Tag: major economic problems

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Questions Related to major economic problems

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

By scarcity of productive resources we mean ______.

  1. limited supply

  2. restricted supply

  3. non existence of supply

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

Scarce resources refers to the resources which are limited in quantity and have alternative uses in production of various commodities. So the problem of these scarce resources is reflected in the aggregate supply of the economy which is also limited owing to limited source of inputs. 

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

During deflation_____.

  1. the purchasing power of money increases

  2. the purchasing power of money decreases

  3. the purchasing power of money remains constant

  4. the purchasing power of money fluctuates
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

During deflation the purchasing power of money will increase. 

Deflation impacts consumers positively in the short term but negatively in the long term. In the short term, deflation essentially increases the purchasing power of consumers as prices fall. Consumers can save more money as their income increases relative to their expenses. This also alleviates debt burdens as consumers are able to deleverage.

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

Who defined mixed economy as "Mixed economy is that economy in which both public and private institutions exercise economic control".

  1. Samuelson

  2. Anatol Murad

  3. Adam Smith

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

Paul Samuelson is widely credited with defining a mixed economy as one where both public and private sectors coexist and exercise control.

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

Trees help in reducing the pollution of our environment. Lakhs of trees are planted by people in the month of July every year. The occasion is called ______________.

  1. forest Conservation Day

  2. plantation month

  3. Van Mahotsav

  4. wildlife week
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

(c).  Lakhs of trees are planted by people in the month of July every year. The occasion is called Van Mahotsav.

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

Which of the following is not a central problem of a society?

  1. What to produce

  2. How to produce

  3. For whom to produce

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

The central problems of production deals with production of necessary commodities using scarce means of resources. Therefore, "when to produce" is not a central problem as it is assumed that goods are demanded throughout the year because of unlimited human wants. 

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

One country enjoys a comparative advantage over the other in producing oil when _______________.

  1. it has more oil than the other country

  2. it can produce oil at a lower opportunity cost than the other country

  3. it does not need to import oil

  4. it wants to export as much oil as possible
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

One country enjoys a comparative advantage over the other in producing oil when it can produce oil at a lower opportunity cost than the other country .The country enjoys a greater advantage over other countries if the opportunity cost of producing oil in that country is less than others.

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

Central problem for every economy includes ________.

  1. Market

  2. What to produce?

  3. Competition

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

Central problem for every economy includes: What to produce?

Production, distribution and disposition of goods and services are the basic economic activities of life. In the course of these activities, every society has to face scarcity of resources. Because of this scarcity, every society has to decide how to allocate the scarce resources.

It leads to following Central Problems that are faced by every economy:

1. What to produce?

2. How to produce?

3. for whom to produce?

These problems are called central problems because these are the most basic problems of an economy and all other problems revolve around them.

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

How many indifference curves can touch the price line?

  1. Two

  2. One

  3. As many as possible

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

The consumer achieves equilibrium at a point which is in the highest possible indifference curve and which fits the budget of the consumer given the prices of both the commodities. Such a point is only possible when the budget line is tangent to the indifference curve. Therefore, only one indifference curve can touch the budget line. 

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

Which of the following is not one of the central questions that the study of economics is supposed to answer?

  1. Who produces what?

  2. When are goods produced?

  3. Who consumes what?

  4. How are goods produced?
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The central problem of an economy does not deal with the time of production as it is assumed that human wants are unlimited and goods are required throughout the year. Therefore, the the problem of 'When to produce?' is not regarded as a central problem of the economy.

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

Which of the following is a cause of economic problem?

  1. Scarcity of Resources

  2. Unlimited Wants

  3. Alternatives Uses

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

Causes of Economic Problem:

(i) Unlimited Wants

Human wants are unlimited in numbers. There is no end of human wants; whenever one want is satisfied, automatically the other wants crop up and this goes on and on. There are several wants which are recurring in nature like, food, clothes, shoes, etc. Moreover, human wants are increasing day by day with the development of education, knowledge and civilisation.

(ii) Limited Resources:

In economics, scarcity means that commodities and resources to produce goods and services are less in relation to their demand. Goods and services that satisfy human wants are produced with the help of resources such as land, labour, capital and enterprise. These resources are scarce while wants are unlimited. Due to scarcity of these resources, an economy cannot produce all that goods and services as required by its citizens. Consequently, some wants remain unsatisfied.

(iii) Alternative Uses of Resources:

Means are not only limited but also have alternative uses. Hence, choice has to be made for different alternative uses. For example, electricity can be used for lighting lamps or for cooking food or for operating TV, Fridge, music system etc. Similarly, there are many resources which have got their alternative uses. This characteristic makes resources scarce. Thus, every economy has to choose better alternative uses of resources to which they can be put.