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Economics Question Bank

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Question Bank and Test Papers on Economics

1. Which one of the following is incorrect?
1) lmmiserizing Growth – Jagdish Bhagwati
2) Reciprocal demand curves – J.S.Mill
3) Effect of trade on factor prices – Samuelson
4) Effect of trade on the distribution of Income – Stopler and Samuelson

2. Under unstable foreign exchange market, BOPs surplus of nation will be eliminated by :
1) Currency devaluation
2) Currency Revaluation
3) Reducing Tariff rates
4) None of these.

3. The Intra – Industry trade Model is based on :
1) Comparative cost Advantage Theory.
2) Opportunity cost Theory
3) Reciprocal Demand Theory
4) Product differentiation.

4. Suppose A and B are two trade Partner nations and the elasticity of nation B’s offer curve is infinite, then nation A will be :
1) Small
2) Large
3) Technologically advanced
4) Backward

5. FDI inflow in India is entered in :
1) Credit Items of Current Account.
2) Debit Items of Current Account.
3) Credit Items of Capital Account.
4) Debit Items of Capital Account.

6. Factor income received from abroad is part of:
1) Trade account
2) Current account
3) Capital account
4) Service account

7. The commodity or net barter terms of trade is defined as :
1) Price of exports/ Price of Imports
2) Price index of Exports/ Price Index of Imports
3) Price index of exports/ Price index of imports) X 100
4) A11 of these.

8. Which of the following are true for Import Quota?
1) Import Quota is used to protect domestic Industry.
2) Import Quota is used to protect domestic agriculture.
3) Both (Import Quota is used to protect domestic Industry) and (Import Quota is used to protect domestic agriculture) are true.
4) Import quota is used to oblige foreign companies

9. Exception to the Stopler-Samuelson theorem is:
1) Leontief Paradox
2) Metzler Paradox
3) Baldwin’s empirical study
4) None of these.

10. Assertion(A) : Impostion of tariff creates dead weight loss or protection cost of tariff. Reason(R) : Tariff redistributes income from domestic consumers to domestic producers of the commodity.
Reason(S) : Tariff redistributes income from Nation’s abundant factor to the Nation’s scarce factor.
1) All (A), (R) and (S) are correct and both (R) and (S) are correct explanation of(A).
2) All (A), (R) and (S) are correct but only (R) is the correct explanation of (A).
3) (A) is true but both (R) and (S) are false.
4) Both (R) and (S) are correct but (A) is false.

11. Growth rate of population means:
1) The difference of growth between male and female.
2) The difference in population between urban and rural area
3) The number of births per thousand people
4) The difference between birth and death rates.

12. Which one indicator is currently not used in the Human Development Index?
1) Real GNP per capita
2) Employment Rates
3) Educational attainment
4) Life expectancy at birth

13. Micro banking is rooted from the philosophy of:
1) Mohammad Yunus
2) Manmohan Singh
3) Mahbub-ul-Haq
4) Amartya Sen

14. In a free economy, inequalities of income are mainly due to?
1) Free trade policy
2) Private property and inheritance
3) Difference in the marginal productivity of labour
4) Private property only.

15. In Agriculture Agreement, WTO has classified subsidies as three boxes:
1) Yellow box, black box and green box
2) Amber box, red box and green box
3) Red box, green box, and Yellow box
4) Amber box, blue box and green box

16. Cost Cascading effect of a tax is:
1) Tax and subsidy coming together
2) Tax with exemption
3) Tax with investment
4) Tax on tax

17. The international institution dedicated to counter money laundering is:
1) Financial Stability Board
2) Financial Action Task Force(FATF)
3) International Centre for Settlement of lnvestment Disputes(ICSID)

18. The Laffer curve as a tax policy instrument; advocates:
1) Optimization of tax revenues and minimization of tax rate
2) Optimization of tax rate and maximization of tax revenue
3) Minimization of tax rate and maximization of tax revenue
4) Maximization of tax rate and maximization of tax revenue

19. Unemployment Rate’ is defined as
1) The number of persons unemployed as a proportion of labour force
2) The number of persons unemployed as a proportion of the working age population
3) The ratio of persons unemployed to those employed
4) Both (The number of persons unemployed as a proportion of labour force) and (The number of persons unemployed as a proportion of the Working age population)

20. The Office of the Chief Economic Adviser in India compiles and releases the Index of Eight Core Industries. Which of the following is NOT one among the eight core industries?
1) Natural Gas
2) Cement
3) Steel
4) Iron Ore

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21. Which of the following can be classified as non-tariff barriers?
1) Quality standards on Information Technology products
2) Anti-dumping duty on steel
3) Complex regulatory environment
4) All of these.

22. The quota that restricted trade in textiles Was known as:
1) MFA

23. Development expenditure of the Central government does not include
1) Expenditure on economic services
2) Defence expenditure
3) Expenditure on social and community services
4) Grant to states

24. Which is the cause of growing urbanization in India?
1) Growth of industry and trade in the urban areas
2) Excessive pressure of population in rural areas
3) Low productivity in agriculture
4) All of these.

25. Which of the following measure is appropriate for correcting BOP scenario?
1) Currency revaluation
2) Expansionary monetary policy
3) Currency devaluation
4) Contractionary fiscal policy

26. South-South co-operation means:
1) Increasing diplomatic relations among emerging economies
2) Rising trade between countries
3) The flow of resources from one developing country to another
4) Increasing investment between developing countries

27. Which one of the following factors establishes the importance of agriculture in the national economy of India?
1) Higher per capita income of the people of the country.
2) Higher share of agriculture sector in the GDP of the country.
3) Higher share of industrial sector in the GDP of the country.
4) Higher percentage of agriculture dependent population in the country.

28. The two regression lines will be at right angles in case of two variables if:
1) r = 0
2) r = +1
3) r = -1
4) r is either +1 or -1

29. The calculated value of F-test will always be:
1) < 1
2) > 1
3) 1
4) None of these

30. If a hypothesis is not rejected at 10% level of significance, it:
1) Must be rejecting at 5% level of significance
2) May be rejecting at 5% level of significance
3) Will not be rejected at 5% level of significance
4) Must be rejecting at 2.5% level of significance

31. Stratified sample is preferred Where-
1) The population is perfectly homogeneous
2) The population is not homogeneous
3) Random sampling is not possible
4) Small samples are required

32. Assertion(A): Devaluation can correct imbalance in the balance of payment. Reason (R ): Devaluation raises the price of imported goods and reduces the foreign price of exports of the devaluating country.
1) Both A and R are true and R is the correct explanation of A.
2) Both A and R are true but R is not the correct explanation of A.
3) A is true, but R is false.
4) A is false, but R is true

33. Assertion (A) : Balance of current account is a flow concept. Reason (R) Balance of capital account is a change in stock concept.
1) Both A and R are true and R is the correct explanation of A.
2) Both A and R are true but R is not the correct explanation of A.
3) A is true, but R is false.
4) A is false, but R is true

34. Public goods are:
1) Goods for which the public must pay
2) Exclusion is not possible
3) More costly than a private good.
4) None of these.

35. Assertion (A):2 A progressive income tax is based on equi-marginal sacrifice. Reason (R ) : Higher the income, lower will be the marginal utility of money for the tax payer.
1) Both A and R are true and R is the correct explanation of A.
2) Both A and R are true but R is not the correct explanation of A.
3) A is true, but R is false.
4) A is false, but R is true

36. To reduce the rate of inflation, the government should
1) Increase public expenditure
2) Encourage consumer spending
3) Increase income tax
4) Reduce interest rate

37. An income tax is considered automatic stabilizer:
1) Tax revenues change with the level of income.
2) Income levels changes With tax revenues
3) Interest rates changes with level of income.
4) Tax revenues remain unchanged with change in level of income.

38. Which of the following is not an item of transfer payment?
1) Pension
2) Scholarship
3) Dividend
4) Subsidy

39. The Principle of maximum social advantage was propounded by:
1) Lindal
2) Wagner
3) Musgrave
4) Dalton

40. Tax based on specific attributes of good like weight, size or volume is called as:
1) Specific tax
2) Advalorem tax
3) Gift tax
4) None of these.

41. A Payment for the service rendered by the state is called as:
1) Prices
2) Fines
3) Fees
4) Special assessment

42. The incidence of import duties will be on:
1) Consumers
2) Producers
3) Both Producers and Consumers
4) None of these

43. Theorem that states free trade leads to an increase in the income of nation’s abundant factor is:
1) Stopler-Samuelson theorem
2) Metzler Theorem
3) Rybczynski theorem
4) Ricardian theorem

44. Necessary condition for the validity of Hecksher-Ohlin model:
1) Factor intensity reversal
2) Similar factor endowment in two nations
3) Strong factor intensity
4) Single factor of production

45. The occasional sale of a commodity at a lower price abroad than domestically is:
1) Predatory dumping
2) Persistent dumping
3) Sporadic dumping
4) Prohibitive dumping

46. Which of the following does not pertain to the partial equilibrium effect of tariff:
1) Trade diversion effect
2) Redistributive effect
3) Consumption effect
4) Revenue effect

47. Which of the following is considered a capital inflow in BOP:
1) A sale of Indian financial assets to a foreign buyer
2) A loan from an Indian bank to foreign borrower
3) A purchase of foreign financial assets by an Indian buyer
4) An Indian citizen’s repayment of a loan from a foreign bank

48. Formation of customs union may lead to:
1) Increase in the welfare
2) Decrease in the welfare
3) Both (Increase in the Welfare) and (Decrease in the Welfare)
4) Neither (Increase in the welfare) nor (Decrease in the welfare)

49. If a nation terms of trade is 2, its trade partners terms of trade will be:
1) 2
2) 4
3) ½
4) 8

50. Prehisch-Singer hypothesis is associated with:
1) Export instability
2) Complementary trade theory
3) Strategic trade policy
4) Deteriorating terms of trade