Economics MCQ Questions with Answer for all Competitive Exams

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Economics MCQ Questions with Answer

Q21. Corporation tax:

(a) Is levied and appropriated by the States

(b) Is levied by the Union and collected and appropriated by the States

(c) Is levied by the Union and shared by the Union and the States

(d) Is levied by the Union and belongs to it exclusively

Answer: (d)

Explanation: Corporation tax is a direct tax levied, collected, and appropriated by the Union or the central government. No part of this tax can be assigned to the states.

Q22. As per the 2011 Census, which one of the following states has a lower population density than the other three?

(a) Sikkim

(b) Nagaland

(c) Meghalaya

(d) Manipur

Answer: (a)

Explanation: Ranking of States and Union territories by density (per sq. km) in 2011:

Sikkim – 86

Nagaland – 119

Manipur – 122

Meghalaya – 132

Q23. Perfectly inelastic demand is equal to-

(a) One

(b) Infinite

(c) Zero

(d) Greater than one

Answer: (c)

Explanation: Price elasticity of demand is the relationship between a change in quantity demanded of goods and a change in price. If the price elasticity of demand is equal to zero, demand does not change when price changes.

Q24. Which one of the following Five Year Plans recognized human development as the core of all development efforts?

(a) The Third Five Year Plan

(b) The Fifth Five Year Plan

(c) The Sixth Five Year Plan

(d) The Eighth Five Year Plan

Answer: (d)

Explanation: The theme of the Eighth Five Year Plan (1992-1997) was “Plan with a human face”.

Q25. . HINDALCO, an aluminum factory located at Renault owes its site basically to:

(a) Proximity of raw materials

(b) Abundant supply of power

(c) Efficient transport network

(d) Proximity to the market

Answer: (b)

Explanation: HINDALCO, an aluminum factory located at Renault due to an abundant supply of power from the National Thermal Power Station, Rihand, and a captive power plant at Renu Sagar. It has a cogeneration unit at the plant itself.

Q26. Human Development Index comprises literacy rates, life expectancy at birth and

(a) Gross National Product per head in the US dollars

(b) Gross Domestic Product per head at real purchasing power

(c) Gross National Product in US dollars

(d) National Income per head in US dollars

Answer: (d)

Explanation: HDI or Human Development Index measures achievements in terms of life expectancy, literacy, and adjusted real income (standard of living). THE First HDR calculations were made in 1990 by Mehboob-ul-Huq.

Q27. The Dinesh Goswami Committee was concerned with:

(a) De-nationalization of banks

(b) Electoral reforms

(c) Steps to put down an insurgency in the north-east

(d) The problem of the Chakmas

Answer: (b)

Explanation: Dinesh Goswami Committee (1990) was concerned with electoral reforms. It suggested providing state funding in kind to political parties. It also suggested that a candidate should not be allowed to contest elections from more than two constituencies.

Q28. A demand curve, which is parallel to the horizontal axis, showing quantity, has the price elasticity equal to-

(a) Zero

(b) One

(c) Less than one

(d) Infinity

Answer: (d)

Explanation: A demand curve when parallel to the horizontal axis that means perfect elasticity. Here the coefficient price elasticity of demand is infinity.

Q29. If the price of an article decreases from Rs 80 to Rs 60, the quantity demanded increases from 600 units to 750 units. Find the point elasticity of demand?

(a) -1

(b) 1

(c) -1.25

(d) 1.25

Answer: (b)

Explanation: Point Elasticity is finding elasticity at a point on demand curve.

Formula = P. Elasticity = $\frac{\%\Delta \mathrm{Q}}{\%\Delta \mathrm{P}}\,\,$

By putting values to formula answer will be 1.

Q30. Movement along the same demand curve is known as–

(a) Extension and contraction of demand

(b) Increase and decrease in demand

(c) Contraction of supply

(d) Increase in supply

Answer: (a)

Explanation: Movement along the same demand curve is caused by the change in the price of the commodity itself and this is referred to as an increase (extension) and decrease (contraction) of demand.

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