Economics ยท 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

Which factor of production is the human effort used in the production of goods and services?

  1. Land

  2. Labor

  3. Capital

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

Labor is the human effort used in the production of goods and services.

Multiple choice

Which factor of production is the physical assets used in the production of goods and services?

  1. Land

  2. Labor

  3. Capital

  4. Technology
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital is the physical assets used in the production of goods and services.

Multiple choice

Which factor of production is the knowledge and skills used in the production of goods and services?

  1. Land

  2. Labor

  3. Capital

  4. Technology
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Technology is the knowledge and skills used in the production of goods and services.

Multiple choice

Which of the following is an example of a positive externality?

  1. Pollution from a factory

  2. Education

  3. Traffic congestion

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

Education is an example of a positive externality, as it benefits not only the individual receiving the education but also society as a whole, through increased productivity, innovation, and social cohesion.

Multiple choice

Which of the following is an example of a private good?

  1. National defense.

  2. Clean air.

  3. Private property.

  4. Personal income.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Private property is an example of a private good, as it is excludable (people can be prevented from enjoying it) and rivalrous (one person's enjoyment diminishes another's enjoyment).

Multiple choice

What is the term used to describe the process of transferring ownership of a Public Enterprise to the private sector?

  1. Privatization

  2. Nationalization

  3. Deregulation

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

Privatization is the term used to describe the process of transferring ownership of a Public Enterprise to the private sector.

Multiple choice

What is the term used to describe the process of structural transformation in an economy, where the share of agriculture declines while the shares of industry and services increase?

  1. Industrialization

  2. Deindustrialization

  3. Economic diversification

  4. Structural change
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Structural change refers to the process of transformation in an economy's structure, typically involving a shift from agriculture to industry and services.

Multiple choice

Which of the following is a measure of the overall price level in an economy?

  1. GDP

  2. CPI

  3. PPI

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

CPI stands for Consumer Price Index, which is a measure of the overall price level in an economy.

Multiple choice

What is the most commonly used indicator to measure knowledge creation?

  1. Number of patents

  2. Number of scientific publications

  3. Number of R&D personnel

  4. Number of university graduates
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The number of scientific publications is often used as a proxy for knowledge creation, as it reflects the amount of new knowledge that is being generated and disseminated.

Multiple choice

Which of the following is NOT a major economic institution?

  1. The market

  2. The firm

  3. The government

  4. The family
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The family is not a major economic institution. The market, the firm, and the government are all major economic institutions.

Multiple choice

What is the main function of the firm?

  1. To produce goods and services

  2. To make a profit

  3. To create jobs

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

The main function of the firm is to produce goods and services, make a profit, and create jobs.

Multiple choice

What is the economic impact of milk production on a global scale?

  1. It generates billions of dollars in revenue annually.

  2. It supports millions of jobs worldwide.

  3. It contributes to food security and nutrition.

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

Milk production has a significant economic impact globally, generating billions of dollars in revenue, supporting millions of jobs, and contributing to food security and nutrition.

Multiple choice

Which of the following is NOT a measure of human development?

  1. Life expectancy

  2. Literacy rate

  3. Gross domestic product (GDP)

  4. Human Development Index (HDI)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Gross domestic product (GDP) is not a measure of human development, as it is a measure of economic development.

Multiple choice

Which of the following factors can influence the supply of industrial goods?

  1. Availability of raw materials

  2. Technological advancements

  3. Government policies

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

The supply of industrial goods can be influenced by various factors such as the availability of raw materials, technological advancements, government policies, and other economic conditions.

Multiple choice

What is the main factor that determines the supply of cultural goods?

  1. The cost of production

  2. The demand for cultural goods

  3. The availability of resources

  4. The level of technology
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The cost of production is the main factor that determines the supply of cultural goods because it affects the profitability of producing these goods.