MCQOPTIONS
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MCQOPTIONS
This section includes 70 Mcqs, each offering curated multiple-choice questions to sharpen your Economics knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Which of the following statements is true about a market economy ? |
| A. | With a large enough computer, central planners could guide production more efficiently than markets. |
| B. | Market participants act as if guided by an invisible hand to produce outcomes that maximize social welfare |
| C. | The strength of a market system is that it tends to distribute resources evenly across consumers. |
| D. | Taxes help prices communicate costs and benefits to producers and consumers. |
| Answer» C. The strength of a market system is that it tends to distribute resources evenly across consumers. | |
| 2. |
Which one of the following is a normative statement ? |
| A. | The richest 10 per cent of the population has had a bigger percentage increase in incomes over the past 10 years than the poorest 10 percent |
| B. | Inflation is rising |
| C. | The proportion of people’s income paid in taxes is higher under this government than under the previous one. |
| D. | Inequality in the distribution of income is a more serious problem than unemployment |
| Answer» E. | |
| 3. |
Workers in Western Europe enjoy a high standard of living because ? |
| A. | the countries of Western Europe have set high minimum wage rates. |
| B. | Unions in Western Europe keep the wage high |
| C. | none of these answers. |
| D. | The countries of Western Europe have protected their industries from foreign corporation |
| E. | Workers in the united states are highly productive |
| Answer» D. The countries of Western Europe have protected their industries from foreign corporation | |
| 4. |
You are planning to run a hot dog stand during a forthcoming fair. You originally estimated that you will generated sales revenue of Rs 2000 and you have already spent Rs 1000 building the hot dog stand. The hot dog stand is nearly completed but now you estimate total sales to be only Rs 800 because the fair clashes with a major music festival in a nearby location. You can complete the hot dog stand for another Rs 300 Your decision rule should be to complete the hot dog stand as long as the cost to complete the stand is less than ? |
| A. | Rs 300 |
| B. | Rs 1000 |
| C. | Rs 500 |
| D. | Rs 800 |
| Answer» E. | |
| 5. |
Which of the following situations describes the greatest market power ? |
| A. | Subaru’s impact on the price f cars |
| B. | a farmer’s impact on the price of corn |
| C. | Microsoft’s impact on the price of desktop operating systems |
| D. | a student’s impact on college tuition |
| Answer» D. a student’s impact on college tuition | |
| 6. |
Which of the following products would be least capable of producing an externality ? |
| A. | inoculations against disease |
| B. | cigarettes |
| C. | food |
| D. | education |
| E. | stereo equipment |
| Answer» D. education | |
| 7. |
Which of the following is not part of the opportunity cost of going on holiday ? |
| A. | The money you spent on a theater show |
| B. | The money you could have made if you had stayed at home and worked |
| C. | The money you spend on airline tickets |
| D. | the money you spent on food |
| Answer» E. | |
| 8. |
Which of the following is not one of the basic economic s ? |
| A. | What to produce |
| B. | Who to produce for |
| C. | How to produce |
| D. | How to maximize economic growth |
| Answer» E. | |
| 9. |
Which of the following is a normative statement in economics ? |
| A. | More spending by the government reduces poverty |
| B. | Higher taxes lead to less desire to work |
| C. | The Pakistan’s economy is growing fast relative to other SAARC members |
| D. | The government should concentrate on reducing unemployment |
| Answer» E. | |
| 10. |
Which of the following involves a trade – off ? |
| A. | Taking a nap |
| B. | All of these answers involve trade-offs |
| C. | Watching a football game on Saturday afternoon |
| D. | Going to university |
| Answer» C. Watching a football game on Saturday afternoon | |
| 11. |
Which of the following activities is most likely to produce an externality? |
| A. | A student eats a hamburger in the student union. |
| B. | A student reads a novel for pleasure |
| C. | A student sits at home and watches T.V |
| D. | A student has a party in her room in the student hall of residence. |
| Answer» E. | |
| 12. |
When we know the quantity of a product that buyers wish to purchase at each possible price we know_____________? |
| A. | Demand |
| B. | Supply |
| C. | Excess demand |
| D. | Excess supply |
| Answer» B. Supply | |
| 13. |
when a market is in equilibrium ? |
| A. | quantity demanded equals quantity supplied |
| B. | Excess demand and excess supply are zero |
| C. | The market is cleared by the equilibrium price |
| D. | All of the above |
| Answer» E. | |
| 14. |
Unemployment means that ? |
| A. | there is excess demand in the labour market |
| B. | there are some people who will not work at the going wage rate. |
| C. | people are not willing to work at the going wage rate. |
| D. | at the going wage rate, there are people who want to work but cannot find work. |
| Answer» E. | |
| 15. |
Trade-offs are required because wants are unlimited, and resources are ? |
| A. | economical |
| B. | unlimited |
| C. | Efficient |
| D. | Scarce |
| Answer» E. | |
| 16. |
Time series data show information ? |
| A. | about the same point in time over different places |
| B. | about different points in time over the same variable |
| C. | about different variables over different places |
| D. | about different points in time over different places |
| Answer» C. about different variables over different places | |
| 17. |
The total demand for goods and services in an economy is known as_____________? |
| A. | gross national product. |
| B. | national demand. |
| C. | economy-wide demand |
| D. | aggregate demand |
| Answer» E. | |
| 18. |
The study of inflation is part of ? |
| A. | descriptive economics |
| B. | normative economics |
| C. | macroeconomics |
| D. | microeconomics |
| Answer» D. microeconomics | |
| 19. |
The sacrifice involved when you choose a particular course of action is called the ? |
| A. | Alternative |
| B. | Opportunity cost |
| C. | Consumer cost |
| D. | Producer cost |
| Answer» C. Consumer cost | |
| 20. |
The sacrifice involved when you choose a particular course of action is called the? |
| A. | Alternative |
| B. | Opportunity cost |
| C. | Consumer cost |
| D. | Producer cost |
| Answer» C. Consumer cost | |
| 21. |
The retail price index is used to__________________? |
| A. | construct price lists |
| B. | compare shop prices |
| C. | measure changes in the cost of living |
| D. | None of the above |
| Answer» D. None of the above | |
| 22. |
The public sector includes ? |
| A. | Investors owning companies |
| B. | Government ownership of assets |
| C. | Market forces of supply and demand |
| D. | All trade via barter |
| Answer» E. | |
| 23. |
The Phillips curve shows that ? |
| A. | the business cycle has been eliminated |
| B. | an increase in inflation temporarily increases unemployment. |
| C. | inflation and unemployment are unrelated in the short run. |
| D. | a decrease in inflation temporarily increases unemployment. |
| E. | none of these |
| Answer» E. none of these | |
| 24. |
The opportunity cost of a good is______________? |
| A. | the time lost in finding it |
| B. | the quantity of other goods sacrificed to get another unit of that good |
| C. | the expenditure on the good |
| D. | the loss of interest in using savings |
| Answer» C. the expenditure on the good | |
| 25. |
The free market involves ? |
| A. | The free provision of products |
| B. | The Subsidizing of products by the government |
| C. | Market forces of supply and demand |
| D. | All trade via barter |
| Answer» D. All trade via barter | |
| 26. |
The equilibrium price clears the market it is the price at which _________________? |
| A. | Everything is sold |
| B. | Buyers spend all their money |
| C. | Quantity demanded equal quality supplied |
| D. | Excess demanded equals quantity |
| E. | C and D |
| Answer» F. | |
| 27. |
The economics the central problem is ? |
| A. | Scarcity |
| B. | Money |
| C. | Consumption |
| D. | Allocation |
| Answer» B. Money | |
| 28. |
The concept of opportunity cost ? |
| A. | is relevant only for a capitalist economy like the United States. |
| B. | Suggests a major increase in public health care spending means an expansion in other areas will be harder to achieve |
| C. | Suggests all our wants can be achieved |
| D. | Would be relevant if we eliminated poverty |
| Answer» C. Suggests all our wants can be achieved | |
| 29. |
The circular flow of goods and incomes shows the relationship between? |
| A. | Wages and salaries. |
| B. | income and money |
| C. | goods and services |
| D. | firms and households |
| Answer» C. goods and services | |
| 30. |
The basic economic problems will not be solved by ? |
| A. | Market forces |
| B. | Government intervention |
| C. | A mixture of government intervention and the free market |
| D. | The creation of unlimited resources |
| Answer» E. | |
| 31. |
Resources in an economy ? |
| A. | Are always found |
| B. | Can never decease |
| C. | Always increase over time |
| D. | Are limited at any moment in time |
| Answer» E. | |
| 32. |
Raising taxes and increasing welfare payments ? |
| A. | reduces market power |
| B. | Proves that there is such a thing as a free lunch |
| C. | improves efficiency at the expense of equity. |
| D. | improves equity at the expense of efficiency. |
| Answer» E. | |
| 33. |
Productivity can be increased by ? |
| A. | improving the education of workers |
| B. | raising union wages. |
| C. | raising minimum wages. |
| D. | restricting trade with foreign countries. |
| Answer» B. raising union wages. | |
| 34. |
Periods of less than full employment corresponds to _________________ ? |
| A. | points outside the production possibility curve |
| B. | either points inside or outside the production possibility curve. |
| C. | points on the production possibility curve |
| D. | points inside the production possibility curve. |
| Answer» E. | |
| 35. |
Opportunity cost is_________________? |
| A. | the cost incurred in the past before we make a decision about what to do in the future. |
| B. | a cost that cannot be avoided. regardless of what is done in the future |
| C. | that which we forgo, or give up, when we make a choice or a decision. |
| D. | the additional benefit of buying an additional unit of a product |
| Answer» D. the additional benefit of buying an additional unit of a product | |
| 36. |
On a graph, a positive linear relationship___________________? |
| A. | moves down to the right |
| B. | moves up to the left |
| C. | moves up to the right |
| D. | moves down to the left |
| Answer» D. moves down to the left | |
| 37. |
Normative economics Forms ________ based on ________? |
| A. | positive statements, facts |
| B. | opinions personal facts |
| C. | positive statements values |
| D. | opinions facts |
| Answer» B. opinions personal facts | |
| 38. |
Microeconomics is not concerned with the behavior of ? |
| A. | aggregate demand |
| B. | firms |
| C. | Consumers |
| D. | industries. |
| Answer» B. firms | |
| 39. |
Macroeconomics is the study of ? |
| A. | individual building blocks in the economy |
| B. | the relationship between different sectors on the economy |
| C. | household purchase decisions |
| D. | the economy as a whole |
| Answer» E. | |
| 40. |
Macroeconomics deals with? |
| A. | the behavior of the electronics industry |
| B. | the behavior of firms |
| C. | economics aggregates |
| D. | the activities of individual units |
| Answer» D. the activities of individual units | |
| 41. |
Inflation is___________________? |
| A. | a decrease in the overall price level. |
| B. | an increase in the overall price level. |
| C. | an increase in the overall level of economic activity. |
| D. | a decrease in the overall level of economics activity |
| Answer» C. an increase in the overall level of economic activity. | |
| 42. |
In the mixed economy________________? |
| A. | economics problems are solved by the government and market |
| B. | economic decisions are made by the private sector and free market |
| C. | economic allocation is achieved by the invisible hand |
| D. | economics s is solved by government departments |
| Answer» B. economic decisions are made by the private sector and free market | |
| 43. |
In a planned or command economy, all the economics decisions are taken by the ? |
| A. | Consumers |
| B. | voters |
| C. | government |
| D. | Workers |
| Answer» D. Workers | |
| 44. |
In a free market? |
| A. | government intervenes |
| B. | government plan production |
| C. | government interferes |
| D. | Prices adjust to reconcile scarcity and desires |
| Answer» E. | |
| 45. |
In a free market system, the amount of goods and services that any one household gets depends upon its ? |
| A. | income |
| B. | income and wealth |
| C. | wealth |
| D. | wage and interest income |
| Answer» C. wealth | |
| 46. |
In a command (planned) economy ? |
| A. | The price mechanism acts as an incentive |
| B. | Resources are allocated by market forces |
| C. | Individual firms make decisions for themselves about what to produce and how to produce it |
| D. | The public sector is large |
| Answer» C. Individual firms make decisions for themselves about what to produce and how to produce it | |
| 47. |
If you income during one year is Rs10,000 and the following year it is Rs12,000 then it has grown by ________________? |
| A. | 20% |
| B. | 2% |
| C. | 12% |
| D. | 16% |
| Answer» B. 2% | |
| 48. |
If the diagram of a line shows that lower values on the vertical scale are associated with higher values on the horizontal scale this is an example of ? |
| A. | a nonlinear relationship |
| B. | a positive linear relationship |
| C. | a scatter diagrams |
| D. | a negative linear relationship |
| Answer» E. | |
| 49. |
If marginal benefit is greater than marginal cost, a rational choice involves ? |
| A. | no more of the activity. |
| B. | less of the activity |
| C. | more of the activity |
| D. | more or less, depending on the benefits of other activities |
| Answer» D. more or less, depending on the benefits of other activities | |
| 50. |
If a price increase of good A increases the quantity demanded of good B, then good B is a________________? |
| A. | substitute good |
| B. | complementary good |
| C. | bargain |
| D. | inferior good |
| Answer» B. complementary good | |