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. Which among the following is a suitable term for the state of economy in which economic activity is slowing down but wages and prices continue to rise ?
[A] Inflation
[B] Deflation
[C] Skweflation
[D] Stagflation
Show Answer
Correct Answer: D [Stagflation]
Notes:
Stagflation refers to persistent high inflation coupled with high unemployment and stagnant demand /growth in economy.
High Inflation + Low Economic Growth {or conditions of recession} + Low Employment Generation = Stagflation
2. 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.
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. 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.
5. Which among the following does not come under Land Resources:
[A] Fertility of Land
[B] Location of Land
[C] Composition of Land
[D] all of the above are land resources
Show Answer
Correct Answer: D [all of the above are land resources]
Notes:
Fertility of Land, Location of Land as well as Composition of Land come under Land Resources.
6. 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.
7. 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.
8. A transfer payment is a payment that is __:
[A] made by the government to its current workers
[B] made to people who are needy
[C] For in-kind services provided to the government
[D] For which no services or goods are rendered
Show Answer
Correct Answer: D [ For which no services or goods are rendered ]
Notes:
Transfer Payment is the payment exchanged for return of no goods or services. It generally describes the welfare expenditure of the government such as subsidies, pensions, grants etc.
9. The central Statistical Office (CSO) has started measuring economic growth by gross value-added (GVA) at basic prices, replacing the practice of measuring it by GDP at factor cost. What is the difference between GDP at factor cost and GVA at basic prices?
[A] Production taxes are included and production subsidies excluded from GVA at basic prices
[B] Production taxes are excluded and production subsidies included in GVA at basic prices
[C] Production taxes and production subsidies included in GVA at basic prices
[D] Production taxes and production subsidies excluded from GVA at basic prices
Show Answer
Correct Answer: A [ Production taxes are included and production subsidies excluded from GVA at basic prices ]
Notes:
The difference between GDP at factor cost and GVA at basic prices is that production taxes are included and production subsidies excluded from the latter.
10. Per Capita Income of a country is obtained by dividing National Income by which of the following?
[A] Total working population
[B] Total population of the country
[C] Area of the country
[D] Volume of the capital used
Show Answer
Correct Answer: B [ Total population of the country ]
Notes:
Per capita income or average income measures the average income earned per person in a given area in a specified year. It is calculated by dividing the area’s total income by its total population.
