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Economics Questions and Answers for Competitive Exams | Indian Economy Quiz Set 1

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Free Download as PDF Economics Quiz Questions and Answers for Competitive Exams or solved MCQs with answers. These quiz objective questions are helpful for competitive exams SSC, UPSC, IAS, IPS, CDS, NDA, Railways or RRB, psc exams of Andhra Pradesh, Arunachal Pradesh, Assam, Bihar, Gujarat, Haryana, Himachal Pradesh, Jammu & Kashmir, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Meghalaya, Mizoram, Nagaland, Orissa, Punjab, Rajasthan, Sikkim, Tamil Nadu, Tripura, Uttar Pradesh, West Bengal, Chhattisgarh, Uttarakhand, Jharkhand, Telangana etc.
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(1) Which of the following will be true for both monopoly and monopolistic competition in the short run ?
(1) Price is greater than marginal revenue.
(2) Price is equal to marginal revenue.
(3) Price is equal to marginal cost.
(4) Price is equal to average cost.
Answer: Price is greater than marginal revenue.
(2) When the marginal cost is equal to average cost, the slope of the average cost is :
(1) positive
(2) negative
(3) zero
(4) infinite
Answer: zero

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(3) For the function Q=A ⋅ Kα ⋅ Lβ, which of the following is correct ?
(1) The degree of homogeneity is 1
(2) Elasticity of substitution is equal to α+β
(3) Output elasticity with respect to capital is α
(4) Marginal product of a factor=Average product of the factor
Answer: Output elasticity with respect to capital is α
(4) When an information asymmetry is observed after an agreement is obtained between individuals, it is called :
(1) Signalling
(2) Moral hazard
(3) None of the above
(4) Both (1) and (2) above
Answer: Moral hazard
(5) The first fundamental Theorem of Welfare Economics requires :
(1) that there be an efficient market for every commodity.
(2) that the economy operates at some point on the utility possibility curve.
(3) producers and consumers to be price takers.
(4) All of the above.
Answer: All of the above.
(6) The Theory in which trade cycle is generated due to excess of actual over the desired investment has been given by who amongst the following ?
(1) R.G. Hawtry
(2) F. Hayek
(3) P. Samuelson
(4) J. Schumpeter
Answer: F. Hayek
(7) ‘Menu costs’ in relation to inflation refers to :
(1) Cost of revaluing currency.
(2) Cost of altering price lists.
(3) Cost of the maintenance of monetary base.
(4) Cost of finding better rates of return.
Answer: Cost of altering price lists.
(8) According to M. Friedman, Quantity Theory of Money is the theory of :
(1) Value of money
(2) Price determination
(3) Nominal income
(4) Demand for money
Answer: Demand for money
(9) Gilt - edged market means :
(1) Bullion Market
(2) Market of pure metals
(3) Market of government securities
(4) Market of commodities
Answer: Market of government securities
(10) Which of the following is likely to be most inflationary in its impact ?
(1) Repayment of public debt
(2) Borrowings from the public to finance a budget deficit
(3) Borrowings from banks to finance a budget deficit
(4) Creating new money to finance a budget deficit
Answer: Creating new money to finance a budget deficit
(11) “The absorption approach” of analyzing balance of payments was formulated by :
(1) M. Friedman
(2) Marshall and Lerner
(3) Sydney Alexander
(4) Haberler
Answer: Sydney Alexander
(12) Prebisch - singer hypothesis relates to :
(1) Balance of payments problem of developing countries.
(2) Terms of trade of developing countries.
(3) Prevalency of poverty among developing countries.
(4) Inequality of income in developing countries.
Answer: Terms of trade of developing countries.
(13) Which of the following statement about the India’s balance of payments is not correct ?
(1) If a foreign citizen deposits some money in a bank in India, the accounts regard this as a credit.
(2) The current account balance shows only the balance for the trade in goods and services combined.
(3) Allowing for errors and omissions, the accounts always balance.
(4) If the country’s reserves of foreign currencies increase then there is a minus sign for this entry.
Answer: The current account balance shows only the balance for the trade in goods and services combined.
(14) Let elasticity of demand for exports for a certain country be ex and elasticity of demand for imports be em. Assume that the country devalues its currency. Its balance of payments will almost certainly show an improvement if :
(1) ex + em > 1
(2) ex + em < 1
(3) ex + em= 1
(4) ex = em =1
Answer: ex + em > 1
(15) Which of the following would cause Rupee to depreciate against U.S. Dollar, other things being equal ?
(1) A rise in interest rates in India.
(2) A fall in incomes in U.S.A.
(3) An expected rise in the external value of rupee.
(4) An increased flow of foreign investment into India.
Answer: A fall in incomes in U.S.A.

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