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.

2220
Total Questions

Practice Questions

Page 16 of 111
Question #301
The concept of 'Consumer Equilibrium' under utility analysis is achieved when:
A. MU of a commodity is equal to its price
B. Total utility is zero
C. Marginal utility is maximum
D. Price is zero
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option A

Explanation:
A consumer is in equilibrium when the marginal utility derived from a commodity equals its price (or MU per unit of money is equalised across commodities).
This question belongs to: Economy GK Economy Set 1
Question #302
Which of the following is NOT a type of inflation based on cause?
A. Creeping inflation
B. Cost-push inflation
C. Demand-pull inflation
D. Built-in inflation
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option A

Explanation:
Creeping inflation is classified on the basis of speed/intensity. Demand-pull, cost-push and built-in (wage-price spiral) are classifications based on causes.
This question belongs to: Economy GK Economy Set 1
Question #303
In the context of Indian economy, the concept of 'Inclusive Growth' emphasises:
A. Growth without any government intervention
B. Growth only in urban areas
C. Growth only in the industrial sector
D. Growth that benefits all sections of society
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option D

Explanation:
Inclusive growth refers to economic growth that creates opportunities for all segments of the population and distributes the benefits of prosperity more equitably.
This question belongs to: Economy GK Economy Set 1
Question #304
Which of the following is a feature of a perfectly competitive market?
A. Firms are price makers
B. Barriers to entry exist
C. Product differentiation exists
D. Firms are price takers
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option D

Explanation:
In perfect competition, individual firms are price takers because the market price is determined by industry demand and supply, and no single firm can influence it.
This question belongs to: Economy GK Economy Set 1
Question #305
The term 'Budgetary Deficit' in the earlier classification referred to:
A. Fiscal deficit
B. Excess of total expenditure over total receipts excluding borrowings
C. Primary deficit
D. Difference between revenue expenditure and revenue receipts plus capital receipts excluding borrowings
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option D

Explanation:
In the older classification, budgetary deficit was the difference between total expenditure and total receipts (both revenue and capital, excluding borrowings). It is no longer widely used.
This question belongs to: Economy GK Economy Set 1
Question #306
Which of the following is NOT a determinant of the supply of a commodity?
A. Price of the commodity
B. Tastes and preferences of consumers
C. Technology
D. Cost of production
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option B

Explanation:
Tastes and preferences of consumers affect demand, not supply. Supply is determined by price, cost of production, technology, prices of related goods, and government policies.
This question belongs to: Economy GK Economy Set 1
Question #307
In the context of economic reforms in India, the New Economic Policy of 1991 emphasised:
A. Import substitution only
B. Liberalisation, privatisation and globalisation
C. Complete isolation from the world economy
D. Licence-permit-quota raj
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option B

Explanation:
The 1991 economic reforms focused on Liberalisation, Privatisation and Globalisation (LPG) to open up the economy, reduce government control and integrate with the global economy.
This question belongs to: Economy GK Economy Set 1
Question #308
Which of the following is a characteristic of a developing economy?
A. Low dependence on foreign trade
B. Dualistic economic structure
C. High rate of capital accumulation
D. High productivity in agriculture
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option B

Explanation:
Developing economies often exhibit dualism — coexistence of a modern industrial sector and a traditional agricultural sector with low productivity.
This question belongs to: Economy GK Economy Set 1
Question #309
The concept of 'Social Opportunity Cost' is particularly relevant in the evaluation of:
A. International trade only
B. Monetary policy only
C. Private investment projects only
D. Public investment projects
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option D

Explanation:
Social opportunity cost considers the true cost to society of using resources in a particular project and is especially important in the appraisal of public investment projects.
This question belongs to: Economy GK Economy Set 1
Question #310
Which of the following is NOT a type of bank in the Indian banking system?
A. Shadow banks as scheduled commercial banks
B. Commercial banks
C. Cooperative banks
D. Regional Rural Banks
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option A

Explanation:
Shadow banks (NBFCs engaged in credit intermediation) are not scheduled commercial banks. The formal banking system includes commercial banks, cooperative banks and RRBs.
This question belongs to: Economy GK Economy Set 1
Question #311
In the context of national income, 'Personal Income' is equal to:
A. GDP − Depreciation
B. National income − Corporate taxes − Undistributed profits + Transfer payments
C. GNP − Net factor income from abroad
D. National income + Corporate taxes
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option B

Explanation:
Personal Income = National Income − Corporate taxes − Undistributed corporate profits − Social security contributions + Transfer payments + Interest on public debt (simplified form).
This question belongs to: Economy GK Economy Set 1
Question #312
Which of the following is a tool to measure income inequality?
A. Lorenz Curve
B. Phillips Curve
C. Engel Curve
D. Laffer Curve
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option A

Explanation:
The Lorenz Curve plots the cumulative percentage of income against the cumulative percentage of population and is used to measure income inequality (along with the Gini coefficient).
This question belongs to: Economy GK Economy Set 1
Question #313
The term 'Reverse Repo Rate' is the rate at which:
A. Government borrows from banks
B. Banks borrow from the public
C. RBI lends to banks
D. Banks lend to RBI
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option D

Explanation:
Reverse Repo Rate is the rate at which the RBI borrows money from commercial banks, absorbing excess liquidity from the system.
This question belongs to: Economy GK Economy Set 1
Question #314
Which of the following is NOT a feature of the Keynesian theory?
A. Importance of government intervention
B. Wage-price flexibility ensuring full employment
C. Emphasis on effective demand
D. Possibility of underemployment equilibrium
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option B

Explanation:
Keynes rejected the classical assumption of wage-price flexibility leading to automatic full employment. He argued that underemployment equilibrium is possible.
This question belongs to: Economy GK Economy Set 1
Question #315
In the context of international trade, 'Most Favoured Nation' (MFN) treatment means:
A. Preferential treatment to one country only
B. Ban on imports from certain countries
C. Higher tariffs for all countries
D. Equal trade treatment to all member countries
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option D

Explanation:
MFN principle under WTO requires that any advantage granted to one member country must be extended to all other members, ensuring non-discrimination.
This question belongs to: Economy GK Economy Set 1
Question #316
Which of the following is a capital expenditure of the government?
A. Subsidies
B. Interest payments
C. Payment of salaries
D. Construction of a new highway
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option D

Explanation:
Capital expenditure creates assets or reduces liabilities. Construction of a highway creates a durable asset and is therefore capital expenditure.
This question belongs to: Economy GK Economy Set 1
Question #317
The concept of 'Producer Surplus' is the difference between:
A. Price and marginal cost only
B. Total revenue and total cost
C. What consumers are willing to pay and what they actually pay
D. What producers are willing to accept and what they actually receive
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option D

Explanation:
Producer surplus is the difference between the amount a producer is willing to accept for a good and the amount actually received (market price).
This question belongs to: Economy GK Economy Set 1
Question #318
Which of the following is NOT a cause of the balance of payments deficit?
A. High external debt servicing
B. Large capital inflows
C. Low export competitiveness
D. High import intensity
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option B

Explanation:
Large capital inflows help finance the current account and improve the overall balance of payments. High imports, low exports and debt servicing contribute to BOP problems.
This question belongs to: Economy GK Economy Set 1
Question #319
In the context of production, the stage of diminishing returns begins when:
A. Marginal product starts declining
B. Average product is zero
C. Marginal product is negative
D. Total product is maximum
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option A

Explanation:
The stage of diminishing returns starts when the marginal product of the variable factor begins to decline, although it may still be positive.
This question belongs to: Economy GK Economy Set 1
Question #320
Which of the following is a feature of the Indian capital market?
A. Presence of stock exchanges and long-term instruments
B. Absence of regulatory bodies
C. No role of mutual funds
D. Only short-term instruments
Discuss
Get Complete Subject PDF for Economy GK

Correct Answer: Option A

Explanation:
The Indian capital market deals with long-term funds and includes stock exchanges, bonds, equities and mutual funds, regulated by SEBI.
This question belongs to: Economy GK Economy Set 1
Today's Top Topics
Economy Set 1 2220
Explore Subjects
Geography GK 6121 Reasoning 2064 Current Affairs 575 Maths 5575 Economy GK 2220
Practice Mix
When is the International Day of Democracy observed?
He is _______ good that he saves many lives.
Which is a key metric for laptop CPUs?
She keeps ___ smiling.
Which Indian athlete won the silver medal in the men's triple jump at the 2022 Commonwealth Games?