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

Who proposed a model to apply economic order quantity concept of inventory management to determine the optimum cash holding in a firm?

  1. Keith V. Smith

  2. Miller and Orr

  3. William J. Baumol

  4. J.M. Keynes
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

William J. Baumol applied the Economic Order Quantity (EOQ) model to cash management in 1952, treating cash as an inventory item to minimize total costs.

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

Which of the following function does money serve when used to measure the prices of different goods and services?

  1. Store of value

  2. Medium of exchange

  3. Standard of value

  4. Display of power
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Money as a standard of value or measure of value refers to that function of money which helps in determining the value of goods and services in the economy. Money is taken as the common denominator while measuring the value of goods and services in monetary terms according to which prices are measured for all commodities in the economy. 

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

Which of the following is the main function of money according to modern economists ?

  1. Medium of exchange

  2. Common measure of value

  3. Store of value

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

Money refers to a common medium of exchange that is issued under the law of government and acts as a legal tender for the whole country. The main function of money according to modern economics is money as a store of value. As a store of value, money functions by helping individuals to store their wealth in the form of money. Therefore, money acts as an asset that sustains value over a period of time because it is non-perishable and inexpensive form of storage. 

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

Money acts as a means of calculating relative prices of goods & services.

  1. True

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

True.

Money refers to a common medium of exchange that is issued under the law of government and acts as a legal tender for the whole country. As a measure of value, money functions by determining the value of goods and services in the economy. Money is taken as the common denominator while calculating relative prices of all goods and services in the economy.

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

The transaction approach to the "Quantity Theory of Money" is given by ____________.

  1. Frisch

  2. Fisher

  3. Finlay

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

This appears to be a duplicate of question 473932. Irving Fisher developed the transaction approach to the Quantity Theory of Money, expressed as MV = PT. This focuses on money's role in facilitating transactions. Frisch is associated with econometrics, not monetary theory. Fisher's formulation is the standard transaction-based version taught in economics.

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

When we say that Money serves as a common measure of value, we are considering the _________ aspect of Money.

  1. Static

  2. Dynamic

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The static aspect of money refers to its role in facilitating current transactions and providing a stable unit of account at a specific point in time.

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

A vital function of money is its ability to provide a standard for __________.

  1. difference in consumer's goods

  2. marginal utility

  3. deferred payments

  4. consumer's preference
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The ability to express future debts and contracts in a common unit is the definition of money serving as a standard for deferred payments.

Multiple choice organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

Non-economic activities aim at ___________.

  1. social service

  2. profit maximization

  3. consumer satisfaction

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

Economic activities are related to manufacturing, distribution, exchange and consumption of goods and services. The most important aim of economic activity is the production of goods and services with a view to make them available to the consumer. 

Non-economic activity is an action perform willingly, with the aim of providing services to others lacking any regard as to monetary gain. Individuals human activities which are assumed for individual satisfaction or to satisfy human sentiment are non-economic activities.

The correct option is A.

Multiple choice organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

Which of the following statement is true?

  1. Accumulation of capital depends solely on income

  2. Savings can also be affected by the State

  3. External economies go with size and internal economies with location

  4. The supply curve of labour is an upward slopping curve
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Since govt.  also earn income it can also effect savings.

Multiple choice organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

Our economy is characterized by __________.

  1. unlimited wants and needs

  2. unlimited material resources

  3. no energy resources

  4. abundant productive labour
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
Our economy is characterized by unlimited wants and needs.Every economy in the world is characterized by needs and wants which are unlimited as it is a very well known fact that human needs are never ending.
Economics deals with the management of this scarce resources to its alternative uses in order to gain maximum satisfaction and profit.
Multiple choice organisation of commerce and management economics of development and planning fundamental of economic development economics of development economic mechanism

__________ of credit control affects indiscriminately all sectors of the economy.

  1. Qualitative Methods

  2. Quantitative Methods

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Quantitative methods of credit control affects indiscriminately all sectors of the economy.Quantitative measures to control credit are also known as general measures. Quantitative instruments of control credit are those instruments which focus on overall supply of money in the economy. These measures are used in a manner such that overall supply of money in the economy is reduced during inflation and increased during deflation.