Important Questions on Interest (Economics) for all Competitive Exams

Important Questions on Interest (Economics)

Important Questions on Interest (Economics)/ Top Ten question on Interest (Economics) / MCQ’s on Interest (Economics) / Questions asked in previous year exams on Interest (Economics)

Important Questions on Interest (Economics)

Important Questions on Interest (Economics) : ‘Interest’ is one of the main topics in the Economics subject and it is a utmost importance for all those candidates who are preparing for the Government Competitive Exams like UPSC, IAS, PSC, NDA, SSC, CTET/ PSPET/ PTET etc.

Interest: Payment made for the service of capital is called Interest. Capital denotes machines, raw material, buildings, factory premise, hard cash or money. Basically Interest is classified as “Gross and Net Interest” According to classical theory of Interest, Interest is a real phenomenon and its depends upon demand and supply of capital, but Loanable Funds Theory consider monetary factors too in determination of rate of Interest. While Liquidity Preference Theory, propounded a monetary theory of Interest determination.

Important Questions on Interest (Economics)

1. Constituents of Gross interest are:
(A) Reward for risk
(B) Reward of Management
(C) Reward of Inconvenience
(D) All of the above

2. Rate of interest is determined by:
(a) Forces of demand of supply
(b) Forces of saving and investment
(c) Forces of income & consumption
(d) None of these

3. Savings occur when:
(a) Consumption > income
(b) Consumption < income
(c) Consumption = income
(d) Consumption ~ income

4. Demand for capital takes place when:-
(a) Interest > marginal productivity of capital
(b) Interest < marginal productivity of capital
(c) Interest = marginal productivity of capital
(d) None of these

Important Questions on Interest (Economics)

5. Loanable funds theory considers ______ factor for interest determination.
(a) Real
(b) Monetary
(c) Real + Monetary
(d) None of these

6. The term “Reward for parting with liquidity” of interest is given by:
(a) Classical theory
(b) Loanable funds theory
(c) Liquidity preference theory
(d) Neo-classical theory

7. According to Liquidity Preference Theory, Money is demanded for:
(a) Transaction motive
(b) Precautionary motive
(c) Speculative motive
(d) All of the above

8. Rate of Interest is determined where:
(a) Demand = Supply
(b) Demand > Supply
(c) Demand < Supply
(d) Demand <= Supply

9. There is a _____ relationship between rate of Interest and Supply of money.
(a) Direct
(b) Inverse
(c) Equal
(d) All of the above

10. Saving is a function of :
(a) Interest
(b) Income
(c) Expenditure
(d) Demand


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1. d

2. a

3. b

4. b

5. c

6. c

7. d

8. a

9. a

10. b

View Answers





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