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.
11. A Goldilocks economy is represented by __:
[A] Low Inflation , High Economic Growth
[B] High Inflation, Low Economic Growth
[C] Low Inflation, Steady economic growth
[D] High Inflation, High Economic Growth
Show Answer
Correct Answer: C [ Low Inflation, Steady economic growth ]
Notes:
A colloquial term for an economy that combines low inflation with steady economic growth
12. 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.
13. 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.
14. In which of the following market forms a firm does not exercise control over price?
[A] Monopoly
[B] Mixed Competition
[C] Perfect competition
[D] Oligopoly
Show Answer
Correct Answer: C [Perfect competition]
Notes:
In economics, specifically general equilibrium theory, a perfect market is defined by several idealizing conditions, collectively called perfect competition.
15. Which of the following says that the marginal product of a factor input initially rises with its employment level. But after reaching a certain level of employment, it starts falling?
[A] Law of diminishing marginal product
[B] Law of variable proportions
[C] The Short Run
[D] The Long Run
Show Answer
Correct Answer: B [Law of variable proportions]
Notes:
The law of variable proportions states that as the quantity of one factor is increased, keeping the other factors fixed, the marginal product of that factor will eventually decline.
16. Which among the following is related to the demand curve?
[A] Relation between quantity demanded and price of a commodity
[B] Relation between supply and demand of a commodity
[C] Relation between income of customer and demand of commodity
[D] None of the above
Show Answer
Correct Answer: A [Relation between quantity demanded and price of a commodity]
Notes:
The demand curve is the graphical representation of the relationship between the quantity demanded of a commodity and its prices. It is downward sloping from left to right because of the law of diminishing marginal utility, income effect, and price effect.
17. What is perfectly inelastic demand?
[A] Demand doesn’t change with price
[B] Demand change with price
[C] Change in demand is equal to price
[D] Demand changes infinitely
Show Answer
Correct Answer: A [Demand doesn’t change with price]
Notes:
Price elasticity = 0, Perfectly inelastic- Demand does not change as price changes
Price elasticity < 1, less than unit elastic- % change in demand is less than that in price
Price elasticity = 1, Unit elastic – % change in demand is equal that in price
Price elasticity > 1, more than unit elastic – % change in demand is more than that in price
Price elasticity = ∞ , Perfectly elastic Demand changes infinitely
18. Which among the following is an example of substitute goods?
[A] Milk and Coffee
[B] Pen and Paper
[C] Ink and Pen
[D] Tea and coffee
Show Answer
Correct Answer: D [Tea and coffee]
Notes:
Substitution Effect refers to the substitution of the commodity in place of other commodity when it becomes relatively cheaper. In the given question if the price of Coffee increases, Tea can replace it.
19. Which of the below is a correct statement regarding inferior goods?
[A] Demand of a good decreases with increases in peoples income
[B] Demand of a good increases with increases in peoples income
[C] Demand of a good decreases with decrease in peoples income
[D] Demand of a good increase with decrease in peoples income
Show Answer
Correct Answer: A [Demand of a good decreases with increases in peoples income]
Notes:
An inferior good is an economic term that describes a good whose demand drops when people’s incomes rise. This occurs when a good has more costly substitutes that see an increase in demand as incomes and the economy improve. Inferior goods are the opposite of normal goods where in normal goods, a consumer would demand less of if they had a higher level of real income.
20. Which among the following is related to utility?
[A] Satisfaction and wants
[B] Necessity and wants
[C] Usefulness and need
[D] None of the above
Show Answer
Correct Answer: A [Satisfaction and wants]
Notes:
Utility is the power or capacity of a commodity to satisfy a human want or it is the amount of satisfaction that a person gets from the consumption of a good or service. It is measured in utils.
