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. 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.
12. 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.
13. 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.
14. Which of the following is represented by ‘Lorenz Curve’?
[A] Inflation
[B] Income Distribution
[C] Employment
[D] Deflation
Show Answer
Correct Answer: B [Income Distribution]
Notes:
In economics, the Lorenz curve is a graphical representation of the distribution of income or of wealth. It was developed by Max O. Lorenz in 1905 for representing inequality of the wealth distribution.
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 of the following is called GDP Deflator?
[A] Ratio of nominal to real GNP
[B] Ratio of nominal to real CPI
[C] Ratio of real to nominal GNP
[D] Ratio of nominal to real GDP
Show Answer
Correct Answer: D [Ratio of nominal to real GDP]
Notes:
The GDP deflator is a measure of price inflation. It is calculated by dividing Nominal GDP by Real GDP and then multiplying by 100. Nominal GDP is the market value of goods and services produced in an economy, unadjusted for inflation
17. “Gresham’s Law” in Economics relates which of the following?
[A] Supply and demand
[B] Circulation of currency
[C] Consumption and supply
[D] Distribution of goods and services
Show Answer
Correct Answer: B [Circulation of currency]
Notes:
Gresham’s law states that bad money drives out good. For example, if there are two forms of commodity money in circulation, which are accepted by law as having similar face value, the more valuable commodity will gradually disappear from circulation.
The law holds that bad money drives out good money in circulation. Bad money is then the currency that is considered to have equal or less value compared to its face value. Meanwhile, good money is currency that is believed to have greater value or more potential for greater value than its face value. Logically, consumers will choose to use bad money over good money because good money has the potential to be worth more than its face value.
18. Which of the following is related to Microeconomics?
[A] The size of national economy
[B] Inflation
[C] Unemployment
[D] Behaviour of individual economic units
Show Answer
Correct Answer: D [Behaviour of individual economic units]
Notes:
Micro Economics is that branch of economics which deals with the behaviour of individual economic units of the economy such as individual households, individual firms or industry. It revolves around the determination of prices of individual commodities and factors.
19. What is the demand of a commodity?
[A] Need of the commodity
[B] Desire for a commodity
[C] Quantity of a commodity demanded at a particular time at a particular price
[D] Amount of commodity demanded
Show Answer
Correct Answer: C [Quantity of a commodity demanded at a particular time at a particular price]
Notes:
Demand for a commodity refers to the quantity of a commodity that a consumer’s desire to purchase goods and services and a willingness to pay a price for a specific good or service. Demand and supply are the basic factors that run the economy.
20. What does low price elasticity of demand for a commodity show?
[A] Necessity of good
[B] It is luxury good
[C] It doesn’t have importance
[D] It is inferior good
Show Answer
Correct Answer: A [Necessity of good]
Notes:
Price Elasticity is the measure of the degree of responsiveness of demand for a commodity to change in its price. That means the low price elasticity is demand doesn’t change with the price. These are the necessary goods.
