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. An autonomous increase in expenditure should result in an increase in a country’s real GNP only if ?
[A] The country’s balance of trade is negative
[B] The country’s economy is working under conditions of less than full employment
[C] It is government expenditure
[D] The multiplier is at least 1.5
Show Answer
Correct Answer: B [The country’s economy is working under conditions of less than full employment]
Notes:
When the economy is working under conditions of less than full employment, the GDP gap is positive and the economy operates at less than potential. At this point, an increase in expenditure would result in an increase in a country’s real GNP.
2. Which among the following is considered to be the main determinant of the level of activity is in national income terms?
[A] The level of taxation
[B] Realized investment
[C] Planned saving
[D] Factor mobility
Show Answer
Correct Answer: B [Realized investment]
Notes:
Realized Investment means an Investment resulting in a sale, transfer or restructuring of a good or service. It is considered to be the main determinant of the level of activity in national income.
3. 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
4. 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.
5. Which among the following bodies estimates the national income of India?
[A] Office of the Economic Advisor
[B] Ministry of Statistics
[C] Central Statistical Office
[D] Ministry of Finance
Show Answer
Correct Answer: C [Central Statistical Office]
Notes:
The Central Statistics Office (CSO) is a governmental agency in India under the Ministry of Statistics and Programme Implementation. It is responsible for estimating National Income, Index of Industrial Production and Consumer Price Indices.
6. Which among the following imposes a greater burden (relative to resources) on the poor than on the rich ?
[A] Progressive tax
[B] Regressive Tax
[C] Lump Sum tax
[D] Proportional tax
Show Answer
Correct Answer: B [Regressive Tax]
Notes:
A regressive tax is the one in which tax rate decreases as the amount subject to taxation increases; and the tax rate progresses from high to low. The lowest amount is subject to higher taxation and this leads to individuals with low income bear the highest burden of regressive taxes. Such tax does not take into account the ability to pay.
7. Which among the following phrases generally denotes National Income?
[A] Gross National Product at Market Prices
[B] Net National Product at Market Prices
[C] Gross National Product at Factor Cost
[D] Net National Product at Factor Cost
Show Answer
Correct Answer: D [Net National Product at Factor Cost]
Notes:
Net National Product at Factor Cost generally denotes National Income.
8. In context with the macroeconomics , Philips Curve is a relationship between the rates of ___?
[A] Unemployment & Exim trade
[B] Unemployment and Inflation
[C] Unemployment and Demand
[D] Unemployment and Poverty
Show Answer
Correct Answer: B [Unemployment and Inflation]
Notes:
Phillips curve developed by A. W. Phillips says that the inflation and unemployment have a stable and inverse relationship; which means that higher inflation is associated with lower unemployment and vice versa. However, later it was proved that this curve is applicable only in the short-run, and in long-run, inflationary policies would not decrease unemployment.
9. 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.
10. Economic growth is normally coupled with?
[A] Inflation
[B] Hyper Inflation
[C] Deflation
[D] Stagflation
Show Answer
Correct Answer: A [Inflation]
Notes:
Economic growth results in higher disposable income available with the consumers which increases the overall demand along with the supply available for the consumers. This increase in demand spurs inflation, which eventually becomes a necessary evil for a growing economy.
