Economics MCQ Questions with Answer

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Economics MCQ Questions with Answer


Q71. Consider the following statements in regard to zero-base budgeting (ZBB): ​

(1) ​Existing Government programs can be discarded under ZBB if they are found to be outdated. ​

(2) ​ZBB is difficult to be applied to Human Development programs as the outcome of such a program is intangible in nature. ​

Which of the statements given above is/are correct?

​(a) ​1 only ​

(b) ​2 only ​

(c) ​Both 1 and 2 ​

(d) ​Neither 1 nor 2

Answer: (c)

Explanation: Zero-based budgeting is an approach to planning and decision-making which reverses the working process of traditional budgeting. In zero-based budgeting, every line item of the budget must be approved, rather than only changes. During the review process, no reference is made to the previous level of expenditure. Regarding Zero Base Budgeting (ZBB) existing government programs can be discarded under ZBB if they are found to be outdated. Moreover, ZBB is difficult to be applied to Human Development programs as the outcome of such programs is intangible in nature.

Q72. Which one of the following is not a method of measurement of National income?

​(a) ​Value Added Method

​(b) ​Income Method ​

(c) ​Expenditure Method

​(d) ​Investment Method

Answer: (d)

Explanation: The investment method is not a method of measurement of National income. There are three methods of measurement: income method, product or value-added method, and the expenditure method. ​​

The investment method is only appropriate if the property is let or operated under a management structure by a third party.

​​Income method – Under this method National income is measured as a flow of factor income.

Q73. ​Which company, adopted the Taj Mahal through the ‘Clean India Campaign’ of the tourism ministry?

​(a)  ​Indian oil ​

(b)  ​BPCL ​

(c)  ​HPCL

​(d)  ​ONGC

Answer: (d)

Explanation: With an aim to attract more visitors to the country by improving cleanliness and hygiene at tourist destinations, Tourism Ministry launched the “Clean India” campaign at the world heritage site Taj Mahal which has been adopted by ONGC. It is the second site to be covered under this project. The first one was Qutub Minar.

Q74. What is CRISIL? ​

(a) ​Bank

​(b) ​Insurance Company ​

(c) ​Depository

​(d) ​Credit Rating Agency

Answer: (d)

Explanation: CRISIL is the Credit Rating Agency of India. CRISIL’s majority shareholder is Standard and Poor’s (S&P). ​​

CRISIL: It is a global analytical company providing ratings, research, and risk and policy advisory services. It was founded in 1987, Headquarters (Mumbai).

Q75. During the episode of sustained fall in crude oil prices during the year 2015, which among the following best describes the pricing strategy of the OPEC countries? ​

(a)  ​Transfer pricing

​(b)  ​Predatory pricing ​

(c)  ​Defensive pricing

​(d)  ​Profit maximizing prices

Answer: (c)

Explanation: Defensive Pricing is a pricing strategy where a product or service is set at a very low price with the intention to drive competitors out of the market.

Q76. In which one of the following crops international trade is low in the context of total produce?

(a) Rice

(b) Coffee

(c) Rubber

(d) Wheat

Answer: (a)

Explanation: Rice production is highest in India among cereals but its quality of rice cannot compete with other rice-producing countries. Most of the rice produced in India is meant for internal consumption. India is a major producer and exporter of Basmati rice.

Q77. Some time back, the Government of India, decided tode-license a ‘white goods’ industry. ‘White goods’ include:

(a) Stainless steel and aluminum utensils

(b) Milk and milk products

(c) Items purchased for conspicuous consumption

(d) Soaps, detergents, and other mass consumption goods

Answer: (c)

Explanation: White goods are large electrical goods used domestically such as air conditioners, refrigerators, cooking range, etc., which had a white enamel finish. Despite their availability in varied colors now, they are still called white goods. The term is used where British English is spoken. In the year 1993 the govt. of India had decided to de-license these goods.

Q78. Hawala transactions relate to payments:

(a) Received in rupees against overseas currencies and vice versa without going through the official channels

(b) Received for sale/transfer of shares without going through the established stock exchanges

(c) Received as commission for services rendered to overseas investors/buyers/sellers in assisting them to get over the red tape and/or in getting preferential treatment

(d) Made to political parties or to individuals for meeting election expenses

Answer: (a)

Explanation: Hawala is an illegal method of remittance across countries. There are money brokers who are the middlemen who undertake hawala transfer. This method of remittance does not involve the physical movement of cash. It is also known as Hundi. The word Hawala means trust. The Hawala system works as it is based on mutual trust between the hawala agents. It works outside the banking system and legal financial systems. The remittance happens based on communication between the hawala agents. It is an alternative to the traditional remittance system.

Q79. Micro-economics is also called-

(a) Income theory

(b) Investment theory

(c) Price theory

(d) Expenditure theory

Answer: (c)

Explanation: Price theory is associated with microeconomics which is basically concerned with the determination of output and price for an individual firm or industry.

Q80. The self-employed in a developing country who are engaged in small scale labor-intensive work belong to the-

(a) Informal sector

(b) Primary sector

(c) Secondary sector

(d) Tertiary sector

Answer: (b)

Explanation: The above scenario can be observed in the primary sector of developing countries. Since developing stage work done in the primary sector is more labor-intensive like agriculture employees, farmers engaging in small scale is labor-intensive work.

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