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

Price theory is an important constituent of __________ economics.

  1. micro

  2. macro

  3. development

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

Micro economics studies economics from the point of an individual unit. Price theory is included in micro economics. Price theory determines that how demand and supply forces determine the price of goods and services in a market.

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 a variable of macro economics?

  1. Aggregate Supply

  2. National Income

  3. Aggregate Demand

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

Macro economics deals in the study of economics as a whole. Aggregate supply, (that refers to total production of goods and services in the economy) national income (income incurred by a nation from the production of goods and services during an accounting period) and aggregate demand (total expenditure on the purchase of goods and services in an economy during an accounting year) - all are included in the study of 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

Income theory is the other name of __________.

  1. macroeconomics

  2. microeconomics

  3. econometrics

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

Macroeconomics is also called Income theory as it studies the relative levels of income, output, employment, and prices in an economy. 

The income theory is a major aspect of macroeconomics theory. A major task of macroeconomics is the determination of national income. Macroeconomics studies the factors determining national income and the causes of the trends in 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

In micro economics, we study about __________..

  1. aggregates

  2. national income

  3. demand & supply

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

The main branch of micro economics deals with the change in price of a commodity due to various market forces like quantity demanded and quantity supplied of that commodity in the market. 

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 covered in Micro-Economics?

  1. Consumer Behaviour

  2. External Value of Money

  3. Employment and Economic Growth

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

Consumer behaviour is a micro unit as it measures the behaviour of each consumer when they purchase the commodity which developed many theories like utility analysis, indifference curve analysis 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

___________ deals with the problem of allocation of resources.

  1. Statistic

  2. Macro-Economic Theory

  3. Econometrics

  4. Micro-Economic Theory
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Micro economics deals in the study of production of output of individual firms which requires resource allocation as many resources have alternative uses. 

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 covered in Macro Economics?

  1. Factor Pricing

  2. National Income and Output

  3. Location of Industry

  4. Study of Firms
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

National income refers to the earnings of the citizens of a nation during a given period of time and national output refers to the total production of all the firms of a nation during a given period of time.  We know, that macro economics deal with the study of economics as a whole and hence national income and output is covered in 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 statements is correct?

  1. Employment and economic growth are studied in micro economics

  2. Micro economics deals with balance of trade and payment

  3. Economic condition of a section of the people is studied in micro economics

  4. External value of money is dealt with in micro economics
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Microeconomics deals with the study of individual variables like firms, workers, consumers, and investors. It also studies the economic condition of a section of people and how it can be improved.

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

Research in macroeconomics such as the principle of acceleration describing the relationship between income and consumption, has been derived based on ______________.

  1. inductive method

  2. deductive method

  3. both (a) and (b)

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

The inductive method involves the process of reasoning from particular facts to general principle.  

This method consists in deriving conclusions from general truths, taking few general principles and applying them to draw conclusions in general.

Thus, macroeconomics uses inductive method in its study.

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

Identify the correct statement.

  1. In deductive method, logic proceeds from the particular to the general

  2. Micro economics and macro economics are interdependent

  3. In a capitalist economy, the economic problems are solved only by planning commission

  4. Higher the prices, lower is the quantity demanded of a product. This is a normative statement.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation


Microeconomics and macroeconomics are interdependent or complementary to each other. The relationship between microeconomics and macroeconomics in the aggregate production and consumption levels are the result of choices made by individual households and firms.

In deductive method, logic proceeds from the general to particular.

In a capitalist economy, the economic problems are solved by market forces of demand and supply.

Higher the prices, lower is the quantity demanded of a product. This is a positive statement.

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 time period(s) covered in Economics Study is/are ______________.

  1. short-run

  2. long-run

  3. Both (a) and (b)

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

Economists employ the world of in progress associations. Studying finances includes learning to use statistics and to read essentially.  Economics majors are fascinating people both because of their skills and because they can explain why an economic phenomenon occurs and how economic performance strength improves. 

In macroeconomics, the short run is generally defined as the time prospect over which the earnings and price of other input to make are "close," or inflexible, and the long run is defined as the period of time over which these input prices have time to adjust.

Thus, the correct option is C.

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

When we are studying how a producer fixes the prices of his products we are studying:

  1. Macro Economics

  2. Micro Economics

  3. Both (a) & (b)

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

Micro economics study economics from the view point of an individual point. Product pricing deals with how producer fixes the prices of his products depending on the market forces and thus it is a component of micro 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

Macro economics is also called _____________ economics.

  1. applied

  2. aggregate

  3. experimental

  4. none of the above
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, aggregate employment and unemployment , inflation etc. Therefore, it studies aggregate or national 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

Which of the following is related to micro economics?

  1. Inflation in the economy

  2. Problem of unemployment

  3. National income

  4. Income from the railways to the government
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Income from the railways is related to microeconomics as it is related to a particular department and not the whole 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

The study of economics in divided into:

  1. Deductive and inductive

  2. Micro and macro economics

  3. Positive and normative

  4. An art and science
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Economics is divided into two parts:

  • Micro economics which deals in the study of individual variables and their relation with each other.
  • Macro economics that  deals in the study of collective or aggregate variables and how they influence the whole economy.