Marshallian utility analysis is based on –
(A) Ordinal utility
(B) Cardinal utility
(C) Revealed preferences
(D) Consumer surplus only
Answer: (B)

Total revenue is maximum when –
(A) Marginal revenue = 0
(B) Price = marginal cost
(C) Marginal revenue = price
(D) Price = 0
Answer: (A)

Negative income elasticity is a feature of –
(A) Luxury goods
(B) Inferior goods
(C) Normal goods
(D) Giffen goods only
Answer: (B)

Trade creation under a customs union refers to –
(A) Increase in domestic taxes
(B) Replacement of low-cost imports with higher-cost ones
(C) Shift from domestic to more efficient partner imports
(D) Trade diversion
Answer: (C)

A good with perfectly inelastic demand will have a demand curve that is –
(A) Horizontal
(B) Vertical
(C) Downward sloping
(D) Upward sloping
Answer: (B)

Supply curve of monopolist is –
(A) Horizontal
(B) Vertical
(C) Does not exist independently
(D) U-shaped
Answer: (C)

The real burden of public debt increases when –
(A) Inflation is high
(B) Interest rate is low
(C) Inflation is low
(D) Output rises
Answer: (C)

A flexible exchange rate system is also known as –
(A) Gold standard
(B) Fixed system
(C) Floating exchange rate
(D) Dollar peg
Answer: (C)

The opportunity cost of holding money is –
(A) Income earned
(B) Inflation
(C) Interest foregone
(D) Loan cost
Answer: (C)

Profit maximization under perfect competition occurs when –
(A) MR = AR
(B) MR = MC
(C) AR = AC
(D) MC = AC
Answer: (B)

In the long-run equilibrium of monopolistic competition, firms earn –
(A) Supernormal profits
(B) Losses
(C) Normal profits
(D) Zero revenue
Answer: (C)

The supply of money in the economy is controlled by –
(A) Ministry of Finance
(B) RBI
(C) SEBI
(D) State governments
Answer: (B)

Aggregate supply curve in Keynesian short-run model is –
(A) Vertical
(B) Upward sloping
(C) Horizontal at low levels of output
(D) U-shaped
Answer: (C)

Current account deficit may be financed by –
(A) Budget surplus
(B) Capital account surplus
(C) Government loans
(D) Tax hikes
Answer: (B)

The average fixed cost curve is –
(A) U-shaped
(B) Horizontal
(C) Downward sloping
(D) Vertical
Answer: (C)

The backward bending supply curve applies to –
(A) Commodity supply
(B) Labor supply
(C) Public goods
(D) Normal goods
Answer: (B)

Nominal GDP increases when –
(A) Real output increases
(B) Prices rise
(C) Both price and output rise
(D) Any of the above
Answer: (D)

Dumping is prohibited under –
(A) Bretton Woods agreement
(B) WTO rules
(C) IMF Act
(D) SAARC charter
Answer: (B)

Terms of trade is calculated as –
(A) Imports / exports
(B) Export price index / import price index × 100
(C) GDP / trade deficit
(D) Tax rate × GDP
Answer: (B)

Saving function is derived from –
(A) Consumption function
(B) IS curve
(C) LM curve
(D) Investment function
Answer: (A)

Balanced budget multiplier is –
(A) Greater than 1
(B) Equal to 1
(C) Less than 1
(D) Zero
Answer: (B)

A horizontal supply curve implies –
(A) Perfectly elastic supply
(B) No supply
(C) Perfectly inelastic supply
(D) Unitary elasticity
Answer: (A)

Market equilibrium occurs when –
(A) Demand exceeds supply
(B) Supply exceeds demand
(C) Demand equals supply
(D) Price is regulated
Answer: (C)

Disguised unemployment is mainly found in –
(A) Manufacturing sector
(B) Service sector
(C) Agriculture
(D) Corporate sector
Answer: (C)

Effective capital means –
(A) Total planned investment
(B) Capital actually available for use
(C) Capital reserves
(D) Depreciated capital
Answer: (B)

The law of diminishing returns applies in –
(A) Long-run
(B) Both short and long-run
(C) Only agricultural production
(D) Short-run with at least one fixed input
Answer: (D)

Multiplier effect is stronger when –
(A) MPC is low
(B) MPC is high
(C) Investment falls
(D) Tax increases
Answer: (B)

Open economy includes –
(A) No trade with others
(B) Full government control
(C) Trade in goods and capital across borders
(D) Only financial flows
Answer: (C)

The budget constraint in consumer theory represents –
(A) Marginal cost of spending
(B) Trade-off between goods within income
(C) Fixed utility
(D) Supply limitations
Answer: (B)

Price rigidity is common in –
(A) Perfect competition
(B) Monopoly
(C) Oligopoly
(D) Public goods
Answer: (C)

Cost-benefit analysis is used in –
(A) Trade balancing
(B) Investment appraisal and public project evaluation
(C) Budgeting only
(D) Tax reform
Answer: (B)

Incremental revenue is –
(A) Total revenue
(B) Increase in revenue from selling one more unit
(C) Net profit
(D) Operating surplus
Answer: (B)

A conglomerate merger is between –
(A) Firms producing similar goods
(B) Firms in the same supply chain
(C) Firms in unrelated businesses
(D) Firms with same brand
Answer: (C)

GDP at constant prices shows –
(A) Nominal growth
(B) Real growth adjusted for inflation
(C) Net factor income
(D) Tax-adjusted GDP
Answer: (B)

The production possibility frontier is concave due to –
(A) Increasing returns
(B) Constant opportunity cost
(C) Increasing opportunity cost
(D) Decreasing returns
Answer: (C)

Securitization refers to –
(A) Selling company assets
(B) Bundling financial assets into marketable securities
(C) Foreign borrowing
(D) Tax structuring
Answer: (B)

The present value of a future income is –
(A) Discounted future income
(B) Actual future value
(C) Sum of current earnings
(D) Capital gain
Answer: (A)

Transaction cost is –
(A) Cost of input
(B) Cost of tax
(C) Cost of exchange or negotiating an economic deal
(D) Cost of capital
Answer: (C)

Autonomous investment is –
(A) Income-dependent
(B) Government-linked
(C) Independent of income
(D) Trade-based
Answer: (C)

Pareto improvement occurs when –
(A) Everyone gains
(B) Some gain, no one loses
(C) Rich lose
(D) Government benefits
Answer: (B)

The life-cycle hypothesis explains –
(A) Consumption smoothing over life
(B) Investment growth
(C) Wage flexibility
(D) Tax avoidance
Answer: (A)

Value-added tax (VAT) is imposed on –
(A) Final retail sale only
(B) Imports
(C) Each stage of production value addition
(D) Profits
Answer: (C)

Tax evasion differs from tax avoidance in that it –
(A) Is legal
(B) Is illegal
(C) Reduces liability lawfully
(D) Increases revenue
Answer: (B)

A progressive tax system means –
(A) Same rate for all
(B) Higher rates for higher incomes
(C) Less tax for the rich
(D) Flat rate
Answer: (B)

Transaction demand for money increases with –
(A) Lower interest rates
(B) Higher income
(C) High inflation
(D) Currency depreciation
Answer: (B)

Black economy affects –
(A) Employment positively
(B) GDP growth directly
(C) Fiscal health and equity
(D) Nothing
Answer: (C)

Ricardian theory of comparative advantage is based on –
(A) Absolute cost advantage
(B) Opportunity cost differences
(C) Technological growth
(D) Capital accumulation
Answer: (B)

FDI is a component of –
(A) Current account
(B) Capital account
(C) Revenue account
(D) Fiscal account
Answer: (B)

The Keynesian multiplier fails if –
(A) Marginal propensity to consume = 0
(B) MPC = 1
(C) Inflation rises
(D) Government spends
Answer: (A)

The value of marginal product (VMP) is calculated as –
(A) MP × total cost
(B) MP × price
(C) Price / MP
(D) Total cost / output
Answer: (B)