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 geography economic growth and development development and growth need for sustainable development economics of development

Economic growth stresses on _________ period of time, whereby the rise in per capita income must be sustained or prolonged.

  1. short

  2. long

  3. very short

  4. either A or C
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Economic growth is a long-term process. Short-term fluctuations in income do not constitute economic growth; it requires a sustained increase over an extended period.

Multiple choice geography economic growth and development development and growth need for sustainable development economics of development

Economic development is _____________ in nature.

  1. static

  2. multidimensional

  3. one-dimensional

  4. both A & C
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Economic development is considered multidimensional because it involves improvements in health, education, infrastructure, and social equity, rather than just an increase in economic output.

Multiple choice geography economic growth and development development and growth need for sustainable development economics of development

Increased efficiency of inputs due to technology advancements provide the basis for __________ economic growth.

  1. sustained

  2. volatile

  3. intermittent

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

Sustained economic growth requires long-term increases in efficiency, which are typically driven by technological advancements. Volatile or intermittent growth suggests instability rather than the consistent improvement provided by technological progress.

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

Money means anything that serves as ______________.

  1. medium of Exchange

  2. common measure of value

  3. store of Value

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

Money is defined by its ability to act as a medium of exchange, a common measure of value, and a store of value. Since all these options are standard functions of money, 'all of the above' is correct.

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

 Money is ___________.

  1. neutral for production

  2. helpful for production

  3. harmful for production

  4. distorts production
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Money facilitates trade and investment, which are essential for production processes. By providing liquidity and a medium for exchange, it acts as a catalyst for economic activity.

Multiple choice organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

The scarcity of capital, technological backwardness, and unemployment are generally found in ________.

  1. Developed countries

  2. Underdeveloped countries

  3. Developing countries

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

In economics, underdevelopment is when resources are not used to their full socio-economic potential. As a result  local or regional development is slower in most cases than it should be, especially compared with the investment and innovation in countries that surround it. The scarcity of capital, technological backwardness, and unemployment are generally found in underdeveloped countries.

Multiple choice organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

 Production is a / an _____________ activity.

  1. Charitable

  2. Beneficial

  3. Economic

  4. Successful
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
Economic activity is an activity that generates income and involves production, sale and distribution of goods and services. The motive behind an economic activity is to earn money and not to meet emotional and sentimental human needs. 
Thus, production is an economic activity that generates income and is undertaken with a motive to earn profit.
The correct option is C.
Multiple choice organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

In which of the following situations, the Law of Variable Proportions will not apply?

  1. Improvement in technology

  2. When all factors are proportionately varied

  3. Where the factors must be used in fixed proportions to yield the product

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
In the following situations, the Law of Variable Proportions will not apply:
a) Improvement in technology
b) When all factors are proportionately varied c) Where the factors must be used in fixed proportions to yield the product
Law of variable proportions is also known as the law of law of diminishing returns. This law shows the production function with one input factor variable while keeping the other input factors constant.
Multiple choice organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

After the initial stages of increasing returns to scale, the Firm will experience ________________________.

  1. Still Increasing Returns to Scale

  2. Constant Returns to Scale

  3. Diminishing Returns to Scale

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

In economic terms, constant returns to scale is when a firm changes its inputs with the results being exactly the same change in outputs (production). In other words, if a firm increases its inputs they will see a proportional increase in production (or outputs). 

The similar can be true if a firm decreases its inputs and that results in a proportional decrease in outputs. Constant returns to scale take place when increasing the number of inputs leads to an equivalent increase in the output.

 Thus, the correct option is B.