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 business organisation and correspondence commerce and modern civilization history of commerce in india hindrances of commerce historical background of commerce in the sub-continent

Marginal utility theory was originated by _____________.

  1. Keynes

  2. Marshall

  3. Mayo

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

Alfred Marshall is widely credited with formalizing the marginal utility theory in his work, Principles of Economics, which became a cornerstone of neoclassical economics.

Multiple choice social science index number value and price important index numbers price rise/inflation

Consumer price index is also known as ____.

  1. cost of living index

  2. cost of consumption index

  3. IIP

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

The Consumer Price Index is widely used as a measure of inflation and is often referred to as the cost of living index because it tracks the price changes of goods and services that households consume.

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

Study of how the consumer decides, given his income and many alternative goods to choose from, what to buy when he knows the prices is called study of __________.

  1. consumption

  2. production

  3. distribution

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

The theory of consumption is studied through the indifference map.
The consumption function is created on the basis of the wants of the consumers (and plotted as an indifference curve) and the budget line represents the ability to pay and depends on the consumers' income. 

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

Consumption function is the functional relationship between ______ and  ______.

  1. Consumption, Aggregate demand

  2. Consumption, National Income

  3. Aggregate Demand, Aggregate Supply

  4. National Income, Private Income
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Consumption function refers to the standard equation of consumption which defines the relationship between consumption and income where consumption value can be derived at each level with the use of income value. 

C= c+ bY where c=autonomous consumption, b= marginal propensity to consume, and Y= income. 

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

If saving function of an economy is given as: S = - 40 + 0.4 M, then MPC is ___________________.

  1. 1

  2. 0.4

  3. 0.8

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Saving function is S= s + M(1-b) where s=autonomous savings, (1-b)= marginal propensity to save, and M= income. Comparing it to S=−40+0.4(M), MPS= 0.4.


We know that, 

MPS + MPC = 1 

=> MPC = 1 - MPS 

=> MPC = 1 - 0.4 

=> MPC = 0.6 


Therefore, MPC is 0.6. 

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

Which among the following is the other term used for 'saving function'?

  1. Income function

  2. Propensity to save

  3. Reverse consumption propensity

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

Savings function refers to the standard equation of savings which defines the relationship between savings and income where savings value can be derived at each level with the use of income value. 

S= s + Y(1-b) where s=autonomous savings, (1-b)= marginal propensity to save, and Y= income.

It defines the propensity to save in the economy at every level of income. 

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

Saving is a function of ___________.

  1. income

  2. aggregate demand

  3. export

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

Savings refers to the proportion which is not utilized at present and is saved for future. It is a function of income where,

Saving function is S= s + Y(1-b) where s=autonomous savings, (1-b)= marginal propensity to save, and Y= income. 

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

The distance between the line of consumption and the income curve after the intersection of both the curves is termed as __________.

  1. investment

  2. savings

  3. dissavings

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

Savings refers to the amount of the income which is not spend on the consumption of the commodities. It is the distance between the consumption curve and the income curve after the intersection. 

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

According to Keynes, consumption function is only affected by objective factors.

  1. True

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

False. 

According to Keynes, Consumption function refers to the standard equation of consumption which defines the relationship between consumption and income where consumption value can be derived at each level with the use of income value. It is affected by both objective and subjective factors. 

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

The consumption function depends on _______________.

  1. interest

  2. savings

  3. wealth

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

Consumption function refers to the standard equation of consumption which defines the relationship between consumption and income where consumption value can be derived at each level with the use of income value. 

C= c+ bY where c=autonomous consumption, b= marginal propensity to consume, and Y= income.

Multiple choice business mathematics and statistics moving averages introduction to time series introduction to time series and forecasting time series and forecasting uses of average in day-to-day life

The general pattern of increase or decrease in economics or social phenomena is shown by:

  1. Seasonal trend

  2. Cyclical trend

  3. Secular trend

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

$\Rightarrow$  The general pattern of increase or decrease in economics or social phenomena is shown by : $Secular\, trend$.

$\Rightarrow$  Term tendency of the time series to move in an upward or down ward direction. It indicates how on the whole, it has behaved over the entire period under reference.
$\Rightarrow$  These are result of long-term forces that gradually operate on the time series variable. A general tendency of a variable to increase, decrease or remain constant in long term.
$\Rightarrow$  Secular trend is be long-term tendency of the time series to move on upward or downward direction. It indicates how on the whole behaved over the entire period under reference.

Multiple choice economics laws of returns - returns to a factor and returns to scale production and costs production function producer behaviour and supply total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function land land,labour, capital and entrepreneur how does production take place?

In economics, _______ is a period where all factors/inputs are variable.

  1. long run

  2. short run

  3. very short period

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

In the long run all factors are variable as producers have enough time to organize all factor inputs in the appropriate proportions to achieve the minimum efficient scale.

Multiple choice economics laws of returns - returns to a factor and returns to scale production and costs production function producer behaviour and supply total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function land land,labour, capital and entrepreneur how does production take place?

In economics, ________ is a period where some factor inputs are fixed, while the others are variable.

  1. long run

  2. short run

  3. very long period

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

The short run, as economists use the phrase, is characterized by at least one fixed factor of production so the proportion of inputs can be changed, the law of variable proportion will only operate in the short run. It is in the long run all factors are variable as producers have enough time to organize all factor inputs in the appropriate proportions to achieve the minimum efficient scale.