Economics · General Awareness

Economics Concepts and Theories

1,710 Questions

Review fundamental and advanced economics concepts through this structured question bank. The topics include macroeconomics, fiscal policy, international trade theories, and economic regulation. These questions are ideal for candidates preparing for civil services and other administrative competitive examinations.

Macroeconomics fundamentalsInternational trade theoriesFiscal policy debatesEconomic regulationLabor theory of value

Economics Concepts and Theories Questions

Multiple choice the economy of maharashtra economics

The term Economics is derived from the Greek words "OIKOU" and "Nonos" meaning :

  1. Rule or law of household

  2. Rule or law of the land

  3. Rule or law of the nature

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

The term Economics is derived from the Greek words 'Oikos' (household) and 'Nomos' (management/law), which translates to the management or law of the household.

Multiple choice economics circular flow of income and methods of calculating national income expenditure method and income method methods of measuring national income national income accounting

Old age pension is _________ income.

  1. earned

  2. transfer

  3. increased

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

Old age pension is paid to people after retirement who no longer provide any productive services in exchange. The government in this case collects taxes from working population and provide pension to older population in the form of government expenditure.

The pension is income for those who receive it, however, no new income is generated in the economy, hence it is a transfer payment.

Multiple choice economics circular flow of income and methods of calculating national income expenditure method and income method methods of measuring national income national income accounting

National Income estimates are _______ in India.

  1. accurate

  2. not accurate

  3. rising

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

Due to the large size of the informal sector and difficulties in data collection, national income estimates in India are often considered to have significant margins of error, hence not fully accurate.

Multiple choice economics circular flow of income and methods of calculating national income expenditure method and income method methods of measuring national income national income accounting

Illegal income includes ______ while transfer income includes ________.

  1. cost, price

  2. taxes, payments

  3. none of the above

  4. betting, scholarships
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Illegal income (like betting) is generally excluded from national income calculations, while transfer payments (like scholarships) are also excluded as they do not represent production of goods or services.

Multiple choice economics circular flow of income and methods of calculating national income expenditure method and income method methods of measuring national income national income accounting

For developed economics which of the following methods is most suitable?

  1. Value Added Method

  2. Income Method

  3. Expenditure Method

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

The Income Method is often considered most suitable for developed economies where income tax records and organized financial data are comprehensive and reliable.

Multiple choice elements of business classification of busniess activities business as an activity meaning and types of trade trade and aids to trade

A network that allows trade is called a ______.

  1. networking

  2. specialization

  3. internet

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

A market is one of the many varieties of systems, institutions, procedures, social relations and infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services in exchange for money from buyers.

Multiple choice civics consumer in the market consumer awareness, education and protection consumers and their rights consumer : satisfaction and protection

The concept that under a system of free enterprise, it is consumers who decide what goods and services shall be produced and in what quantities, is known as ________.

  1. consumer protection

  2. consumer's decision

  3. consumer preference

  4. consumer's sovereignty
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Consumer sovereignty is an economic theory stating that the consumer is the king in a free market, as their purchasing decisions determine what is produced and in what quantities.

Multiple choice national income identity for open economy open economy macroeconomics determination of income and employment economics

The ratio of the total increment in equilibrium value of final goods output to the initial increment in autonomous expenditure is called the _____________.

  1. income multiplier

  2. output multiplier

  3. employment multiplier

  4. money supply multiplier
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The output multiplier represents the ratio of the change in equilibrium output to the change in autonomous expenditure. It measures how much total output increases for a given increase in spending.

Multiple choice national income identity for open economy open economy macroeconomics determination of income and employment economics

The ____________, states, that if all the individuals in the economy increase the proportion of income they save, the total value of savings in the economy will
not increase, rather it would decrease or remain unchanged.

  1. paradox of savings

  2. paradox of income function

  3. paradox of thrift

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

The paradox of thrift is a concept in Keynesian economics which states that while individual saving is a virtue, if everyone tries to save more during a recession, aggregate demand falls, leading to lower income and ultimately lower total savings.

Multiple choice national income identity for open economy open economy macroeconomics determination of income and employment economics

The critical elements of macro-economic environment are:
I. Economic system
II. Economic legislation
III. Economic Planning
IV. Economic Policy Statements
Of these:

  1. I and II are correct

  2. II and IV are correct

  3. I, II and III are correct

  4. All are correct
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

For an economy to run smoothly and maintain order, there has to be an economic system that is governed by legislation, and constant planning  is undertaken in order to add new and review existing policies to further develop the economy.  

Multiple choice national income identity for open economy open economy macroeconomics determination of income and employment economics

The level of income and employment in an economy is determined by the effective demand.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

According to Keynesian theory, the level of output and employment in an economy is determined by the total amount of spending, known as effective demand, which is the point where aggregate demand equals aggregate supply.

Multiple choice business economics and quantitative methods public economics components of budget and budgetary procedure government budget and taxation government budget and economy

Capital expenditure is majorly of developmental nature.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Capital expenditure are all those expenditure of the government that either creates an asset for the government or reduce the liability of the government. For example - Expenditure on land and building, purchase of shares etc. Therefore, these expenditure are usually development as it contributes to the social and economic welfare of the country.