Economics MCQ Questions with Answer

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Economics MCQ Questions with Answer

Quiz-1Quiz-2

Q31. The four factors of production are-

(a) Land, labor, capital, organization

(b) Land, electricity, water labor

(c)Labor, capital, land rainfall

(d)Labor, climate, land, rainfall

Answer: (a)

Explanation: Factors of production are resourced by which production is done or essential resources which are core for production. Examples are land, labor, capital, and organization.

Q32. Consider the following actions by the Government: ​

1.​ Cutting the tax rates. ​

2.​ Increasing the government spending. ​

3.​ Abolishing the subsidies. ​In the context of economic recession,

Which of the above actions can be considered a part of the ‘fiscal stimulus package? ​

(a) ​1 and 2 only ​

(b)​ 2 only ​

(c)​ 1 and 3 only ​

(d)​ 1, 2 and 3

Answer: (a)

Explanation: ​Fiscal stimulus – Government measures, normally involving increased public spending and lower taxation are aimed at giving a positive jolt to economic activity.

Q33. If the Sales tax on a commodity is raised, but the revenue earned through its sale decrease sharply, which one of the following statements about the nature of this commodity would be correct?​​​ ​

(a) ​Price elasticity of demand for it is unity ​

(b) ​It must be essential goods ​

(c) ​Price elasticity of demand for it is high ​

(d) ​Price elasticity of demand for it is low

Answer: (c) ​

Explanation: The price elasticity of demand for goods also depends on the proportion of their income the buyers spend on the goods. Therefore, if the sales tax on a commodity is raised, but the revenue earned through its sale decrease sharply, the price elasticity of demand for the commodity would be high.

Q34. Which one of the following is true regarding the Jawahar Rozgar Yojana (JRY)?

(a) It was launched during the Prime Ministership of Indira Gandhi

(b) It aims at creating one million jobs annually

(c) The target group of JRY is the urban poor living below the poverty line

(d) Under the scheme 30% of the employment generated is reserved for women

Answer: (d)

Explanation: Though the people below the poverty line were the target group for employment, the preference was to be given to the Scheduled Castes, Scheduled Tribes, and freed bonded laborers. Thirty percent of the employment opportunities were to be reserved for women in rural areas.

Q35. The largest source of financing the public sector outlay of the Eighth Five Year Plan comes from:

(a) Balance from current revenue

(b) Contribution of public enterprises

(c) Government borrowings

(d) Deficit financing

Answer: (d)

Explanation: Under Deficit financing, the government spends more money than it collects as revenue, the difference being made up by borrowing from the Reserve Bank of India by the issue of Promissory notes.

Q36. Assertion (A): India’s software exports increased at an average growth rate of 50% since 1995-96.

Reason (R): Indian software companies were cost-effective and maintained international quality.

(a) Both A and R are individually true and R is the correct explanation of A

(b) Both A and R are individually true but R is not the correct explanation of A

(c) A is true but R is false

(d) A is false but R is true

Answer: (a)

Explanation: The only negative factor is the time difference which causes large turnover as most IT work is conducted during the night shift.

Q37. Depreciation is equal to ​

(a) ​GNP – NNP ​

(b) ​NNP – GNP ​

(c) ​GNP – Personal Income ​

(d) ​Personal Income – Personal Taxes

Answer: (a)

Explanation: Depreciation is equal to GNP–NNP (Gross national products–Net national products)

​​In economics, Depreciation is the gradual decrease in the economic value of the capital stock of a form nation or other entity.

Q38. .​Which of the following Tax is levied by Union and collected and appropriated by States?​

​(a)​Stamp Duties

​(b)​Passenger and Goods Tax ​

(c)​Estate Duty

​(d)​Taxes on Newspapers

Answer: (a)

Explanation: As mention in article 268 of the Indian Constitution, Stamp Duties are mentioned in the Union List shall be levied by the Government of India but collected and appropriated by the States.

Q39. Investment is equal to-

(a) Gross total of all types of physical capital assets

(b) A Gross total of all capital assets minus wear and tear

(c) Stock of plants, machines

(d) None of the above

Answer: (b)

Explanation: Investment is a portion of the amount that is used for capital formation and all the wear and tear is deducted to know the actual amount of investment.

Q40. Extension or contraction of quantity demanded of a commodity is a result of a change in the-

(a) Unit price of the commodity

(b) Income of the consumer

(c) Tastes of the consumer

(d) Climate of the region

Answer: (a)

Explanation: Law of demand represents the inverse relationship between demand and price. So change in the unit price of the commodity will result from the change in demand i.e. extension and contraction of quantity demanded.

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