Economics Questions (MCQs) for Competitive Examinations
Economics Multiple Choice Questions (MCQs) for General Studies and GK preparation of SSC, NDA, CDS, UPSC, UPPSC and State PSC Examinations.
1. A systematic record of all economic transactions completed between residents of a country and the rest of the world in a year is known as..?
[A] Net Capital Flow
[B] Balance of Payment
[C] Balance of Trade
[D] Absolute Flow
Show Answer
Correct Answer: B [Balance of Payment]
Notes:
The Balance of International payments or Balance of Payments refers to the systematic and summary record of a country’s economic and financial transactions with the rest of the world, over a period of time.
The three main components of BoP are Current Account, Capital Account and Official Reserve Transactions
2. Which among the following is the branch of economics that deals with the performance, structure, and behavior of the economy of the entire community, either a nation, a region, or the entire world?
[A] Heterodox approaches
[B] Micro Economics
[C] Macro Economics
[D] All of the above
Show Answer
Correct Answer: C [Macro Economics]
Notes:
Macroeconomics is a branch of economics, which deals with how an economy functions on a large scale. It deals with the structure, and behavior of the economy of either a region, country or the whole world.
3. If a commodity has more number of substitutes, the demand for this commodity will be _______?
[A] more elastic
[B] less elastic
[C] inelastic
[D] perfectly elastic
Show Answer
Correct Answer: A [more elastic]
Notes:
Substitute goods are those goods which can be used in place of each other. Examples of substitute goods are : tea and coffee; ghee and edible oil. In case of substitute goods like tea and coffee, demand for a commodity falls with a fall in the price of other substitute goods.
4. A monopolist will be able to maximize his profits when _________?
[A] His output is maximum
[B] He charges a Higher price
[C] His average cost is minimum
[D] His marginal cost is equal to the marginal revenue
Show Answer
Correct Answer: D [His marginal cost is equal to the marginal revenue]
Notes:
A monopolist can maximize profits when the marginal cost is equivalent to the marginal revenue. This strategy is implemented because the greatest profit occurs at the output level where the difference between total revenue and total cost is the greatest. This ensures economic efficiency and profit gains for the monopolist.
5. Which one of the following is NOT a sign of economic development?
[A] Changing structure of GDP in favour of industry
[B] Larger share of GDP coming from primary sector
[C] Larger capital inflows
[D] Institutional changes in an economy.
Show Answer
Correct Answer: C [ Larger capital inflows ]
Notes:
Larger capital inflows are not always sign of economic development.
6. Which of the following is not included in the calculation of national income?
[A] Value of annual goods production
[B] Value of annual services
[C] Value of old goods sold
[D] Value of new technology
Show Answer
Correct Answer: D [Value of new technology]
Notes:
In the calculation of national income, the value of old goods sold is not included. National income accounting typically focuses on the value of goods and services produced within a specific period, usually a year. It includes the production of new goods and the provision of services. However, the resale of old goods does not contribute to the current production of goods and services and therefore is not counted. Additionally, non-market services such as the services of a housewife, which are not paid for in the market, are also not included in the national income calculations. This exclusion is due to the difficulty in accurately measuring the economic value of such non-market services.
7. Which of the following ministries is responsible for calculating GDP in India?
[A] Ministry of Finance
[B] Ministry of Commerce and Industry
[C] Ministry of Central Statistical and Program Implementation
[D] Ministry of consumer Affairs
Show Answer
Correct Answer: C [Ministry of Central Statistical and Program Implementation]
Notes:
The work of computing the GDP is done by the Central Statistical Organization (CSO) which is under the Ministry of Statistical and Program Implementation. It is is responsible for macroeconomic data gathering and statistical record keeping.
8. Which of the following is the movement along the supply curve?
[A] Curve Supply
[B] Contraction of supply
[C] Expansion of supply
[D] Expansion and contraction of supply
Show Answer
Correct Answer: D [Expansion and contraction of supply]
Notes:
When the price of a commodity increases its quantity supplied also increases it is called the extension of supply. In opposite process, when the price of commodity decreases, the quantity supplied of it also decreases it is called the contraction of supply. It leads to the law of supply.
9. On the basis of distribution, resources can be classified into which of the following?
[A] Potential resources
[B] Ubiquitous resources
[C] Actual resources
[D] Abiotic resources
Show Answer
Correct Answer: B [Ubiquitous resources]
Notes:
A ubiquitous resource is a natural resource that is available just about anywhere you live. Air, wind, water are all ubiquitous resources. Localized resources are natural resources only found in certain places.
10. Which among the following is an example of micro-economic variable?
[A] National Income
[B] Consumer’s Equilibrium
[C] Aggregate Supply
[D] Employment
Show Answer
Correct Answer: B [Consumer’s Equilibrium]
Notes:
Microeconomic variables are those patterns or elements that can be used to describe the behavior of a person or an individual economic unit, like a business. Eg. Consumer’s Equilibrium.
