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.
31. Which of the following are correct for Real GDP?
[A] Current year production valued at current prices
[B] Current year production valued at base year
[C] Current year production valued at last year prices
[D] Current year production valued at forecasted prices
Show Answer
Correct Answer: B [Current year production valued at base year]
Notes:
Real GDP refers to current year production of goods and services valued at base year prices. Real GDP is corrected for inflation. The current base year for calculation for GDP is 2011-12.
32. What is the aggregate of the gross balances of primary income of all resident institutional units knows as?
[A] Gross domestic Product
[B] Gross national product
[C] Gross National income
[D] Net national product
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Correct Answer: C [Gross National income]
Notes:
Gross National Income is the aggregate value of the gross balances of the primary income of all resident institutional units.
33. Which of the following are part of National income?
[A] Value of all goods and services produced in a financial year
[B] An reused good sold in that financial year
[C] Service rendered by housewife
[D] None of the above
Show Answer
Correct Answer: A [Value of all goods and services produced in a financial year]
Notes:
In the calculation of national income, the value of goods and services produced in a year is added. While the value of old sold goods and the services of the housewife is not added.
34. Which of the following is not a method of calculating National Income?
[A] Income method
[B] Expenditure method
[C] Output method
[D] Value method
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Correct Answer: D [Value method]
Notes:The 3 methods used for calculating the national income are :
- Income method
- Output method or Product method
- Expenditure method
35. What causes the depreciation of a good?
[A] Reduction in market value of a good
[B] Physical wear and tear
[C] Fall in value of good
[D] None of the above
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Correct Answer: B [Physical wear and tear]
Notes:
Depreciation of a good reduction in the value of an asset over time, due in particular to wear and tear. It is method of valuation.
36. What is the formula for GDP Deflater?
[A] Nominal GDP + Real GDP
[B] Nominal GDP – (minus) Real GDP
[C] Real GDP/ Nominal GDP
[D] Nominal GDP/ Real GDP
Show Answer
Correct Answer: D [Nominal GDP/ Real GDP]
Notes:
The GDP deflator measures price inflation in an economy.It measures the changes in prices for all of the goods and services produced in an economy. The GDP deflator is calculated by dividing nominal GDP by real GDP and multiplying by 100.
37. What does free market in an economy imply?
[A] Minimum government intervention in trade and maximum regulations
[B] Maximum government intervention in trade and maximum regulations
[C] Minimum government intervention in trade and minimum regulations
[D] Maximum government intervention in trade and maximum regulations
Show Answer
Correct Answer: C [Minimum government intervention in trade and minimum regulations]
Notes:
In a free market economy, the law of supply and demand, rather than a central government, regulates production and labor. Companies sell goods and services at the highest price consumers are willing to pay while workers earn the highest wages companies are willing to pay for their services
38. What does decreasing contribution of agriculture to GDP signifies?
[A] Country is becoming poor
[B] Country is becoming less developed
[C] Country is becoming more developed
[D] None of the above
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Correct Answer: C [Country is becoming more developed]
Notes:
The movement from an agrarian-based economy to a manufacturing and the service-based economy shows that, a country is moving from a less developed phase to a developing and developed phase.
39. What does a good with positive externalities known as?
[A] Giffen goods
[B] Public goods
[C] Merit goods
[D] Snob good
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Correct Answer: C [Merit goods]
Notes:
Merit goods are the goods that are provided generally by the government to certain sections of society. Unlike in the case of pure public goods, merit goods are not provided to the entire society; rather they are given to certain targeted people. They Have positive externalities Ex: health, education
40. Which of the following is included in market price?
[A] Indirect taxes
[B] Direct taxes
[C] Subsidies
[D] None of the above
Show Answer
Correct Answer: A [Indirect taxes]
Notes:
Market price(MP)refers to the actual transacted price and includes indirect taxes. The market price is the current price at which an asset or service can be bought or sold. The economic theory contends that the market price converges at a point where the forces of Supply and demand meet.
