Economics MCQ Questions with Answer for all Competitive Exams

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Economics MCQ Questions with Answer

Q81. Stagflation exists when _____

(a) Price indices and output both decrease.

(b) Price indices increase but output decreases.

(c) Price indices and output both increase.

(d) Price indices decrease but output increases.

Answer: (b)

Explanation: Stagflation is a situation in a country when there is inflation but not employment. Here production will decrease with the price rise resulting increase in price indices but a decrease in output.

Q82. The Expenditure on an advertisement and public relation by an enterprise is a part of its-

(a) Consumption of fixed capital

(b) Final consumption Expenditure

(c) Intermediate Consumption

(d) Fined Capital

Answer: (c)

Explanation: The expenditure on advertisement and public relations by an enterprise is a part of its intermediate consumption. Intermediate consumption is the expenditure done on those good and services which are used as inputs for the production of final goods and services.

Q83. India’s biggest nationalized enterprise today

(a) The Indian Railways

(b) The Indian Commercial Banking System

(c) The Indian Power Sector

(d) The Indian Telecommunication System

Answer: (a)

Explanation: Indian Railways is a government organization that works under the Ministry of railways it was set up during the British under a private entity. Later on, during independence, it was changed to a nationalized enterprise

Works of Indian Railways

  1. A medium of mass transport and communication
  2. A medium of mass transportation of goods and services
  3. Connecting last mile people in the country.

One of the most successful public enterprise of Govt. India

Q84. GDP at factor Cost is-

(a) GDP minus indirect taxes plus subsidies

(b) GDP minus depreciation allowances

(c) NNP plus depreciation allowances

(d) GDP minus subsidies plus indirect taxes

Answer: (a)

Explanation: GDP at factor cost is GDP minus indirect tax plus Subsidies. Gross Domestic Product at Factor cost

Net = Gross – Depreciation

National = Domestic + factor income from abroad Factor cost = Market price + subsidies – taxes.

Q85. Average propensity to consume is defined as-

(a) Aggregate consumption total population

(b) Aggregate income Aggregate consumption

(c) Change in consumption Change in income

(d) Aggregate consumption Aggregate income

Answer: (b)

Explanation: Average propensity to consume is the percentage of income or part of the income spent on goods and services. It can be calculated by Aggregate Consumption Aggregate Income.

Q86. What is the full form of NNP?

(a) Normal Net Production

(b) Net National Product

(c) Normal National Produce

(d) Net Normal Produce

Answer: (b)

Explanation: Net National Product (NNP) + subsidy indirect taxes = National Income.

Q87. Which among the following is open Bank for small industries?

(a) IDBI


(c) IFCI


Answer: (b)

Explanation: SIDBI Small Industries Development Bank of India is a financial institution with an objective of growth & development of Micro, Small, and medium-scale enterprises. It was established in 1990.

Q88. SBI was earlier known as –

(a) Cooperative Bank of India

(b) Imperial Bank of India

(c) Syndicate Bank

(d) Canara Bank

Answer: (b)

Explanation: Imperial Bank of India was a commercial bank that came into existence in January 1921 by J.M. Keynes. It was the oldest and largest bank of colonial India. It was nationalized and transformed in 1955 into the State Bank of India.

Q89. Which of the following is not a ‘Public Good’?

(a)​ Electricity ​

(b) ​National Defence ​

(c) ​Light House ​

(d)​ Public Parks

Answer: (a)

Explanation: ​Electricity is not a public good but it is a club good including roads, bridges, gas, sewage, wires, and telecom.

Q90. Which of the following will not contribute to a higher current account deficit? ​

(1)​ Increase in price of crude oil ​

(2)​ Rise in the export of software services

​(3)​ Rise in the import of services ​

Choose the correct answer using the codes given below:

​(a)​ 1 and 2 only

​(b)​ 2 only ​

(c)​ 3 only ​

(d)​ 1 and 3 only

Answer: (b)​

Explanation: Current account deficit is a measurement of a country’s trade in which the value of goods and services it imports exceeds the value of goods and services it exports. An increase in crude oil prices and a rise in the import of services oil increase the current account deficit. However, an increase in exports will reduce the deficit.

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