Tag: economics

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Questions Related to economics

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 is the instrument for determining the level of _________.

  1. production and consumption

  2. savings and investment

  3. technological development

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

Price mechanism refers to the mechanism where 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 the demand sector i.e demand will increase if price decreases and vice-versa. Therefore, it determines the overall production in the economy that also signifies technological development and investment done. Moreover, it determines the consumption expenditure in the economy through aggregate demand which also signifies the overall savings in the economy. 

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 imposition of ceiling on a monopoly's price will affect his ____________.

  1. profits only

  2. average revenue in the short-run only

  3. equilibrium output only

  4. equilibrium output and profits
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The imposition of price ceiling on monopoly's price will affect his equilibrium output and price. A monopoly is a price maker and influences the market as there are no close substitutes or competitors of the monopolist. By imposing a price restriction the government is restricting the price and there by converting the monopoly market like a competitive one. Hence, the equilibrium output and price will change because of the price ceiling. 

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, it is the responsibility of the ___________ to ensure that adequate amount of goods are made available to the people.

  1. central bank

  2. planning authority

  3. NGOs

  4. business firms
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

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 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 planning authority decides 'what to produce' based on which of the following?

  1. Needs of the people

  2. National priorities

  3. Both A & B

  4. Neither A nor B
Reveal answer Fill a bubble to check yourself
C 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 problem of 'What to produce? Consumer goods or capital goods?' which is decided keeping in mind the needs of the people i.e. consumer goods and national priorities i.e. capital goods. 

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 planning authority allocates resources to the production of those commodities which people want.

  1. True

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

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 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

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 planning authority of a socialist economy aims at ___________ distribution of income.

  1. inequitable

  2. equitable

  3. random

  4. scattered
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
In socialist economy, the centrally based planning authority can plans the future government expenditure on various factors of the economy like infrastructure, health, education etc in such a way that it provides adequate employment to all the people unemployed which brings stability in the distribution of income in the economy.
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 planning authority is expected to choose a production technique that ensures that the available resources are _____________.

  1. fully utilised

  2. under utilised

  3. over utilised

  4. either B or C
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

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 problem of 'How to produce? Using labour or capital intensive techniques?' which is decided by allocating resources for the production keeping in mind the most efficient technique that will maximize the output of the economy. 

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.