TEST- ECONOMICS

CLASS: 12th DATE: 12/1/2025

MULTIPLE CHOICE QUESTIONS (MCQs)

Q.1.Which of the following is a phase of circular flow of income?
(a) Generation Phase (b) Distribution Phase
(c) Disposition Phase (d) All of these
Q.2.Which of the following is not an example of flow variable?
(a) Number of births during a year (b) National wealth
(c) National Income (d) Wheat produced during a year
Q.3.Which of the following is not considered a factor income?
(a) Rent (b) Wages
(c) Gifts from abroad (d) Profit
Q.4. Two- sector economy consists of:
(a) Households, firms (b) Firms, Foreign sector
(c) Households, Government (d) Firms, Government
Q.5. Stock variable is defined as a variable which is :
(a) Measured over a period of time (b) Measured at a particular point of time
(c) Cannot be measured (d) None of these
Q.6. Losses are classified as:
(a) Stock variable (b) Flow variable
(c) Either (a) or (b) (d) Neither (a) nor (b)
Q.7. Real flow is also known as :
(a)Nominal flow (b) Physical flow
(c) Money flow (d) Both (a) and (b)
Q.8. Which of the following sector is not included in a two- sector economy?
(a) Government (b) Firms
(c) Households (d) All of these
Q.9. Money flow involves exchange of:
(a) Goods and services (b) Gifts
(c)Money (d) None of these
Q.10. Real flow refers to the flow of factor services from_________
(a) Firms to households (b) Households to firms
(c) Firms to government (d) Households to government
Q.11. In a closed economy,__________ is not included.
(a) Households (b) Firms
(c) Government (d) Foreign sector
Q.12. Which of the following is not a flow?
(a) Capital (b) Income
(c) Investment (d) Foreign sector
Q.13. Which of the following is a stock?
(a) Wealth (b) Saving
(c) Exports (d) Profits

Q.14. Which of the following diagram represents Real Flow?

Q.15. What does the following diagram represent ?

(a) Real Flow (b) Money Flow

(c) Nominal Flow (d) Both (b) and (c)
Q.16. Circular Flow of Income is correctly represented in the diagram:

Q.17. Which of the following is a flow?

(a) Deposits in a bank (b) Capital
(c) Depreciation (d) Wealth
Q.18.Whcih of the following is a stock?
(a) Savings (b) Production
(c) Consumptions of fixed capital (d) Capital
Q.19. Flow of Goods and services and factors of production across different sectors in a batter economy is known as:
(a) Circular Flow (b) Real Flow
(c) Monetary Flow (d) Capital Flow
Q.20. Continuous sectoral flow of goods and money is an economy is known as _________.
(a) Real Flow (b) Nominal Flow
(c) Circular Flow (d) None of these
Q.21. In a two-sector economy,___________ depend on ___________ for supply of factor services.
(a) Firms, Households (b) Households, Firms
(c) Firms, Government (d) Government, Households
Q.22. Which of the following is included in Real Flow?
(a) Flow of Services (b) Flow of Goods
(c) Both (a) and (b) (d) Flow of Money
Q.23. Inventory is a ________ concept , whereas the change in inventory is a ____________ concept.
(a) Stock ,Flow (b) Flow of Goods
(c) Both (a) and (b) (d) Flow of Money
Q.24. Which of the following is considered as ‘Real Flow’ in the Circular Flow of Income?
 (a) Flow of factor services form households to firms
(b) Flow of goods and services from firms to households
(c) Both (a) and (b)
(d) Flow of factor payment from firms to households
Q.25. In a two sector economy, firms depend on the households for supply of:
(a) Goods and Services (b) Factor Inputs
(c) Both (a) and (b) (d) None of these
Q.26. Which of the following is considered as a part of nominal flow in the circular flow of income?
(a)Flow of goods and services from firms to households
(b) Flow of factor payments from firms to household
(c) Flow of factor services form households to firms
(d) All of these
ASSERTION REASON QUESTIONS (ARQs)
Read the following statements: Assertion (A) and Reason (R) . Choose one of the correct alternatives given below:
Alternatives:
(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): Savings are zero is case of two-sector economy.
Reason (R): Households spend the entire factor income received from firms on consumption of goods and services.
2.Assertion (A): Stock variable does not have a time dimension.
Reason (R): Stock variable is measured over a period of time.
3. Assertion(A): Total production is equal to total consumption in case of circular flow in a two-sector economy.
Reason (R): Household sector supplies factor services only to firms and the firms hire factor services only from
households.
4. Assertion (A): Real Flow is also known as Nominal Flow
Reason (R): Real Flow involves flow of goods and services between firms and households.
Statement Based Questions
Read the following statements carefully and choose the correct alternative from the following:
Alternatives:
(a) Bothe the statements are true
(b) Both the statement s are false
(c) Statement 1 is true and Statements 2 is false
(d) Statement 2 is true and Statement 1 is false.
1. Statement 1: Real Flow involves exchange of goods and services
Statement 2:Real Flow is also known as Normal Flow.
2. Statement : In a two –sector economy with households and firms, there are no savings in the economy.
Statement: Real Flow in the form of factor services and final goods and services is equal to money flow between firms
and households in a two – sector economy.
3.Statement 1: Circular flow of income does not take place in case of closed economy.
Statement2: Flow of income is circular in a two-sector economy,
4. Statement 1: Real flow refers to the flow of factor services from firms to households.
Statement 2: Flow of goods and services and factors of production across different sectors in a labour economy is known
as capital flow.
5.Statement 1: Floe variable is measured over a period of time.
Statement 2: National Income is a flow variable.
 QUESTION AND ANSWERS
Q.1. Explain the circular flow of income.
Or
Explain Circular Flow of Income is a two sector economy.
Q.2. What are the different phases of a circular flow of income?
Q.3. Distinguish briefly, the circular flow of income in a two sector economy with the help of a suitable diagram.
Q.4. Distinguish between stocks and flows. Give an example of each.
Q.5. Briefly explain the money flow and the real flow of income.