. Robinson
  4. Ragnar Nurske 

Solution:

Question : 12

____ is concerned with welfare proposition.

  1. Normative Economics
  2. Positive Economics
  3. Both (a) and (b)
  4. None of these

Solution:

CA Foundation Business Economics Important Question - Jan 26 - 5

Chapter 2: Theory of Demand and Supply

Question : 13

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: 

  1. Proportionately large fall in quantity demanded 
  2. No change in quantity demanded  
  3. Proportionately small fall in quantity demanded  
  4. Infinite change in quantity demanded 

Solution:

Question : 14

Price Elasticity of Demand of a good is (-) 3. It shows that: 

  1. When price falls by 1%, demand rises by 3%  
  2. When price rises by 1%, demand falls by 3%  
  3. Either (a) or (b) 
  4. Neither (a) nor (b) 

Solution:

Question : 15

The substitution effect will be stronger when:

  1. The goods are closer substitutes 
  2. There is lower cost of switching to the substitute good
  3. There is lower inconvenience while switching to the substitute good.
  4. All of these

Solution:

Question : 16

Decrease in input demand _________.

  1. Doesn’t affect inputs prices
  2. Pushes inputs prices up 
  3. Pulls inputs prices down 
  4. Either (B) or (C) 

Solution:

Question : 17

Traditional approach of law of demand was propounded by______.

  1. Giffen
  2. Paul A Samuelson
  3. Alfred Marshall 
  4. Pique 

Solution:

Question : 18

When two goods are complementary, the cross elasticity between them is:

  1. Infinite
  2. Positive and large
  3. Zero
  4. Negative

Solution:

Question : 19

What are the determinants of price elasticity?

  1. Availability of substitutes
  2. Price range
  3. Position of a Commodity in the Consumer’s budget
  4. All the above

Solution:

Question : 20

The rate at which the consumer is prepared to exchange-good x and y is :

  1. Marginal rate of substitution 
  2. Elasticity of Substitution 
  3. Diminishing Marginal Utility
  4. None of these 

Solution:

Question : 21

A dealer sells only two brands of Motorcycle- Royal and Hero. It was observed that when the price of royal rises by 10% the demand for Hero increases by 15%. What is the cross elasticity of Hero against the Price of Royal?

  1. + 1.5
  2. -1.5
  3. 2.5
  4. None of these

Solution:

Question : 22

For Giffen good the angle Curve is:

  1. Vertical
  2. Horizontal
  3. Negatively Sloped
  4. Positively Sloped

Solution:

Question : 23

Total revenue will be maximum, where elasticity is equal to:

  1. Greater than 1
  2. Less than 1
  3. Zero
  4. 1

Solution:

Question : 24

While drawing the budget line of a consumer consuming Nachos chips and Pepsi, if the quantity of Nachos is taken on the Y-axis and the quantity of Pepsi on the X-axis, the slope of the budget line will be:

[Where, Pp – Price of Pepsi, PN - Price of Nachos & M – Money income of consumer]  

  1. PP/ PN 
  2. PN /PP  
  3. M/ PN  
  4. M /PP

Solution:

Question : 25

When total utility is increasing at decreasing rate:

  1. Marginal utility is equal to total utility.
  2. Marginal utility is decreasing but remains positive.
  3. Marginal utility becomes negative.
  4. Marginal utility is equal to zero.

Solution:

Question : 26

Due to an increase in price of product X from ₹100 to ₹110, quantity supplied increases from 150 units to 200 units. Calculate elasticity of supply using arc-elasticity method.

  1. 2.3
  2. 3
  3. 3.33
  4. 3.5

Solution:

Question : 27

What will happen to the equilibrium price and equilibrium quantity when demand increases and supply decreases?

  1. The equilibrium price rises but change in equilibrium quantity is uncertain
  2. Both equilibrium price and equilibrium quantity falls
  3. Both equilibrium price and equilibrium quantity go up.
  4. The equilibrium quantity increases but the change in equilibrium price is uncertain.

Solution:

CA Foundation Business Economics Important Question - Jan 26 - 5

Chapter 3: Theory of Production and Cost

Question : 28

Which of the following is not a determinant of the firm’s cost function?

  1. Taxes
  2. The Production Function 
  3.  The Price of the firm’s output
  4. Subsidies

Solution:

Question : 29

Law of Production does not include ___

  1. least Cost Combination of factors
  2. Law of variable proportion 
  3. Law of diminishing returns to a factor
  4. Return to scale 

Solution:

Question : 30

Which one of the following is not an internal economies of scale?

  1. Technical economies 
  2.  Financial economies 
  3.  Economies due to localization of industries 
  4.  Marketing economies 

Solution :

Solution:

Question : 31

At the Point of Inflexion: 

  1. Total Product is maximum 
  2. Average Product is maximum 
  3. Marginal Product is maximum
  4. Marginal Product is zero 

Solution:

Question : 32

The long-run average cost curve is also called:

  1. Kinked curve
  2. Equal quantity curve
  3. Envelope curve
  4. Sharp curve

Solution:

Question : 33

Initially a firm enjoys ______ of scale and beyond a certain limit it suffers from ______ of scale.

  1. internal economies, internal diseconomies
  2. external economies, external diseconomies
  3. internal diseconomies, internal economies
  4. external diseconomies, external economies

Solution:

Question : 34

In short-run, when average cost falls as a result of an increase in output, marginal cost is ______ average cost.

  1. greater than
  2. less than
  3. equal to
  4. independent of

Solution:

Question : 35

Which of the following factors or resources make it possible to produce goods and services?

  1. Land, Labour, Industrial policy and Capital
  2. Land, Labour, Fiscal policy and Capital
  3. Land, Labour, Capital and Entrepreneurial ability
  4. Land, Labour, Technology and Capital

Solution:

Question : 36

If a firm adds more number of workers but total output starts to increase at a decreasing rate, the firm is experiencing:

  1. Increasing Returns to Scale 
  2. Diminishing Marginal Returns
  3. Constant Returns to Scale
  4. Negative Marginal Returns

Solution:

Question : 37

Goodwill, patent right, etc. are example of:

  1. Tangible capital
  2. Real capital
  3. Intangible capital
  4. None of these

Solution:

Question : 38

Which of the following in incurred first?  

  1. Historical Cost  
  2. Replacement Cost
  3. Realized Value
  4. None of these

Solution:

Question : 39

Secular Period is also known as :

  1. Short Period 
  2. Very Long Period 
  3. long Period
  4. Very short Period 

Solution:

Question : 40

At the point of producer equilibrium: 

  1. The isoquant is tangent to the isocost,
  2. The MRTSLK equals PL/PK, 
  3. MPL/PL / MPK/PK,
  4. All of the above.

Solution:

Question : 41

Even as fixed average cost continues to fall the average variable cost begins to rise because:  

  1. return to factor start diminishing
  2. return to factor start rising 
  3. input price start rising  
  4. producer budget starts shrinking

Solution:

Question : 42

Time element was conceived by: 

  1. Adam Smith 
  2. Alfred Marshall 
  3. Pigou

  4. None of these 

Solution:

CA Foundation Business Economics Important Question - Jan 26 - 5

Chapter 4: Price Determination in Different Markets

Question : 43

Full Capacity is utilized in the which market condition______. 

  1. Perfect Competition
  2. Monopoly 
  3. Oligopoly 
  4. None of these 

Solution:

Question : 44

The Price in Collusive Oligopoly is decided by: 

  1. The Firm 
  2. Price leader 
  3. The Industry 
  4. None of these 

Solution:

Question : 45

Pure oligopoly is based on the ________________ products

  1. differentiated
  2. homogeneous
  3. unrelated
  4. none of the above

Solution:

Question : 46

The firm and the industry are one and the same in _______________ 

  1. Perfect competition
  2. Monopolistic competition
  3. Duopoly
  4. Monopoly

Solution:

Question : 47

Price varies by attributes such as location or by Customer Segment is __________ degree of Price Discrimination.

  1. First
  2. Second
  3. Third
  4. Fourth

Solution:

Question : 48

Identify the correct formula for Marginal Revenue (MR) when there is a one-unit change in output.

  1. MRn = TRn – TRn - 1
  2. MRn = TRn + TRn - 1
  3. MRn = TRn x TRn - 1
  4. MRn = TRn / TRn - 1

Solution:

Question : 49

A fast-food chain introduces a new burger with a unique sauce to differentiate itself from competitors. Although many similar burger options exist in the market, customers perceive this product as distinct. Which type of market structure has been represented in given scenario?

  1. Perfect Competition
  2. Monopoly
  3. Monopolistic Competition
  4. Oligopoly

Solution:

Question : 50

In an increase in supply with unchanged demand:

  1. The equilibrium price will go down and the quantity demanded will go up.
  2. The equilibrium price will go up and the quantity demanded will go down.
  3. The equilibrium price will go up and the quantity demanded will remain constant.
  4. The equilibrium price will go down and the quantity demanded will also go down.

Solution:

Question : 51

The cobweb theory was propounded by _____

  1. Hawtrey
  2. Adam Smith
  3. Nicolas Kaldor
  4. None of these

Solution:

Question : 52

Microeconomic theory studies how a free-enterprise economy determines: 

  1. the price of goods
  2. the price of services
  3. the price of economic resources
  4. all of the above

Solution:

Question : 53

Price discrimination to be profitable elasticity of demand in different submarket will be _____ 

  1. Different
  2. Uniform
  3. Zero
  4. None of these

Solution:

Question : 54

In which of the following market situations/forms, firms are able to maximise profits?

  1. Price Leadership 
  2. Cartel
  3. At the Kink Point
  4. Monopolistic Competition

Solution:

Question : 55

Which of the following is a key assumption of the monopoly model? 

  1. Barriers to entry 
  2. A product with several substitutes 
  3. Price-taking behavior
  4. Many identical producers 

Solution:

Question : 56

When actual price of a commodity is less than equilibrium price, its price: 

  1. starts rising 
  2. starts falling 
  3. starts fluctuating
  4. remains constant 

Solution:

Question : 57

Which of the following is correct about Cartel? 

  1. There are few firms 
  2. All of which are similar in size
  3. Most Cartels have only a Subset of producers
  4. All of the above

Solution:

Question : 58

Monopsony means _____

  1. Where there are large firms
  2. There is a single buyer  
  3. Small number of large buyers 
  4. Single seller and single buyer  

Solution:

CA Foundation Business Economics Important Question - Jan 26 - 5

Chapter 5: Business Cycles

Question : 59

In the context of oligopoly, the kinked demand hypothesis is designed to explain

  1. Price and output determination
  2. Price rigidity
  3. Price leadership
  4. Collusion among rivals

Solution:

Question : 60

Which of the following is not an essential condition of pure competition?

  1. Large number of buyers and sellers
  2. Homogeneous product
  3. Freedom of entry
  4. Absence of transport cost

Solution:

Question : 61

Under which of the following forms of market structure does a firm have no control over the price of its product?

  1. Monopoly
  2. Monopolistic competition
  3. Oligopoly
  4. Perfect competition

Solution:

Question : 62

The structure of the cold drink industry in India is best described as

  1. perfectly competitive
  2. monopolistic
  3. monopolistically competitive
  4. oligopolistic

Solution:

Question : 63

Pure oligopoly is based on the ________________ products

  1. differentiated
  2. homogeneous
  3. unrelated
  4. none of the above

Solution:

Question : 64

The firm and the industry are one and the same in _______________ 

  1. Perfect competition
  2. Monopolistic competition
  3. Duopoly
  4. Monopoly

Solution:

Question : 65

Price varies by attributes such as location or by Customer Segment is __________ degree of Price Discrimination.

  1. First
  2. Second
  3. Third
  4. Fourth

Solution:

Question : 66

The Price in Collusive Oligopoly is decided by: 

  1. The Firm 
  2. Price leader 
  3. The Industry 
  4. None of these 

Solution:

Question : 67

Full Capacity is utilized in the which market condition______.

  1. Perfect Competition
  2. Monopoly
  3. Oligopoly
  4. None of these 

Solution:

Question : 68

Excess capacity is not found under ___________

  1. Monopoly
  2. Monopolistic competition
  3. Perfect competition
  4. Oligopoly

Solution:

CA Foundation Business Economics Important Question - Jan 26 - 5

Chapter 6: Determination of National Income

Question : 69

Which one is a component of profit? 

  1. Dividend
  2. Undistributed Profit 
  3. Corporate Profit Tax
  4. All of these

Solution:

Question : 70

Under equation C= a+by, b=0.8, what is the value of 2 sector expenditure multiplier?

  1. 4
  2. 2
  3. 5
  4. 1

Solution:

Question : 71

Find nominal GDP if real GDP = 450 and price index = 120

  1. 500
  2. 450
  3. 540
  4. None

Solution:

Question : 72

The ratio of total consumption to total income is known as: 

  1. Average Propensity to Consume (APC) 
  2. Marginal Propensity to Consume (MPC) 
  3. Saving function
  4. Income function

Solution:

Question : 73

Nominal GDP is:

  1. Same as real GDP
  2. Real GDP less depreciation
  3. GDP at current prices
  4. GDP at constant prices

Solution:

Question : 74

The investment multiplier is defined as the ratio of:

  1. Change in income due to change in saving
  2. Change in demand due to change in investment
  3. Change in consumption due to change in investment
  4. Change in national income due to change in investment

Solution:

Question : 75

The ratio of total consumption to total income is known as: 

  1. Average Propensity to Consume (APC)
  2. Marginal Propensity to Consume (MPC)
  3. Saving function
  4. Income function

Solution:

Question : 76

While using the income method, which of the following income is included while calculating national income?

  1. Capital gains
  2. Windfall profits
  3. Income from sale of second-hand goods
  4. Commissions and brokerages

Solution:

Question : 77

Which organization is primarly responsible for compiling and publishing regional data in India?

  1. Reserve Bank of India (RBI)
  2. National Sample Survey Organisation (NSSO)
  3. Central Statistical Office (CSO)
  4. Ministry of Finance

Solution:

Question : 78

What does the term Y represent in the expression Md = k PY ?

  1. Real National Income
  2. Price level
  3. Money supply
  4. Interest rate

Solution:

Question : 79

The maximum value of investment multiplier will be the infinity when the value of:

  1. MPC is 1.
  2. MPC is -1.
  3. APC is 1.
  4. MPS is-1.

Solution:

Question : 80

There are three different interlinked phases in a circular flow of income, namely:

  1. Production, consumption and disposition
  2. Production, consumption and investment
  3. Production, disposition and distribution
  4. Production, expenditure and disposition

Solution:

CA Foundation Business Economics Important Question - Jan 26 - 5

Chapter 7: Public Finance 

Question : 81

The government's use of proceeds from progressive taxes to supply essential food grains at highly subsidized prices to BPL households is an example of:

  1. Allocation Function
  2. Stabilization Function
  3. Redistribution Function
  4. Production Function

Solution:

Question : 82

The Right of Children to Free and Compulsory Education Act, 2009, which mandates free and compulsory education for every child between the ages of six to fourteen years, is an example of:

  1. Government Intervention in the case of Merit Goods.
  2. Government Intervention in the case of Demerit Goods.
  3. Government Intervention in the case of Public Goods
  4. Government Intervention to correct Externalities.

Solution:

Question : 83

Alex has comprehensive car insurance, which covers the cost of repairs if his car is damaged in an accident. As a result, he drives more recklessly, knowing that his insurance will cover any damages, Over time, he gets into more accidents and files more insurance claims due to his careless driving. This scenario illustrates which of the following concepts?

  1. Moral Hazard
  2. Market Power
  3. Lemon's Problem
  4. Government Interventions

Solution:

Question : 84

Under Article 266(1) of the Constitution of India, which of the following is used in relation to all fund flows where the government acts as a banker?

  1. Public Account
  2. Consolidated Fund
  3. Contingency Fund
  4. State Development Fund

Solution:

Question : 85

______ is defined as the excess of total estimated expenditure over total estimated revenue and is the difference between all receipts and expenditures, both revenue and capital.

  1. Fiscal Deficit
  2. Revenue Deficit
  3. Budgetary Deficit
  4. Primary Deficit

Solution:

Question : 86

Which of the following information regarding the receipts and expenditure of the Government is not presented in the budget documents?

  1. Budget estimates of Current financial year
  2. Budget estimates of the Ensuing financial year
  3. Revised estimates of the Ensuing financial year
  4. Actual expenditure and Income of Current financial year

Solution:

Question : 87

Which of the following is the nodal department for overseeing the public financial management system in the Central Government?

  1. NITI Aayog
  2. Department of Revenue under Finance Ministry
  3. Department of Expenditure under Finance Ministry
  4. Reserve Bank of India

Solution:

Question : 88

The statutory disclaimer that “Mutual Fund investments are subject to market risks please read the offer documents carefully before investing” is which of the following type of government intervention?

  1. Government intervention to correct externalities.
  2. Government intervention for equitable distribution.
  3. Government intervention to correct information failure
  4. Government intervention in case of public goods.

Solution:

Question : 89

During the Budget proceedings, the Speaker of Lok Sabha, once the prescribed time is over, puts all the outstanding demand for grants, whether discussed or not, to the vote of the house. This process is known as:

  1. Cut Motion
  2. Presenting the Appropriation Bill
  3. Outcome Budget
  4. Guillotine

Solution:

Question : 90

Which of the following is not true regarding the fiscal policy of Government?

  1. It is deliberate policy of Government.
  2. An economy producing full employment does not require Government action in the form of fiscal policy.
  3. Taxation policy is part of Fiscal policy
  4. Fiscal Policy is supply side policy.

Solution:

Question : 91

Which of the following are fiscal reforms?

 i. Ensuring better tax compliance
ii. Reinvestment of funds in more profitable options
iii. Encouraging private sector participation
iv. Thrust on curbing government expenditure

  1. Only i and iii
  2. Only i, ii, iii
  3. Only i, iii, iv
  4. Only i, ii, iv

Solution:

Question : 92

Which of the following is an anti-inflationary measure that puts downward pressure on aggregate demand, causing the economy to slow down?

  1. Reduction in government spending.
  2. Increase in government spending
  3. Decrease in interest rates.
  4. Decrease in taxes.

Solution:

Question : 93

What does Article 275 of the Indian Constitution deal with?

  1. Surcharge on certain duties and taxes for purposes of the union.
  2. Statutory grants-in-aid from the union to certain states.
  3. Grants for any public purpose.
  4. Loans for any public purpose.

Solution:

Question : 94

Who introduced the concept of 'collective consumption goods, which later came to be known as public goods?

  1. Milton Friedman
  2. John Maynard Keynes
  3. Paul A. Samuelson
  4. Adam Smith

Solution:

Question : 95

If a government's revenue receipts for a year are ₹ 10,000 crore, capital receipts excluding borrowing are ₹ 2,000 crore, revenue expenditure is  ₹ 12,000 crore and capital expenditure is ₹ 5,000 crore. What is the fiscal deficit?

  1. ₹ 5,000 crore
  2. ₹ 7,000 crore
  3. ₹ 10,000 crore
  4. ₹ 9,000 crore

Solution:

CA Foundation Business Economics Important Question - Jan 26 - 5

Chapter 8: Money Market

Question : 96

 

In an economy, a change in the reserve ratio will directly affect the:

  1. Level of interest rates in the market
  2. Supply of money in circulation
  3. Demand for money at different income levels
  4. Government’s budgetary balance

Solution:

Question : 97

According to the Quantity Theory of Money, if the money supply increases while the velocity of money and output remain constant, the general price level will:

  1. Decrease
  2. Increase proportionately
  3. Stay the same
  4. Increase, but unpredictably

Solution:

Question : 98

The transaction motive for holding money implies that money is held to: 

  1. Make speculative investments in financial markets
  2. Provide liquidity for daily transactions and purchases
  3. Protect wealth against inflationary risks
  4. Save for future investment in assets 

Solution:

Question : 99

Which of the following factors does NOT directly affect the demand for money?

  1. Interest rates
  2. The level of income or output
  3. The price level in the economy
  4. The government’s fiscal deficit

Solution:

Question : 100

Which of the following is NOT a typical tool of monetary policy used by a central bank?

  1. Open market operations
  2. Changing the reserve requirements of commercial banks
  3. Adjusting the tax rates in the economy
  4. Changing the discount rate

Solution:

Question : 101

Which of the following is NOT a part of the money supply in an economy?

  1. Currency held by the central bank
  2. Demand deposits in commercial banks
  3. Saving accounts in commercial banks
  4. Time deposits in commercial banks

Solution:

Question : 102

The function of money that allows individuals to save purchasing power for the future is called:

  1. Medium of exchange
  2. Unit of account
  3. Store of value
  4. Standard of deferred payment

Solution:

Question : 103

Which economist applied capital asset demand theory to money?

  1. Keynes
  2. Tobin
  3. Baumol
  4. Milton Friedman

Solution:

Question : 104

Liquidity Adjustment Facility (LAF) includes:

  1. Only Repo
  2. Repo and Reverse Repo
  3. Only Reverse Repo
  4. None of these

Solution:

Question : 105

Margin requirement specified under instrument of monetary policy: 

  1. Variable reserve requirement 
  2. Statutory liquidity requirement
  3. Selective credit control
  4. Open market operation

Solution:

CA Foundation Business Economics Important Question - Jan 26 - 5

Chapter 9: International Trade

Question : 106

Which of the following is a non-tariff barrier? 

  1. Ad valorem duty
  2. Quotas
  3. Countervailing duty
  4. None of these 

Solution:

Question : 107

Which regime replaced the Foreign Investment Promotion Board (FIPB)?

  1. SEBI
  2. FIF Portal
  3. NITI Aayog
  4. DPIIT

Solution:

Question : 108

Which of the following is the primary objective of bilateral trade agreements?

  1. To create trade barriers between the two countries involved
  2. To establish free trade between two countries by eliminating tariffs and restrictions
  3. To focus on mutual military cooperation between the countries
  4. To standardize monetary policies between two countries

Solution:

Question : 109

If a country’s currency is depreciating, it means that:

  1. The domestic currency is increasing in value relative to foreign currencies.
  2. The country’s exports will become more expensive to foreign buyers
  3. The country’s exports become cheaper for foreign buyers, potentially boosting trade
  4. The central bank is actively increasing the supply of money

Solution:

Question : 110

Which of the following is the most important source of India’s foreign exchange earnings?

  1. Industrial exports
  2. Remittances from Indians working abroad
  3. Tourism
  4. Services exports, especially IT and software

Solution:

Question : 111

FDI in telecom sector is raised to: 

  1. 49%
  2. 51%
  3. 100%
  4. None of these

Solution:

Question : 112

Non -tariff barriers (NTBs) include all of the following except: 

  1. import quotas
  2. tariffs
  3. export subsidies
  4. technical standards of products

Solution:

Question : 113

Which of the following culminated in the establishment of the World Trade Organization?

  1. The Doha Round
  2.  The Tokyo Round
  3. The Uruguay Round
  4. The Kennedy Round

Solution:

Question : 114

The most controversial topic in the yet to conclude Doha Agenda is

  1.  trade in manufactured goods
  2. trade in intellectual property rights-based goods
  3. trade in agricultural goods
  4. market access to goods from developed countries

Solution:

Question : 115

Theory of Mercantilism propagates: 

  1. Encourage exports and imports
  2. Encourage exports and discourage imports
  3. Discourage exports and imports
  4. Discourage exports and encourage imports 

Solution:

Question : 116

According to the Heckscher-Ohlin theory, a country will have a comparative advantage in the production of goods that:

  1. Require labour-intensive techniques if the country has a surplus of capital.
  2. Utilize abundant factors of production that the country has in large supply.
  3. Require advanced technology in which the country is technologically superior.
  4. Require high labour costs in a country with low wages.

Solution:

Question : 117

In the context of trade negotiations, the term “Most-Favoured-Nation (MFN)” status refers to:

  1. A preferential treatment granted to one country over others in trade agreements
  2. The obligation to trade exclusively with a particular country
  3. A policy that allows countries to impose tariffs on imports from specific nations.
  4. A requirement to offer the same trade terms to all trading partners

Solution:

Question : 118

The effects of inflation on the price competitiveness of a country’s products may be offset by:

  1. An appreciation of the currency
  2. A revaluation of the currency
  3. A depreciation of the currency
  4. None of the above

Solution:

Question : 119

What is the primary purpose of an import quota?

  1. To encourage domestic production.
  2. To reduce government spending.
  3. To limit the quantity of imports.
  4. To increase the trade deficit.

Solution:

Question : 120

Which exchange rate regime is adopted by highest no of IMF members

  1. Hard Peg
  2. Floting
  3. Free Floating
  4. Soft Peg

Solution:

CA Foundation Business Economics Important Question - Jan 26 - 5

Chapter 10. Indian Economy

Question : 121

The Indian industry stagnated under the colonial rule because

  1. Indians were keen on building huge structures and monuments only
  2. Deterioration was caused by high prices of inputs due to draught
  3. The Indian manufactures could not compete with the imports of cheap machine made goods
  4. None of the above 

Solution:

Question : 122

The first wave of liberalization starts in India

  1. In 1951
  2. In 1980’s
  3. In 1990
  4. In 1966

Solution:

 

Question : 123

The sequence of growth and structural change in Indian economy is characterized by

  1. The historical pattern of prominence of sectors as agriculture, industry, services
  2. The historical pattern of prominence of sectors as industry, services, agriculture
  3. Unique experience of the sequence as agriculture, services, industry
  4. All the above are correct

Solution:

Question : 124

Imports of foreign goods and entry of foreign investments were restricted in India because -

  1. The government wanted people to follow the policy of’ Be Indian; Buy Indian’
  2. Because foreign goods were costly and meant loss of precious foreign exchange
  3. Government policy was directed towards protection of domestic industries from foreign competition
  4. Government wanted to preserve Indian culture and to avoid influence of foreign culture

Solution:

Question : 125

As per the economic survey 2023-24 the contribution of service sector is _____.

  1. 55%
  2. 60%
  3. 45%
  4. None of these

Solution:

Question : 126

New Industrial Policy was announced on _____.

  1. 24th July 1991
  2. 15th August 1990
  3. 10th January 1995
  4. None of these

Solution:

Question : 127

One of the reasons mentioned below doesn’t justify imposition of tariffs:

  1. It will enhance consumer sovereignty
  2. It helps in curbing BoP deficit.
  3. It raises government revenue.
  4. It is used to protect domestic industry from subsidized imports.

Solution:

Question : 128

What was India’s rank in 2022 as per Global Innovation Index?

  1. 81st
  2. 40th
  3. 63rd
  4. 25th

Solution:

Question : 129

Which government scheme focuses on providing financial support to farmers suffering crop loss or damage?

  1. PM KISAN
  2. Pradhan Mantri Fasal Bima Yojana (PMFBY)
  3. Soil Health Card Scheme
  4. Paramparagat Krishi Vikas Yojana (PKVY)
 

Solution:

Question : 130

In economics, generally the classification of the markets is made on the basis of: 

  1. Time
  2. Geographic area
  3. Both (a) and (b)
  4. None of these 

Solution:

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Yashvardhan Saboo A Story teller, passionate for simplifying complexities, techie. Perfectionist by heart, he is the founder of - Konceptca.

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