Economics
1. Father of political economy
CORRECT ANSWER: Adam Smith
2. In economics, assumptions:
CORRECT ANSWER: enable economists to simplify reality
3. Economics
CORRECT ANSWER: is a social science
4. Market system means
CORRECT ANSWER: capitalism
5. "Everyone should study economics"
CORRECT ANSWER: is a normative statement
6. Who described economics as a science of material welfare?
CORRECT ANSWER: Marshall
7. A positive statement
CORRECT ANSWER: concerns 'what is'
8. Economic law
CORRECT ANSWER: show economic behavior of people
9. One or more persons living together and having a common budget is called
CORRECT ANSWER: household
10. Utility and usefulness are
CORRECT ANSWER: different
11. Which is not part of institutional arguments that characterize an economic system?
CORRECT ANSWER: how governments officials are selected
12. As nearly as we cab estimate it, Soviet productivity growth
CORRECT ANSWER: was stagnant after 1965
13. An apparently irreversible trend in China in the 1990s is
CORRECT ANSWER: shift from public to private production
14. If business managers are rewarded on the basis of how much output they create
CORRECT ANSWER: potential for quality to suffer
15. Microeconomics is also known as
CORRECT ANSWER: price theory
16. When resources are allocated by government planning
CORRECT ANSWER: decision making is decentralized
17. Under the Soviet system supply-demand balance was
CORRECT ANSWER: unsatisfactorily attempted by planners
18. Market allocation fundamentally relies upon
CORRECT ANSWER: a system of relative prices
19. There is an early belief that Socialist economy would fail because they underutilized
CORRECT ANSWER: scarce information
20. Macroeconomics is study of
CORRECT ANSWER: economy as whole
21. When inflation is positive
CORRECT ANSWER: average price rise
22. Which of the following decades was characterized by stagflation?
CORRECT ANSWER: 1970s
23. During a recession the government
CORRECT ANSWER: spends more on unemployment insurance
24. The four phases of the business cycle include the
CORRECT ANSWER: expansion period
25. Which is least important in study of macroeconomics?
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
CORRECT ANSWER: 300
27. In the course of a business cycle, a recession is followed by
CORRECT ANSWER: trough
28. The potential affects of inflation include all of the following except
CORRECT ANSWER: income redistribution from borrowers to lenders
29. The redistribution of income that inflation entails depends fundamentally on
CORRECT ANSWER: correct anticipation of inflation
30. Economic problems arise because
CORRECT ANSWER: all of them
31. The Law of Demand, assuming other things to remain constant, establishes the relationship between
CORRECT ANSWER: price of a commodity and the quantity demanded
32. Production is a function of
CORRECT ANSWER: profits
33. Elasticity of supply refers to the degree of responsiveness of supply of a commodity to changes in its
CORRECT ANSWER: price
34. Discriminating monopoly implies that the monopolist charges different prices for his commodity
CORRECT ANSWER: any of the above
35. Which is not essential condition for an economic problem to arise?
CORRECT ANSWER: use of money
36. Identify the factor, which generally keeps the price-elasticity of demand for a commodity low:
CORRECT ANSWER: its low price
37. An Is-product curve slopes
CORRECT ANSWER: downward to the right
38. The cost of one thing in terms of the alternative given up is known as
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
CORRECT ANSWER: different
- 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