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. 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.
12. 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.
13. 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.
14. Which of the following curves represents the demand of all consumers in the market taken together at different levels of the price of the good?
[A] Monotonic
[B] Indifferent
[C] Market demand
[D] Diminishing
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Correct Answer: C [Market demand]
Notes:
The market demand curve is the summation of all the individual demand curves in a given market. It shows the quantity demanded of the good by all individuals at varying price points.
15. 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.
16. 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.
17. Which of the following is an alternative way of representing the production function?
[A] Average Product
[B] The Long Run
[C] Isoquant
[D] The Short Run
Show Answer
Correct Answer: C [Isoquant]
Notes:
An isoquant is a firm’s counterpart of the consumer’s indifference curve. An isoquant is a curve that shows all the combinations of inputs that yield the same level of output. ‘Iso’ means equal and ‘quant’ means quantity.
18. 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
19. “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.
20. 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.