100 MCQ on Economics with answer

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100 MCQ on Economics with answer

1. Who is the father of Economics ?
A.   Max Muller
B.    Adam Smith
C.    Karl Marx
D.   None of these above
2. Indian Economy is :
A.   Socialistic Economy
B.    Gandhian Economy
C.    Mixed Economy
D.   Free Economy
3. Mixed economy means an economy where
A.   both agriculture and industry are equally promoted by the state
B.    there is co-existence of public sector along with private sector
C.    there is importance of small scale industries along with heavy industries
D.   economy is controlled by military as well as civilian rulers
4. India's economic planning CANNOT be said to be :
A.   indicative
B.    imperative
C.    limited
D.   democratic
5. Which one of the following is the task of the Planning Commission ?
A.   Preparation of the plan
B.    Implementation of the plan
C.    Financing of the plan
D.   None of these above
6 Which one of the following bodies finalizes the Five Year Plan Proposals ?
A.   Planning Commission
B.    Union Cabinet
C.    National Development Council
D.   Ministry of Planning
7. Which one of the following is true about Planning Commission ?
A.   It is a Ministry
B.    It is a Government Department
C.    It is an Advisory Body
D.   It is an Autonomous Corporation
8. Economic survey is published by :
A.   Ministry of Finance
B.    Planning Commission
C.    Govt of India
D.   Indian Statistical Institute
9. Who is the Chairman of the Planning Commission in India ?
A.   President
B.    Vice President
C.    Prime Minister
D.   Finance Minister
10. The Deputy Chairman of the Planning Commission :
A.   HRD Minister
B.    Finance Minister
C.    Holds the rank of a cabinet minister
D.   is an economist of repute
11. ‘Globalisation of Indian Economy’ means:
A.   Stepping up external borrowings
B.    Establishing Indian Shopping Malls in abroad
C.    Giving up programmes of import substitution
D.   Having minimum possible restrictions on economic relations with other countries
12. National Development Council was set up in:
A.   1952
B.    1950
C.    1949
D.   1948
13. ‘Take off stage’ in an economy means:
A.   Economy is stagnant
B.    Steady growth begins
C.    Economy is about to collapse
D.   All controls are removed
14. Which of the following indicates economic growth through Five Year Plans ?
A.   Rise in national income and per capita income
B.    Development of railways and roadways
C.    Development of education and health services
D.   Development of industrial towns and industrial estate
15. Which of the following statements about the Indian Economy is correct ?
A.   In India, single biggest employment is agriculture and allied activities
B.    No physical targets were visualized
C.    About 48% Indian workforce is employed in foreign countries or in organizations assisted by foreign capital
D.   About 70% Indians are involved in some type of self- employment and are the owners of some or the other micro or small enterprise
16. In the context of India’s Five Year Plans, a shift in the pattern of industrialization, with lower emphasis on heavy industries and more on infrastructure begins in
A.   Tenth Plan
B.    Eighth Plan
C.    Sixth Plan
D.   Fourth Plan
17. A “closed economy” is a kind of economy in which
A.   Only exports take place
B.    The money supply is fully controlled
C.    Deficit financing takes place
D.   Neither exports nor imports take place
18. Which statement is correct for Indian Planning Commission ?
A.   Members do not require any minimum education
B.    It is not defined in Indian Constitution
C.    Members and Vice-Chairman of it do not have fixed working duration
D.   All of the these
19. The author of the chapter on “Objectives of Planned Development” for the Third Five Year Plan was:
A.   Jawaharlal Nehru
B.    Morarji Desai
C.    C.D.Deshmukh
D.   Lal Bahadur Shastri
20. “Functional Finance” is associated with:
A.   Adams
B.    Adam Smith
C.    Adolph Wogner
D.   Abba ‘P’ Lerner
21.As per the TRIPS Agreement 1994, a good originating from a region with specific character/quality/reputation is covered/to be protected under the IPR as
A.   Patent
B.    Trademark
C.    Trade sector
D.   GI (Geographical Indicator)
22. The economist who believed that unemployment is impossible and that market mechanism has a built in regulatory system to meet any ups and downs
A.   Ohlin
B.    J.B. Say
C.    Galbraith
D.   J.M. Keynes
23. A philosophy that the worker should share in industrial decisions is termed as
A.   Worker dictatorship
B.    Industrial socialism
C.    Worker sovereignty
D.   Industrial democracy
24. According to Modern Theory of Rent, rent accrues to
A.   Any factor
B.    Capital only
C.    Land only
D.   Labour only
25. The book which is at the centerpiece of the study of Macro-Economics was written by
A.   Prof. Benham
B.    Prof. Baumol
C.    Prof. Samuelson
D.   Prof. J.M. Keynes
26. The basic problem studied in Macro-Economics is
A.   Usage of income
B.    Flow of income
C.    Production of income
D.   Distribution of income
27. ‘Take-off stage’ in an economy means
A.   Steady growth begins
B.    Economy is stagnant
C.    Economy is about to collapse
D.   All controls are removed
29. The relationship between the rate of interest and level of consumption was first visualized by
A.   Amartya K. Sen
B.    Irving Fisher
C.    Milton Friedman
D.   James Duesenberry
30. Multiplier process in economic theory is conventionally taken to mean:
A.   The manner in which prices increase
B.    The manner in which banks create credit
C.    The manner in which government expenditure increases
D.   Income of an economy grows on account of an initial investment
31. Which of the following concepts are most closely associated with J.M. Keynes?
A.   Marginal utility theory
B.    Control of money supply
C.    Marginal efficiency of capital
D.   Indifference curve analysis
32. Evaluating all the options to find out most suitable solution to business problems is inter-displinary activities. It is called
A.   Commercial research
B.    Operational research
C.    Management research
D.   Professional research
33. In a Laissez-faire economy
A.   The Government controls the allocation of all the factors of production
B.    The customers take all the decisions regarding production of all the commodities
C.    The Government does not interfere in the free functioning of demand and supply forces in the market
D.   The private sector takes all the decisions for price determination of various commodities produced
34. In Economics, production means
A.   Farming
B.    Creating Utility
C.    Making
D.   Manufacturing
35. With which form of economy is the term ‘Laissez-faire’ associated?
A.   Command economy
B.    Mixed economy
C.    Socialist economy
D.   Capitalist economy
36. Who among the following is not a classical economist?
A.   John Maynard Keynes
B.    Thomas Malthus
C.    John Stuart Mill
D.   David Ricardo
37. In Economics the ‘Utility’ and ‘Usefulness’ have
A.   Same meaning
B.    Different meaning
C.    Opposite meaning
D.   None of the above
38. “Economics is what it ought to be” – This statement refers to
A.   Fiscal economics
B.    Monetary economics
C.    Positive economics
D.   Normative economics
39. The problem of Economics arises from
A.   Plenty
B.    Scarcity of goods
C.    More wants and less goods
D.   All of the above
40. The symbol of Reserve Bank of India is
A.   Tiger before a Palm tree
B.    Capitol of Asokan Pillar
C.    Kuber with a purse of money
D.   A Dog sitting in a defensive state
41. The achieve high rates of growth of national output, the economy has to
A.   Borrow foreign capital
B.    Step up the rate of savings
C.    Reduce the rate of growth of population
D.   Increase the rate of investment and reduce the capital output ratio
42. National income refers to
A.   Money value of stocks and shares of a country during a year
B.    Money value of capital goods produced by a country during a year
C.    Money value of consumer goods produced by a country during a year
D.   Money value of goods and services produced in a country during a year
43. Why did the Government ban the import of “Terminator seeds”?
A.   To contain a virus which can destroy local crops
B.    These seeds multiply at very slow rates
C.    These seeds are injurious to human and animal health
D.   These seeds contain genetically engineered properties to prevent further multiplication
44. Merchant Banking is an institution which provides finances to:
A.   International trade among countries
B.    Domestic retail trade among
C.    International aid agencies
D.   Domestic whole sale trade
45. Which amidst the following taxes collected by the Union is NOT mandated to be assigned to the States?
A.   Service Tax
B.    Taxes on consignment of goods
C.    Taxes on railway fares and freights
D.   Terminal taxes on goods or passengers carried by railway, sea or air
46.  Inflation is caused by:
A.   Increase in supply of goods
B.    Decrease in money supply
C.    Increase in money supply
D.   Increase in cash with the government
47. Open market operation refers to
A.   Purchase and sale of Government securities by the R.B.I.
B.    Purchase and sale of bounds and securities by the Central Govt.
C.    Borrowing by commercial banks from the R.B.I.
D.   Lending by scheduled banks to non-scheduled banks
48. What is the main function of Central Statistical Organisation (CSO)?
A.   Determination of money supply
B.    Price determination
C.    Collection of estimates of national income
D.   Collection of detail data regarding employment
49. What does National Income mean?
A.   The total value of all consumer goods produced in the country during a period of one year
B.    The total value of all capital goods produced in the country during a period of one year
C.    The total value of all stocks and shares in the country during a period of one year
D.   The total value of all goods and services produced in the country during a period of one year
50.  Which one of the following is not an industrial finance institution?
A.   UTI
B.    SFCs
51. The largest source of revenue to the Union Government is
A.   Central Excise Duty
B.    Customs Duty
C.    Income Tax
D.   Wealth Tax
52. Which bank in India performs duties of Central Bank?
A.   State Bank of India
B.    Central Bank of India
C.    Reserve Bank of India
D.   Above (A) and (B)
53. Which of the following is not the source of the revenue of central Government?
A.   Income Tax
B.    Excise Duty
C.    Corporate Tax
D.   Agricultural Income Tax
54. Which one of the following is not an objective of Fiscal Policy in India?
A.   Price Stability
B.    Full Employment
C.    Regulation of International Trade
D.   Equitable Distribution of Wealth and Incomes
55. The best example of a capital intensive industry in India is
A.   Steel Industry
B.    Tourism Industry
C.    Textile Industry
D.   Sports Goods Industry
56. Which one of the following is not included while estimating national income through income method?
A.   Rent
B.    Pension
C.    Mixed Income
D.   Undistributed profits
57. Who advocated the adoption of ‘PURA’ model to eradicate rural poverty?
A.   A.M. Khusro
B.    Dr. A.P.J. Abdul Kalam
C.    M.S. Swami Nathan
D.   Maulana Abul Kalam Azad
58. The main difference between Gross Domestic Product (GDP) and Gross National Product (GNP) is
A.   Capital gains
B.    Transfer payments
C.    Net foreign income from abroad
D.   Capital consumption allowance
59. The Community Development Programme was launched in the year
A.   1950
B.    1952
C.    1954
D.   1956
60. Which of the following is the most important domestic source of planned finance?
A.   Additional taxation
B.    Domestic private savings
C.    Profit from public sector units
D.   Balance of current revenue
61.What is the name of the electronic communication network of the Reserve Bank of India?
62. Which authority decides about the States’ share in central taxes?
A.   Finance Ministry
B.    Election Commission
C.    Planning Commission
D.   Finance Commission
63. Which of the following is has the sole right of issuing currency (except one rupee coins and notes) in India?
A.   The Reserve Bank of India
B.    The State Bank of India
C.    The Planning Commission
D.   The Government of India
64.  RBI does not transact the business of which State Government?
A.   Assam
B.    Bihar
C.    Jammu and Kashmir
D.   Nagaland
65.  ICI is the name associated with
A.   private sector bank
B.    Indian Cement Industry
C.    Chamber of Commerce and Industry
D.   A MNC which manufactures chemicals
66. Reserve Bank of India was nationalized in
A.   1948
B.    1949
C.    1950
D.   1951
67. Per capita income is obtained by dividing National Income by
A.   Area of the country
B.    Volume of capital used
C.    Total working population
D.   Total population of the country
68. GDP at Factor Cost is
A.   GDP minus indirect taxes plus subsidies
B.    GDP minus subsidies plus indirect taxes
C.    NNP plus depreciation allowances
D.   GDP minus depreciation allowances
70. NREGP is the abbreviated form of
A.   National Rapid Employment Guarantee Programme
B.    National Rapid Educational Guarantee Programme
C.    National Rural Employment Guarantee Programme
D.   National Rural Educational Guarantee Programme
71. If Japan chooses to engage in trade, it
A.   will only benefit if it trades with countries which produce goods it cannot produce.
B.    cannot benefit if it trades with less developed countries.
C.    should first attempt to produce the good itself.
D.   can benefit by trading with any other country.
72. If the United States decides to trade with Mexico, we know that
A.   Mexico will be better off, but trade with a less developed country could not help the United States.
B.    it will not benefit Mexico because workers in the United States are more productive.
C.    Mexico and the United States can both be better off.
D.   it will not benefit either country because they are too different culturally.
73. If France is better than Belarus at producing wine, but Belarus is better than France at producing crystal,
A.   Belarus should sell crystal to France, and should buy French wine.
B.    Belarus should impose a tariff on French wine in order to protect jobs in the Belarusian crystal industry.
C.    Belarus should subsidize its wine industry so that it can compete with French wine.
D.   Belarus should put a quota on the amount of French wine imported.
74. Which of the following is the best statement about markets?
A.   Markets are usually a good way to organize economic activity.
B.    Markets are usually inferior to central planning as a way to organize economic activity.
C.    Markets fail and are therefore not an acceptable way to organize economic activity.
D.   Markets are a good way to organize economic activity in developed nations, but not in less developed nations.
75. Which would NOT be true in a market economy?
A.   Firms decide whom to hire and what to produce.
B.    Government policies do not affect the decisions of firms and households.
C.    Households decide which firms to work for and what to buy with their incomes.
D.   Profit and self-interest guide the decisions of firms and households.
76. The decisions of firms and households are guided by profit and self-interest in a
A.   command economy.
B.    traditional economy.
C.    market economy.
D.   All of the above are correct.
77. In a market economy, economic activity is guided by
A.   the government.
B.    corporations.
C.    central planners.
D.   prices.
78. The term used to describe a situation in which markets fail to allocate resources efficiently is called
A.   economic meltdown.
B.    market failure.
C.    corporate bankruptcy.
D.   disequilibrium.
79. In a market economy decisions are guided by individual self-interest. Hence, there is
A.   still the ability to achieve desirable economic well-being for society as a whole.
B.    a strong need for government intervention in the market.
C.    less efficiency in market economies than in command economies.
D.   more need for a strong legal system to control individual greed.
80. Prices direct economic activity in a market economy by
A.   influencing the actions of buyers and sellers.
B.    reducing scarcity of the goods and services produced.
C.    eliminating the need for government intervention.
D.   allocating goods and services produced in the most equitable way.
81. In a market economy, prices reflect the
A.   value of a good to society.
B.    cost to society of making the good.
C.    quantity society will ultimately choose to produce.
D.   Both a and b are correct.
82. An example of market power is
A.   a fast food restaurant in a college town.
B.    a wheat farmer in Kansas.
C.    the last gas station in New Mexico for 100 miles.
D.   a shoe store in Kentucky.
83. An example of a firm with market power is a
A.   deli in New York.
B.    cable TV provider in St. Louis.
C.    clothing store in Los Angeles.
D.   farmer in Illinois.
84. One advantage market economies have over central planning is that market economies
A.   provide an equal distribution of goods and services to consumers.
B.    establish government economic control.
C.    solve the problem of scarcity.
D.   are more efficient.
85. A market economy differs from a communist economy in that economic decisions are made by
A.   a central planner.
B.    millions of firms and households.
C.    primarily the government.
D.   large corporations.
86. The collapse of communism in the Soviet Union and Eastern Europe took place in the
A.   1960s
B.    1970s
C.    1980s
D.   1990s
87. Prior to its collapse, communist countries worked on the premise that economic well-being could be organized only through/by
A.   a market economy.
B.    government central planners.
C.    government-imposed private monopolies.
D.   increased competition.
88. Which of the following observations was made famous by Adam Smith in his book The Wealth of Nations?
A.   There is no such thing as a free lunch.
B.    People buy more when prices are low than when prices are high.
C.    No matter how much people earn, they tend to spend more than they earn.
D.   Households and firms interacting in markets are guided by an “invisible hand” that leads them to desirable market outcomes.
89. The term “invisible hand” was coined by
A.   Adam Smith.
B.    David Ricardo.
C.    John Maynard Keynes.
D.   Thomas Jefferson.
90. The “invisible hand” directs economic activity through
A.   advertising.
B.    prices.
C.    central planning.
D.   government regulations.
91. The invisible hand’s ability to coordinate the decisions of the firms and households in the economy can be hindered by
A.   government actions that distort prices.
B.    increased competition in the market.
C.    extended periods of unemployment.
D.   a dramatic reduction in consumer spending.
92. Adam Smith’s book The Wealth of Nations was published in
A.   1692.
B.    1776.
C.    1816.
D.   1936.
92. Both The Wealth of Nations and the Declaration of Independence share the point of view that
A.   every person is entitled to life, liberty, and the pursuit of happiness.
B.    individuals are best left to their own devices without the government guiding their actions.
C.    the government has a central role in organizing a market economy.
D.   because of human nature a strong legal system is necessary for a market system to survive.
93. President Gerald Ford referred to inflation as
A.   the national thief.
B.    a blight on our nation’s economy.
C.    public enemy number one.
D.   a torpedo that could sink our economy.
94. The person who referred to inflation as public enemy number one was
A.   Gerald Ford.
B.    Alan Greenspan.
C.    Richard Nixon.
D.   John F. Kennedy.
95. In the 1990s, inflation in the United States
A.   was almost zero.
B.    was about 3 percent per year.
C.    approached double digits.
D.   was caused by too much consumer spending.
96. Inflation causes
A.   incomes to fall.
B.    productivity to increase.
C.    the government to lower taxes.
D.   the value of money to fall.
97. Which of the following is the most correct statement about the relationship between inflation and unemployment?
A.   In the short run, reducing inflation is associated with falling unemployment.
B.    In the short run, reducing inflation is associated with rising unemployment.
C.    In the long run, reducing inflation is associated with falling unemployment.
D.   In the long run, reducing inflation is associated with rising unemployment.
98. The curve that illustrates the tradeoff between inflation and unemployment is called the
A.   Laffer curve.
B.    Lorenz curve.
C.    Phillips curve.
D.   Demand curve.
99. In the short run, the Phillips curve illustrates
A.   the tradeoff between inflation and unemployment.
B.    the tradeoff between equity and efficiency.
C.    labor productivity in an economy.
D.   the level of government intervention in a market economy.
100. Although the Phillips curve is controversial, most economists believe that
A.   society faces a tradeoff between unemployment and inflation in the short run only.
B.    society faces a tradeoff between unemployment and inflation in the long run only.
C.    no tradeoff exists between unemployment and inflation.
D.   society faces a continuous tradeoff between unemployment and inflation.


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