MCQs- CHAPTER 5- ECONOMIC ANALYSIS

Savings refer to income that is not spent and can be used to finance investments. Investments involve channeling savings into productive ventures to generate further earnings.

Higher levels of savings and higher conversion into investments contribute to economic stability and growth by providing funds for productive activities, job creation, and overall economic development.

Microeconomics is the study of how individuals and firms make decisions and how they interact in markets. It focuses on the factors that influence supply and demand in an economy, including unemployment rates, GDP, overall price levels, inflation, savings rate, and investment rate.

Inflation is defined as the general increase in price levels, which leads to a decrease in the purchasing power of money over time.

Unemployment rate represents the proportion of people who are actively seeking employment but are currently without a jo

Fiscal policy refers to the measures taken by the government to manage its expenditure and revenue, which influence the overall economic activity in the country.

Demand pull inflation occurs when the demand for goods and services exceeds the available supply, leading to an increase in their prices.

Consumer Price Index (CPI) measures inflation at the retail level by computing the prices of a basket of products based on general consumption in the economy.

Fiscal deficit refers to the budgeted excess of government's expenditure over its revenue in a specific year.

Microeconomics focuses on understanding individual decision-making and how it affects the overall supply and demand of goods and services in an economy.

National income can be measured using three methods: Product Method, which measures the output produced by all sectors of the economy; Income Method, which measures the income earned by all factors of production; and Expenditure Method, which measures the total expenditure on goods and services produced in the economy.

Higher inflation motivates people to save more, which increases the demand for higher interest rates.

National income can be measured using different methods: the Product Method measures the aggregate flow of goods and services, the Income Method measures the aggregate income of individuals, and the Expenditure Method calculates the aggregate demand for goods and services.

The government and central bank are two major influencers of public policies in an economy. The government formulates policies related to taxation, public expenditure, subsidies, et, while the central bank deals with monetary policies, interest rates, inflation, et

Macroeconomics deals with the overall functioning of the economy, including factors such as unemployment rates, GDP, price levels, and government policies.

FDI refers to investments where participating entities have decision-making control, while FPI involves investments in markets without management participation.