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Economics Questions and Answers for Competitive Exams | Indian Economy Quiz Set 27

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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) What does ‘Price Scissors’ refer to ?
(1) Marshall’s example of forces of supply and demand.
(2) Exports of two strategic raw materials from a country.
(3) A sharp fall in price of a major export item accompanied by a sharp rise in price of a major import
(4) Export basket of competitive local manufactures
Answer: A sharp fall in price of a major export item accompanied by a sharp rise in price of a major import
(2) Hedging in the foreign exchange market refers to :
(1) An act of devaluation.
(2) Not covering a risk of foreign exchange in future.
(3) Covering a risk of foreign exchange in future.
(4) None of the above.
Answer: Covering a risk of foreign exchange in future.

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(3) Tax incidence refers to :
(1) Whether a tax is progressive, proportional or regressive.
(2) How often a tax is collected.
(3) The person or group who ends up paying a tax.
(4) How a tax is collected.
Answer: The person or group who ends up paying a tax.
(4) Given the production function Q52 K1 3 . L2 3 , find the output level when 8 units of capital and 27 units of labour are used.
(1) 36
(2) 54
(3) 18
(4) 24
Answer: 36
(5) If OLS is applied separately to each equation that is part of a simultaneous interdependent system, the resulting estimates will be :
(1) Unbiased and consistent
(2) Biased and consistent
(3) Biased and inconsistent
(4) It is impossible to apply OLS to the equations that are part of a simultaneous system
Answer: Biased and inconsistent
(6) Which one of the following is not a plausible remedy for multicollinearity ?
(1) Use principal components analysis
(2) Drop one of the collinear variables
(3) Use a longer-run of data
(4) Take logarithm of each of the variables
Answer: Take logarithm of each of the variables
(7) In which one of the following market situations are the firms mutually interdependent in pricing and output decisions ?
(1) Oligopoly
(2) Monopsony
(3) Monopoly
(4) Monopolistic Competition
Answer: Oligopoly
(8) A tax is said to be buoyant if tax revenue is proportionally :
(1) More responsive to changes in output
(2) Less responsive to changes in output
(3) Equally responsive to changes in tax base
(4) Less responsive to changes in tax base
Answer: More responsive to changes in output
(9) “Value and Capital” is written by who among the following economists ?
(1) Hanson
(2) Philipes
(3) Ursula
(4) J.R. Hicks
Answer: J.R. Hicks
(10) Giffen paradox occurs when income effect is :
(1) Greater than the substitution effect
(2) Equal to the substitution effect
(3) Less than the substitution effect
(4) Negative and is greater than the substitution effect
Answer: Negative and is greater than the substitution effect
(11) Which one of the following curves will respond the supply curve of labour ?
(1) Marginal product curve of labour
(2) Marginal revenue product curve of labour
(3) Value of marginal product curve of labour
(4) Average product curve of labour
Answer: Marginal product curve of labour
(12) Limit price refers to the :
(1) Price which maximizes the profits of the firm
(2) Price which prevents entry of new firms
(3) Price at which firm just starts earning a surplus over cost
(4) Maximum price which the firm is allowed to charge
Answer: Price which prevents entry of new firms
(13) Intellectual property rights regime is managed by :
(1) IMF
(2) W.T.O.
(3) European Union
(4) SAARC
Answer: W.T.O.
(14) According to Heckscher - ohlin theorem, a nation will export a commodity which is :
(1) Intensive in its relatively abundant factor
(2) Intensive in its relatively cheap factor
(3) Both (1) and (2) are necessary
(4) Neither (1) nor (2) in necessary
Answer: Both (1) and (2) are necessary
(15) Customs union always leads to :
(1) Trade diversion effect alone
(2) Trade creation effect alone
(3) Both trade creation and trade diversion effects
(4) Neither trade diversion nor trade creation effect
Answer: Both trade creation and trade diversion effects

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