Question

Write True or False: 

(i) Investment is defined as addition to the stock of physical capital. 

(ii) Foreign Exchange Rate also called Forex Rate. 

(iii) Law of demand is also applicable on Giffen's goods. 

(iv) Fixed cost is also known as supplementary cost. 

(v) Variable cost can be zero. 

(vi) The perfect competition consists of a large number of buyers and sellers. 

(vii) Full employment never means zero unemployment.

Hint:

Remember, Giffen goods are exceptions to the law of demand, and fixed costs do not vary with production levels.

Answer 1

Step 1: Understanding each statement. 
- (i) Investment is indeed the addition to physical capital, so this statement is True. 

- (ii) The Foreign Exchange Rate is often called Forex rate, so this is also True. 

- (iii) The law of demand does not apply to Giffen goods, where the demand increases with an increase in price. This is False. 

- (iv) Fixed cost is not referred to as supplementary cost; it remains constant regardless of output. This is False. 

- (v) Variable cost is directly related to production, and it cannot be zero unless no production occurs. This is False. 

- (vi) Perfect competition indeed consists of a large number of buyers and sellers. This is True. 

- (vii) Full employment doesn't mean zero unemployment, as frictional and structural unemployment still exists. This is True.
 

Step 2: Conclusion.
The answers are: (i) True, (ii) True, (iii) False, (iv) False, (v) False, (vi) True, (vii) True.