Economics Questions and Answers

Economics Questions and Answers

1-A tariff that maximises the difference between the terms of trade gain and the dead weight loss is called 

(a) Retaliatory tariff 

(b) Optimum tariff 

(c) Countervailing tariff 

(d) Double-column tariff

2-Which one of the following is not a non-tariff barrier ? 

(a) Voluntary export restraint

(b) Quota 

(c) Advalorem tariff  

(d) Technical barriers

3-The Absorption Approach is developed by 

(a) Sidney Alexander 

(b) Alfred Marshall 

(c) A. Lerner   

(d) Jacob Viner

4-A curve that goes through all the tangency points of an x and y isoquants in a Edgeworth Box is called 

(a) Indifference curve 

(b) Trade indifference curve 

(c) Offer curve   

(d) Contract curve

5-According to monetary approach of Balance of Payments, the demand for money is a stable function of    

(a) income, prices and rate of interest 

(b) income and prices 

(c) prices and rate of interest  

(d) income, prices and foreign exchange reserves

6-Producers’ surplus is equal to the difference between  

(a) Price and Marginal cost curve

(b) Price and Marginal utility curve 

(c) Average cost and Marginal cost 

(d) Total cost and Marginal cost

7-A demand curve is considered as Rectangular Hyperbola when : 

(a) e > 1

(b) e = 1 at all points

(c) e < 1 

(d) e = 0

8-When cost of production is zero, monopoly equilibrium will be established at a level where elasticity of demand curve is : 

(a) Greater than one 

(b) Equal to one

(c) Less than one   

(d) Infinity

9-If the total production in an economy for a product is produced by a few big firms, then this market is known as : 

(a) Monopolistic Competition

(b) Oligopoly 

(c) Duopoly   

(d) Discriminating Monopoly

10-“Natural Monopoly” is the monopoly  

(a) which is provided by nature. 

(b) which needs large amount of capital. 

(c) when there is only one producer.  

(d) when average costs declines with increase in output.

11-When average cost is increasing, marginal cost is  

(a) Equal to average cost

(b) Less than average cost 

(c) Greater than average cost 

(d) Uncertain

12-A firm should cease production in the short run if  

(a) Price is less than average fixed cost

(b) Price is less than average cost

(c) Profits are negative  

(d) Price is less than average variable cost

13-Engel’s curve illustrates the relationship between 

(a) Consumption and Utility

(b) Production and Productivity 

(c) Income and Consumption 

(d) Income and Production

14-If total revenue rises when price falls, the demand curve is  

(a) Elastic

(b) Unitary elastic

(c) Inelastic 

(d) None of the above

15-A movement along the supply curve can be caused by a change in 

(a) Technology  

(b) Factor prices 

(c) The price of the good 

(d) All of these

16-An indifference curve indicates  

(a) No choice among goods

(b) No need of any good 

(c) Disinterested in acceptance of goods  

(d) One combination is preferred to another  

17-According to W.W. Rostow, the stages of economic growth are : 

(a) 5

(b) 4

(c) 3 

(d) 2

18-Vicious circle of poverty should be broken for economic development. This fact has been emphasised by :  

(a) Ragnar Nurkse

(b) Lewis

(c) Rosenstein 

(d) Singer

19-‘Wage Fund Theory’ has been given by  

(a) Adam Smith

(b) Malthus

(c) David Ricardo 

(d) J.S. Mill

20-Unbalanced Theory of Growth was propounded by

(a) Singer

(b) Hirschman

(c) W.W. Rostow 

(d) Kindleberger

21-Input – Output technique was invented by  

(a) Lewis

(b) Hicks

(c) Todaro 

(d) Leontief

22-Deficit financing leads to  

(a) Price rise

(b) Price fall

(c) Price control 

(d) None of the above

23-The Diffusion theory in Taxation was given by 

(a) Adam Smith  

(b) Seligman 

(c) Findlay Shirras  

(d) Mansfield and Canard

24-Okun’s law shows the relationship between the following : 

(a) Unemployment and Growth

(b) Employment and Growth 

(c) Tax rate and Tax revenue 

(d) Inflation and Employment

25-Milton Friedman gave emphasis in his quantity theory of money on 

(a) Production and Income

(b) Price level 

(c) Supply of Money  

(d) Demand for Money

26-Money is said to be neutral if  

(a) it affects the real variables of the economy. 

(b) it does not affect the real variables of the economy.

(c) it affects only the production.  

(d) it affects both production & employment.

ANSWERS:

1-(b). 2-(c), 3-(a), 4-(c), 5-(a), 6-(a), 7-(b), 8-(b), 9-(b), 10-(b), 11-(c), 12-(d), 13-(c), 14-(a), 15-(a), 16-(d), 17-(a), 18-(a), 19-(c), 20-(b), 21-(d), 22-(a), 23-(d), 24-(a), 25-(c), 26-(b)