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 economic reconstruction economics of planning objectives of economic planning in india major economic problems
Problem of resource allocation is automatically solved in a free market economy.

  1. True

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

In a free market economy, prices of commodities in the market are affected by the forces of demand and supply. This generates open competition in the market which leads to optimum allocation and utilization of resources in the economy without any planning or intervention of any authority.

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems
Choice between 'production for the poor' and 'production for the rich' refers to the problem of 'what to produce'.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Choice between 'production for the poor' and 'production for the rich' refers to the problem of 'for whom to produce' where the product is produced keeping in mind the the end users of the product whereas 'what to produce' relates with the production of goods that are in high demand in the economy irrespective of poor or rich class. 
Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

Economic problem arises when ____________.

  1. wants are unlimited

  2. resources are unlimited

  3. alternative uses of resources

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The central economic problems rise for the basic fact that the resources in the economy is scarce with many alternative uses whereas the wants are unlimited. Therefore, it deals with the efficient allocation of the resources for the production of goods and services in the economy. 

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

If there were no choices in resource allocation, microeconomics would not have existed.

  1. True

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

Micro economics deals with solving the central problem of the economy which deals with resource allocation. It is the study of how resources are allocated in the production of various goods and services in the economy for the satisfaction of human wants. This is because these resources are scarce and have alternative uses whereas human wants are unlimited.

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

Lack of scarcity implies lack of economic problem.

  1. True

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

Economics deals in the problems of how resources are allocated in the production of various goods and services in the economy for the satisfaction of human wants. This is because these resources are scarce and have alternative uses whereas human wants are unlimited.

Multiple choice business economics and quantitative methods nature and scope of economics definition, scope, importance and limitation of statistics introduction - statistics for economics meaning and definition of statistics

Statistical information basically helps to understand the _____________.

  1. economic problems

  2. formulation of economic policies

  3. both (A) and (B)

  4. neither (A) nor (B)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
Statistics is useful in studying the role of the government in economic problems and formulation of policies to alleviate it. Through the collection and analysis of statistical data the government will be able to identify problems such as unusually high unemployment and then formulate the best policy to help solve the problem. 
Multiple choice social science food security in india need for nregs rural development and employment guarantee scheme food security and nutrition

Hoarding leads to which of the following:

  1. creation of artificial scarcity

  2. creation of monopoly

  3. exploitation of consumers

  4. all of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Hoarding in economics refers to maintaining unaccounted stocks of many commodities to save guard oneself from rise in general price level i.e. inflation or to take advantage of future rise in prices. This creates artificial scarcity of commodities in the market which further increases the prices of the commodities through which consumers are exploited. This may also lead to creation of monopoly of a seller, in case of scarcity of goods.

Multiple choice

Adam Smith talked about this economic principle

  1. Profit and Expense

  2. Supply and Demand

  3. Supply and Take

  4. Demand and Give
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Adam Smith, often called the father of modern economics, discussed the mechanics of market forces, including supply and demand, in his seminal work The Wealth of Nations. He explained how these forces regulate prices in a free market.

Multiple choice economics ancient indian economic concepts goods, wealth and welfare major definitions of economics wealth, capital and money

The way in which rational consumers allocate their expenditure on goods and service is best described by ___________.

  1. The law of diminishing marginal utility

  2. The law of demand

  3. The theory of value

  4. The marginal rate of substitution
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The law of diminishing marginal utility explains how consumers allocate their income to maximize satisfaction by equating the marginal utility per dollar spent across different goods.

Multiple choice economics ancient indian economic concepts goods, wealth and welfare major definitions of economics wealth, capital and money

Goods or services that are necessary for living are called ________.

  1. needs

  2. desires

  3. wants

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

The goods and services that are necessary for a living are called needs. Needs are the essential things that you need for survival, to live properly. Thus, it is important to satisfy these needs as if we don’t satisfy needs, we will not be able to live long. For example, when we are hungry, a need arises for food.

Multiple choice economics ancient indian economic concepts goods, wealth and welfare major definitions of economics wealth, capital and money

 Wants that are related to consumption of goods and services is:

  1. Economic wants

  2. Non economic wants

  3. Economics

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

Economic wants refer to the wants that are related to the satisfaction of own need by the way of consumption or profit earning. We fulfill these kind of wants through exchange mechanism, i.e., exchange of goods for profit.

Multiple choice economics ancient indian economic concepts goods, wealth and welfare major definitions of economics wealth, capital and money

Wants can be satisfied by the consumption of __________ are economic wants.

  1. goods

  2. services

  3. goods and services

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

Economic wants refer to the wants that result in monetary gain for the people who are demanding it. Therefore, to have some monetary gain there is need for consumption of some materialistic thing carrying some value for which money can be exchanged for.

Multiple choice economics ancient indian economic concepts goods, wealth and welfare major definitions of economics wealth, capital and money

Which of the following can be treated as a characteristic of economic wants?
1. Even if satisfied, the wants have a tendency to re-emerge.
2. With the passage of time, the wants tend to increase in number and in variety.
Select the correct answer from the options given below -

  1. 1 only

  2. 2 only

  3. Both 1 & 2

  4. Neither 1 nor 2
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Human wants are unlimited, so there is always a tendency that human wants get re-emerge even after the satisfaction is achieved on the consumption of the commodity as the wants keep on increasing after a passage of time and consumer also start demanding more variety of that commodity in order to achieve higher utility. 

Multiple choice economics ancient indian economic concepts goods, wealth and welfare major definitions of economics wealth, capital and money

Human wants may be classified into ______________________.

  1. Economic wants & non-economic wants

  2. Economic wants & unsatisfied wants

  3. Satisfied wants & non-economic wants

  4. Plain wants & economic wants
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Human wants refers to the demands of humans in order to satisfy themselves.

Some wants results in monetary gain for the people who are demanding it known to be as economic wants whereas some wants are for the welfare of other people which is called non-economic wants.

Multiple choice economics ancient indian economic concepts goods, wealth and welfare major definitions of economics wealth, capital and money

Which one of the following is incorrect?

  1. There are limited wants.

  2. Means are scarce.

  3. Resources have alternative uses.

  4. Economics is a science.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Human wants are unlimited and resources are limited which leads to problem of choice. Thus the statement, 'there are limited wants' - is incorrect.