What is Macroeconomics?

Correct answer: D. When a similar fall occurs in many firms and total output falls

Explanation: The output of one firm is ordinarily a microeconomic matter. It becomes macroeconomically significant when the decline is widespread across industries or firms and reduces aggregate production, income or employment. The key change is from an isolated individual outcome to an economy-wide aggregate effect.

Correct answer: A. An incomplete assessment of the macroeconomic condition

Explanation: Inflation and unemployment are both important macroeconomic indicators, but they describe different dimensions of economic performance. Focusing only on price stability may hide job losses, falling incomes or unused resources. Sound policy evaluation therefore considers several objectives and indicators, including output, employment, inflation and stability.

Correct answer: D. Broad economic weakness resembling a recession

Explanation: A simultaneous fall in output, income and employment indicates a broad contraction in economic activity rather than an isolated market change. Such a pattern is consistent with recessionary conditions, although a formal recession requires an appropriate assessment of duration and national data. It signals weakness in aggregate demand or supply.

Correct answer: A. Demand growth should be assessed together with inflationary pressure

Explanation: Macroeconomic policy aims to support output and employment, but excessive aggregate demand can create demand-pull inflation. Therefore, policymakers must examine both real growth and the general price level. A rise in production is beneficial only if it does not generate destabilising inflation; this is why inflationary pressure must be monitored alongside demand.

Correct answer: B. External-sector stability along with economic growth

Explanation: Macroeconomics studies economy-wide outcomes, not only domestic income or production. If real income increases while the external deficit expands, analysts must examine the balance of payments, foreign-exchange position, import dependence and sustainability of external borrowing. Growth is stronger when it is accompanied by a stable external sector.

Correct answer: C. How the gains from growth are distributed

Explanation: Macroeconomic assessment does not stop at measuring total output. It can also ask who receives the benefits of growth. If output rises but labour receives a smaller share of national income, the distribution of gains, wage conditions, inequality and inclusiveness of growth become important analytical concerns.

Correct answer: A. ₹900 crore

Explanation: Use the expenditure formula: GDP = C + I + G + (X − M). Substituting the values gives 500 + 200 + 150 + (100 − 50) = 500 + 200 + 150 + 50 = 900 crore. Therefore, the correct answer is ₹900 crore. Computing net exports first helps avoid reversing exports and imports.

Correct answer: A. A new phone is current production, whereas resale of an old phone is not current production

Explanation: GDP measures the value of final goods and services produced during the current accounting period. A newly manufactured mobile phone represents current production and its value can be counted when sold as a final good. Reselling an old phone merely transfers ownership of a product made in an earlier period, so its full value is not counted again in current GDP. Any separately produced current resale or brokerage service may be counted.

Correct answer: D. 125

Explanation: The GDP deflator is calculated as (Nominal GDP ÷ Real GDP) × 100. Real GDP is 80% of ₹2,400 crore, so it equals 0.80 × 2,400 = ₹1,920 crore. Hence, the deflator is (2,400 ÷ 1,920) × 100 = 125. Option A represents the real-to-nominal ratio, not the deflator formula, while 100 would indicate equal nominal and real GDP. Therefore, option D is correct.

Correct answer: A. 5 percent

Explanation: Inflation measured by an index is calculated from the percentage change in the index, not merely from the point difference. The GDP deflator rises from 140 to 147, an increase of 7 index points. Therefore, inflation is (147 − 140) ÷ 140 × 100 = 7 ÷ 140 × 100 = 5%. The 7-point change is not a 7% rate, so option A is correct.