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 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

_____________ refers to what the households and firms are expected to spend on the purchase of different goods and services in the economy.

  1. Aggregate supply price

  2. Aggregate demand price

  3. Aggregate expenditure

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

Aggregate demand price refers to the the maximum value of money which the households and firms expect to spend on the purchase of different goods and services for consumption and production purpose respectively in the economy. 

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

The aggregate demand determines the flow of total expenditure.

  1. True

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

Aggregate demand represents the total demand for finished goods and services in an economy, which effectively dictates the total planned expenditure by households, firms, and the government.

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

For open economy aggregate demand is equal to Consumption + Investment + Government expenditure.

  1. True

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

An open economy is an economy in which there are economic activities between the domestic country with the other countries.

Hence, for an open economy, aggregate demand is equal to Consumption + Investment + Government expenditure + (X-M) where X is the income from Exports and M is the expenditure on imports

AD = C + I + G + (X-M)

Multiple choice economics economics of development and planning economics of planning objectives of economic planning in india major economic problems

The periodic rise and fall in production, employment and investment etc., in an economy is called ________.

  1. economic instability

  2. economic fluctuation

  3. economic cycle

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

Economic fluctuations are simply fluctuations in the level of the national income of a country representing growth or contraction. A market economy is not static. It's dynamic. A rise in national income means an economy is growing, while a decline in national income means that an economy is contracting.

Multiple choice economics economics of development and planning economics of planning objectives of economic planning in india major economic problems

________are the measures to solve an economic problem.

  1. Solutions

  2. Policies

  3. Plans

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

Policies are measured implemented by the government to solve economic problems. In India, the government has implemented various measures such as National Rural Employment Guarantee Act, 2005, which is implemented to help solve the issue of rural unemployment. 

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

Economic development has become the central theme of economic thought in recent years.

  1. True

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

Economic development refers to the development and growth of the economy in all terms which includes all aspects and has become a main and central theme of economic thought throughout the years.

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

'Redistribution with growth' is the slogan that defined economic development under the ___________ approach.

  1. traditional

  2. quantitative

  3. classical

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

The 'redistribution with growth' approach emerged as a modern critique of earlier models, emphasizing that growth must be accompanied by policies that ensure the benefits are shared across the population.

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

Which view of economic development presumed that the increase in per capita income would trickle down to the masses, thus, reducing income inequalities and poverty?

  1. Modern view

  2. Classical view

  3. Traditional view

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

The traditional view of economic development was heavily focused on the growth of national income and per capita income, operating under the assumption that this growth would eventually benefit all segments of society.

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

Economic development is not fully measurable because it is measured based on both quantitative as well as qualitative variables.

  1. True

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

True. 

Economic development refers to the economic growth of the economy in both quantitative as well as qualitative terms which includes all aspects and has become a main and central theme of economic thought throughout the years. It includes reduction in poverty, income inequality as well as unemployment.  

Multiple choice economics meaning and scope of public finance public finance, budget and fiscal policy government budget and economy public finance and budget

The term mixed economy denotes.

  1. Co-existence of consumer and producer's goods Industries in the economy

  2. Co existence of private & public sectors in the economy

  3. Co existence of urban & rural sectors in the economy

  4. Co existence of large & small industries sectors in the economy
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A mixed economy is defined by the coexistence of both private enterprise and government-owned public sector entities. This structure allows for market mechanisms alongside state intervention.

Multiple choice economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

Which of these statements is true?

  1. Precautionary demand for money is due to uncertainty of income and expenditure

  2. Uncertainty of future leads to precautionary demand for money

  3. Precautionary demand for money is related to income level

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

Precautionary motive of money refers to the demand for money to store it for future uncertainties. In other words, if money is demanded so that it can be kept for bad days then the demand of such money is known as precautionary money. In such cases, money functions as the store of value. Precautionary money balance in needed in a company so that it can be used if there is any uncertainty of receipt in the income and expenditure statement which means the company can make use of this money if the expenditure exceeds the income in a particular year. 

 

 

Multiple choice economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

In a free market economy, the optimal quality of goods and service is determined by ____________.

  1. customers

  2. workers

  3. firms

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

Customer is one who purchase goods and services from the seller. Customer satisfaction is the main aim of the seller to earn goodwill in the market. Free market economy is one where there are no government or less government interventions. Hence, in a free market economy, the optimal quality of goods and service is determined by customers.

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

Measure of value of all goods and services refers __________ from following function of money.

  1. medium of exchange

  2. unit of account

  3. standard of deferred payments

  4. store of value
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The unit of account function allows money to serve as a common measure for the value of goods and services. This enables prices to be set and accounting to be performed.