Economy Set 1 MCQs

Economy GK

Economy Set 1 MCQs

Practice Economy GK MCQs on basic economic concepts including economy, economics, microeconomics, macroeconomics, goods and services, demand and supply, factors of production, opportunity cost, economic activities, sectors of economy and other fundamental concepts frequently asked in SSC, Railway, Banking, UPSC, JKSSB, JKPSC, Police, Defence and other competitive examinations.

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Total Questions

Practice Questions

Page 10 of 111
Question #181
Which of the following is the primary objective of monetary policy in India?
A. Price stability while keeping in mind growth
B. Reducing fiscal deficit
C. Increasing government expenditure
D. Maximising tax revenue
Discuss
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Correct Answer: Option A

Explanation:
As per the Monetary Policy Framework Agreement, the primary objective of monetary policy is to maintain price stability while keeping in mind the objective of growth.
This question belongs to: Economy GK Economy Set 1
Question #182
The concept of 'Liquidity Trap' was introduced by:
A. Milton Friedman
B. David Ricardo
C. Adam Smith
D. John Maynard Keynes
Discuss
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Correct Answer: Option D

Explanation:
Keynes introduced the concept of liquidity trap, a situation where interest rates are so low that people prefer to hold cash rather than invest in bonds, making monetary policy ineffective.
This question belongs to: Economy GK Economy Set 1
Question #183
Which of the following is NOT a method of measuring national income?
A. Balance of payments method
B. Expenditure method
C. Product method
D. Income method
Discuss
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Correct Answer: Option A

Explanation:
National income is measured by product (value added), income and expenditure methods. Balance of payments is used for recording international transactions, not for measuring national income.
This question belongs to: Economy GK Economy Set 1
Question #184
In the context of elasticity, if the price elasticity of demand is greater than one, demand is said to be:
A. Inelastic
B. Perfectly inelastic
C. Elastic
D. Unitary elastic
Discuss
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Correct Answer: Option C

Explanation:
When |Ed| > 1, demand is elastic, meaning quantity demanded changes more than proportionately to a change in price.
This question belongs to: Economy GK Economy Set 1
Question #185
Which of the following is a non-tax revenue of the government?
A. Interest receipts
B. Customs duty
C. Income tax
D. Corporation tax
Discuss
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Correct Answer: Option A

Explanation:
Non-tax revenue includes interest receipts, dividends and profits from PSUs, fees, fines, etc. Taxes like corporation tax, income tax and customs duty are tax revenues.
This question belongs to: Economy GK Economy Set 1
Question #186
The term 'Repo Rate' refers to the rate at which:
A. Government borrows from RBI
B. RBI lends to commercial banks against securities
C. Commercial banks lend to RBI
D. RBI borrows from commercial banks
Discuss
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Correct Answer: Option B

Explanation:
Repo rate is the rate at which the Reserve Bank of India lends money to commercial banks against government securities for short-term needs.
This question belongs to: Economy GK Economy Set 1
Question #187
Which of the following is an example of a regressive tax?
A. Goods and Services Tax (GST)
B. Wealth tax
C. Income tax with higher rates for higher income
D. Corporate tax with progressive slabs
Discuss
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Correct Answer: Option A

Explanation:
GST is largely regressive because lower-income groups spend a higher proportion of their income on consumption, bearing a relatively higher tax burden compared to higher-income groups.
This question belongs to: Economy GK Economy Set 1
Question #188
In oligopoly, the kinked demand curve model was developed by:
A. Joan Robinson
B. Paul Sweezy
C. Edward Chamberlin
D. A.C. Pigou
Discuss
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Correct Answer: Option B

Explanation:
Paul Sweezy developed the kinked demand curve model to explain price rigidity in oligopolistic markets.
This question belongs to: Economy GK Economy Set 1
Question #189
Which of the following is NOT a cause of demand-pull inflation?
A. Increase in cost of production
B. Increase in government expenditure
C. Increase in consumer spending
D. Increase in money supply
Discuss
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Correct Answer: Option A

Explanation:
Increase in cost of production causes cost-push inflation. Demand-pull inflation arises from excess aggregate demand due to increased money supply, government spending or consumer spending.
This question belongs to: Economy GK Economy Set 1
Question #190
The Human Development Index (HDI) is published by:
A. World Bank
B. United Nations Development Programme
C. World Economic Forum
D. International Monetary Fund
Discuss
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Correct Answer: Option B

Explanation:
The Human Development Index is published annually by the United Nations Development Programme (UNDP) in its Human Development Report.
This question belongs to: Economy GK Economy Set 1
Question #191
Which of the following is a feature of a mixed economy?
A. Coexistence of public and private sectors
B. Complete government ownership of resources
C. Absence of government intervention
D. Complete private ownership of resources
Discuss
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Correct Answer: Option A

Explanation:
A mixed economy is characterised by the coexistence of both public and private sectors, with government intervention to correct market failures.
This question belongs to: Economy GK Economy Set 1
Question #192
The term 'Disguised Unemployment' is commonly associated with:
A. Service sector
B. Information technology sector
C. Agricultural sector
D. Industrial sector
Discuss
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Correct Answer: Option C

Explanation:
Disguised unemployment is prevalent in the agricultural sector of developing countries where more people are engaged in work than are actually required, with marginal productivity close to zero.
This question belongs to: Economy GK Economy Set 1
Question #193
Which of the following is NOT a component of the capital account of Balance of Payments?
A. External commercial borrowings
B. Remittances from abroad
C. Foreign direct investment
D. Portfolio investment
Discuss
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Correct Answer: Option B

Explanation:
Remittances from abroad are unilateral transfers and form part of the current account. Capital account includes FDI, portfolio investment and external borrowings.
This question belongs to: Economy GK Economy Set 1
Question #194
In the IS-LM model, the IS curve represents equilibrium in the:
A. Labour market
B. Money market
C. Goods market
D. Foreign exchange market
Discuss
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Correct Answer: Option C

Explanation:
The IS curve shows combinations of interest rate and income at which the goods market is in equilibrium (Investment = Saving).
This question belongs to: Economy GK Economy Set 1
Question #195
Which of the following is an example of an automatic stabiliser in the economy?
A. Discretionary government spending
B. Change in repo rate
C. Progressive income tax
D. Open market operations
Discuss
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Correct Answer: Option C

Explanation:
Automatic stabilisers are features of the fiscal system that automatically dampen economic fluctuations without new legislation. Progressive income tax reduces disposable income during booms and increases it during recessions.
This question belongs to: Economy GK Economy Set 1
Question #196
The concept of 'Consumer Surplus' was introduced by:
A. J.S. Mill
B. Adam Smith
C. David Ricardo
D. Alfred Marshall
Discuss
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Correct Answer: Option D

Explanation:
Alfred Marshall developed the concept of consumer surplus, which is the difference between what a consumer is willing to pay and what he actually pays.
This question belongs to: Economy GK Economy Set 1
Question #197
Which of the following is NOT a type of unemployment recognised in economics?
A. Structural unemployment
B. Frictional unemployment
C. Nominal unemployment
D. Cyclical unemployment
Discuss
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Correct Answer: Option C

Explanation:
The main types of unemployment are frictional, structural, cyclical and seasonal. 'Nominal unemployment' is not a standard classification.
This question belongs to: Economy GK Economy Set 1
Question #198
In the context of Indian economy, NITI Aayog replaced which institution?
A. Planning Commission
B. Finance Commission
C. Election Commission
D. University Grants Commission
Discuss
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Correct Answer: Option A

Explanation:
NITI Aayog (National Institution for Transforming India) was established in 2015, replacing the Planning Commission which was set up in 1950.
This question belongs to: Economy GK Economy Set 1
Question #199
Which of the following is a characteristic of a public enterprise?
A. Ownership and control by private individuals
B. Profit maximisation as the sole objective
C. Absence of social objectives
D. Ownership and control by the government
Discuss
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Correct Answer: Option D

Explanation:
Public enterprises are owned and controlled by the government and often pursue social objectives along with commercial ones.
This question belongs to: Economy GK Economy Set 1
Question #200
The term 'Base Effect' is related to the calculation of:
A. Fiscal deficit
B. National income
C. Balance of trade
D. Inflation rate
Discuss
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Correct Answer: Option D

Explanation:
Base effect refers to the impact of the price level of the previous year (base) on the calculation of the inflation rate in the current year.
This question belongs to: Economy GK Economy Set 1
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