Free Objective test Questions on Economics

Free Objective test Questions on Economics

Multiple choice questions on indian economics

1. The sequencing process of Schumpeter model of development is

(A) Swarm like Clusters, Innovation, Bank credit, Breaking circular flow

(B) Breaking circular flow,Innovation, Bank credit, Swarm like Clusters

(C) Innovation, Bank credit, Breaking circular flow, Swarm like Clusters

(D) Bank credit, Innovation, Swarm like Clusters, Breaking circular flow

Ans :B

2. Arrange the following in chronological order :

I. CES production function.

II. Cobb-Douglas production function

III. Tronslog production function

IV. The law of variable proportions

Codes :

(A) III, I, IV, II

(B) I, IV, II, III

(C) IV, II, I, III

(D) II, III, I, IV

Ans :C

3. Assertion (A) : Investment has also a supply effect.

Reason (R) : Because it raises capacity to produce.

Codes :

(A) Both (A) and (R) are correct and (R) is not the correct explanation

of (A).

(B) Both (A) and (R) are correct and (R) is the correct explanation of

(A).

(C) (A) is correct, but (R) is not correct.

(D) (A) is not correct, but (R) is correct.

Ans :B

4. Assertion (A) : K/L ratio will adjust through time in the direction of

equilibrium ratio.

Reason (R) : Because the technical coefficient of production are variable.

Codes :

(A) Both (A) and (R) are correct and (R) is not the correct explanation

of (A).

(B) Both (A) and (R) are correct and (R) is the correct explanation of

(A).

(C) (A) is correct, but (R) is incorrect.

(D) (A) is incorrect, but (R) is correct.

Ans :B

5. Assertion (A) : Effective demand can be increased by more equitable

distribution of wealth.

Reason (R) : Thirty or forty entities with income averaging between 1 lakh and 5 lakhs would create much more effective demand than a single entity having

income of 10 lakhs a year.

Codes :

(A) Both (A) and (R) are correct and(R) is not the correct explanation

of (A).

(B) Both (A) and (R) are correct and (R) is the correct explanation of

(A).

(C) (A) is correct, but (R) is incorrect.

(D) (A) is incorrect, but (R) is correct.

Ans :B

6. The Planning Commission of India has recently made announcement regarding Poverty Line :

I.  Rs. 42 per capita per day in urban area

II. Rs. 26 per capita per day in rural area

III. Rs. 32 per capita per day in urban area

IV.  Rs.32 per capita per day in rural area

Codes :

(A) I and II are correct.

(B) I and III are correct.

(C) II and III are correct.

(D) III and IV are correct.

Ans :C

7. In Keynesian system speculative demand for money arises because of

I. Uncertainty of future interest rates

II. Unexpected expenditures

III. To bridge the gap between income

and eventual expenditure

IV. Relationship between changes in

the interest rates and bond prices

Codes :

(A) I and III are correct.

(B) I and IV are correct.

(C) II and III are correct.

(D) III and IV are correct.

Ans :B

8. The doctrine of unbalanced growth was propounded by

I. Hirschman

II. Robert Solow

III. Singer

IV. Ragnar Nurkse

Codes :

(A) I and II are correct.

(B) II and III are correct.

(C) III and IV are correct.

(D) I and III are correct.

Ans :D

9. Fiscal policy relates to the Government decision in respect of

I. Taxation

II. Government spending

III. Government borrowing

IV. Public Debt

Codes :

(A) III and IV are correct.

(B) II, III and IV are correct.

(C) I and II are correct.

(D) All the above are correct.

Ans :D

10. Improvement in the BOP deficit may be effected through

I. Import control

II. Export promotion

III. Foreign exchange control

IV. Devaluation

Codes :

(A) I and II are correct.

(B) I, II, III and IV are correct.

(C) II and III are correct.

(D) I, II and III are correct.

Ans :B

11. For an inferior goods, income consumption curve and Engles curves

are

(A) Positively sloped

(B) Negatively sloped

(C) Are the same

(D) Income consumption curve is positively sloped and the Engles curve is negatively sloped

Ans :B

12. If the demand for money is perfectly interest inelastic, the LM schedule will

be

(A) Upward sloping

(B) Downward sloping

(C) Horizontal line

(D) Vertical line

Ans :D

13. In calculating the buoyancy of a tax,we consider

(A) Only discretionary changes

(B) Only automatic changes

(C) Both (A) and (B)

(D) Neither (A) nor (B)

Ans :C

14. Comparative cost advantage in Ricardo’s international trade theory

arises due to

(A) Labour cost differences

(B) Differences in factor endowment

(C) Factor abundance defined in terms of factor prices

(D) All of the above

Ans :A

15. A point of ‘Kink’ in the kinked demand curve indicates

I. Price rigidity

II. Quantity rigidity

III. Price flexibility

IV. Quantity flexibility

Codes :

(A) I and II are correct.

(B) II and III are correct.

(C) III and IV are correct.

(D) I and IV are correct.

Ans :A

16. HDI is entrusted with reference to :

I. Life expectancy at birth

II. Real GDP/per capita

III. Infant mortality

IV. Morbidity

Codes :

(A) I and II are correct.

(B) II and III are correct.

(C) III and IV are correct.

(D) All the above

Ans :D

17. According to Milton Friedman Theory of permanent component of

consumption-expenditure depends on

I. Transitory income alone

II. Transitory and permanent income

III. Permanent income alone

IV. Windfall gains

Codes :

(A) I and II are correct.

(B) I and III are correct.

(C) II and IV are correct.

(D) Only III is correct.

Ans :D

18. Assertion (A) : According to the Life Cycle Theory of consumption, an

individual level of consumption depends not just on current income but also on long run expected earnings.

Reason (R) : Individuals are assumed to plan a pattern of expenditure

based on expected earnings over life time.

Codes :

(A) (A) is true, but (R) is false.

(B) Both (A) and (R) are false.

(C) (A) is not correct, but (R) is correct.

(D) Both (A) and (R) are correct and

(R) is correct explanation of (A).

Ans :D

19. Assertion (A) : Stationary state is the end of the process of capital

formation.

Reason (R) : Scarcity of natural resources as also capital leads the

economy to the stationary state.

Codes :

(A) Both (A) and (R) are correct and (R) is not the correct explanation

of (A).

(B) Both (A) and (R) are correct and (R) is the correct explanation of

(A).

(C) (A) is correct, but (R) is not correct.

(D) (A) is not correct, but (R) is correct.

Ans :B

20. Arrange the following theories in the

chronological order :

I. Restatement of Quantity Theory

II. Income Theory

III. Quantity Theory

IV. Cash Balance Approach

Select the correct answer from the

given codes :

Codes :

(A) I, II, IV, III

(B) III, I, II, IV

(C) IV, III, I, II

(D) III, IV, II, I

Ans :D