Economics MCQs

Option A: industry equilibrium analysis

Option B: specific equilibrium analysis

Option C: partial equilibrium analysis

Option D: general equilibrium analysis

Correct Answer: partial equilibrium analysis ✔

Option A: less than the efficient level of output

Option B: more than the efficient level of output

Option C: so that consumer surplus is zero

Option D: the efficient level of output

Correct Answer: less than the efficient level of output ✔

Option A: marginal damage cost

Option B: marginal social cost

Option C: marginal private cost

Option D: marginal external cost

Correct Answer: marginal social cost ✔

Option A: raising the price of X.

Option B: production less X

Option C: Producing more X

Option D: Increasing the cost of producing X

Correct Answer: Producing more X ✔

Option A: market orientated economists

Option B: left-wing theorists

Option C: Keynesian

Option D: New-Keynesian

Correct Answer: market orientated economists ✔

Option A: Public borrowing

Option B: The private sector

Option C: time and motion studies

Option D: foreign labour

Correct Answer: The private sector ✔

Option A: reduce poverty

Option B: reduce unemployment

Option C: weaken the power of trade unions

Option D: help small businesses

Correct Answer: reduce unemployment ✔

Option A: initially increase and then decrease

Option B: decrease continuously

Option C: rise continuously

Option D: initially decrease and then increase

Correct Answer: initially increase and then decrease ✔

Option A: aggregate supply will increase , aggregate demand will decrease

Option B: aggregate supply will increase, aggregate output will increase and the price level will decrease

Option C: aggregate supply will increase aggregate output will increase and the price level will increase

Option D: both aggregate supply and demand will increase and the price level will increase

Correct Answer: aggregate supply will increase , aggregate demand will decrease ✔

Option A: supply side economists

Option B: neo-Keynesian economists

Option C: rational -expectations economists

Option D: New classical economists

Correct Answer: supply side economists ✔

Option A: the level of national income

Option B: the level of aggregate demand

Option C: the rate of change of national income

Option D: expectations

Correct Answer: the rate of change of national income ✔

Option A: an increase in income and an increase in overall saving

Option B: a decrease in income and an overall decrease in saving

Option C: a decrease in income but an increase in saving

Option D: an increase in income but no overall change in saving

Correct Answer: a decrease in income and an overall decrease in saving ✔

Option A: 1/MPS

Option B: 1/(1+ MPC)

Option C: 1 – MPC

Option D: 1/MPC

Correct Answer: 1/MPS ✔

Option A: 5

Option B: 8

Option C: 2

Option D: 1.25

Correct Answer: 5 ✔

Option A: aggregate output equals consumption minus investment

Option B: saving equals consumption

Option C: Planned aggregate expenditure equals aggregate output

Option D: planned aggregate expenditure equals consumption

Correct Answer: Planned aggregate expenditure equals aggregate output ✔

Option A: the fiscal stance

Option B: the tax multiplier

Option C: the marginal tax propensity

Option D: the average tax propensity

Correct Answer: the marginal tax propensity ✔

Option A: the average amount of income that is saved

Option B: the fraction of a change in income that is saved

Option C: the ratio of saving to income

Option D: the ratio of income to saving

Correct Answer: the fraction of a change in income that is saved ✔

Option A: income tax and social security payments

Option B: taxes and the addition of benefits

Option C: income tax

Option D: contractual payments such as pensions and mortgages

Correct Answer: taxes and the addition of benefits ✔

Option A: The marginal propensity to consume.

Option B: The amount of income when consumption is zero

Option C: The average consumption level

Option D: The amount of consumption when income is zero

Correct Answer: The marginal propensity to consume. ✔

Option A: aggregate investment

Option B: aggregate expenditure

Option C: aggregate demand

Option D: aggregate output

Correct Answer: aggregate output ✔

Option A: A lower interest rate but the same quantity of money

Option B: A higher interest rate but the same quantity of money

Option C: A higher quantity of money but lower interest rates

Option D: A higher quantity of money but the same interest rate

Correct Answer: A higher quantity of money but lower interest rates ✔

Option A: Reduce interest rates

Option B: Buy back government bonds

Option C: Sell government bonds

Option D: Encourage banks to lend

Correct Answer: Encourage banks to lend ✔

Option A: The velocity of circulation decrease

Option B: The number of transaction decrease

Option C: There is deflation

Option D: The velocity of circulation and the number of transactions is constant

Correct Answer: The number of transaction decrease ✔

Option A: Is perfectly interest elastic

Option B: Is perfectly interest inelastic

Option C: Means that an increase in money supply leads to a fall in the interest rate

Option D: Means that an increases in the money supply leads to an increases in the interest rate

Correct Answer: Is perfectly interest elastic ✔

Option A: Depreciation

Option B: Acceleration

Option C: Declaration

Option D: Capital investment

Correct Answer: Declaration ✔

Option A: Government policy

Option B: Expectations

Option C: National income

Option D: Historic trends

Correct Answer: Government policy ✔

Option A: The cost of borrowing equals the marginal efficiency of capital

Option B: The cost of borrowing is greater than the marginal efficiency of capital

Option C: The cost of borrowing is less then the marginal efficiency of capital

Option D: The cost of borrowing equals the marginal propensity to consume

Correct Answer: The cost of borrowing is less then the marginal efficiency of capital ✔

Option A: The marginal propensity to consume is constant

Option B: The economy is at full employment

Option C: There is a constant relationship between net investment and the rate of change of output

Option D: The multiplier is constant

Correct Answer: There is a constant relationship between net investment and the rate of change of output ✔

Option A: Decrease consumption

Option B: Increase aggregate demand

Option C: Reduce aggregate supply

Option D: Slow economic growth

Correct Answer: Reduce aggregate supply ✔

Option A: Total spending / total consumption

Option B: Total consumption / total income

Option C: change in consumption / change in income

Option D: Change in consumption / change in savings

Correct Answer: Total spending / total consumption ✔

Option A: Decrease consumption

Option B: increase cost of borrowing

Option C: Encourage saving

Option D: Increase spending

Correct Answer: increase cost of borrowing ✔

Option A: The average propensity to consume gets nearer in value of the marginal propensity to consume

Option B: The average propensity to consume diverges in value from the marginal propensity to consume

Option C: The average propensity to consume falls

Option D: The average propensity to consume always approaches 0

Correct Answer: The average propensity to consume falls ✔

Option A: increase the size of the multiplier

Option B: Increase the marginal propensity to save

Option C: Decrease national income

Option D: Reduce injections into the economy

Correct Answer: Increase the marginal propensity to save ✔

Option A: GDP increase

Option B: Inflation is likely to increase

Option C: Stock levels are likely to increase

Option D: Investment in equipment is likely to increase

Correct Answer: Stock levels are likely to increase ✔

Option A: 0.8

Option B: 800

Option C: 810

Option D: 0.81

Correct Answer: 0.8 ✔

Option A: The Production Possibility Frontier

Option B: The Gross Domestic Barrier

Option C: The Marginal Consumption Frontier

Option D: The Minimum Efficient Scale

Correct Answer: The Minimum Efficient Scale ✔

Option A: The output per worker

Option B: The output per machine

Option C: Total output

Option D: Marginal output

Correct Answer: Marginal output ✔

Option A: Grows negatively

Option B: Grows slowly

Option C: Grows by 0%

Option D: Grows rapidly

Correct Answer: Grows by 0% ✔

Option A: The CPI

Option B: The CBI

Option C: GDP

Option D: MPC

Correct Answer: The CPI ✔

Option A: increase injections

Option B: Reducing taxation rates

Option C: Reducing interest rates

Option D: Reducing government spending

Correct Answer: Reducing interest rates ✔

Option A: Actual injections = actual withdrawals

Option B: Planned injections = planned withdrawals

Option C: Savings = investment

Option D: Government spending = tax revenue

Correct Answer: Actual injections = actual withdrawals ✔

Option A: National income will increase

Option B: National income will decrease

Option C: National income will stay in equilibrium

Option D: Price will fall

Correct Answer: National income will increase ✔

Option A: Decrease tax receipts

Option B: Worsen the balance of trade

Option C: Automatically cause an increase in government spending

Option D: causes an increase in injections into the economy

Correct Answer: Decrease tax receipts ✔

Option A: Likely in increase exports

Option B: Likely to decrease savings

Option C: Likely to decrease investment

Option D: Likely to increase spending on imports

Correct Answer: Likely in increase exports ✔

Option A: The government

Option B: Shareholders

Option C: Employees

Option D: The community

Correct Answer: Employees ✔

Option A: Average revenue equals average variable cost

Option B: Marginal revenue equals marginal cost

Option C: Average revenue equals marginal cost

Option D: Average revenue equals average cost

Correct Answer: Average revenue equals average variable cost ✔

Option A: The total cost equals demand

Option B: The average revenue equals the marginal revenue

Option C: The price equals the average cost

Option D: The price equals the marginal cost

Correct Answer: The price equals the average cost ✔

Option A: Revenue – fixed costs

Option B: Fixed cost + revenue

Option C: Revenue – sales

Option D: Revenue – total costs

Correct Answer: D. Revenue – total costs ✔

Option A: Marginal cost is zero

Option B: Marginal revenue is maximised

Option C: Marginal revenue is zero

Option D: Marginal revenue equals marginal cost

Correct Answer: Marginal revenue equals marginal cost ✔

Option A: Enable abnormal profits to be made in the long run

Option B: Enable losses to be made in the long run

Option C: Enable abnormal profits to be made in the short run only

Option D: Occur in perfect competition

Correct Answer: Enable losses to be made in the long run ✔

Option A: The demand curve is the marginal cost curve

Option B: The average revenue equals the average cost

Option C: The marginal cost is the average cost curve

Option D: The demand curve is the marginal revenue

Correct Answer: The average revenue equals the average cost ✔

Option A: Consumer surplus is maximised

Option B: produce surplus is zero

Option C: Community surplus is maximised

Option D: Consumer surplus is zero

Correct Answer: produce surplus is zero ✔

Option A: Marginal revenue in A= Price B

Option B: Marginal revenue in A = Marginal revenue B = Price A = Price B

Option C: Marginal revenue in A = Marginal revenue B = Marginal cost

Option D: Marginal revenue in A = Marginal revenue B = Average cost

Correct Answer: Marginal revenue in A = Marginal revenue B = Price A = Price B ✔

Option A: Do not exist in monopoly

Option B: Cannot exist in oligopoly

Option C: Do not exist in monopolistic competition

Option D: Do exist in perfect competition

Correct Answer: Do not exist in monopolistic competition ✔

Option A: No profit is being made

Option B: Total revenue equals total cost

Option C: Profits are maximised

Option D: Producing another unit would increase profits

Correct Answer: Profits are maximised ✔

Option A: The average cost increase from Rs20 to Rs30

Option B: The total costs for 11 units are Rs700

Option C: The average cost for 10 units is Rs1300

Option D: The average cost for 11 units is Rs1300

Correct Answer: The average cost for 10 units is Rs1300 ✔

Option A: covers fixed costs

Option B: covers variable costs

Option C: covers total costs

Option D: covers revenue

Correct Answer: covers variable costs ✔

Option A: They will aim to leave the industry

Option B: Other firms will join the industry

Option C: The revenue equal total costs

Option D: No profit is made is accounting terms

Correct Answer: The revenue equal total costs ✔

Option A: Reduce output

Option B: Increase output

Option C: Leave output where it is:

Option D: Increase costs

Correct Answer: Reduce output ✔

Option A: Marginal cost is Rs20

Option B: Average cost rises

Option C: Variable cost rises by Rs200

Option D: Average fixed cost was Rs10originally

Correct Answer: Average cost rises ✔

Option A: Total cost is falling

Option B: Total cost is increasing at a falling rate

Option C: Total cost is falling at a falling rate

Option D: Total cost is increasing at an increasing rate

Correct Answer: Total cost is increasing at a falling rate ✔

Option A: The Minimum Efficient Scale

Option B: The Minimum External Scale

Option C: The Maximum External Scale

Option D: The Maximum Effective Scale

Correct Answer: The Minimum Efficient Scale ✔

Option A: There are no fixed factors of production

Option B: There are no variable factors of production

Option C: Utility is maximised when marginal product falls

Option D: Some factors of production are fixed

Correct Answer: Utility is maximised when marginal product falls ✔

Option A: An increase in demand

Option B: More government spending

Option C: Better training of employees

Option D: Productive inefficiency

Correct Answer: Better training of employees ✔

Option A: Constantly increasing

Option B: Fixed at any moment

Option C: Constantly decreasing

Option D: Able to be transferred easily between industries

Correct Answer: Fixed at any moment ✔

Option A: It is not utilizing its resources fully

Option B: It is being productively efficient

Option C: It is a mixed economy

Option D: It is trading other economies

Correct Answer: It is trading other economies ✔

Option A: Market forces of supply and demand

Option B: The government

Option C: The law

Option D: The public Sector

Correct Answer: Market forces of supply and demand ✔

Option A: An inward shift of the production possibility frontier

Option B: A movement along the production possibility frontier

Option C: An outward shift of the production possibility frontier

Option D: A decision by the government to produce inside the production possibility frontier

Correct Answer: An outward shift of the production possibility frontier ✔

Option A: New classical economists

Option B: left-wing theorists

Option C: interventionist policies

Option D: monetarists

Correct Answer: interventionist policies ✔

Option A: Technological change has made it possible for many industries to become more competitive

Option B: Because few real natural monopolies exist there is rarely a reason for government regulation

Option C: Many instances of government regulation have succeeded in reducing competition in industries where competition may be beneficial

Option D: All of the above

Correct Answer: All of the above ✔

Option A: Publicly held stock to private individuals

Option B: corporately owned businesses to individuals

Option C: government businesses to the private sector

Option D: Privately owned business to the government sector

Correct Answer: government businesses to the private sector ✔

Option A: The charities economy

Option B: The demand side of the country

Option C: The underground economy

Option D: the supply side of the economy

Correct Answer: the supply side of the economy ✔

Option A: There is no income effect when tax rates are changed

Option B: The income effect of a wage change is greater than the substitution effect of a wage change.

Option C: There is no substitution effect when tax rates are changed

Option D: The substitution effect of a wage change is greater than the income effect of a wage change

Correct Answer: The substitution effect of a wage change is greater than the income effect of a wage change ✔

Option A: An increase in the minimum wage that would cause consumer spending to increase

Option B: Investment tax credits for businesses to encourage investment

Option C: Restrictions placed on the amount that can be imported

Option D: An increased in government spending that would lead to increased aggregate demand

Correct Answer: Investment tax credits for businesses to encourage investment ✔

Option A: The upturn

Option B: The peeking out

Option C: The expansion

Option D: The recession

Correct Answer: The recession ✔

Option A: an inflationary gap

Option B: hysteresis

Option C: A deflationary gap

Option D: hyperinflation

Correct Answer: A deflationary gap ✔

Option A: Rs80 million

Option B: Rs20 million

Option C: Rs 15 million

Option D: Rs26.67 million

Correct Answer: Rs80 million ✔

Option A: 4

Option B: 25

Option C: 6

Option D: 2.5

Correct Answer: 6 ✔

Option A: automatic stabiliser

Option B: multiplier

Option C: elasticity coefficient

Option D: marginal propensity of the autonomous variable

Correct Answer: multiplier ✔

Option A: 1/investment multiplier

Option B: 1-(1/injections multiplier

Option C: MPS + MPT + MPM

Option D: the proportion of national income that is withdraw from the circular flow of income

Correct Answer: MPS + MPT + MPM ✔

Option A: decrease

Option B: remain constant

Option C: increase

Option D: either increase or decrease depending on the size of the change in investment

Correct Answer: decrease ✔

Option A: previous decisions

Option B: absolute income

Option C: relative income

Option D: permanent income

Correct Answer: absolute income ✔

Option A: the marginal propensity of expenditure

Option B: the marginal propensity to save

Option C: the average propensity to consume

Option D: the marginal propensity to consume

Correct Answer: the average propensity to consume ✔

Option A: exogenous

Option B: constant

Option C: endogenous

Option D: independent

Correct Answer: endogenous ✔

Option A: Reduces the interest rate

Option B: Buys and sells bonds and securities

Option C: Increases taxation

Option D: Increase the exchange rate

Correct Answer: Increases taxation ✔

Option A: Individuals hold money just in case an emergency happens

Option B: Individuals hold money to buy things

Option C: Individuals hold money rather than other assets because they are worried about the price of the other assets falling

Option D: Individuals hold money to shop

Correct Answer: Individuals hold money to buy things ✔

Option A: Reduce the interest rate

Option B: Increase the interest rate

Option C: Increase inflation

Option D: Decrease deflation

Correct Answer: Increase the interest rate ✔

Option A: Increase aggregate demand

Option B: Increase savings

Option C: Decrease consumption

Option D: Decrease exports

Correct Answer: Increase aggregate demand ✔

Option A: An idle because

Option B: An active balance

Option C: Directly related to interest rates

Option D: Inversely related to income

Correct Answer: An idle because ✔

Option A: Accelerator

Option B: Aggregate demand

Option C: Monetarism

Option D: Multiplier

Correct Answer: Aggregate demand ✔

Option A: An injection that increases aggregate demand

Option B: A withdrawal that increase aggregate demand

Option C: An injection that decreases aggregate demand

Option D: A withdrawal that decrease aggregate

Correct Answer: A withdrawal that decrease aggregate ✔

Option A: Past levels of income

Option B: Future expected profits

Option C: Present national income levels

Option D: Historic data

Correct Answer: Present national income levels ✔

Option A: Is likely to reduce savings

Option B: Is likely to reduce the external value of the currency

Option C: Leads to a shift in the MEC schedule

Option D: Leads to a movement along the MEC schedule

Correct Answer: Leads to a shift in the MEC schedule ✔

Option A: Lower interest rates

Option B: Lower national income

Option C: A decrease in the marginal propensity to consume

Option D: An increase in withdrawals

Correct Answer: A decrease in the marginal propensity to consume ✔

Option A: Past income

Option B: Current income

Option C: Disposable income

Option D: permanent income

Correct Answer: permanent income ✔

Option A: A fall is savings

Option B: An increase in exports

Option C: A fall in taxation revenue

Option D: A decrease in import spending

Correct Answer: An increase in exports ✔

Option A: 0.8

Option B: 800

Option C: 810

Option D: 0.81

Correct Answer: 810 ✔

Option A: 0.8

Option B: 800

Option C: 810

Option D: 0.81

Correct Answer: 0.8 ✔

Option A: 10

Option B: 1

Option C: 9

Option D: 0.1

Correct Answer: 1 ✔

Option A: Lagging indicators

Option B: Flashing indicator

Option C: Coincidental indicators

Option D: Leading indicators

Correct Answer: Leading indicators ✔