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 is correct for economic efficiency?
[A] Increase in economic acitivty in an economy
[B] Use of resources to maximize the production of goods and services
[C] Distribution of economic resources in fair and equitable manner
[D] Maximum usage of resources for maximum production of goods
Show Answer
Correct Answer: B [Use of resources to maximize the production of goods and services]
Notes:
Economic Efficiency is the use of resources so as to maximize the production of goods and services. Resources are scarce and there are unlimited wants so economic efficiency is key in development.
32. What does Public sector in an economy means?
[A] That which is owned by community
[B] That which is owned by public
[C] That which is owned by government
[D] Both a and b
Show Answer
Correct Answer: C [That which is owned by government]
Notes:
The Public Sector in an economy is that which are owned and operated by the government and exist to provide services for its citizens. They are government-owned and government-controlled and doest exist to generate profits.
33. Which of the following correctly defines the Economic profit?
[A] Total revenue – Total cost
[B] Total cost – Total sold
[C] Total cost- Total revenue
[D] None of the above
Show Answer
Correct Answer: A [Total revenue – Total cost]
Notes:
Profit for any firm is the surplus of revenue over the total cost of production. It is the extra money generated over the cost of production.
Profit = Total Revenue – Total cost
34. What is the extra cost imposed by the government which increase the price for a customer is known as?
[A] Subsidy
[B] Tax
[C] Inflation
[D] Fine
Show Answer
Correct Answer: B [Tax]
Notes:
Tax is the cost imposed by the government over goods and services in an economy to generate revenue for the government for its expenditure. This includes capital as well as revenue expenditure.
35. Which type of Economy is Indian Economy?
[A] Mixed
[B] Market
[C] Capitalist
[D] Socialist
Show Answer
Correct Answer: A [Mixed]
Notes:
Indian Economy is a mixed economy where both state and market play a key role in the management of economy. In India both the Public sector as well as the private sector coexist.
36. Which of the following is considered as transfer payment?
[A] College fees
[B] Bank loan
[C] Bonus of employees
[D] Unemployed allowance by the government
Show Answer
Correct Answer: D [Unemployed allowance by the government]
Notes:
Transfer payment– is the payment by the government in grants, allowances, pensions etc to people such as pensioners, widows, sick or unemployed people or others with little or no income. It does not include subsidies given by the government .
Ex: PM KISAN amount transfer
37. 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
Show Answer
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.
38. Which of the following are part of Gross National Product(GNP)?
[A] Imports
[B] Exports
[C] Money earned by resident abroad
[D] All of the above
Show Answer
Correct Answer: D [All of the above]
Notes:
Gross National Product is the value of all finished goods and services owned by a country’s residents over a period of time.
GNP: GDP+ NR (Net receipts from abroad or inflows from abroad) – NP (Net payment outflow to foreign assets)
39. 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
Show Answer
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.
40. What is the difference between the Gross value added and Net value-added ?
[A] Value added
[B] Depreciation
[C] Production flow
[D] Investment
Show Answer
Correct Answer: B [Depreciation]
Notes:
Net value added = Gross value added – depreciation
