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.

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Economics Concepts and Theories Questions

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

Which of the following is not correct?

  1. Micro and Macro economics are complementary to each other.

  2. Every macro economic problem requires micro economic analysis for its proper understanding.

  3. Micro-economic behaviour can be added-up to drive macro economic behaviour.

  4. What is macro from the national angle is micro from world angle.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Microeconomic behaviour cannot be added-up to drive macroeconomic behaviour.

The phenomenon in Microeconomics cannot be generalized for all the units in the economy on an aggregate level.

For example the theory of an individual firm cannot be universally applied to the whole industrial sector in an economy. The theory of individual consumer behaviour is different from the behaviour of the whole economy’s behaviour at the aggregate level. The demand of a single person may not always match with the economy’s aggregate demand. 

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

Micro economics is also known as _________.

  1. price theory

  2. slicing method

  3. product theory

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

Micro economics is also known as Price theory because it takes into account the demand and supply of individual units and thus aims to determine the price of a product using the factors of production.

It is also called the Slicing method as it is used in Microeconomics. This is because it divides the economy in slices, parts or individual units for the purpose of in-depth study. And hence the name slicing method.

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

"During the period of boom when aggregate demand, national income and prices are high, entrepreneurs tend to make high profits."
This statement implies _______.

  1. effect of micro economic variables on macro variables

  2. effect of macro economic variables on micro variables

  3. interdependence of micro and macroeconomics

  4. both (b) and (c).
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

When boom period is going on in the economy, the macro level economic growth is reflected positively in the micro variables of the economy, due to which all the inter-related sectors enjoy the benefits. Therefore, it showcases the relation between micro and macro economics.

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

Which of the following is defined as branch of economic analysis that studies the economic behaviour of the individual unit, a particular household, or a particular firm?

  1. Macro economics

  2. Micro economics

  3. National economics

  4. General economics
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Microeconomics is defined as "The study of the economic choices individuals and firms make and of how these choices create markets." 

The study of microeconomics looks at specific markets individually and in great detail. Thus it will tend to examine micro variables such as the demand and supply decisions specific to a particular market or good. Thus its variables of concern will include how individual firms, individual workers, individual consumers, and individual investors interact and make decisions in the marketplace.

 It will not be concerned with the aggregate market demand, or any other aggregate variables that treat the whole economy as one unit. 
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

Macro economics is the study of:

  1. All aspects of scarcity

  2. The national economy and the global economy as a whole

  3. Big businesses

  4. The decisions of individual businesses and people
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Macro economics deals in the study of a nation's aggregate demand, aggregate supply, national income, employment, inflation etc. It simply focusses on the economy as a whole. Therefore, it is the study of a nation's economy as well as its relation with other countries. 

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 a study of one particular unit rather than all the units combined together.

  1. Macro economics

  2. Micro economics

  3. Both (A) and (B)

  4. Social economics
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Microeconomics is defined as "The study of the economic choices individuals and firms make and of how these choices create markets." 

The study of microeconomics looks at specific markets individually and in great detail. Thus it will tend to examine micro variables such as the demand and supply decisions specific to a particular market or good. Thus its variables of concern will include how individual firms, individual workers, individual consumers, and individual investors interact and make decisions in the marketplace.

 It will not be concerned with the aggregate market demand, or any other aggregate variables that treat the economy as one unit. 
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 branch of economic theory that deals with the problem of allocation of resources is ________________.

  1. Micro economic theory

  2. Macro economic theory

  3. Econometrics

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

Micro economics deals with the individual problems of production which involves cost and production function. Therefore, allocation of resources is a part of this branch.

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

Micro and Macro Economics were coined by ________during the twenties, and since then they are frequently used by economists for economic analysis.

  1. Prof. Keynes

  2. Prof. Robbins

  3. Prof. Marshall

  4. Prof. Ragner Frisch
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Prof. Ragnar Frisch was a Norwegian economist who was best known for founding the various disciplines of econometric and for coining the two common terms i.e. micro and macro economics which is the most widely used terms in modern economics.

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

__________ may be defined as that branch of economic analysis which studies the behaviour of all the units combined together.

  1. Microeconomics

  2. Macroeconomics

  3. Individual economics

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

Macroeconomics is the branch of economics that studies the aggregate units of the economy like national income, employment, etc. It uses lumping method for the purpose of economic study. For example, under lumping method we study the general price level that is prices of all products, and not prices of individual products.

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 a study in aggregates.

  1. Macro economics

  2. Micro economics

  3. Both (a) and (b)

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

Macro economics deals in the study of a nation's aggregate demand, aggregate supply, national income, aggregate employment and unemployment , inflation etc. Therefore, it studies group variables and not individual variables. 

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

We mainly study the following in macro economics-
I. National income and output
II. General price level
III. Balance of trade and payments
Select the correct answer from the options given below -

  1. I & II

  2. II & III

  3. I & III

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

Macroeconomics studies economic relationships or economic problems or economic issues at the level of the economy as a whole. Thus national income and output, general price level and balance of trade and payments- all are studied under macro economics since they all involve the study of the economic aggregates.

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 publication of______General Theory, in 1936, gave a strong impetus to the growth and development of modern macro economics.

  1. Keynes

  2. Robbins

  3. Marshall

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

Keynes general theory focused on income and employment of the nation which affects aggregate demand and supply of the nation which was the main branch of macro economics after national income.

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

We mainly study the following in Macro-Economics: 

  1. External value of money

  2. Consumer behaviour

  3. All (A), (B) & D)

  4. Location of industry
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Macro economics has a separate branch known as exchange rate systems that deals in the study of external value of money in comparison to the domestic currency and how these fluctuations affects a nation's growth and development. 

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

We mainly study the following in Micro-Economics:

  1. General price level

  2. National income and output

  3. Location of industry

  4. Employment and economic growth
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In micro economics, summation of various similar markets form an industry which is located at various places according to the required resources available there and demand and supply of the commodities prevailing there. 

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

Microeconomics and macroeconomics are not independent approaches to economic analysis but they are complementary to each other.

  1. False

  2. True

  3. Partly true

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

Micro and macro approaches of economics are very dependent on each other. To know well about the working of an economy, on must have knowledge of both the branches of economics. It can be said that macroeconomics uses the principles of microeconomics as its foundation and the former is a magnified version of the latter.