Economics · General Awareness

Economic Principles

1,087 Questions

Economic principles form the foundation of how societies allocate resources and produce goods. This topic covers factors of production, types of capital, and demand classifications. It is a vital component of the economics syllabus in many civil services and banking exams.

Factors of productionCapital typesDemand classificationsEconomic activities

Economic Principles Questions

Multiple choice

The total value of goods and services which are produced whitin a country

  1. Alternating Current/Direct Current (AC/DC)

  2. Rapid Eye Movement (REM)

  3. Free Trade Agreement (FTA)

  4. Gross Domestic Product (GDP)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

GDP stands for Gross Domestic Product, which measures the total monetary value of all finished goods and services produced within a country's borders in a specific time period. It is a key indicator of a country's economic health and standard of living. The other options (AC/DC, REM, FTA) are unrelated concepts.

Multiple choice general knowledge resources of india and world animal husbandry and fishery green and white revolution agriculture in indian economy

A system is in ______ when it is neither growing nor getting smaller but continues to be in complete operation.

  1. dynamic equilibrium

  2. equilibrium

  3. closed state

  4. feedback equilibrium
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Dynamic equilibrium refers to a state where a system remains stable because the processes of growth and decay, or input and output, are balanced. It describes a steady state in an active system.

Multiple choice economics parameters (indicators) of development human development and human development index (hdi) hdi dynamic of human development

Human development is the end of all activities, while ____________ is only a means to this end.

  1. economic growth

  2. profit

  3. supply of output

  4. all of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In human development theory, economic growth is viewed as a tool or means to achieve the broader goal of improving human well-being and expanding choices.

Multiple choice economics parameters (indicators) of development human development and human development index (hdi) hdi dynamic of human development

Over population has ________ the growth of the economy.

  1. increased

  2. stabilized

  3. decreased/reduced

  4. none of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Overpopulation generally strains resources, infrastructure, and public services, which hinders or reduces the overall growth rate of an economy by diverting capital from investment to consumption.

Multiple choice history contribution of madhya pradesh in freedom struggle the age of industrialisation emerging from the shadow of china the nationalist movement in indo-china

For the development of industry, _____ workers at all levels were needed.

  1. educated

  2. skilled

  3. unskilled

  4. none of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Industrial development requires skilled workers at all levels to operate machinery and manage complex production processes efficiently.

Multiple choice economics dynamic of human development development indices various development indexes social development

A sustained high rate of growth of an economy depends upon _________.

  1. high-rate of growth of the agricultural sector

  2. continuous emergence of new inventions and new innovations

  3. change in occupational structure in favour of industry

  4. Rapid industrialisation
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A sustained high rate of growth is a rate which is achieved by adopting environment-friendly measures. It doesn’t create any kind of economic problems too. It helps the present generation to satisfy its needs without compromising with the needs of the future generation. It depends upon the continuous emergence of new innovations and inventions.

Thus, the correct answer is B.

Multiple choice economics dynamic of human development development indices various development indexes social development

__________ refers to increase in welfare of one individual without decreasing the welfare of another individual.

  1. Social efficiency

  2. Production efficiency

  3. Distribution efficiency

  4. All the three
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Distribution efficiency refers to increase in welfare of one individual without decreasing the welfare of another individual. The idea of distributive efficiency is proposed by Alba Lerner in the year of 1944. According to welfare economic consideration, distributive efficiency is concerned with an equitable distributionof resources.

Multiple choice economics production and costs return to scale and cobb douglas function total product, average product and marginal product laws of returns - returns to a factor and returns to scale

Returns to scale means ________________.

  1. the behaviour of production or return when all the production factors are increased or decreased simultaneously in the same ration

  2. the behaviour of production where one or two factors of production are fixed while the others are variable

  3. the marginal returns goes on increasing as more labour is invested in industry.

  4. the behaviour of production, when changes are made in factor proportions, keeping on or some factors fixed
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In the long run all factors are varied, the proportion of inputs while kept same is scaled up or down in order to produce at the minimum efficiency scale (long run minimum average cost) . Thus as the entire scale of production is changing, this phenomenon is know as returns to scale. 

Multiple choice economics production and costs return to scale and cobb douglas function total product, average product and marginal product laws of returns - returns to a factor and returns to scale

The Cobb-douglas production function $Q= K^{1/2} L^{1/3}$ exhibits __________. 

  1. constant returns to scale

  2. increasing returns to scale

  3. decreasing returns to scale

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The terms in the equation are raised to coefficients less than 1, this implies for every one unit increase in input the output will increase by less than 1. Thus, this is is a function exhibiting deceasing returns to scale. 

Multiple choice economics production and costs return to scale and cobb douglas function total product, average product and marginal product laws of returns - returns to a factor and returns to scale

In the standard notation of Cobb Douglas Function, if + = 1,  the production function exhibits _____.

  1. constant returns to scale

  2. increasing returns to scale

  3. decreasing returns to scale

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In a Cobb-Douglas production function Q = A * L^a * K^b, the sum of the exponents (a + b) determines the returns to scale. If a + b = 1, the function exhibits constant returns to scale.

Multiple choice economics production and costs return to scale and cobb douglas function total product, average product and marginal product laws of returns - returns to a factor and returns to scale

In the standard notation of Cobb Douglas Function, if the terms are raised to coefficients greater than 1, then the production function exhibits _______.

  1. CRS

  2. DRS

  3. IRS

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In the standard notation of Cobb Douglas Function, if the terms are raised to numbers greater than 1 then for each one unit increase in input the output will increase by more than 1. eg: $Q(K,L)$ = ${K^3}$${L^6}$ 


Multiple choice economics production and costs return to scale and cobb douglas function total product, average product and marginal product laws of returns - returns to a factor and returns to scale

Law of variable proportion applies _______.

  1. in the long run

  2. in the short period

  3. on the very long period

  4. all of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
It is only possible for the law of variable proportions to operate under specific conditions. 
1. The state of technology is given and remains unchanged
2. It is assumed that some inputs are fixed while others are varied. As it is only then that the factor proportions can be changed. 
3. It is assumed that technology is such that it is possible to change the factor proportions. The law will not apply in situations where the factors of production must be used in fixed proportions. 
4. It is assumed that all the units of the variable factor are homogeneous and are equally efficient. (eg every worker hired is equally efficient).