Macro Economics Reason Assertion Based Questions
REASON-ASSERTION BASED QUESTIONS
Choose the correct alternative from the following in each question given below:
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true but Reason (R) is false.
(d) Assertion (A) is false but Reason (R) is true
(1) Assertion (A): Marginal propensity to consume tends to fall with rising in the level of income and eventually becomes zero.
Reason (R): A person supports his/ her basic consumption needs from past savings or borrowings.
Ans. (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(2) Assertion (A): Money as a medium of exchange, has overcome the problem of lack of double coincidence under the C-C economy.
Reason (R) Currency has a general acceptance which makes it convenient to use and has segregated buying and selling activities.
Ans. (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(3) Assertion (A): Central Bank as a banker to the government, works as a custodian of cash reserves.
Reason (R): The Central Bank acts as a clearinghouse for the transfer and settlement of mutual claims of commercial banks.
Ans. (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(4) Assertion (A): Capital of balance of payment is non-recurring.
Reason (R): Capital transfer affects the assets and liabilities of a country.
Ans. (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(5) Assertion (A): Depreciations of domestic currency leads to a rise in exports
Reason (R): Rise in demand for domestic goods leads to an increase in the supply of foreign exchange.
Ans. (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(6) Assertion (A): Deflationary gaps reflect the presence of unemployment in an economy.
Reason (R): Full employment doesn’t ensure zero unemployment during a period of time.
Ans. (b) Both Assertion (A) and Reason (R) are true and Reason (R) is not the correct explanation of Assertion (A)
(7) Assertion (A): Commercial banks decide the SLR rate
Reason (R): Central bank does not deal with the public directly.
Ans. (d) Assertion (A) is false but Reason (R) is true
(8) Assertion (A): To increase excess demand Central Bank starts purchasing securities from the open market.
Reason (R): To maintain aggregate demand, RBI uses only a qualitative method.
Ans. (c) (c) Assertion (A) is true but Reason (R) is false.
(9) Assertion (A): Change in taste and preference of Indian consumers towards MNCs and imported goods leads to a decrease in its GDP.
Reason (R): Expenditure on imports of goods is subtracted from final expenditure to estimate GDP.
Ans. (a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)