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Capital - class-XI

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Capital which is invested in the private sector or by people privately is known as ____________.

  1. public capital

  2. private capital

  3. national capital

  4. international capital


Correct Option: B
Explanation:

Private capital refers to that capital which is invested in the private sector or by people privately. This capital is used to generate income for the people operating in the private sector.

_________ capital includes all the private and public capital in a country.

  1. Internal

  2. External

  3. National

  4. International


Correct Option: C
Explanation:

National capital is the total capital in the country. It includes all the public capital as well as the privately owned capital in the economy.

The capital which directly helps in the production of goods, e.g. machines, tools, factories, etc. is termed as ____________.

  1. consumption capital

  2. production capital

  3. private capital

  4. public capital


Correct Option: B
Explanation:

Production capital refers to that capital which is associated with the production mechanism directly. It is used in the process of production in the physical form, i.e, in the form of machines, tools, etc.

When the capital is obtained from foreign countries and used in our country, it is called ___________.

  1. external capital

  2. internal capital

  3. national capital

  4. international capital


Correct Option: A

The capital spent on food, clothing, housing, etc. is termed as __________.

  1. production capital

  2. consumption capital

  3. private capital

  4. public capital


Correct Option: B
Explanation:

Consumption capital is the money set aside for daily consumption purposes.

International Monetary Fund, World Bank, etc. are the examples of __________.

  1. internal capital

  2. external capital

  3. national capital

  4. international capital


Correct Option: D
Explanation:

The capital obtained for investment purposes is obtained from an said international group. 

The capital owned by a group of people or a business, which is run by a family or a group, is known as __________.

  1. collective capital

  2. individual capital

  3. national capital

  4. international capital


Correct Option: A
Explanation:

Collective capital is the capital owned by a group of people or a business, which is run by a group or family. In this case, all the people of the group or family collectively use the benefits derived from the utilization of that capital.

The most important function of capital is to promote the ___________.

  1. economic growth of the country

  2. advertisement of the product

  3. payment of wages to the workers

  4. none of the above


Correct Option: A
Explanation:

Capital is used to produce goods and services and hence is important efficient growth of an economy. 

The supply of capital is increased or diminished by the efforts of man.

  1. True

  2. False


Correct Option: A
Explanation:

Efficiency of labour is directly proportional to the supply of capital in an economy, thus supply of capital is increased or decreased by the efforts of man accordingly.

Higher income of people enables them to save more as compared to lower income.

  1. True

  2. False


Correct Option: A

Capital helps in increasing production and productivity.

  1. True

  2. False


Correct Option: A
Explanation:

Capital helps to improve the production,that is ,the action of transforming things from raw materials to finished products.It also helps in increasing the productivity,that is,the ability to produce things in a more efficient and effective manner.

Capital is not the core of economic development.

  1. True

  2. False


Correct Option: A
Explanation:

Capital is a passive factor of production thus it is not the core of economic development. Economic development of a country depends on several factors including capital.

Capital is a gift of nature.

  1. True

  2. False


Correct Option: B
Explanation:

Capital is man-made and not a free gift of nature. For example, machinery.

Countries like U.S.A. and some western countries have high per capita income, but the people over there have lower savings.

  1. True

  2. False


Correct Option: B
Explanation:

Western countries have high per capita income and thus they have higher savings and investment in their respective economy.

The capital which is invested by the government in public sector is called __________.

  1. private capital

  2. public capital

  3. individual capital

  4. collective capital


Correct Option: B
Explanation:

Public capital refers to the productive assets owned by the government. 

Capital helps in maintaining defence of the country.

  1. True

  2. False


Correct Option: A
Explanation:

Several arms and ammunition is necessary to maintain the defence of the country, which is made with the help of capital such as machines, tools etc.Thus capital helps in maintaining the defence of the country.

When the people are provided with more facilities to mobilize the savings, the people save less and invest less. 

  1. True

  2. False


Correct Option: B
Explanation:

When an economy provides more opportunities to save then people save more, thus in turn investment and rate of capital formation rise.

Lower __________ leads to low savings which lead to a lower rate of capital formation.

  1. per capita income

  2. gross domestic product

  3. development plan

  4. economic instability


Correct Option: A

Besides the level of income, the taxation policies of the government also affect the ability to save.

  1. True

  2. False


Correct Option: A
Explanation:

Even when the income of person is high , he is left with less real income after paying the high taxes levied by the government this then affects both the level of consumption and savings of the person.

When the rates of income tax and sales tax are high, the major portion of the earnings of people goes to the government exchequer and very little remains with people to save and invest.

  1. True

  2. False


Correct Option: A
Explanation:

When high rate of taxes (income tax and sales tax)  are imposed by the government ,the real income of the consumers go down and hence the purchasing power falls so in turn savings of the people falls accordingly.

Capital formation is highly affected by market conditions of boom and depression.

  1. True

  2. False


Correct Option: A
Explanation:

During boom market condition, the economy flourishes,investment rises and thus capital formation rises and during depression period , market sinks down and rate of capital formation falls.

Higher income and low taxation lead to higher rate of capital formation.

  1. True

  2. False


Correct Option: A
Explanation:

Higher income and low taxation  causes the people to save more ,and thus investment rises which in turn leads to higher rate of capital formation.

The prosperity encourages and enhances the saving but depression reduces the saving of people.

  1. True

  2. False


Correct Option: A
Explanation:

The prosperity of a country helps to provide the citizens with more investment channels and thus people tend to save more but during depression period of an economy ,market sinks down and falls into a low -equilibrium trap which results in less investment,less savings and low rate of capital formation.

The inadequate number of investment channels is one of the reasons for low capital formation in India.

  1. True

  2. False


Correct Option: A
Explanation:

Insufficient options to invest in an economy results in low net capital accumulation during a period of time in an economy since the people of that economy is left with very few options to invest.

Plant and machinery are ________.

  1. producer's goods

  2. consumers goods

  3. distributors goods

  4. free goods


Correct Option: A
Explanation:

Plant and machinery are Producers goods. Together with stocks and work in progress, these goods are collectively termed 'Capital'.

What does capital formation mean?

  1. The increase in the stock of real capital in a country

  2. The increase in the supply of money in a country

  3. The decrease in the supply of money in a country

  4. The improvement of technological factors


Correct Option: A
Explanation:

Capital formation means the net accumulation of stock in a country during a particular accounting period.

The term capital in economics means ___________.

  1. factor of production

  2. investment in shares and debentures

  3. funds brought in by the entrepreneur

  4. an important city of the state


Correct Option: A
Explanation:

Capital is used as a factor of production in economics as it helps in production process and helps to increase the productivity.

The cost of capital as a factor of production is expressed in the form of _______.

  1. interest

  2. dividend

  3. rent

  4. wages


Correct Option: A
Explanation:

Interest is known as the cost of capital as a factor of production.For instance, when we keep a certain amount in bank,we get some extra money with the principle amount .This extra amount is known as interest.

In economics we call the buildings, machinery, other equipment used in production as _______.

  1. capital

  2. land

  3. money

  4. none of the above


Correct Option: A
Explanation:

Buildings,machinery,other equipment used in production process -all are regarded as capital in economics as these are fixed assets and helps to increase productivity in an economy.

Which of these Industries falls in the category of capital goods industry?

  1. Mineral

  2. Coal

  3. Petroleum

  4. Machine


Correct Option: D
Explanation:

Machines are the capital goods as machines are used in producing other goods ,rather than being bought by consumers.

Which of these is not a stage of capital formation?

  1. Saving

  2. Mobilization of savings

  3. Investment

  4. Consumption


Correct Option: D
Explanation:
The 3 stages of capital formation-
1)creation of savings
2)mobilization of savings
2)converting savings into investment
Thus,consumption is not included in capital formation process.

In economics, the term 'Capital' means -
I. Money introduced in business
II. Things like tools, machines and equipments.

  1. I only

  2. II only

  3. Both I and II

  4. None of the above


Correct Option: C
Explanation:

Money invested to run an organization and fixed assets like tools,machines,and equipment- both are termed as 'capital' in economics as both help the production process to improve.

Addition to the stock of capital goods in a country means _______.

  1. capital reduction

  2. investment

  3. capital formation

  4. both (b) & (c)


Correct Option: D
Explanation:

Addition to the existing stock of capital leads to increase in investment and capital formation in an economy.

Social overhead capital mainly includes _______.

  1. transport, irrigation, energy, education

  2. health & medical facilities

  3. union of the above two sets

  4. capital employed in agricultural activities


Correct Option: A
Explanation:

Social overhead capital includes all the 'basic' services required in the production process such as,transport,irrigation,energy,education,health and medical facilities.

Over the years the rate of gross capital formation has _______.

  1. increased

  2. decreased

  3. remained constant

  4. has not shown any specific trend.


Correct Option: A
Explanation:

Over the years the rate of accumulation of net capital during a particualar accounting period has increased as the skill and knowledge of labour are increasing day by day ,which in turn is increasing the productive capacity of an economy.

A characteristic feature of capital is _____________.

  1. elasticity

  2. gift of nature

  3. mobility 

  4. All of the above


Correct Option: C
Explanation:

Capital  as a factor of production,possess great mobility as it can be transferred from one place to another instantly.

In Economics, capital includes ______________.

  1. asset

  2. money

  3. entrepreneurship

  4. Both a & b


Correct Option: D
Explanation:

Capital, as a factor of production, includes both assets like machines, equipment, etc and money-which are important to maintain the smooth functioning of the production process.

Which of these constitutes does not constitute "Capital'?

  1. Factory Building

  2. Plant and Machinery

  3. Forests

  4. Dams and Canals


Correct Option: C

Which of these constitutes "Capital'?

  1. Land

  2. Water

  3. Air

  4. Plant and Machinery


Correct Option: D

The number of units of capital required in order to produce one unit of output is termed as:

  1. Capital output ratio

  2. Input output ratio

  3. Investment ratio

  4. Capital input ratio


Correct Option: A
Explanation:

Units of capital employed to produce a certain level of output divided by total units of output gives us the capital output ratio. It is measured in order to check the efficiency and effectiveness of an organization.

Which of the following is an example of working capital?

  1. Tools

  2. Machine

  3. Building

  4. Raw Materials


Correct Option: D
Explanation:

Raw materials and money in hand are called working capital. Unlike tools, machines and buildings, these are used up in production. 

One component of fixed capital is ______.

  1. cash

  2. stock

  3. labour

  4. building


Correct Option: D
Explanation:

Fixed capital is a one-time investment made at the early stages of a business. The fixed capital investment is made to cater the long term needs of a business. 

Raw materials and money in hand are called _____.

  1. Fixed capital

  2. Every thing

  3. Working capital

  4. Human capital

  5. None of these


Correct Option: C
Explanation:

Raw materials and money in hand are called working capital.

Working capital is the capital required by a business on a day to day basis. 

Fixed capital stands for ______.

  1. money with the proprietor

  2. tools, machines, buildings etc. which can be used in production over many years

  3. money deposited in the bank

  4. total share of capital


Correct Option: B
Explanation:

Fixed capital refers to investment in long-term assets. Management of fixed capital involves the allocation of the firm’s capital to different projects or assets with long-term implications for the business. For example, tools, machines, buildings, etc. which can be used in production over many years. 

What are 'raw materials and money in hand' called?

  1. Working capital

  2. Fixed capital

  3. Physical capital

  4. Human capital


Correct Option: A
Explanation:

Working capital  is a financial metric which represents operating liquidity available to a business, organization or other entity, including governmental entity. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. Gross working capital equals to current assets. Working capital is calculated as current assets minus current liabilities. If current assets are less than current liabilities, an entity has a working capital deficiency, also called a working capital deficit.

Those hidden qualities in a person which earn him an income and cannot be transferred from one place to another are called ________.

  1. trade capital

  2. social capital

  3. human or personal capital

  4. fixed capital


Correct Option: C
Explanation:

Human capital belongs to that person itself, it cannot be delegated or transferred from one person to another. It is an individual's effort and potential talent coinciding with the availability of proper opportunity which helps them to earn income.

Capital includes all those goods (items or commodities) which are used for further production of more goods, e.g. _______________.

  1. machines and tools

  2. factory buildings

  3. transport equipments

  4. all the above


Correct Option: D
Explanation:

Capital goods are generally a long term investment as it is used to produce many different products. 

What is meant by individual capital?

  1. Owned by the society.

  2. Owned by one person.

  3. Owned by a group of people.

  4. Owned by the government.


Correct Option: B
Explanation:

Individual capital refers to the capital owned by one person/individual. Summation of all the individual capital in an economy is termed as the national capital, which determines the status of an economy.

Capital is an indispensable factor of production.

  1. True

  2. False


Correct Option: B
Explanation:

Capital is an indispensable factor of production as it supervises other factors of production,Also it is the human capital which makes the profit possible.

What is remunerative capital?

  1. Capital provided to the government

  2. Capital provided to private companies

  3. Capital provided to workers in the form of wages

  4. Capital provided to the society


Correct Option: C
Explanation:

Remunerative capital refers to the payment made to the workers for their contribution to production. It is a capital provided to workers in the form of wages. E.g. salaries, wages, allowance for food etc.

The __________ capital helps a labourer to produce goods.

  1. collective capital

  2. individual capital

  3. auxiliary capital

  4. concrete capital


Correct Option: C
Explanation:


Auxiliary means to help or helping hence auxiliary capital helps laborers produce goods. 

Give an example of a sunk capital.

  1. A textile weaving machine

  2. Photographic films

  3. Railways

  4. Wool


Correct Option: A

Capital ____________ over a period of time. 

  1. appreciates

  2. depreciates

  3. compensates

  4. demonstrates


Correct Option: B

Circulating capital is directly absorbed into the finished products.

  1. True

  2. False


Correct Option: A
Explanation:

Capital gets circulated and all results into the finished products as capital holds enough significance in the functional relationship between inputs and outputs produced in an economy during a given period of time.

Amongst all the factors of production, _________ has the highest mobility.

  1. land

  2. labour

  3. capital

  4. entrepreneurship


Correct Option: B
Explanation:

LAbour has the highest mobility, hence migrating from one place to another is very common.

The functions of capital include provision for subsistence, provision for appliances, _______.

  1. provision for raw material

  2. provision for marketing and sales promotion

  3. economic development

  4. all the above


Correct Option: D
Explanation:

Capital has a large set of effects and is generally used for multiple purposes. 

Those producer goods having a long life which can be used again and again in production processes are called ___________.

  1. trade capital

  2. fixed capital

  3. social capital

  4. human capital


Correct Option: B

The saving by individuals depends more or less upon ___________.

  1. ability (or power) to save

  2. willingness (or desire) to save

  3. opportunity to save

  4. all the above


Correct Option: D

The rate of capital formation is the ratio between the gross capital formation and gross domestic product at current prices.

  1. True

  2. False


Correct Option: A
Explanation:

The rate of capital formation is the ratio between (the increase in fixed capital and inventories) and (the total value of good produced and services provided in a country during one year).

An increase in income tax adversely affects the willingness to save.

  1. True

  2. False


Correct Option: A
Explanation:

This statement is true as persons feel demotivated to work hard in order to earn more as because the real income after paying the increased income tax is much less despite the hard work of the individuals .Therefore the willingness to save is also less as the willingness to earn more is less.

The opportunity to save refers to the conditions of ___________.

  1. peace and security in the country

  2. favorable political inducement policy of the government to motivate people to save

  3. both A and B

  4. none of the above


Correct Option: C
Explanation:

Peace and financial security in the economy is necessary to create an environment where the general public experiences an opportunity to save. Moreover, there is a need for favorable political inducement by the government through its policies to motivate people to save.

Which of the following is the suggestion to increase the rate of capital formation?

  1. The taxation policy should be revised and adequate tax reliefs should be allowed to salaried persons and industrialists.

  2. Saving schemes like provident fund, compulsory insurance, compulsory deposits, etc., should be encouraged and extended.

  3. The law and order condition in every part of the country should be improved and security of life and property must be ensured

  4. All of these


Correct Option: D

The process of capital formation occurs in three stages.

  1. True

  2. False


Correct Option: A
Explanation:
The 3 stages of capital formation are as follows;
1)creation of savings;increase in the volume of savings
2)mobilization of saving;credit and financial mechanism so that available savings are utilized by private and public sectors
3)investment of savings:the act of investment by which resources are used for production of capital goods.

Who create the savings from an economic point of view?

  1. Individuals

  2. Banks

  3. Markets

  4. None of these


Correct Option: A

"Larger the volume of saving, larger the size of capital, smaller the volume of saving, less is the size of capital." Who said this? 

  1. Prof. Marshal

  2. Peterson

  3. Adam Smith

  4. Benham


Correct Option: A
Explanation:

The economy falls into a growth cycle-more savings lead to more investment, thus large capital availability in an economy, which will further lead to the upliftment of an economy. Prof. Marshal remarked this thought.

In which countries the extensive use of machinery and tools has yielded higher production?

  1. U.S.A.

  2. U.K.

  3. Japan

  4. All of these


Correct Option: D

Which of the following are true or false?
a) Capital formation means the increase in the stock of real capital in a country 
b) Saving is not essential for capital formation

  1. Both (a) and (b) are true

  2. (a) is true, but (b) is false

  3. (a) is false, but (b) is true

  4. Both (a) and (b) are false


Correct Option: B
Explanation:
1)Capital formation refers to the net capital accumulation during an accounting period for a particular area.Thus 1st statement is true.
2)Savings is essential for capital formation as savings leads to investment in an economy which in turn leads to more capital formation.

What is marginal efficiency of capital ?

  1. Expected rate of return on new investment

  2. Expected rate of return of existing investment

  3. Difference between rate of profit and rate of interest

  4. Value of output per unit of capital invested


Correct Option: A
Explanation:

It is calculated in order to make the future prediction and to check the efficiency of the return which the investors will receive when they will invest in that new investment opportunity.It is extremely important in order to draw more shareholders in the financial market.

Capital-output ratio of a commodity measures ________. 

  1. its per unit cost of production

  2. the amount of capital invested per unit of output

  3. the ratio of capital depreciation to quantity of output

  4. the ratio of working capital employed to quantity of output


Correct Option: B
Explanation:

Capital-output ratio is measured by calculating the proportion of capital investment needed to produce one unit of output. Capital-output ratio helps to determine the productivity of the economy.

Capital-Output Ratio measures ________.

  1. its per unit cost of production

  2. the amount of capital invested per unit of output

  3. the ratio of capital depreciation to quantity of output

  4. the ratio of working capital employed to quantity of output


Correct Option: B
Explanation:

It is the amount of capital needed to produce one unit of output.

It represent the proportionate change in the amount of investment due to a fixed capital investment in an economy in a particular period of time.

In the short run which of the following is fixed?

  1. Labor

  2. Capital

  3. Raw material

  4. None of the above


Correct Option: B
Explanation:

In short run period(which generally means period within 1 year)capital remains fixed as capital formation needs high investment and moreover in short run even when the output is zero some fixed cost is incurred by the firm due to capital .

Labour intensive technique would get chosen in a _______.

  1. Labour surplus economy

  2. Capital surplus economy

  3. Developed economy

  4. Developing economy


Correct Option: A
Explanation:

The economy has to decide about technique of production on the basis of cost of labour and capital. A labour surplus economy choose labour intensive techniques and a capital surplus economy choose capital - intensive technique.

Find the odd option out.

  1. Capital is man-made

  2. All capital is wealth

  3. Capital is durable

  4. Mobilisation of savings


Correct Option: D
Explanation:

Capital is that wealth which is used in the production of goods and services in an economy: capital and human resource have an integrated  relationship:capital has to withstand wear ,pressure, damage etc.MOBILISATION OF SAVINGS is the odd one as it is not a feature of capital

Capital that can be used for several purposes or by several industries is ___________.

  1. working capital

  2. social capital

  3. floating capital

  4. human capital


Correct Option: C
Explanation:

Floating capital can be used for many purposes or by several industries. It is a part of capital that is invested in current assets of the organization, like raw materials.

Leather in a shoe factory is _______.

  1. fixed capital

  2. sunk capital

  3. floating capital

  4. circulating capital


Correct Option: C
Explanation:

Floating capital refers to the raw material part of the capital also known as working capital which can be used in many ways in the factory. Therefore, leather in a shoe factory is a floating capital.

Machines and tools are included in ________.

  1. circulating capital

  2. fixed capital

  3. floating capital

  4. sunk capital


Correct Option: B
Explanation:

Machines and tools are fixed capital  they are fixed assets(assets which are purchased for long term use and are not likely to be converted quickly into cash)

Consider the following groups of items:
(i)Factory buildings
(ii)Plant and Machinery
(iii) Stocks of raw materials

(iv)Wage bills
Which of these are known as working capital?

  1. i and ii

  2. iii and iv

  3. i, ii and iii

  4. ii, iii and iv


Correct Option: B
Explanation:

Working capital refers to those goods which are used to run the day-to-day activities in an organization. Thus stocks of raw materials and wage bills comprise the working capital.

In economics, the term 'capital' means-
I. Money introduced in business.
II. Things like tools, machines & equipment.
Select the correct answer from the options given below-

  1. I only

  2. II only

  3. Both I and II

  4. None of the above


Correct Option: C
Explanation:

Capital is the overall investment that is done in the business which is used either in the form of money or converted into assets, like tools, machines and equipment which are used productively to yield output.

What does venture capital mean?

  1. A short-term capital provided to industries

  2. A long-term start-up capital provided to new entrepreneurs

  3. Funds provided to industries at times of incurring losses

  4. Funds provided for replacement and renovation of industries


Correct Option: B
Explanation:

Entrepreneurs with ideas but lacking capital seek funds through the 'venture capital funds', In the RBI's classification such funds fall under Alternative Investment Funds (AIFs).

Which of the following statements is correct?

  1. Robbins defined economics in the form of welfare economics.

  2. The law of demand is always true.

  3. All capital is wealth, but all wealth is not capital.

  4. None of the above.


Correct Option: C
Explanation:

Capital is a part of wealth which can be utilized for supplementary production of wealth. Hence, all money/wealth is not said to be capital, but only that which is engrossed in generation of more income.
Law of demand has certain exceptions. While, Robbins defined economics under the scarcity approach.

All Wealth is Capital, but all Capital is not Wealth. This statement is _____________.

  1. True

  2. False

  3. Partially True

  4. None of the above


Correct Option: B

If a Resource is lying idle, it will constitute ______________.

  1. Wealth

  2. Capital

  3. Both (a) and (b)

  4. Neither (a) nor (b)


Correct Option: A

All Capital is Wealth, but all Wealth is not Capital. This statement is ____________.

  1. True

  2. False

  3. Partially True

  4. None of the above


Correct Option: A

As a Factor of Production, "Capital" can be used for _______________.

  1. Further production of wealth

  2. Yielding further income

  3. Both (a) and (b)

  4. Neither (a) nor (b)


Correct Option: C

The process of increase in the stock of real capital in a country is called ______________.

  1. Stock Increase

  2. Capital Formation

  3. Increase in GDP

  4. Resource Allocation


Correct Option: B

"Capital" is considered as a "produced means of production". This statement is _________________.

  1. True

  2. False

  3. Partially True

  4. None of the above


Correct Option: A

As a Factor of Production, "Tools and Accessories" constitute ___________________.

  1. Land

  2. Labour

  3. Capital

  4. Enterprise


Correct Option: C

Capital $\neq$ Wealth. This statement is ______________.

  1. True

  2. False

  3. Partially True

  4. None of the above


Correct Option: B

If a Resource is being used for generating further revenue, it will constitute _______________.

  1. Wealth

  2. Capital

  3. Both (a) and (b)

  4. Neither (a) nor (b)


Correct Option: C

Income arising out of "Capital" is a ________ concept.

  1. Stock

  2. Flow

  3. Both (a) and (b)

  4. Neither (a) nor (b)


Correct Option: B

As a Factor of Production, "Capital" is _________________.

  1. A free gift of nature

  2. Produced by man alone

  3. Produced by the man working with nature

  4. Not relevant at all.


Correct Option: C

As a Factor of Production, "Capital" is a ________ means of Production.

  1. Original

  2. Primary

  3. Produced

  4. Monetary


Correct Option: C

Capital Formation is required for _____________________.

  1. Replacement and renovation of existing machinery and equipments

  2. Creating additional productive capacity

  3. Both (a) and (b)

  4. Neither (a) nor (b)


Correct Option: C

As a Factor of Production, "Capital" is a ________ concept.

  1. Stock

  2. Flow

  3. Both (a) and (b)

  4. Neither (a) nor (b)


Correct Option: A

If current consumption is reduced for the purpose of Capital Formation, that represents a _________________.

  1. Uneconomic activity

  2. Current sacrifice for future growth

  3. Decrease in demand

  4. Decrease in resources


Correct Option: B

Larger production of ____________ goods would lead to higher production in future.

  1. consumer 

  2. capital 

  3. agricultural 

  4. public 


Correct Option: B
Explanation:

An increase in the stock of capital goods, which are used for the production of consumer goods, will lead to increased production of consumer goods and enhance the future production output.

For the purpose of Capital Formation _____________________.

  1. Current consumption is to be sacrificed to a certain extent

  2. Current income should be saved

  3. Both (a) and (b)

  4. Neither (a) nor (b)


Correct Option: C

A 100% Consumption Economy ______________________.

  1. Cannot have any Capital Formation

  2. Will become static and cannot grow

  3. Both (a) and (b)

  4. Neither (a) nor (b)


Correct Option: C

Capital Formation is possible by _______________________.

  1. Using whole of the current capacity to produce only Consumer Goods

  2. Reducing present consumption to a certain extent

  3. Both (a) and (b)

  4. Neither (a) nor (b)


Correct Option: B

Capital Formation is required for _________________.

  1. Increasing the efficiency of production efforts

  2. Expansion of output of consumer goods in the future.

  3. Ensuring growth of the economy

  4. All the above


Correct Option: D

Ability to Save depends upon _________________.

  1. Average level of income

  2. Distribution of national income.

  3. Both (a) and (b)

  4. Neither (a) nor (b)


Correct Option: C

For the purpose of Capital Formation, which of the following create "Savings" in an economy?

  1. Individuals or Households

  2. Business Enterprises

  3. Government

  4. All of the above


Correct Option: D

Which of these is a source of savings for Government?

  1. Tax and Fees Collections

  2. Profits of PSUs

  3. Both (a) and (b)

  4. Neither (a) nor (b)


Correct Option: C

Capital Formation involves ___________________.

  1. Creation of Savings

  2. Mobilisation of Savings

  3. Investment of Savings into Real Capital

  4. All of the above


Correct Option: D

Real Capital Formation requires ___________________.

  1. An entrepreneurial class which is prepared to bear the risk of business

  2. Economic and industrial policies in which Investment is given initiative

  3. An inducement to invest, e.g. prospective rate of profit

  4. All of the above


Correct Option: D

Inducement to Invest is influenced by _______________________.

  1. Prospective Rate of Profit

  2. Rate of Interest

  3. Both (a) and (b)

  4. Neither (a) nor (b)


Correct Option: C

In the pre-reforms period (i.e. before 1991), import permission was available primarily for _______________.

  1. Consumer Goods

  2. Capital Goods

  3. Both (a) and (b)

  4. Neither (a) nor (b)


Correct Option: B

Under Cobb- Douglas production function contribution of capital and labour respectively _________________.

  1. $3/4^{th} , 1/4^{th}$

  2. $1/4^{th} , 3/4^{th}$

  3. 1/2, 1/2

  4. none of the above


Correct Option: B

In the pre-reforms period (i.e. before 1991), import permission was available primarily for ________________.

  1. Capital Equipment

  2. Machinery

  3. Industrial Raw Material

  4. All of the above


Correct Option: D

Gross capital formation in India is very ___________.

  1. high

  2. low

  3. uncertain

  4. dynamic


Correct Option: B

Which capital includes durable consumer goods, inventories and intermediate goods?

  1. Human capital.

  2. Physical capital.

  3. External capital.

  4. Floating capital.


Correct Option: D

"Capital is the produced means of production". Who gave this definition?

  1. Bohm Bawerk

  2. J.K. Hicks

  3. Von Sickle and Roger

  4. Prof. Samuelson


Correct Option: A
Explanation:

Bohm Bawerk proclaimed that "Capital is the produced means of production". Capital is already a produced means as other factors of production are used to produce capital in an economy.

Which of the following is/are the stages of capital formation?

  1. Creation of savings

  2. Effective mobilization of savings

  3. Investment in savings

  4. All of these


Correct Option: D
Explanation:
The three stages of capital formation are:-
1) Creation of savings-Collective savings of individuals in an economy leads to creation of savings.
2) Effective mobilization of savings-Savings should be properly allocated to different purposes.
3) Investment in savings-Savings should be properly invested by the economy which will yield better productivity and help to increase the rate of existing capital formation.

Why is capital a passive factor of production?

  1. Because it becomes ineffective without cooperation of labour

  2. Because it becomes ineffective without land

  3. Because it becomes ineffective without entrepreneurs

  4. Because it becomes ineffective without natural resources


Correct Option: A
Explanation:

Without the presence of labour factor of production ,capital is of no use,hence capital is a passive factor of production. Without labour , capital will not get utilized in the production mechanism. Capital without the accompany of the labour cannot produce any goods and services in an economy.

Capital Formation means ___________________.

  1. A sustained increase in the stock of real capital in a country.

  2. Production of more capital goods, which are used for further production of goods.

  3. Investment

  4. All of the above


Correct Option: D
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