Economics for Engineers MCQ set-2

1. A person of Rs. 1,10,000 was made for 31 days. The net interest after deducting 20% withholding tax is Rs. 890,36. Find the rate of return annually.

(A) 12.25
(B) 12.75
(C) 11.75
(D) 11.95

2. The present value of ₹ 1 to be received after 3 years compounded annually at 10%

(A) 0.909
(B) 0.826
(C) 0.751
(D) None of these

3. If the inflation rate is 7% per year, market interest rate is 15%, then the real interest rate will be

(A) 7%
(B) 10%
(C) 3%
(D) 12%

4. At the break-even point

(A) Revenue > cost
(B) Revenue < cost
(C) Revenue = cost
(D) No relation between revenue and cost

5. For a project to be financially viable the value of Benefit-Cost Ratio should be

(A) Greater than 1
(B) Less than 1
(C) In between 0 and 1
(D) Negative

6. The period required for the project’s profit or other benefits to equal the project’s cost is called

(A) Investment period
(B) Equalization period
(C) Pay back period
(D) None of these

7. Internal rate of return is an indicator of

(A) Loss of an investment
(B) Profit of an investment
(C) Efficiency of an investment
(D) Depreciation of an asset

8. Annualized capital recovery cost is defined as

(A) C(A/P,i,n)+S(A/F,i,n)
(B) -C(A/P,i,n)+ S(A/F,i,n)
(C) -C(A/P,i,n)-S(A/F,i,n)
(D) C(A/P,i,n)-S(A/F,i,n)

9. IIR stands for the rate of return for which

(A) NPV=0
(B) NPV=1
(C) NPV=-1
(D) NPV is maximum

10. The index which measures prices of a selection of goods and services purchased by a given consumer class is

(A) Consumer Price-Index
(B) Commodity Price Indices
(C) Composite Price Indices
(D) Produceer Price Indices

11. If Index Number for a certain period is equal to 100, then

(A) Price are increasing
(B) Prices are decreasing
(C) Prices remain constant
(D) Change in prices cannot be predicted

12. Demand-pull inflation may be caused by

(A) An increase in costs
(B) A reduction in government spending
(C) A reduction in interest rates
(D) An outward shift in aggregate supply

13. What is the full form of PVIP?

(A) Present Value Income Factor
(B) Present Value Interest Factor
(C) Profit Value Income factor
(D) None of these

14. If actual sales are Rs. 40,000 and BEP sales are Rs. 30,000 the Margin of Safety is Rs.

(A) 70,000
(B) 10,000
(C) 1,40,000
(D) 15,000

15. FVIF_5%3=

(A) 1.050
(B) 1.103
(C) 1.158
(D) 1.216

16. In NPV method, cash flow is generally calculated on the basis of

(A) Present value
(B) Future value
(C) Annunity
(D) None of these

17. What could be the value of present sum for Rs. 10,000 at 8% interset for one year ?

(A) Rs. 9,263
(B) Rs. 9,216
(C) Rs. 9,264
(D) None of these

18. If E₀=optimistic estimate, E_m=most likely estimate, and E_p=pessimistic estimate then the average or mean value of a parameter for economic analysis is given by

(A) (E₀+E_m-E_p)
(B) (E₀+E_m-E_p)/3
(C) (E₀+2E_m+E_p)/4
(D) (E₀+4E_m-E_p)/6

19. Margin of safety is equal to

(A) Actual sales minus BEP sales
(B) BEP sales minus Actual sales
(C) Actual sales minus Actual cost
(D) None of these

20. If A and B are two mutually non-exclusive events, then P(A or B) is

(A) P(A)xP(B)
(B) P(A)+P(B)
(C) P(A)+P(B)-P(A)P(B)
(D) P(A)P(B)-P(A)-P(B)