Description : 'Marginal efficiency of capital' is - (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
Last Answer : (1) expected rate of return on new investment Explanation: The volume of investment depend upon the following two factors: (1) rate of interest: and (2) marginal efficiency of capital. Before ... partly on expectations of future yields and partly on the actual price of the capital good concerned.
Description : A profit maximizing firm will invest up to the level of investment where (a) The cost of borrowing equals marginal efficiency of capital (b) The cost of borrowing is greater than marginal ... marginal efficiency of capital (d) The cost of borrowing is equal to marginal propensity to consume.
Last Answer : (a) The cost of borrowing equals marginal efficiency of capital
Description : Rate of interest is determined by - (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks
Last Answer : (3) Liquidity preference Explanation: According to the classical view, rate of interest is determined by the interaction of supply of and demand for capital. Thus this theory is popularly called ... higher shall be the rate of interest. The liquidity preference constitutes the demand for money.
Last Answer : (4) Commercial Banks Explanation: Bank Rate is determined by the Reserve Bank of India. The rate of interest is determined by the commercial banks in India. As per RBI notification, banks are free to determine rates of interest subject to BPLR and spread guidelines.
Description : Rate of interest is determined by (1) The rate of return on the capital invested (2) Central Government (3) Liquidity preference (4) Commercial Banks
Last Answer : Liquidity preference
Description : According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations, in the - (1) Marginal efficiency of capital (2) Marginal propensity to save (3) Marginal propensity to consumption (4) Marginal efficiency to investment
Last Answer : (1) Marginal efficiency of capital Explanation: According to Keynes' General Theory of Employment, Interest, and Money,' business cycles are caused by variations in the rate of investment ... efficiency of capital. Marginal efficiency of capital means the expected profits from new investments.
Description : According to Keynes, business cycles are due to variation in the rate of investment caused by fluctuations , in the (1) Marginal efficiency of capital (2) Marginal propensity to save (3) Marginal propensity to consumption (4) Marginal efficiency to investment
Last Answer : Marginal efficiency of capital
Description : Capital : Output Ratio of a 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
Last Answer : (2) the amount of capital invested per unit of output Explanation: Capital output ratio is the ratio of capital used to produce an output over a period of time. This ratio has a tendency to be ... its resources in lieu of capital to boost its output; hence the resulting capital output ratio is low.
Description : 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
Last Answer : (2) the amount of capital invested per unit of output Explanation: Capital Output Ratio is the ratio of capital used to produce an output over a period of time. This ratio has a tendency ... order to increase the output. When countries use their natural resources instead of capital then COR reduces.
Description : 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
Last Answer : the amount of capital invested per unit of output
Description : Keynesian theory of investment is known as ----- (a) Marginal Efficiency of Capital Theory. (b) Marginal Efficiency of Investment Theory. © Optimum Stock of Capital Theory. (d) Actual Stock of Capital Theory.
Last Answer : (b) Marginal Efficiency of Investment Theory.
Description : If $190 is invested at an interest rate of 11% per year and is compounded continuously, how much will the investment be worth in 4 years Use the continuous compound interest formula: A = Pert?
Last Answer : 10001/999900
Description : The internal rate of return - (1) must be less than the interest rate if the firm is to in-vest. (2) makes the present value of profits equal to the present value of costs. (3) falls as the annual yield of an investment rises. (4) is equal to the market interest rate for all the firm's in-vestment.
Last Answer : (3) falls as the annual yield of an investment rises. Explanation: The internal rate of return on an investment or project is the "annualized effective compounded re-turn rate" or discount rate ... the investment equals the net present value of the benefits (positive cash flows) of the investment.
Description : The internal rate of return (1) must be less than the interest rate if the firm is to invest. (2) makes the present value of profits equal to the present value of costs. (3) falls as the annual yield of an investment rises. (4) is equal to the market interest rate for all the firm’s investment.
Last Answer : falls as the annual yield of an investment rises.
Description : As the number of investments made by a firm increases, its internal rate of return - (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will ... the firm for the current consumption foregone. (4) increases because the level of savings will fall.
Last Answer : (3) increases to compensate the firm for the current consumption foregone. Explanation: Internal rates of return are commonly used to evaluate the desirability of investments or projects. The higher a ... of return is greater than an established minimum acceptable rate of return or cost of capital.
Description : As the number of investments made by a firm increases, its internal rate of return (1) declines due to diminishing marginal productivity. (2) declines because the market rate of interest will fall ... firm for the current consumption foregone. (4) increases because the level of savings will fall.
Last Answer : increases to compensate the firm for the current consumption foregone.
Description : The return on investment (ROI) may be calculated as A. Net profit before interest, tax and dividend / Capital employed B. Net profit after interest, tax and dividend / Shareholder's fund C. ( Net profit - preference dividend )/ No. of equity shares D. Return on Investment / Net profit ratio
Last Answer : A. Net profit before interest, tax and dividend / Capital employed
Description : Average Revenue means - (1) the revenue per unit of commodity sold (2) the revenue from all commodities sold (3) the profit realised from the marginal unit sold (4) the profit realised by sale of all commodities
Last Answer : (1) the revenue per unit of commodity sold Explanation: Average revenue is the revenue per unit of the commodity sold. It can be obtained by dividing the TR by the number of units sold. Then, AR = ... of view. Therefore, average revenue curve of the firm is the same as demand curve of the consumer.
Description : Average Revenue means (1) the revenue per unit of commodity sold (2) the revenue from all commodities sold (3) the profit realised from the marginal unit sold (4) the profit realised by sale of all commodities
Last Answer : the revenue per unit of commodity sold
Description : Crowding out means that a. a government budget deficit lowers interest rates and causes investment spending to rise b. an increase in marginal tax rates lowers production c. a government ... spending to fall d. a government budget deficit raises American exports and lowers American imports
Last Answer : c. a government budget deficit raises interest rates and causes investment spending to fall
Description : 10. Crowding out means that a. a government budget deficit lowers interest rates and causes investment spending to rise b. an increase in marginal tax rates lowers production c. a ... investment spending to fall d. a government budget deficit raises American exports and lowers American imports
Description : .An increases in investment is most likely to be caused by (a) Lower interest rates (b) Expectations of lower national incomes © A decrease in the marginal propensity to consume (d) An increase in withdrawals.
Last Answer : (a) Lower interest rates
Description : An increase in investment is caused by (a) Lower interest rates (b) Expectations of lower national income © A decrease in the marginal propensity to consume (d) An increase in withdrawals
Description : The return available by investing the capital elsewhere is known as (A) profit rate (B) discount rate (C) opportunity cost (D) return on investment
Last Answer : (C) opportunity cost
Description : The profit of a company (whose capital is divided into 25‚000 shares of Rs. 10 each) for the last three years are : Rs. 50‚000; Rs. 60‚000 and Rs. 40‚000. The fair return on investment is taken at 10% p.a. The value of company’s share will be– (A) Rs. 10 (B) Rs. 20 (C) Rs. 30 (D) Rs. 40
Last Answer : Answer: Rs. 20
Description : A monopolist is able to maximise his profit when (a) his output is maximum (b) he charges higher prices (c) his average cost is minimum (d) his marginal cost is equal to marginal revenue
Last Answer : (d) his marginal cost is equal to marginal revenue
Description : With regard to the rate of return on investment (ROI), which one of the following statements is not valid ? (A) It is an overall indicator of the profitability of an enterprise (B) It is a ... superior measure compared to the cash flow generated per share (D) It was first developed by Dupont, USA
Last Answer : Answer: It is a superior measure compared to the cash flow generated per share
Description : Which among the following statements is not true when there is an increase in interest rate in an economy? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return
Last Answer : (4) increase in capital return Explanation: Interest rate increase the cost of borrowing, which results in lesser investment activity and the purchase of consumer durables. In a low interest-rate ... . All of these factors raise output and employment as well as investment and consumer spending.
Description : Which from the following is not true when the interest rate in the economy goes up? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases
Last Answer : (4) Return on capital increases Explanation: The interest rate is the cost of demanding or borrowing loanable funds. Alternatively, the interest rate is the rate of return from supplying or lending loanable funds. ... rate per unit of time, which is why it is called the rate of return on capital.
Description : Which among the following statements is not true when there is an increase in interest rate in an economy ? (1) increase in saving (2) decrease in loan (3) increase in production cost (4) increase in capital return
Last Answer : increase in capital return
Description : Which from the following is not true when the interest rate in the economy goes up ? (1) Saving increases (2) Lending decreases (3) Cost of production increases (4) Return on capital increases
Last Answer : Return on capital increases
Description : ___________ can be used as a standard to measure the efficiency of an economy 1. Cash reserve ratio 2. Exchange rate ratio 3. Incremental capital output ratio 4. Profit ratio 5. None of these
Last Answer : Incremental capital output ratio
Description : Three friends started a Company, let there names are P, Qand R. What profit Q will get, if, 1. R invested Rs. 4000 for nine months, his profit was 3/2 times that of Q's and his investment was four times that of P. 2. ... year end. A) Only 1 and 3 B) Only 1 and 2 C) All 1, 2 and 3 D) None of above
Last Answer : Answer: C) 1 and 2 will give : R = Rs. (4000 x 9) for 1 year = Rs. 36000 for 1 year. P = Rs. (1/4 * 4000 * 12 ) for 1 year = Rs 12000 for 1 year Q = Rs 24000 for one year R:P:Q = ... Profit = 500 Now from the ratio and total profit we can get Share of R. R share will be = 500 * 2/6 = 166.66
Description : Two persons P and Q invested in a business with 21 lakh and 28 lakh rupees. They agree that 30% of the profit should be in tha ratio 2:3 for P and Q and rest is divided between them according to their investment ... got Rs.1200 more than P, then then total profit Q is A) 4350 B) 4567 C) 4467 D) None
Last Answer : Answer: A) Ratio of profit of P&Q is, P:Q=21:28 => 3:4 Let total profit gained be X Since ,30% of profit should be divided in ratio 2:3 for P&Q, Remaining share is =70% of x P's share =70/100 *x* ... =1200 X =Rs 7500 Q's total profit =70/100 *7500 *4/7 + 30/100 *7500*3/5 =Rs 4350
Description : Two people abi and krish invested in a business with 7 lakh and 8 lakh rupees respectively. They agree that 46% of the profit should be divided equally among them and rest is divided between them according to their ... more than abi, Then the total profit is, A) 55000 B) 56000. C) 58333 D) None
Last Answer : Answer: C) Ratio of profit abi and krish is, =>7:8 46% of then profit should be divided equally among them, remaining share is 54% of x Abi share =54/100 * x * 7/15 Krish share =54/100 * x* 8/15 54/100 * x * 8/15 - 54/100 * x* 7/15 =2100 X =58333
Description : Gross assets are Rs.1,01,000, fictitious assets Rs.350 are included in the gross assets. External liabilities are Rs.7,500. 6% prefer share capital is Rs.45,000. Equity capital is 4,500 equity shares of Rs.10 each fully ... . The Net Asset Value Per share is A Rs.11 B Rs.10.70 C Rs.15 D Rs.20
Last Answer : Rs.10.70
Description : An investor invested Rs. 5 lakhs in Company Q in 1996. After one year, the entire amount along with the interest was transferred as investment to Company P in 1997 for one year. What amount will be received from Company P, by ... . 5, 80,425 C. Rs. 5, 77,800 D. Rs. 5, 77,500 E. None of these
Last Answer : B. Rs. 5, 80,425
Description : What is meant by 'Capital Gain'? (1) Part of profits added to the capital (2) Appreciation in the money value of assets (3) Additions to the capital invested in a business (4) None of these
Last Answer : (2) Appreciation in the money value of assets Explanation: A capital gain is a profit that results from a disposition of a capital asset, such as stock, bond or real estate, where the ... a capital gain represents an appreciation in value accruing over a prescribed period of time on the asset.
Description : What is meant by ‘Capital Gain’ ? (1) Part of profits added to the capital (2) Appreciation in the money value of assets (3) Additions to the capital invested in a business (4) None of these
Last Answer : Appreciation in the money value of assets
Description : The additional capital used per unit of additional production is called a. Induced investment b. Autonomous investment c. Incremental COR d. None of the above
Last Answer : : c. Incremental COR COR refers to the number of units of capital required to produce one unit of output.
Description : Judging from the PIMS database, Nestle's high market share definitely guarantees the firm a: A)large level of profit. B)high return on investment. C)quality product. D)high level of capital intensity. E)strong market position.
Last Answer : E)strong market position.
Description : Return on investment is determined by … A.Net profit B . capital employed C. Net worth D.Net profit & capital employed
Last Answer : Answer:D
Description : Return of investment is determined by A.Net profit B. Capital employed C. Net worth D.Net profit & capital employed
Last Answer : Answer: D
Description : In a heat treatment shop, steel components are heat-treated in batches of 80 Tons. The heat treatment cycle is as follows; Increase temperature from 30 OC to 850 OC in 3 hours. ... efficiency of 80%, for same requirement. The investment towards installation of the new furnace is Rs. 50
Last Answer : Quantity of steel treated per batch - 80 Tons a. Efficiency of Furnace: Useful heat supplied to steel - 80000 x 0.12 x (850 - 30) = 7872000 kcal/batch .1 mark Total heat ... = Rs. 64400/batch Efficiency of new LPG furnace - 80% Heat supplied in new LPG furnace - 7872000/0.8
Description : Is there a relatively safe way to have a 10% return on invested money in this economy?
Last Answer : eden2eve: I suggest an investment in pine-trees. They take about 45 years to mature but the return is pretty close to 10% over the life of the investment and they are relatively safe. You can lose ... to develop a good relationship with a forester to show you the ropes, mark trees for thinning, etc.
Description : Marginal cost is the - (1) cost of producing a unit of output (2) cost of producing an extra unit of output (3) cost of producing the total output (4) cost of producing a given level of output
Last Answer : (2) cost of producing an extra unit of output Explanation: Marginal cost is the change in total cost that arises when the quantity produced changes by one unit. That is, it is the cost ... , marginal cost at each level of production includes any additional costs required to produce the next unit.
Description : The addition to total cost by producing an additional unit of output by a firm is called (1) Variable cost (2) Average cost (3) Marginal cost (4) Opportunity cost
Last Answer : Marginal cost
Description : Marginal cost is the (1) cost of producing a unit of output (2) cost of producing an extra unit of output (3) cost of producing the total output (4) cost of producing a given level of output
Last Answer : cost of producing an extra unit of output
Description : Producers’ surplus is equal to the difference between (a) Price and Marginal cost curve (b) Price and Marginal (c) Average cost and Marginal cost (d) Total cost and Marginal cost curve
Last Answer : ) Price and Marginal cost curve
Description : Which of the following is Stock concept ? (a) Capital (b) Investment (c) Income (d) Profit
Last Answer : (a) Capital