Economics

1. Father of political economy

• Adam Smith


• Malthus


• Marshall


• Samuelson

CORRECT ANSWER: Adam Smith


2. In economics, assumptions:

• make economic theory useless


• mean other things equal


• enable economists to simplify reality


• used in micro and not in macroeconomist

CORRECT ANSWER: enable economists to simplify reality


3. Economics

• is more important than mathematics


• is a social science


• should be made compulsory for every student


• none of them

CORRECT ANSWER: is a social science


4. Market system means

• socialism


• capitalism


• a place where goods are traded


• all of them

CORRECT ANSWER: capitalism


5. "Everyone should study economics"

• is a positive statement


• is a normative statement


• is a true statement


• is nonsense

CORRECT ANSWER: is a normative statement


6. Who described economics as a science of material welfare?

• Robbins


• Marshall


• Ricardo


• Keynes

CORRECT ANSWER: Marshall


7. A positive statement

• concerns 'what is'


• is always accurate


• deals with values and opinions


• cannot be tested in the real world

CORRECT ANSWER: concerns 'what is'


8. Economic law

• must be followed


• is hated by people


• show economic behavior of people


• is unscientific

CORRECT ANSWER: show economic behavior of people


9. One or more persons living together and having a common budget is called

• a family


• organisation


• household


• all commodities in house

CORRECT ANSWER: household


10. Utility and usefulness are

• equal


• different


• similar


• unrelated

CORRECT ANSWER: different


11. Which is not part of institutional arguments that characterize an economic system?

• poverty is owned by individual


• at what level economic decisions are made


• how governments officials are selected


• what incentives are used to motivate economic behavior

CORRECT ANSWER: how governments officials are selected


12. As nearly as we cab estimate it, Soviet productivity growth

• was subject to sever cycles


• accelerated in 1980s


• had nothing to do with the decline of socialism


• was stagnant after 1965

CORRECT ANSWER: was stagnant after 1965


13. An apparently irreversible trend in China in the 1990s is

• reliance on moral incentives


• state-run banks to print own money


• shift from public to private production


• to allow Japan to operate major industries

CORRECT ANSWER: shift from public to private production


14. If business managers are rewarded on the basis of how much output they create

• consumers will get what they want


• profit will be large


• productivity will increase


• potential for quality to suffer

CORRECT ANSWER: potential for quality to suffer


15. Microeconomics is also known as

• price theory


• positive economics


• normative economics


• none of them

CORRECT ANSWER: price theory


16. When resources are allocated by government planning

• capitalism is usually the result


• economy is more efficient


• decision making is decentralized


• both a and c

CORRECT ANSWER: decision making is decentralized


17. Under the Soviet system supply-demand balance was

• maintained effectively


• unsatisfactorily attempted by planners


• not a major consideration of planners


• left to market price movements

CORRECT ANSWER: unsatisfactorily attempted by planners


18. Market allocation fundamentally relies upon

• a system of relative prices


• a belief that employees work for good of society


• government interference


• moral incentives

CORRECT ANSWER: a system of relative prices


19. There is an early belief that Socialist economy would fail because they underutilized

• scarce information


• labor resources


• plants and factories


• natural resources

CORRECT ANSWER: scarce information


20. Macroeconomics is study of

• large firms and consumers


• industries as a whole rather than individual firms


• economy as whole


• individual firms

CORRECT ANSWER: economy as whole


21. When inflation is positive

• prices rise


• prices fall


• more prices rise than fall


• average price rise

CORRECT ANSWER: average price rise


22. Which of the following decades was characterized by stagflation?

• 1930s


• 1940s


• 1970s


• 1960s

CORRECT ANSWER: 1970s


23. During a recession the government

• collects more taxes


• spends more on unemployment insurance


• spends less overall


• adjust spending

CORRECT ANSWER: spends more on unemployment insurance


24. The four phases of the business cycle include the

• expansion period


• leverage period


• acceleration phase


• plateau

CORRECT ANSWER: expansion period


25. Which is least important in study of macroeconomics?

• general price level


• relative prices of goods


• interest rate


• total output

CORRECT ANSWER: relative prices of goods


26. If a given market basket of goods and services that cost $40 in the base period now costs $120 then the current value of the price index is

• 120


• 300


• 33.3


• 3

CORRECT ANSWER: 300


27. In the course of a business cycle, a recession is followed by

• trough


• recovery


• depression


• expansion

CORRECT ANSWER: trough


28. The potential affects of inflation include all of the following except

• income redistribution from borrowers to lenders


• scarce resources devoted to anticipating


• investment in inflation


• possible changes in real output

CORRECT ANSWER: income redistribution from borrowers to lenders


29. The redistribution of income that inflation entails depends fundamentally on

• current rate of unemployment


• correct anticipation of inflation


• government programs to increase productivity to lower inflation


• current stage of business cycle

CORRECT ANSWER: correct anticipation of inflation


30. Economic problems arise because

• wants are unlimited


• resources are scarce


• scarce resources have alternative uses


• all of them

CORRECT ANSWER: all of them


31. The Law of Demand, assuming other things to remain constant, establishes the relationship between

• income of the consumer and the quantity of a commodity demanded by them


• price of a commodity and the quantity demanded


• price of a commodity and the demand for its substitute


• quantity demanded of a commodity and the relative prices of its complementary goods

CORRECT ANSWER: price of a commodity and the quantity demanded


32. Production is a function of

• profits


• costs


• inputs


• price

CORRECT ANSWER: profits


33. Elasticity of supply refers to the degree of responsiveness of supply of a commodity to changes in its

• demand


• price


• costs of production


• state of technology

CORRECT ANSWER: price


34. Discriminating monopoly implies that the monopolist charges different prices for his commodity

• from different groups of consumers


• for different uses


• at different places


• any of the above

CORRECT ANSWER: any of the above


35. Which is not essential condition for an economic problem to arise?

• unlimited wants


• use of money


• scarcity of resources


• alternative uses of scarce resources

CORRECT ANSWER: use of money


36. Identify the factor, which generally keeps the price-elasticity of demand for a commodity low:

• variety of uses for that commodity


• its low price


• close substitutes for that commodity


• high proportion of the consumer's income spent on it

CORRECT ANSWER: its low price


37. An Is-product curve slopes

• downward to the left


• downward to the right


• upward to the left


• upward to the right

CORRECT ANSWER: downward to the right


38. The cost of one thing in terms of the alternative given up is known as

• production cost


• physical cost


• real cost


• opportunity cost

CORRECT ANSWER: opportunity cost


39. Price discrimination will be profitable only if the elasticity of demand in different markets into which the total market has been divided is

• uniform


• different


• less


• zero

CORRECT ANSWER: different