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 solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

In a socialist economy, the central planning authority takes decisions to solve which of the following problems of the economy?

  1. What to produce

  2. How to produce

  3. For whom to produce

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

In a socialist economy, the central problems of the economy is solved by a centrally based planning authority that resolves all the centrally based problems related to production of goods and services in the economy which includes the following

  • What to produce? Consumer goods or capital goods?
  • How to produce? Using labour or capital?
  • For whom to produce? Rich people or poor people?

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

Under a socialist economy framework, it is the responsibility of the central bank of the country to ensure that adequate amount of goods are made available to the people.

  1. True

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

In a socialist economy, the central problems of the economy is solved by a centrally based planning authority which is the government that resolves all the centrally based problems related to production of goods and services in the economy which includes the problem of 'What to produce? Consumer goods or capital goods?' which is decided by allocating resources for the production keeping in mind the needs of the people i.e. consumer goods and to satisfy their wants.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

The economic problems in a mixed economy are solved with the use of ____________.

  1. price mechanims

  2. economic planning

  3. both A & B

  4. neither A nor B
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation
In a mixed economy both private as well as public enterprises utilize the resources for the production of goods and services in  the economy for personal as well as social gains. Therefore, the private sector generates price mechanism in the economy to solve to the centrally based economic problems whereas the public sector depends upon an efficient economic plan to be executed to eradicate these problems. 
Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

_______________ price mechanism operates in a socialist economy.

  1. Administered

  2. Open

  3. Free

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

In a socialist economy, the price mechanism i.e. price affects the demand and supply of the commodities is directed by a centrally based planning authority that controls the price mechanism to certain limits and regulates it to protect civilians from fraudulent practices.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

The decision regarding distribution of income is taken by the planning authority in a capitalist economy.

  1. True

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

Capitalist economies has private ownership where utilization of resources takes place for private gains, therefore here decision regarding the distribution of income and wealth is taken on the basis of the purchasing power of an individual where the private investors gain the maximum. 

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

Under mixed economy framework, free markets and price mechanism operate under the control and regulation of the government.

  1. True

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

In a mixed economy, private decisions are intervened by the government due to which there is problem in price mechanism where prices of a commodities are determined by the forces of demand which involves consumers and supply which involves producers and labours with exception set by government on some basic commodities. 

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

The basic economic problems are solved in the public sector of a mixed economy through decision making by the planning authority.

  1. True

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

In a mixed economy, the public sector price mechanism i.e. price affects the demand and supply of the commodities is directed by a centrally based planning authority that controls the price mechanism to certain limits and regulates it to protect civilians from fraudulent practices.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

In the private sector of a mixed economy, ____________ plays an important role in solving the basic economic problems.

  1. price mechanism

  2. planning authority

  3. government

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

In a private sector of a mixed economy, price mechanism takes a very prominent role as in such sectors price directs the flow of goods and services in the market as it directs the supply by the production sector i.e supply will increase if price increases and vice-versa and purchase by the demand sector i.e demand will increase if price decreases and vice-versa. 

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

Under mixed economy, firms operating in both public and private sectors are left free to adjust their activities to the controlled market forces.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
In a mixed economy both private as well as public enterprises utilize the resources for the production of goods and services in  the economy for personal as well as social gains where government only audits the overall production to ensure adequate availability of goods and services in the economy whereas all the operation takes place with free market forces. 
Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Which of the following is not a problem of barter system of exchange?

  1. Store of Value

  2. Double Coincidence of Wants

  3. Unit of Account

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

Barter system was a system of exchange where goods were exchanged for goods and there was no common medium of exchange in the economy. Barter system had many drawbacks like lack of double coincidence of wants, lack of a common unit of value, difficulty of future payments or contractual payments and difficulty of storage of value and transfer of value. Therefore, unemployment is not a problem related to barter system. 

Multiple choice commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

Positive economic analysis ___________.

  1. compares the desirability of alternative government policy outcomes

  2. provides a framework within which we can study how some groups are better off than others

  3. analyses the sources of improvements in the standard of living that result from favourable government policies.

  4. is based on observed cause and effect relationship in the economy
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Positive economics deals with objective analysis and facts, describing how the economy works based on observed cause-and-effect relationships, rather than making value judgments.

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

___________ is that branch of economics that concern how individual households ad firms takes economic decisions to allocate scarce resources.

  1. Marcoeconomics

  2. Microeconomics

  3. Positive economics

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

Microeconomics

  • Micro in Greek means 'small'. 
  • It is that part of economics which deals with the individual units of the economy. 
  • It takes into account the demand and supply of individual units. 
  • It aims to determine the price of a product using the factors of production.
  • Example: Individual income and Individual output.

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

The study of the behaviour of firms, individual markets, and household is called ___________.

  1. national economics

  2. positive economics

  3. macroeconomics

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

 Microeconomics
1. It is that part of economics which deals with the individual units of the economy. 
2. It takes into account the demand and supply of individual units. 
3. It aims to determine the price of a product using the factors of production.
4. Example: Individual income and Individual output.

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

The term micro-economics is derived from Greek prefix mikro which means ____________.

  1. aggregate

  2. consumer choices

  3. biggest

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

Microeconomics

  • Micro in Greek means 'small'. 
  • It is that part of economics which deals with the individual units of the economy. 
  • It takes into account the demand and supply of individual units. 
  • It aims to determine the price of a product using the factors of production.
  • Example: Individual income and Individual output.

Multiple choice business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

To study the impact of rise in the price of edible oils on the demand of edible oil is the concern of ____________.

  1. macroeconomics

  2. microeconomics

  3. positive economics

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

To study the impact of rise in the price of edible oils on the demand of edible oil is the concern of Microeconomics. Microeconomics is that part of economics which deals with the individual units of the economy. It takes into account the demand and supply of individual units and helps in studying the prices of products according to it.