Economics · General Awareness

Economics Concepts and Theories

1,657 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 economics basic concepts of national income macroeconomic theories some basic concepts of macroeconomics introduction to macroeconomics

In developing countries the marginal propensity to consume is ______ than underdeveloped countries.

  1. more

  2. less

  3. constant

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

In developing countries, people generally have lower incomes and a higher proportion of their income is spent on basic necessities, leading to a higher marginal propensity to consume compared to more developed nations.

Multiple choice economics planning and collecting data different types of data primary and secondary data collecting data

In order to save time and money, economists may collect their data by __________.

  1. door to door survey

  2. the use of censuses

  3. using the earlier research papers

  4. the use of samples
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In order to  save time and money, economists may collect their data by the use of samples.An observed set of the population that has been selected for analysis is called a sample. A sample is a small part of the whole information.

Multiple choice economics income-output determination public debt public debt main feature of tax

Which of the following is not a component of aggregate demand in a two-sector economy?

  1. Net Exports

  2. Government Expenditure

  3. Consumption

  4. Both (a) and (b)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The aggregate demand in two sector economy only includes the expenditure made by the consumer sector and the producer sector. The expenditure by the government sector and net exports are not included in the two sector economy.

Multiple choice economics income-output determination public debt public debt main feature of tax

Induced consumption expenditure is ___________ in nature.

  1. income inelastic

  2. income elastic

  3. either A or B

  4. neither A nor B
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Induced consumption refers to that consumption which occurs on the basis of change in income. It changes when there is some same change in the level of income in the economy. Therefore, it is income elastic as it depends on the level of income in the economy. 

Multiple choice economics income-output determination public debt public debt main feature of tax

Who propounded the 'market law'?

  1. Adam Smith

  2. J B Say

  3. T R Malthus

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

Law was propounded by J.B say
This law means that ‘supply always creates its own demand.’ In other words, according to J.B. Say, there cannot be general over­production or general unemployment on account of the excess of supply over demand because whatever is supplied or produced is automatically exchanged for money.

Multiple choice economics income-output determination public debt public debt main feature of tax

Household expenditures on consumer goods and services during the current period is a part of _____________.

  1. aggregate supply

  2. aggregate demand

  3. investment

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

Aggregate demand refers to the total demand in the economy as a result of consumption expenditure of households, investments made and the government expenditure in a given year. The expenditure of households on consumption goods, in a given period is, thus, a part of aggregate demand in the economy for the given period of time.

Multiple choice civics the nature of the indian economy part 1 three phases of indian agriculture cash crops of india agricultural nature of indian economy plantation of crops

Economics of agriculture is known as ___________.

  1. Macro economics

  2. Agro economics

  3. Micro economics

  4. All of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Agro econnomics.

Agricultural economics is an applied field of economics concerned with the application of economic theory in optimizing the production and distribution of food and fiber.

Multiple choice functional area of management financial management nature and significance of management organisation of commerce and management business studies

The key word that can be used to describe the basic economic problem that all societies face is:

  1. Selfishness

  2. Greed

  3. Inequality

  4. Scarcity
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
Scarcity refers to the basic economic problem, the gap between limited – that is, scarce – resources and theoretically limitless wants.
Scarcity, or limited resources, is one of the most basic economic problems we face. Scarcity arises where resources are limited and where the wants of  society are unlimited. Hence it is required that the resources are efficiently allocated.
Multiple choice economics theories of distribution unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

According to Keynes, the equilibrium level of income is always determined corresponding to full employment level. 

  1. True

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

False.
 The equilibrium level on income may be determined at a level less than full employment where the market is clear even in under utilization of resources , more than the full employment where market is clear even if resources are over utilized or equal to level of full employment. 
Multiple choice economics theories of distribution unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

______________ propounded the Liquidity Preference Theory of Interest.

  1. Adam Smith

  2. Marshall

  3. Keynes

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

Liquidity Preference theory refers to the preference of the people to hold wealth in the form of liquid cash rather than in other non-liquid assets like bonds, securities, bills of exchange, land, building, gold etc. According to the liquidity preference theory of interest, interest rates on short-term securities are lower because investors are not sacrificing liquidity for greater time frames as in medium or longer-term securities. 

The theory was propounded by Keynes as a part of his Macro economic studies. 

Multiple choice economics income-output determination unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Aggregate Supply and __________ are always equal.

  1. National Income

  2. Aggregate Demand

  3. Marginal Propensity to save are always equal.

  4. Average Propensity to Consume
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Aggregate supply refers to the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income. Therefore, aggregate supply= consumption + savings. 

Multiple choice economics income-output determination unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Aggregate supply refers to the total value of output of goods and services produced in an economy in a year.

  1. True

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

Aggregate supply refers to the desired level of output in the economy during an accounting year. It is through this output only that the producer sector generates income. Therefore, aggregate supply= consumption + savings.

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Aggregate demand in an economy is measured in terms of the total expenditure on goods and services.

  1. True

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

True.

Aggregate Demand refers to the desired level of expenditure in the economy during an accounting year. It is what people wish to spend on the purchase of goods and services during an accounting year.

Multiple choice economics concept of excess demand and deficient demand unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

_______________ is the minimum amount of money, which all the entrepreneurs in the economy must receive from the sale of output produced by them, at any given level of employment.

  1. Aggregate supply price

  2. Aggregate profit

  3. Aggregate demand price

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

Aggregate supply price refers to the minimum value of money which all the entrepreneurs  in the economy must expect from the sale of output produced by them using the factors of production, at any given level of employment. This is the rate of return from the  business according to which the firms make their long term and short term plans.