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.
41. Real National income increases in which of the following circumstances?
[A] When Prices of goods increases
[B] When saving of people increases
[C] When Inflation increases prices and taxes
[D] When the production of goods and services increases
Show Answer
Correct Answer: D [When the production of goods and services increases]
Notes:
As the calculation of national income is the total value of all goods and services in an economy the real increase happens when the output production increases. The rate change won’t affect because while calculating real national income we take into account the prices of base year. So even the inflation effect is also removed.
42. 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.
43. Which among the following is correct regarding gross capital formation(GCF)?
1. High GCF high savings in the economy
2. It includes capital formation in the public sector too
3. It is the Percentage of investment out of total GDP
Choose the correct option from the code given below:
[A] 1 only
[B] 1 and 2 only
[C] 2 only
[D] 1,2 and 3
Show Answer
Correct Answer: D [1,2 and 3]
Notes:
Gross capital formation (GCF) – The percentage of the investment made each year out of the total GDP is called Gross Capital Formation. High GCF denotes higher rate of savings in the economy which is required for high rate of production, capital formation, changes in production techniques.GCF includes capital formation in public sector, private sector, and also household sector.
44. In terms of micro-economics, comparative advantage is based on which of the following?
[A] dollar price
[B] labor cost
[C] opportunity cost
[D] capital cost
Show Answer
Correct Answer: C [opportunity cost]
Notes:
Opportunity cost is the potential benefits that an investor, individual ora business misses due to choosing an alternate option. It is the forgone benefit.
45. What kind of the cost is emplying a lawyer to seek help in getting a contract drafted and enforced between two parties?
[A] opportunity cost
[B] implicit cost
[C] sunk cost
[D] transaction cost
Show Answer
Correct Answer: D [transaction cost]
Notes:
Transaction cost is the cost incurred when buying or selling goods or services. It represents the costs that do not have returns. The fee of lawyers come under this.
46. Which of these relates to micro-economics?
[A] National Income
[B] Gross Domestic Product
[C] Level of Employment
[D] Consumer Equilibrium
Show Answer
Correct Answer: D [Consumer Equilibrium]
Notes:
Consumer equilibrium studies individual consumer choices, a core focus of micro-economics. Macro-economics deals with aggregates such as national income, GDP, and employment levels. Micro-economics analyzes how individual decisions impact supply, demand, and price formation within markets.
47. What is the income elasticity of demand for inferior goods?
[A] equal to 1
[B] greater than 1
[C] less than 0
[D] greater than 0
Show Answer
Correct Answer: C [less than 0 ]
Notes:
Inferior goods have a negative(less than 0) income elasticity of demand meaning that demand falls as income rises. Inferior goods demand drops when the income of people drops.
48. Which among the following is complementary good?
[A] Petrol and Car
[B] Iphone and Android Phone
[C] Milk and Sweet
[D] Shoes and Sandals
Show Answer
Correct Answer: A [Petrol and Car]
Notes:
Complementary goods are those pair of goods where the quantity demanded of one increases when the price of a related good decrease.
49. Which of the following is a “Public Good”?
[A] A Commodity that is popular among general public
[B] A scheme that benefits the poor
[C] A commodity that is produced by Government
[D] A Commodity whose benefits are indivisibly spread among the entire community
Show Answer
Correct Answer: D [A Commodity whose benefits are indivisibly spread among the entire community]
Notes:
“Public Good” is a Commodity whose benefits are indivisibly spread among the entire community.
50. An increase in the consumer income leads to a decrease in demand of which type of good?
[A] normal good
[B] complementary good
[C] inferior good
[D] substitute good
Show Answer
Correct Answer: C [inferior good]
Notes:
An inferior good is a good whose demand decreases when consumer income rises, unlike normal goods, for which the opposite is observed. Normal goods are those goods for which the demand rises as consumer income rises.
