Most impotent mcqs of economics, for all types of jobs test preparation with explanation, part 2

The basic economics concept with reference to resources is that the resources’ are:

1.     Equally distributed
2.    Unequally distributed
3.     Scare
4.     Unlimited

The word scare mean minimum or limited as compare to human wants. Economics defines; there are limited resources and unlimited human wants.

 Consider a world without scarcity of resources. Then what would be the consequences:

1.      All prices would be zero
2.      Markets would be unnecessary
3.    No importance of Economics subject
4.     All of these

If all types of resources are free or unlimited, so the all prices or cost would be zero.

Who is the considered the founder of micro economics?

1.      John Keynes
2.     Friederich  hayek
3.     Milton friedman
4.      Adam smith

Founder of micro economic is Adam Smith and the founder of macro economics is john Keynes.

When estimating the influence of a variable on the economic-system, the other things’:

1.  Must be kept constant
2.     Must also be analyzed
3.     Must not be taken into consideration
4.     None of the above

 Economics laws based on assumptions, when we check variable impact on the economic system then other things must be constant.

Inputs are combined with technology to produce outputs. The fundamental in-puts (factor of production) are

1.     Land and capital
2.     Land and labour
3.   Land, labour and capital
4.   Labour, capital and investment

For producing outputs combined with technology, the required inputs are land labour, and capital.

Y= AF (k, L,l)

Good’s produced to produce yet other good’s is known as:

1.   Final goods
2.    Capital
3.     Investment
4.     Resources

When one good produced from another good is called capital.

Which economics term is used to stand for in-equality in distribution of income?

1.    GDP
2.     GNP
3.     Gini
4.     HDI

5.     Gini coefficient represents inequality and it is explain with Laurence curve.

                        Values between 0 to 1

                              A/A+B   

The value of the goods or services forgone by choosing another investment is called:

1.   Opportunity cost
2.     Purchasing power parity
3.     Disposable income
4.    Consumer price index

For choosing one good the other good is forgone called opportunity cost.

The market central role is to decide the:

1.      Quality of good
2.     Quantity of good
3.     Level of income
4.     Price of good

In a market, price of a good determine with demand and supply equilibrium.

The economics branch related with the whole performance of the economy is called

1.      Micro economics
2.    Macro economics
3.    Econometrics
4.     Keynesian economics

Macro economics deal with overall performance of the economy, for example, overall demand and supply and national income etc. Micro economics deal with the behavior of the individual farm, for example, individual demand and supply and individual income etc. In econometrics, we discuss statistical tools.

Efficient production in an economy is, when no individuals’ welfare of economic can-be better unless:

1.      Increased in Supply
2.     Increased in Demand  
3.    Someone else is better
4.    “Someone else is made worse off”

It is pareto efficiency which indicates due to one person better off the other person worse off.

Taxation is used to dis-courage of a product:

1.     Consumption
2.     Production
3.      Saving
4.     Inflation

The purpose of taxes is discouraging consumption.

Subsidies are used to encourage of a:

1.    Consumption
2.     Production
3.      Saving
4.    Inflation

Subsidies are giving to encourage production. When subsidies increase production also increase.

Which of the following resources of economic can-not be transformed into product?

1.     Land
2.      Labour
3.      Capital
4.    All of the above

Labour can’t be converted in to commodity. Labour remains labour.

The following are features of a modern economy?

1.      Specialization
2.      Division of labor
3.      Financial market
4.     All of these

When person specialise in their fields develop fresh technologies’ that brings to huge rise in productivity.  Division of labour and financial market is also features of modern economy.

When no consumer and firm are large sufficient to influence the price of market, the market is known as:

1.      Perfect-competition
2.      Imperfect-competition
3.     No-competition
4.      None of the above

In perfect competition, individual, consumer and farm cannot change prices itself. They are price taker in perfect competition.

When single event’ occurred earlier than an-other event, the fallacy in economic analysis that the first event caused the second event is known as:

1.    The post hoc fallacy
2.      Failure to hold other things costant
3.      The fallacy of composition
4.      Normative fallacy

For example, the event “B” occur and before it’s accruing “A” event accrue so the A event cause B unit called post hoc fallacy.

When we presume that what is right for the part is also accurate for the whole, we are committing’:

1.     The post hoc fallacy
2.     Failure to hold other things costant
3.     The fallacy of composition
4.      Normative fallacy

For instance, there are different objects in block if one or two are true, so we said that all objects are true is called normative fallacy.

The three fundamental economic problems every human society must tackle and resolve are:

1.      What, how and when
2.   What, where and when
3.     What, how and for whom
4.      How, where and for whom

These three fundamentals economic problems (what, how and whom) are solved in markets.

Fiscal policy consists of government:

1.      Revenue and taxes
2.    Taxes and credit control
3.    Expenditure and investment
4.    Expenditure and taxes

In a fiscal policy, government control their expenditures and taxes.

The highest number of goods that can-be produced efficiently by an economy with its limited resources and accessible technology is known as:

1.      The supply curve
2.      The demand curve
3.      Production possibility frontier
4.   The supply demand equilibrium

By using limited resources and technology, the maximum production of goods is possible.

Which term of economics is used to determine the over-all performance of an economy?

1.     GDP
2.     GNP
3.     Gini
4.      HDI

Overall economy performance is measure by gross domestic product.

Productive efficiency occurs when an economy cannot produce…. of one product without producing….. Of another product:

1.      More, more
2.      More, less
3.     Less, less
4.      None of the above

Efficiency mean due to one person better off the other person worse off. Producing more commodity of one good the other good produce less.

The idea of invisible-hand in the mechanism of demand and supply in a fine performance market system refers to the

1.    Self regulating economy
2.     Government controlled economy
3.      Command economy
4.    Socialism

The concept of Invisible hand is presented by Adam smith. According to Adam smith self regulating force appears in an economy due to this economy self adjust at equilibrium.

The increase in economic integration among the nation is termed as

1.     Specialization
2.     Market economic
3.     Globalization
4.      Equilibrium condition

For example, all the nations in the world like, A nation, B nation, C nation, D nation and E nation this is called globalization.

The Demand “price elasticity” is the %change in….demand divided by the %change in….

1.      Supply-price
2.    Quantity- price
3.     Price-supply
4.    Price-quantity

Formula: percentage change in quantity/ change in price= p/q

When price of a commodity is increase by 3% the quantity demanded decreased by 5%. The quantity is said to have:

1.      Price elastic demand
2.     Price elastic supply
3.     Price inelastic demand
4.      Price inelastic supply

P= 3% increase, q= 5% decrease. Due to less change in price, quantity change more.

When price of a commodity is increase by 5% the quantity demanded decreased by 3%. The quantity is said to have:

1.      Price elastic demand
2.      Price elastic supply
3.      Price inelastic demand
4.      Price inelastic supply

P= 5% increase, q= 3% decrease. Due to more change in price, quantity change less.

When price of a commodity is decreased by 4% the quantity demanded increased by 4%. The quantity is said to have:

1.   Unit-elastic demand
2.      Unit-elastic supply
3.    Price-equilibrium
4.    Supply demand equilibrium

P= 4% decreased, q= 4% increased. Same change in price and quantity.

1.     The term recession refer to the

1.     High employment
2.      High unemployment
3.     High supply and demand
4.      low supply and demand

When mostly people are unemployed is recession.

What from the following measures a government can get to decrease in-equality in the income distribution?

1.      Progressive-tax
2.     Transfer-payment
3.    Subsidize-consumption of low income groups
4.     All of the above

Government use progressive tax to reduce income inequality. Impose more taxes on higher income people. Impose low taxes on lower income people.