Economics Questions and Answers for Competitive Exams 2016

Economics Questions and Answers for Competitive Exams
Extremely useful questions for Central and State Civil Services, IBPS Banks, MBA and other competitive exams–

1. Income consumption line of the ‘Consumer Theory’ is analogous in ‘Production Theory’ to which one of the following?
(a) Expansion path (b) Isoquant line (c) Ridge line (d) Isocost line (Ans : a)

2. Which one of the following is the correct sequence of magnitude of minima in ascending order in marginal cost (MC) curve, average cost (AC) curve and average variable cost (AVC) curve?
(a) MC, AVC, AC (b) AVC, AC, MC (c) MC, AC, AVC (d) AC, MC, AVC
(Ans : a It appears from the figure of Q.7 that magnitude of minima of MC is at the lowest point, than the AVC and finally the minima of AC is highest)

3. Given
% change in nominal GNP = 1.8
% change in population = 0.5
% change in price level = 1.3
What is the approximate percentage in real capita GNP?
(a) Zero (b) 0.5 (c) 1.0 (d) 1.3 (Ans : c)

4. Who developed the Time Preference Theory of Interest?
(a) Irving Fisher (b) N. Senior (c) J. R. Hicks (d) J.M. Keynes (Ans : a)

5. Which one of the following is the most important determinant of speculative demand for money?
(a) Income (b) Interest rate (c) Profits (d) Prices (Ans : b)

6. Which one of the following equations was used by Fischer to explain the Quantity Theory of Money?
(Symbols have their usual meanings)
(a) MV = PT (b) MP = VT (c) MP = PT (d) PV = MT (Ans : a)

7. If Y is the total money income of the community, M is the money supply and P is the price level, then how is Vy (the income velocity of money) defined as?
(a) Vy = M/Y (b) Vy = Y/M (c) Vy = Y (MP) (d) Yy = PY/M (Ans : d)

8. When shall an increase in money supply have a small effect on nominal Gross Domestic Product?
(a) If the velocity is decreasing (b) If the velocity is unchanged
(c) If the velocity is increasing (d) If the Government’s spending is also increasing (Ans : a)

9. What is the theory that opening a country to world markets gives an opportunity to utilze unemployed and underemployed resources known as?
(a) Ricardian theory (b) Heckscher – Ohlin theory (c) Vent-for-surplus theory (d) Strategic trade Theory
(Ans : c Theory, originally developed by Adam Smith states that international trade provides opportunity to uuntilised or under utilized resources of the country.)

10. Which one of the following is a qualitative credit control method?
(a) Open market operations (b) Bank rate (c) Variable cash reserve ratio (d) Moral suasion (Ans : d)

11. Which one of the following pairs is called an open market operation?
(a) Selling and buying of securities or bills by the central bank
(b) Selling and buying of foreign exchange
(c) Selling and buying of shares by the foreign institutional investors
(d) Selling and buying of gold in the open market by commercial banks (Ans : a)

12. Which one of the following is a source of non-tax revenue for governments?
(a) Import duty on cars (b) Octroi at check points on roads
(c) Entrance fee to museums (d) Excise duty on beverages (Ans : c)

13. The Laffer Curve explains the relationship between which of the following?
(a) Tax rates and tax revenue (b) Tax rates and employment
(c) Tax rates and income (d) Tax rates and government expenditure (Ans : a)

14. What does an increase in the ratio of revenue deficit to gross fiscal deficit indicate?
(a) An increase in investment (b) an increase in the utilization of borrowed funds for revenue purposes
(c) An increase in the utilization of borrowed funds for imports (d) An increase in the utilization of borrowed funds for lending (Ans : b)

15. Which of the following is not a non-tariff barrier?
(a) Voluntary export restraint (b) Health and product standards
(c) Environmental protection laws (d) Ad-valorem duties (Ans : d)

16. In the Balance-of-Payment Account, the transfer payments are included in which one of the following?
(a) Current account (b) Service account (c) Capital account (d) Official Reserves account (Ans : a)

17. Which one of the following explains Balance-of-Payment adjustment mechanism under the gold standard?
(a) Devaluation (b) Flexible exchange rates (c) Income-adjustment mechanism (d) Price-specie flow mechanism (Ans : d)

18. Which of the following is the highest form of economic integration among different nations?
(a) Custom Union (b) Free Trade Area (c) Economic Union (d) Common Market (Ans : d)

19. Which one of the following best characterizes the Bretton Woods System of exchange rates?
(a) Adjustable fixed exchange rates (b) Fixed exchange rates
(c) Adjustable pegged exchange rates (d) Pegged exchange rates (Ans : c)

20. Which of the following is meant by growth in the context of growth and development?
(a) Growth of gross national product in money terms (b) Growth of per capita income in money terms
(c) Growth of gross national product in real terms (d) Growth of per capita income in real terms (Ans : d)

21. Who among the following developed the wage-goods model?
(a) M. Dobb (b) A.K. Sen (c) Vakil and Brahmananda (d) P.C. Mahalanobis (Ans : c)

22. Which among the following is not a committed expenditure of the Government of India?
(a) Interest payments (b) Pay and allowances
(c) Transfers to States and Union Territories (d) Loans and advances to States and Union Territories (Ans : d)

23. If Median and Mode of a set of observations are 20.6 and 26, respectively, then what is the value of Mean of the observations?
(a) 16 (b) 17.9 (c) 18.4 (d) 19 (Ans : b)

24. Which one of the following indices satisfies both time reversal and factor reversal tests?
(a) Laspeyre’s index number (b) Fisher’s index number (c) Paasche’s index number (d) Kelly’s index number (Ans : b)

25. What is strategy which makes an all out effort to provide the masses of people in India access to basic facilities such as health, education, clean drinking water, etc., termed as?
(a) Inclusive growth strategy (b) Exclusive growth strategy (c) Rapid growth strategy (d) Balanced growth strategy (Ans : a)

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