300+ TOP Basics of Economics Studies MCQs and Answers

Basics of Economics Studies Multiple Choice Questions

1. The economic problem arises since
A. Wants are unlimited

B. Resources are limited

C. Resources are capable of alternative uses

D. All of the above

Answer: D. All of the above

2. Economic problem arises in
A. Planned economies

B. Free market economies

C. Mixed economies

D. All of the above

Answer: D. All of the above

3. The resources are :
A. Limited

B. Unlimited

C. Not only limited but are capable of alternative uses

D. None of the above

Answer: C. Not only limited but are capable of alternative uses

4. Which one of the following is an example of an economic good
A. Sunlight

B. Air

C. Petrol

D. None of the above

Answer: C. Petrol

5. —– is not an example of free good
A. Sunlight

B. Car

C. Petrol

D. Computer

Answer: A. Sunlight

6. The term production refers to:
A. Producing things which are capable of satisfying human wants

B. Creation or addition of utilities

C. Transformation of inputs into output

D. All of the above

Answer: D. All of the above

7. The problem of allocation of resources is concerned with:
A. What to produce

B. How to produce

C. For whom to produce

D. All of the above

Answer: A. What to produce

8. The distribution of national product among the members of the society is the problem of:
A. What to produce

B. How to produce

C. For whom to produce

D. All of the above

Answer: C. For whom to produce

9. Production is said to be efficient when:
A. The re-allocation of resources cannot increase the production of the article even by one unit

B. More output is produced with the given input

C. Resources are fully employed

D. All of the above

Answer: A. The re-allocation of resources cannot increase the production of the article even by one unit

10. Which one of the following come under macro economics:
A. Per capital income

B. Study of a firm

C. Individual income

D. Theory of factor pricing

Answer: A. Per capita income

11. Which one of the following is not come under macro economics
A. National income

B. Per capita income

C. Disposable income

D. Individual income

Answer: D. Individual income

12. Partial equilibrium analysis come under:
A. Micro economics

B. Macro economics

C. Welfare economics

D. International economics

Answer: A. Micro economics

13. “The starting point of all economic activity is the existence of human wants” Who said this?
A. Adam Smith

B. Selligman

C. Ricardo

D. Alfred Marshall

Answer: B. Selligman

14. Production and consumption takes place simultaneously in the case of
A. Goods

B. Services

C. Both in the case of goods and services

D. Neither in the case of goods and services

Answer: B. Services

15. Economics is a social science because
A. The central point in economics is man and his problems

B. Economics uses scientific approach to derive its laws

C. Like History, Politics and Psychology economics deals with the problems of human being

D. All of the above

Answer: D. All of the above

16. Economic growth can be achieved through
A. Advanced technology

B. Expansion of resources

C. Both A & B

D. Neither A & B

Answer: C. Both A & B

17. Micro economics doesn’t deal with:
A. The study of individual economic units

B. Determination of factor prices

C. Price determination of commodities

D. General equilibrium analysis

Answer: D. General equilibrium analysis

18. Name the economist who analyses the subject matter of economics into two branches: micro economic analysis and macro economic analysis.
A. Adam Smith

B. Alfred Marshall

C. Ragner Frisc

D. P A Samuelson

Answer: C. Ragner Frisc

19. Transformation of inputs into outputs is known as
A. Production

B. Consumption

C. Distribution

D. Exchange

Answer: A. Production

20. —– is an example of secondary input
A. Land

B. Labour

C. Capital

D. Raw material

Answer: D. Raw material

21. Odd-man out from the following
A. Steel

B. Medicine

C. Education

D. Train

Answer: C. Education

22. The choice of techniques of production is related to the problem of
A. What to produce

B. How to produce

C. For whom to produce

D. None of the above

Answer: B. How to produce

23. The functional relationship between inputs and outputs is called
A. Production function

B. Consumption function

C. Investment function

D. Saving function

Answer: A. Production function

24. Firms owned by one individual is known as
A. Proprietorship

B. Partnership

C. Corporations

D. None of the above

Answer: A. Proprietorship

25. Firms owned by two or more individuals is known as
A. Proprietorship

B. Partnership

C. Corporations

D. None of the above

Answer: B. Partnership

26. Firms owned by stock holders are known as
A. Proprietorship

B. Partnership

C. Corporations

D. None of the above

Answer: C. Corporations

27. The major objective of a firm is
A. Profit maximization

B. Revenue maximization

C. Sales maximization

D. None of the above

Answer: A. Profit maximization

28. Which one of the following is an example of fixed input
A. Raw materials

B. Casual workers

C. Plant and equipments

D. All of the above

Answer: C. Plant and equipments

29. In short-run
A. All inputs are fixed

B. All inputs are variable

C. Some inputs are fixed and some are variable

D. None of the above

Answer: C. Some inputs are fixed and some are variable

30. In long-run
A. All inputs are fixed

B. All inputs are variable

C. Some inputs are fixed and some are variable

D. None of the above

Answer: B. All inputs are variable

31. Marginal product of a factor is
A. The additional product received by the firm due to the employment of an additional unit of a variable factor

B. Addition to the total product when one more unit of a factor is employed

C. The rate of change in the total product per unit change in the variable factor.

D. All of the above

Answer: D. All of the above

32. Production function expresses
A. The relationship between input and output

B. How maximum output is produced with the given input

C. What is the least-cost combination of input to produce the given output

D. All of the above

Answer: D. All of the above

33. The variable cost of a firm vary in direct proportion to the
A. Volume of its output

B. Extent of its profits

C. Volume of its sale

D. All of the above

Answer: A. Volume of its output

34. Law of variable proportions is concerned with
A. Long-run production function

B. Laws of returns to scale

C. Short-run production function

D. None of the above

Answer: C. Short-run production function

35. The ‘point of inflection’ come in which stage of the law of variable proportions
A. Stage I

B. Stage II

C. Stage III

D. None of the above

Answer: A. Stage I

36. A rational producer will select his level of production in which stage of the law of variable proportions
A. Stage I

B. Stage II

C. Stage III

D. Either Stage I or Stage II

Answer: B. Stage II

37. Total product reaches at maximum when
A. MP is increasing

B. MP is maximum

C. MP = 0

D. MP is negative

Answer: C. MP = 0

38. At the ‘point of inflection’
A. MP is maximum

B. AP is maximum

C. TP is maximum

D. All of the above

Answer: A. MP is maximum

39. Returns to scale refers to the production function where
A. All factors are fixed

B. Some factors are fixed and others are variable

C. All factors are variable

D. None of the above

Answer: C. All factors are variable

40. In the case of diminishing returns to scale, a given proportionate increase in all factors causes
A. A more than proportionate increase in output

B. An equal proportionate increase in output

C. A less than proportionate increase in output

D. None of the above

Answer: C. A less than proportionate increase in output

41. Increasing returns to scale occurs due to
A. Division of labour

B. Specialization

C. Economies of scale

D. All of the above

Answer: D. All of the above

42. The cause for diminishing returns to scale is:
A. Improper proportion of factors of production

B. Difficulty in the combination of certain factors

C. Excess combination of certain factors

D. All of the above

Answer: D. All of the above

43. The solution to diminishing returns to scale is :
A. Technical progress

B. Expansion of resources

C. Proper combination or resources

D. All of the above

Answer: D. All of the above

44. Economies of scale refers to:
A. Advantages resulting from large scale production

B. Disadvantages resulting from large scale production

C. Advantages resulting from the increase in the number of consumers

D. All of the above

Answer: A. Advantages resulting from large scale production

45. Which one of the following is not related to economies of scale:
A. Scope for division of labour and specialization

B. Scope for getting inputs at cheaper rates

C. Difficulty faces by the managers to coordinate the business

D. Scope for better storage facilities

Answer: C. Difficulty faces by the managers to coordinate the business

46. The law of Diminishing returns is applicable to:
A. Agriculture only

B. Industry only

C. In short-run only

D. Universally

Answer: D. Universally

47. Let a firm employs 5 labourers and produces 120 units of output. When 6 labourers are employed the firm produces 136 units of output. Then the marginal product is —
A. 120

B. 136

C. 6

D. 16

Answer: D. 16

48. A firm produces 200 units of commodity X by employing 10 workers and 240 units of the same commodity by employing 12 workers. Then the Average Product of the worker is ——–
A. 200

B. 240

C. 20

D. 40

Answer: C. 20

49. Other things remaining the same, the quantity of a product demanded increases with ———— in price.
A. Increase

B. Decrease

C. Variation

D. None of the above

Answer: B. Decrease

50. When total utility is maximum, marginal utility is:
A. Maximum

B. One

C. Zero

D. Infinite

Answer: C. Zero

51. For complementary goods, the cross elasticity of demand:
A. Positive

B. Negative

C. Zero

D. None

Answer: B. Negative

52. Relation between price of a commodity and demand for another commodity is measured by:
A. Price elasticity

B. Income elasticity

C. Cross elasticity

D. Elasticity of substitution

Answer: C. Cross elasticity
53. When TU falls, MU is:
A. Rises

B. Zero

C. Positive

D. Negative

Answer: D. Negative
54. Demand varies ————- with price.
A. Directly

B. Positively

C. Inversely

D. None of the above

Answer: C. Inversely
55. When Q = f (P), the elasticity coefficient is measured by:
A. ∆Q/∆P / P/Q

B. ∆P/∆Q * Q/P

C. ∆Q/∆P * P/Q

D. ∆P/∆Q / Q/P

Answer: C. ∆Q/∆P * P/Q

56. Income elasticity of demand for inferior good is:
A. Negative

B. Positive

C. Zero

D. Unity

Answer: A. Negative
57. In the case of luxury goods, the income elasticity of demand will be:
A. Less than unity

B. Unity

C. More than unity

D. All the above

Answer: C. More than unity
58. Income elasticity is positive, but less than unity in the case of:
A. Necessity

B. Luxury

C. Inferior

D. Substitutes

Answer: A. Necessity
59. In drawing an individual demand curve for a commodity, all but which of the following are kept constant:
A. Individual’s money income

B. The prices of the related commodity

C. Price of the commodity under consideration

D. Tastes of the consumer

Answer: C. Price of the commodity under consideration
60. When an individual’s income rises, when everything else remains the same, his demand for normal goods:
A. Rises

B. Falls

C. Remains the same

D. Any of the above is possible

Answer: A. Rises

61. When an individual’s income falls, when everything else remains the same, his demand for inferior goods:
A. Increases

B. Decreases

C. Remains unchanged

D. Cannot say

Answer: A. Increases
62. When the price of the substitute commodity of X falls, the demand for X:
A. Rises

B. Falls

C. Remains unchanged

D. All of the above is possible

Answer: B. Falls
63. If the quantity demanded remains unchanged as the price of the commodity falls, the coefficient of price elasticity of demand is:
A. Greater than

B. one Equal to one

C. Smaller than one

D. Zero

Answer: D. Zero
64. If the income elasticity of demand is greater than one, then the
commodity is:
A. Necessity

B. Luxury

C. Inferior

D. Non-related commodity

Answer: A. Necessity
65. If the amount of the commodity purchased remains unchanged when the price of another commodity changes, the cross elasticity of demand between them will be:
A. Positive

B. Negative

C. Zero

D. One

Answer: C. Zero
66. Which of the following is an exception to the law of demand?
A. Giffen good

B. Normal good

C. Superior good

D. All of the above

Answer: A. Giffen good

67. The law of diminishing marginal utility was popularized by:
A. Keynes

B. Marshall

C. Smith

D. Samuelson

Answer: B. Marshall
68. If the income elasticity of demand for a commodity is found to be 0.4,
then the commodity concerned is:
A. Luxury

B. Necessity

C. Giffen’s goods

D. Independent good

Answer: B. Necessity
69. Cross elasticity of demand in the case of substitutes:
A. Zero

B. Negative

C. Positive

D. Infinity

Answer: C. Positive
70. If a small change in price leads to infinitely large change in quantity
demanded, then the demand is:
A. Perfectly elastic

B. Perfectly inelastic

C. Elastic

D. Inelastic

Answer: A. Perfectly elastic
71. Net addition to total utility when one more unit is consumed is:
A. AU

B. MU

C. MC

D. TU

Answer: B. MU
72. Most important determinant of demand is :
A. Income

B. Wealth

C. Price

D. Advertisement

Answer: C. Price

73. Which of the following is the reason for law of demand:
A. Price effect

B. Backlash effect

C. Income effect

D. Real balance effect

Answer: C. Income effect
74. A market:
A. Necessarily refers to a meeting place between buyer and sellers

B. Does not necessarily refers to a meeting place between buyer and sellers

C. Extends over the entire country

D. Extends over a city

Answer: B. Does not necessarily refers to a meeting place between buyer and sellers
75. Net addition to total cost is called:
A. Marginal cost

B. Average cost

C. Fixed cost

D. Variable cost

Answer: A. Marginal cost

76. The market equilibrium for a commodity is determined by :
A. Market demand

B. Market supply

C. Balancing of the forces of demand and supply

D. Any of the above

Answer: C. Balancing of the forces of demand and supply
77. When there are only few sellers of the commodity, the market is called:
A. Monopoly

B. Duopoly

C. Oligopoly

D. Monopsony

Answer: C. Oligopoly
78. If the supply curve of the commodity is having a positive slope, a rise in
the price of the commodity, results in:
A. Increase in supply

B. Increase in quantity supplied

C. Decrease in supply

D. Decrease in quantity supplied

Answer: B. Increase in quantity supplied
79. From the position of stable equilibrium, the market supply of a commodity
decreases, while the market demand remains unchanged, then:
A. Equilibrium price falls

B. Equilibrium quantity rises

C. Both equilibrium price and equilibrium quantity decreases

D. Equilibrium price rises, but equilibrium quantity falls

Answer: D. Equilibrium price rises, but equilibrium quantity falls
80. Elasticity of supply for a positively sloped straight line supply curve that
intersects the price axis is:
A. Equal to zero

B. Equal to one

C. Greater than one

D. Constant

Answer: C. Greater than one

81. In which of the following market, advertisement is absent:
A. Monopolistic competition

B. Perfect competition

C. Oligopoly

D. None of the above

Answer: C. Oligopoly
82. ————– cost can never become zero.
A. Variable cost

B. Fixed cost

C. Marginal cost

D. Average cost

Answer: B. Fixed cost
83. If a positively sloped linear supply curve crosses the quantity axis, the
elasticity of supply is:
A. Inelastic

B. Elastic

C. Unitary elastic

D. Perfectly elastic

Answer: A. Inelastic
84. If a positively sloped linear supply curve passes through the origin, the
elasticity of supply is
A. Inelastic

B. Elastic

C. Unitary elastic

D. Perfectly elastic

Answer: C. Unitary elastic
85. Average cost is the sum of AVC and
A. MC

B. TC

C. AFC

D. ATC

Answer: C. AFC

86. The horizontal supply curve parallel to quantity axis represents
A. Elastic supply

B. Inelastic supply

C. Perfectly elastic supply

D. Perfectly inelastic supply

Answer: C. Perfectly elastic supply
87. When output is zero, variable cost is ——–
A. Maximum

B. Minimum

C. Infinity

D. Zero

Answer: D. Zero
88. Change in quantity supplied of a product can result from
A. Changes in own price

B. Changes in cost of production

C. Change in technology

D. Change in price of related products

Answer: A. Changes in own price
89. At prices above the equilibrium price
A. Quantity supplied exceeds quantity demanded

B. Quantity demanded exceeds quantity supplied

C. There is shortage

D. All of the above is possible

Answer: A. Quantity supplied exceeds quantity demanded
90. When MC cuts AC, AC is at its ————
A. Maximum

B. Minimum

C. Zero

D. Negative

Answer: B. Minimum
91. An increase in market supply, demand remaining the same causes
A. Increase in equilibrium price

B. Decrease in equilibrium quantity

C. Decrease in equilibrium price and increase in equilibrium quantity

D. Both equilibrium price and quantity rises

Answer: C. Decrease in equilibrium price and increase in equilibrium quantity

92. Cost function relates cost to
A. Input

B. Output

C. Raw material

D. Machines

Answer: B. Output
93. An increase in market demand, supply remaining the same results in
A. Decrease in equilibrium price

B. Decrease in equilibrium quantity

C. Decrease in equilibrium price and increase in equilibrium quantity

D. Both equilibrium price and quantity rises

Answer: D. Both equilibrium price and quantity rises
94. There is no distinction between firm and industry in
A. Perfect competition

B. Monopoly

C. Monopolistic competition

D. Oligopoly

Answer: B. Monopoly
95. A fall in the market demand, supply remaining the same results in
A. Increase in equilibrium price

B. Increase in equilibrium quantity

C. Increase in equilibrium price and decrease in equilibrium quantity

D. Both equilibrium price and quantity falls

Answer: D. Both equilibrium price and quantity falls
96. The cost of next best alternative is called
A. Marginal cost

B. Average cost

C. Opportunity cost

D. Direct cost

Answer: C. Opportunity cost
97. When MC is greater than AC, AC
A. Rises

B. Falls

C. Maximum

D. Minimum

Answer: A. Rises

98. There is ——- relationship between price and quantity supplied
A. Positive

B. Negative

C. Constant

D. Inverse

Answer: A. Positive
99. Supply curve represents ——– relationship between quantity and
price
A. Direct

B. Inverse

C. Either direct or inverse

D. None of the above

Answer: A. Direct
100. National Income means:
A. GNP at Factor Cost

B. GNP at Market Price

C. NNP at Factor Cost

D. NNP at market Price

Answer: C. NNP at Factor Cost

101. The difference between GDP and NDP equals:
A. Transfer payments

B. Net indirect taxes

C. Net factor income from abroad

D. Depreciation

Answer: D. Depreciation
102. Which of the following is true?
A. GNP + Depreciation = NNP

B. GNP = GDP + Net factor income from abroad

C. NDP = GNP minus net indirect taxes

D. NNP = DGP minus depreciation

Answer: B. GNP = GDP + Net factor income from abroad
103. NNP is equal to:
A. GNP plus Depreciation

B. GNP minus depreciation

C. GNP minus exports

D. GNP plus exports

Answer: B. GNP minus depreciation
104. Which of the following is not a method of national income estimation?
A. Matrix method

B. Income method

C. Expenditure method

D. Product method

Answer: A. Matrix method
105. An accounting year in India is:
A. Calendar year

B. Academic year

C. Fiscal year

D. None of these

Answer: C. Fiscal year

106. Increase in real National Income (NI) means increase in:
A. NI at current prices

B. NI at constant prices

C. Both

D. None of these

Answer: B. NI at constant prices
107. Net indirect taxes means:
A. Indirect taxes plus subsidies

B. Income minus taxes

C. Indirect taxes minus subsidies

D. Exports minus imports

Answer: C. Indirect taxes minus subsidies
108. Net factor income from abroad shows the difference between:
A. GDP and NDP

B. NNP and NDP

C. GNP and GDP

D. GNP and NNP

Answer: C. GNP and GDP
109. Per capita income is equal to:
A. Population/National income

B. National income/population

C. National income/GDP

D. NNP/GNP

Answer: B. National income/population
110. National income in India is estimated by:
A. RBI

B. NSSO

C. CSO

D. World Bank

Answer: C. CSO

111. The first estimate of National income in India was done by:
A. K.N. Raj

B. V.K.R.V. Rao

C. Dadabai Naoroji

D. P.C. Mahalanobis

Answer: C. Dadabai Naoroji
112. Pick the odd one out:
A. Real national income

B. NI at constant price

C. NI at current prices

D. NI at base year price

Answer: C. NI at current prices
113. GDP deflator is given by:
A. Nominal NI/Real NI

B. Nominal DGP/Real GDP

C. Nominal GDP/ Nominal GNP

D. Real GDP/Real GNP

Answer: B. Nominal DGP/Real GDP
114. Wear and tear of capital due to constant use means:
A. Intermediate consumption

B. Final consumption

C. Depreciation

D. Devaluation

Answer: C. Depreciation
115. Value of output minus intermediate consumption is:
A. Depreciation

B. Value added

C. Net value added

D. Net exports

Answer: B. Value added
116. Personal income minus personal taxes is:
A. National Income

B. Private income

C. Disposable income

D. Per capita income

Answer: C. Disposable income

117. Primary sector includes:
A. Agriculture

B. Industry

C. Services

D. Banking

Answer: A. Agriculture
118. National income is a ——–variable.
A. Flow

B. Stock

C. Static

D. Dynamic

Answer: A. Flow
119. In India, National income is estimated at:
A. Current prices

B. Constant prices

C. Both current and constant prices

D. None of these

Answer: C. Both current and constant prices
120. Which of the following is true:
A. GDP is a geographical concept

B. GDP is not a geographical concept

C. GDP and GNP are same

D. None of them

Answer: A. GDP is a geographical concept
121. GNP measured in terms of current market prices is called:
A. Nominal GNP

B. Real GNP

C. Both

D. None

Answer: A. Nominal GNP
122. In India, the current base year is:
A. 1980-81

B. 1993-94

C. 1999-2000

D. 2004-05

Answer: D. 2004-05

123. Which of the following doest not include in the group?
A. GDP

B. GNP

C. GVA

D. NDP

Answer: D. NDP
124. The term “Classical Economics” was first used by:
A. J.M. Keynes

B. Adam Smith

C. Karl Marx

D. David Ricardo

Answer: C. Karl Marx
125. Who is the leader of the Classical school?
A. Thomas Robert Malthus

B. J.S. Mill

C. David Ricardo

D. Adam Smith.

Answer: D. Adam Smith.

126. The core of classical economists is:
A. Effective Demand

B. Employment

C. Say’s Law of Market

D. Socialism

Answer: C. Say’s Law of Market
127. ‘Law of Market’ is attributed to:
A. J.S. Mill

B. J.B. Say

C. Alfred marshall

D. A.C. Pigou

Answer: B. J.B. Say
128. The Classicals adopted ———policy:
A. Governmental policy

B. Laissez-faire

C. Policy of restriction

D. None of these

Answer: B. Laissez-faire
129. According to Classicals, full employment is a:
A. Rare phenomenon

B. Normal phenomenon

C. Abnormal phenomenon

D. None of these

Answer: B. Normal phenomenon
130. According to the Classical economists, general over production is:
A. Possible

B. Impossible

C. Both

D. None

Answer: B. Impossible

131. According to the Classical economists, savings and investments are:
A. Always unequal

B. Always equal

C. Never equal

D. Sometimes equal

Answer: B. Always equal
132. Wages and prices are ———-, according to the Classicals.
A. Rigid

B. Flexible

C. Both

D. All of these

Answer: B. Flexible
133. Classical aggregate supply curve is:
A. Perfectly elastic

B. Perfectly inelastic

C. More elastic

D. Unitary elastic

Answer: B. Perfectly inelastic
134. Pick the odd one from the following:
A. Law of Market

B. J.B. Say

C. Full employment

D. J.M. Keynes

Answer: D. J.M. Keynes
135. According to the Classicals, investment is a function of:
A. Saving

B. Income

C. Employment

D. Rate of Interest

Answer: D. Rate of Interest

136. “Supply creates its own demand” is called:
A. Law of supply

B. Law of market

C. Law of demand

D. Law of elasticity

Answer: B. Law of market
137. Under the classical system, the equilibrium will be at:
A. Under employment

B. Full employment

C. Voluntary employment

D. Disguised unemployment

Answer: B. Full employment
138. When savings exceeds the demand for savings, the rate of interest will:
A. Rise

B. Fall

C. Remain constant

D. None of these

Answer: B. Fall
139. Rate of interest will increase when the demand for saving is:
A. Less than its supply

B. Equal to its supply

C. More than its supply

D. Less than or equal to its supply

Answer: C. More than its supply
140. In the Classical system, the role of the government is:
A. The highest

B. Not at all needed

C. Limited

D. Important

Answer: C. Limited
141. Equilibrium in the economy is settled by ———, according to the
Classicals.
A. Centralized planning

B. Price mechanism

C. Both the planning and price mechanism

D. None of these

Answer: B. Price mechanism

142. Say’s Law of market was proved wrong by:
A. Industrial revolution

B. Great Depression

C. Green revolution

D. Gulf war

Answer: B. Great Depression
143. Self interest, competition, profit motive are the features of:
A. Socialism

B. Capitalism

C. Marxism

D. Mixed economy

Answer: B. Capitalism
144. The Great Depression was during:
A. 1930s

B. 1920s

C. 1940s

D. 1830s

Answer: A. 1930s
145. The equilibrium price is determined by the forces of:
A. Supply only

B. Demand only

C. Both Demand and Supply

D. None of these

Answer: C. Both Demand and Supply
146. Temporary unemployment is ————-, according to the Classical
economists:
A. Impossible

B. Permanent

C. Possible

D. None of these

Answer: C. Possible
147. J.B. Say was a —————Economist.
A. Swedish

B. German

C. French

D. American

Answer: C. French

148. Pick the odd one out:
A. J.B. Say

B. David Ricardo

C. Adam Smith

D. J.M. Keynes

Answer: D. J.M. Keynes
149. Author of the book ‘The General Theory of Employment, Interest and
Money’:
A. Karl Marxq

B. J.B. Say

C. J.M. Keynes

D. Adam Smith

Answer: C. J.M. Keynes
150. ‘The General Theory’, was published in :
A. 1776

B. 1890

C. 1936

D. 1950

Answer: C. 1936

151. The branch of Economics that deals with economic aggregate is called:
A. Micro Economics

B. Development economics

C. Macro Economics

D. Welfare economics

Answer: C. Macro Economics
152. The central theme of Keynesian Theory is:
A. Laissez-faire

B. Free Trade

C. Effective demand

D. Self interest

Answer: C. Effective demand
153. Who repudiated Say’s law of market?
A. J.B. Say

B. David Ricardo

C. J.S. Mill

D. J.M. Keynes

Answer: D. J.M. Keynes
154. Effective demand is that demand when:
A. Aggregate demand is greater than aggregate supply

B. Aggregate demand is less than aggregate supply

C. Aggregate demand is equal to aggregate supply

D. All of these

Answer: C. Aggregate demand is equal to aggregate supply
155. The concept of effective demand is associated with the name of:
A. Marshall

B. Keynes

C. Krugman

D. Adam Smith

Answer: B. Keynes

156. The proportion between total income and total consumption is called:
A. Average propensity to consume

B. Average propensity to save

C. Marginal propensity to consume

D. Marginal propensity to save

Answer: A. Average propensity to consume
157. The proportion between incremental income and incremental
consumption is called:
A. APC

B. APS

C. MPC

D. MPS

Answer: C. MPC
158. The proportion between total income and total saving is called:
A. APC

B. APS

C. MPC

D. MPS

Answer: B. APS
159. 1- MPC is called:
A. APC

B. APS

C. MPC

D. MPS

Answer: D. MPS
160. APC + APS is equal to:
A. 0

B. >0

C. 1

D. <0

Answer: C. 1

161. Multiplier is obtained by:
A. 1 – MPC

B. 1/1- MPS

C. 1/1- APC

D. 1/1-MPC

Answer: D. 1/1-MPC
162. Exports minus imports is termed as:
A. Net income

B. Net imports

C. Net exports

D. National Income

Answer: C. Net exports
163. As income increases consumption also increases, but:
A. Proportionately

B. More than proportionately

C. Less than proportionately

D. Equally

Answer: C. Less than proportionately
164. The expected return on investment is called:
A. Marginal propensity to save

B. Marginal propensity to consume

C. Marginal revenue

D. Marginal efficiency of investment

Answer: D. Marginal efficiency of investment
165. Marginal efficiency of investment curve is:
A. Slopping downwards

B. Slopping upwards

C. Parallel to X axis

D. Parallel to Y axis

Answer: A. Slopping downwards
166. According to Keynes, unemployment is due to:
A. Deficiency of capital

B. Deficiency of labour

C. Deficiency of education

D. Deficiency in effective demand

Answer: D. Deficiency in effective demand

167. “In the long run, we are all dead”. Who said this?
A. Keynes

B. Adam Smith

C. Karl Marx

D. David Ricardo

Answer: A. Keynes
168. According to Keynes, investment is a function of:
A. Rate of interest

B. Rate of profit

C. Rate of MEI

D. MEI and rate of interest

Answer: D. MEI and rate of interest
169. Keynes believed in :
A. Full employment equilibrium

B. Under employment equilibrium

C. Both

D. None

Answer: B. Under employment equilibrium
170. According to Keynes, wages and prices are:
A. Rigid

B. Flexible

C. Variable

D. Automatic

Answer: A. Rigid
171. In Economics, 1930s is popularly known as the period of:
A. Great Battle

B. Great Depression

C. Industrial Revolution

D. Great Devide

Answer: B. Great Depression
172. Keynesian aggregate supply curve is:
A. Perfectly elastic

B. Perfectly inelastic

C. Unitary elastic

D. Parabola

Answer: A. Perfectly elastic

173. Keynes strongly argued for:
A. Free Trade

B. Non-intervention of Government

C. Laissez-faire

D. Governmental intervention

Answer: D. Governmental intervention
174. Consumption expenditure directly varies with:
A. Savings

B. Investment

C. Disposable income

D. Rate of interest

Answer: C. Disposable income
175. An important issue of macro economics is the determination of:
A. Consumption

B. Production

C. Utility

D. Income and employment

Answer: D. Income and employment

176. Pick the odd one:
A. Aggregate demand

B. Effective demand

C. J.M. Keynes

D. Law of market

Answer: D. Law of market
177. Which of the following items does not include in the group?
A. Consumption

B. Investment

C. Rate of Interest

D. Net exports

Answer: C. Rate of Interest
178. If marginal propensity to consume is 0.8, the value of multiplier will be:
A. 1

B. 2.5

C. 5

D. 2

Answer: C. 5
179. Who is known as the father of Modern Economics?
A. Adam Smith

B. J.M.Keynes

C. Robinson

D. Ricardo

Answer: A. Adam Smith
180. Goods without which people can not live are called:
A. Comforts

B. Luxuries

C. Necessaries

D. None

Answer: C. Necessaries

181. The problem of what to produce is a problem of:
A. Distribution

B. Technological choice

C. Consumption

D. Allocation of resources

Answer: D. Allocation of resources
182. Those things that possess both utility and scarcity are called:
A. Economic Goods

B. Free goods

C. Intermediate goods

D. Luxuries

Answer: A. Economic Goods
183. If a worker specializes in the production of a single good, it is called:
A. Product based division of labour

B. Process based division of labour

C. Worker based division of labour

D. None of these

Answer: A. Product based division of labour
184. Goods produced for use in future productive process are called:
A. Intermediate goods

B. Final goods

C. Consumer goods

D. Capital goods

Answer: D. Capital goods
185. In a horizontal straight line demand curve, the price elasticity of
demand is:
A. Unity

B. Infinity

C. Zero

D. Less than one

Answer: B. Infinity

186. Who wrote the article Laws of Returns Under Competitive Conditions?
A. Joan Robinson

B. E.H. Chamberlin

C. A.C. Pigou

D. P. Sraffa

Answer: D. P. Sraffa
187. Increase in output less than proportional to increase in inputs is
called:
A. Increasing returns

B. Constant returns

C. Diminishing returns

D. Marginal returns

Answer: C. Diminishing returns
188. A simplified representation of a real situation is called:
A. Theory

B. Hypotheses

C. Evidence

D. Economic Model

Answer: D. Economic Model
189. When marginal product reaches its maximum, what can be said of
total product?
A. Total product must be at its maximum

B. Total product starts to decline even if marginal product is positive

C. Total product is increasing if marginal product is still positive

D. Total product levels off

Answer: C. Total product is increasing if marginal product is still positive
190. When a firm doubles its inputs and finds that its output has more
than doubled, this is known as:
A. Economies of scale.

B. Constant returns to scale.

C. Diseconomies of scale.

D. A violation of the law of diminishing returns.

Answer: A. Economies of scale.
191. When average product is at a maximum, marginal product is:
A. Zero

B. Increasing

C. Equal to average product

D. Greater than average product

Answer: C. Equal to average product

192. The want satisfying power of a commodity:
A. Satisfaction

B. Utility

C. Value

D. Marginal Utility

Answer: B. Utility
193. Supply curve represents ——– relationship between quantity and
price.
A. Direct

B. Inverse

C. Either direct or inverse

D. None of the above

Answer: A. Direct
194. Laws of return shows ———production function.
A. Short-term

B. Medium term

C. Long term

D. Annual

Answer: A. Short-term
195. In classical theory the level of employment is a function of:
A. Price level

B. Money wage rate

C. Quantity of money

D. Real wage rate

Answer: D. Real wage rate
196. Consumption of capital good in the process of production is called as:
A. Capital Consumption

B. Depreciation

C. Decay of Capital

D. None of the above

Answer: B. Depreciation
197. Economic Laws are:
A. Statement of tendencies

B. Exact and predictable

C. Definite

D. None

Answer: A. Statement of tendencies

198. Returns to scale examines the production function in the:
A. Short-term

B. Medium term

C. Long term

D. Quinquinial

Answer: C. Long term

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