Economics Model Question Paper

1. The wealth-based definition of Economics was put forward by
(A) Lionel Robbins
(B) Alfred Marshall
(C) Adam Smith
(D) David Ricardo

2. Total utility becomes maximum, when
(A) marginal utility is zero
(B) marginal utility is negative
(C) marginal utility equals one
(D) marginal utility is more than one

3. The decrease in the quantity demanded due to a rise in price is called
(A) contraction of demand
(B) extension of demand
(C) shift of demand
(D) multiplication of demand

4. When demand of a commodity depends on the demand of some other commodities, it is called
(A) joint demand
(B) derived demand
(C) autonomous demand
(D) exclusive demand

5. The zero price elasticity of demand (cp =0) is also called as
(A) perfectly inelastic demand
(B) perfectly elastic demand
(C) unitary elasticity of demand
(D) point elasticity of demand

6. Price effect is a combination of
(A) income effect and consumption effect
(B) consumption effect and substitution effect
(C) income effect am! Substitution effect
(D) income effect and investment effect

7. Which of the following statements is correct?
(A) Income effect of inferior good is negative.
(B) Income effect of inferior good is positive.
(C) Income effect of inferior good is neutral.
(D) There is no significant correlation between income and the quantity demanded of a inferior good.

8. Engel curve shows the relationship between
(A) two goods, say X and Y
(B) level of income and quantity purchased
(C) level of income and consumption
(D) level of income and the relative prices of the commodities

9. Hicksian substitution effect is associated with
(A) compensating variation in consumption
(B) compensating variation in profit
(C) compensating variation in relative price rise of the commodities
(D) compensating variation in income

10. Which of the following theories of business cycle was put forward by Hicks?
(A) The innovation theory
(B) The monetary theory
(C) The overinvestment theory
(D) The multiplier accelerator theory

11. What does the term production in Economics refer to?
(A) Creation of an object
(B) Creation of utility
(C) Innovation of an object
(D) Creation of space

12. Who among the following put forward the innovation theory of profit?
(A) M. S. Douglas
(B) A. C. Pigou
(C) J. S. Mill
(D) Joseph Schumpeter

13. “Money is what money does.” Who said this?
(A) Crowther
(B) Robertson
(C) Walker
(D) Paul Euizig

14. ‘Phillips curve’ shows the relationship between
(A) rate of inflation and rate of employment
(B) rate of wage increase and rate of unemployment
(C) rate of wage decrease and rate of unemployment
(D) rate of wage increase and rate of public investment

15. “Bad money drives good money out of circulation” is known as
(A) Gossen’s law
(B) Gresham’s law
(C) law of money circulation
(D) pure theory of money

16. Money burden of a tax refers to
(A) reduction in consumption
(B) reduction in expenditure
(C) reduction in disposable income
(D) reduction in personal assets

17. Which of the following agencies estimates national income of India?
(A) Reserve Bank of India
(B) NITI Aayog
(C) Ministry of Finance
(D) Central Statistical Organization

18. The lowering of official exchange rate between one country’s currency and those of the rest of the world is known as
(A) Devaluation
(B) Depreciation
(C) Appreciation
(D) overvaluation

19. What we derive at, when income from abroad is added to the Gross Domestic Product (GDP) of an economy?
(A) GNP
(B) GDP at market price
(C) NNP
(D) NNP at factor cost

20. In which of the following Five-Year Plans of India, was the slogan of ‘Garibi Hatao’ (Removal of poverty) coined?
(A) First Plan
(B) Third Plan
(C) Fourth Plan
(D) Seventh Plan

21. Under the ‘Lead Bank Scheme’, a bank was expected to adopt a
(A) State
(B) District
(C) Division
(D) Block

22. Inclusion of intermediate products in the national income estimation leads to
(A) correct and the most accurate estimation of national product
(B) underestimation of national product
(C) overestimation of national product
(D) Cannot be said accurately

23. Public expenditure includes
(A) transfer payments
(B) subsidy offered by the government
(C) capital expenditure made by the nationalised industries
(D) All of the above

24. Which of the following is an example of economic activity?
(A) Mother taking care of her child
(B) A working wife taking care of her husband
(C) Husband taking care of his wife
(D) Servant taking care of his master

25. Marginal utility may be expressed in which of the following way?
(A) Tun – TUn+1
(B) TUn -TUn+2
(C) TUn+1 – TUn-2
(D) Tun – TUn-1

26. A deflator is a technique of adjustment for change in
(A) consumption level
(B) income level
(C) expenditure level
(D) price level

27. ln which type of unemployment, marginal productivity is zero or near zero?
(A) Structural
(B) Seasonal
(C) Disguised
(D) Frictional

28. Which of the following is an example of joint supply?
(A) Wool and mutton
(B) Petrol and car
(C) Ink and pen
(D) Sugar and tea

29. A locus of constant utility (satisfaction) is called the
(A) indifference curve
(B) utility function
(C) expansion path
(D) demand function

30. The opportunity cost of a factor of production is
(A) what the factor is earning in its present use
(B) what the factor can earn in the short-run
(C) what the factor can earn in the long-run
(D) what the factor can earn in its next best alternative use

31. In a perfectly competitive market, if an individual seller wishes to double his sales, he would
(A) improve the quality of his product
(B) lower the price of the product by 50%
(C) spend twice the amount in advertisement
(D) simply offer double the quantity for sale

32. A profit maximizing firm will stop production in the short-run, if price is
(A) less than average variable cost
(B) less than average fixed cost
(C) less than marginal cost
(D) less than total fixed cost

33. Which one of the following pairs is not correctly matched?
(A) Revealed preference theory : Samuelson
(B) Indifference curve analysis : Hicks
(C) Cardinal utility approach : Joan Robinson
(D) Input-output analysis : Leontief

34. Isoquant is the locus of various combinations of
(A) factors of production yielding same level of output
(B) factors of production requiring same level of input
(C) commodities yielding different levels of satisfaction
(D) factors of production yielding same level of profit

35. Price theory is known as
(A) Microeconomics
(B) Macroeconomics
(C) public finance
(D) theory of employment

36. Interest is paid for the postponement of
(A) Consumption
(B) Saving
(C) Investment
(D) tax payment

37. If planned saving is greater than planned investment, then it will lead to
(A) decrease in national income
(B) increase in national income
(C) national income remains constant
(D) Cannot say with certainty

38. In Keynesian economics, inflation occurs when there is
(A) increase in money supply
(B) excess demand
(C) increase in import
(D) increase in tax

39. An arrangement by which an individual acting within the letter of the law, reduces his true tax liability, is known as
(A) tax evasion
(B) tax deferment
(C) tax avoidance
(D) tax reduction

40. ‘Parallel economy’ is equivalent to
(A) white money
(B) paper money
(C) black money
(D) bank money

41. The rate at which the central bank exchanges the country’s currency for another is called
(A) bank rate
(B) transaction ratio
(C) exchange rate
(D) business rate

42. The tertiary sector of an economy refers to
(A) service sector
(B) primary sector
(C) manufacturing sector
(D) information technology

43. Planning by direction is an integral part of
(A) capitalist economy
(B) socialist economy
(C) mixed economy
(D) free-market economy

44. In Keynesian analysis, the point of interaction of ASC and ADC is known as the point of
(A) excess demand
(B) deficit demand
(C) effective demand
(D) equilibrium

45. For maximisation of profit, marginal revenue must be equal to marginal cost. This condition is valid
(A) only under monopoly market
(B) only under perfect competition
(C) only under monopolistic competition
(D) in any type of market