Economics · General Awareness

Economics Concepts and Theories

1,710 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 business economics and quantitative methods introduction to micro economics microeconomics and macroeconomics : introduction economic ideas of j k mehta micro and macro economics

Economists who are concerned about the behaviour of individual households, firms and industries are studying __________.

  1. microeconomics

  2. macroeconomics


  3. nanoeconomics

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

Microeconomics is the study of particular firm, particular household, individual price, wages, income, industry and particular commodity.

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. Income theory

  2. Price theory

  3. Expenditure theory

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

Micro economics is also called as the Price theory. It studies the behavior of individual consumers, producers etc.
 It explains consumption, production, allocation and the pricing of goods.

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 theory is generally included under micro-economics?

  1. Price Theory

  2. Income Theory

  3. Employment Theory

  4. None of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
Price theory, also known as microeconomics, is concerned with the economic behaviour or individual consumers, producers, and resource owners. It explains the production, allocation, consumption and pricing of goods and services.
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 terms "Microeconomics" was coined by ___________.

  1. Alfred Marshall

  2. Ragnar Nurkse

  3. Ragnar Frisch

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

The term "Microeconomics" was coined by Ragnar Frisch in the year 1933. It is one of fields in economics that deals with the study of individual units in the economy

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/are not the concerns of microeconomics.

  1. Rates of inflation

  2. Population growth

  3. Rates of unemployment

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

All these options are the concerns of Macro economics. The term ‘Macro’ means large. So Macroeconomics is that part of economics which studies the economic problems and issue that are on a large scale. It studies about the performance of the economy as a whole and not of any individual firm or business. It focuses on the study of problems like inflation, unemployment, poverty, etc. 

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 focus of macroeconomics policy is on _________.

  1. price determination in specific markets

  2. structure and conduct of market operations

  3. addressing the problem of unemployment and inflation

  4. equity and efficiency
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
The twin- focus of macroeconomics policy are-
1)Equity- Fair and impartial treatment should be provided to all the citizens according to their ability.
2)Efficiency- Wastage of resources should be minimised and resources should be used in the most efficient way in the economy to yield a better productivity.
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

A study of how increase in the corporate income tax rate will affect the national unemployment rate is an example of ____________.

  1. macro economics

  2. descriptive economics

  3. micro economics

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

Government policies and rate of unemployment in an economy are the subject matter of macroeconomics.Hence, how increase in the corporate tax will hit the unemployment rate of an economy should be studied under the sphere of macroeconomics as it deals the economy as a whole.

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 covers the study of ___________.
(i) Consumer's behaviour
(ii) Producer's equilibrium
(iii) Fiscal system of an economy
(iv) Factor pricing

  1. i and ii

  2. ii and iv

  3. i, ii and iii

  4. i, ii and iv
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Micro economics deals with the individual approach of various parties involved in an economy, i.e, consumer, producer, price, and cost. Therefore, it studies consumer's behaviour, producer's equilibrium, and factor pricing. 

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 also known as __________.
(i) Method of Lumping
(ii) Price Theory
(iii) General equilibrium analysis
(iv) Aggregative Economics

  1. i and ii only

  2. iii and iv only

  3. i, iii and iv only

  4. ii, iii and iv only
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Macro economics relates to the study of economics as a whole in an economy. It reflects general equilibrium analysis of a set of people involved in the exchange mechanism i.e, as a market. Therefore, it measures the aggregates of all the micro units in the economy.

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.