Which of the following is not considered while estimating GDP by expenditure method?
(A) Private consumption
(B) Investment
(C) Net exports
(D) Black money transactions
Answer: (D)

The expenditure on purchase of machinery is treated as –
(A) Consumption expenditure
(B) Final consumption
(C) Investment expenditure
(D) Government expenditure
Answer: (C)

Which curve shows the relationship between tax rate and tax revenue?
(A) Engel Curve
(B) Laffer Curve
(C) Phillips Curve
(D) Lorenz Curve
Answer: (B)

Which of the following is an example of indirect tax?
(A) Income tax
(B) Wealth tax
(C) GST
(D) Gift tax
Answer: (C)

What is a “Giffen Good”?
(A) A good that defies the law of demand
(B) A highly elastic good
(C) A free good
(D) A complementary good
Answer: (A)

What is the main feature of a mixed economy?
(A) Private sector only
(B) Public sector only
(C) Coexistence of public and private sectors
(D) Absence of market mechanism
Answer: (C)

The difference between Gross National Product and Net National Product is –
(A) Indirect taxes
(B) Depreciation
(C) Transfer payments
(D) Subsidies
Answer: (B)

Which of the following increases in a recession?
(A) Employment
(B) Consumer confidence
(C) Unemployment
(D) Interest rates
Answer: (C)

“Hawthorne Effect” is related to –
(A) Monetary policy
(B) Productivity and human behavior
(C) Inflation and price stability
(D) Consumer demand
Answer: (B)

Which among the following is not a determinant of supply?
(A) Price of the good
(B) Price of related goods
(C) Future expectations
(D) Consumer income
Answer: (D)

The supply of labor is –
(A) Perfectly elastic
(B) Fixed in the short run
(C) Inelastic in the long run
(D) Negatively sloped
Answer: (B)

Which of the following represents the maximum satisfaction level?
(A) TU = MU
(B) MU is falling
(C) MU = 0
(D) TU is falling
Answer: (C)

Which index is used to measure inequality?
(A) Consumer Price Index
(B) Human Development Index
(C) Gini Coefficient
(D) Wholesale Price Index
Answer: (C)

The term “dual economy” refers to –
(A) Presence of foreign investment
(B) Coexistence of modern and traditional sectors
(C) Coexistence of fiscal and monetary policy
(D) Urban and rural divide
Answer: (B)

The price at which quantity demanded equals quantity supplied is called –
(A) Marginal price
(B) Market price
(C) Equilibrium price
(D) Optimal price
Answer: (C)

Which type of inflation is caused by increase in wages and raw materials?
(A) Demand-pull inflation
(B) Cost-push inflation
(C) Hyperinflation
(D) Stagflation
Answer: (B)

Which of the following is a characteristic of public goods?
(A) Rival and excludable
(B) Non-rival and non-excludable
(C) Rival but non-excludable
(D) Excludable but non-rival
Answer: (B)

Which curve represents income distribution in an economy?
(A) Laffer Curve
(B) Engel Curve
(C) Lorenz Curve
(D) Phillips Curve
Answer: (C)

A good whose demand increases with increase in income is –
(A) Inferior good
(B) Normal good
(C) Giffen good
(D) Complementary good
Answer: (B)

Which of the following is not a cause of market failure?
(A) Externalities
(B) Public goods
(C) Perfect competition
(D) Monopoly
Answer: (C)

Inflation is beneficial to –
(A) Creditors
(B) Fixed income groups
(C) Debtors
(D) Pensioners
Answer: (C)

Deflation is a situation where –
(A) Prices rise rapidly
(B) Prices fall persistently
(C) GDP rises
(D) Demand increases
Answer: (B)

The Keynesian theory advocates –
(A) Full employment in the long run
(B) Government intervention during economic fluctuations
(C) Fiscal contraction to manage recession
(D) Laissez-faire policies
Answer: (B)

A vertical supply curve indicates –
(A) Perfectly elastic supply
(B) Perfectly inelastic supply
(C) Unit elastic supply
(D) Infinite supply
Answer: (B)

The primary source of income for a government is –
(A) Grants
(B) Loans
(C) Taxes
(D) Sale of assets
Answer: (C)

The point where MC = MR is called –
(A) Shut down point
(B) Break-even point
(C) Equilibrium point
(D) Profit-maximization point
Answer: (D)

Which concept denotes consumer responsiveness to price?
(A) Elasticity of demand
(B) Marginal utility
(C) Indifference curve
(D) Demand curve
Answer: (A)

Which of the following denotes a horizontal demand curve?
(A) Perfectly inelastic
(B) Perfectly elastic
(C) Unitary elastic
(D) Substitutes
Answer: (B)

Economic rent arises due to –
(A) Government subsidy
(B) Efficient production
(C) Scarcity of resources
(D) Inflation
Answer: (C)

If the cross-price elasticity between two goods is positive, they are –
(A) Complements
(B) Substitutes
(C) Inferior
(D) Luxury goods
Answer: (B)

The slope of the total product curve is –
(A) Average product
(B) Marginal product
(C) Total utility
(D) Isoquant
Answer: (B)

In the short run, marginal cost intersects –
(A) Average variable cost at its maximum
(B) Average total cost at its minimum
(C) Average fixed cost at its maximum
(D) Total cost at its maximum
Answer: (B)

Which of the following policies aims to control inflation?
(A) Expansionary fiscal policy
(B) Tight monetary policy
(C) Liberal trade policy
(D) Subsidy on food
Answer: (B)

What does the investment multiplier show?
(A) The impact of investment on inflation
(B) The change in income due to change in investment
(C) Change in demand due to tax change
(D) Change in prices due to demand
Answer: (B)

The slope of the LM curve depends on –
(A) Sensitivity of investment to interest rate
(B) Sensitivity of money demand to interest rate
(C) Marginal utility of money
(D) Velocity of money
Answer: (B)

“Moral hazard” refers to –
(A) Ethical business conduct
(B) Risk-taking behavior after insurance
(C) Monopoly behavior
(D) Fiscal irresponsibility
Answer: (B)

The income effect is shown by –
(A) Price increase reduces real income
(B) Tax increase raises GDP
(C) Wages rise with productivity
(D) Savings increase with income
Answer: (A)

The expansion of demand occurs due to –
(A) Rise in income
(B) Fall in price
(C) Fall in supply
(D) Rise in cost
Answer: (B)

“Disguised unemployment” means –
(A) Visible unemployment
(B) Underutilization of labor
(C) Overemployment
(D) Structural unemployment
Answer: (B)

A tax that does not depend on income is –
(A) Indirect tax
(B) Progressive tax
(C) Proportional tax
(D) Direct tax
Answer: (A)

In a production function, if output increases more than proportionally with inputs, it is –
(A) Constant returns to scale
(B) Increasing returns to scale
(C) Decreasing returns to scale
(D) Law of variable proportions
Answer: (B)

A higher interest rate leads to –
(A) Higher investment
(B) Lower savings
(C) Lower investment
(D) Lower demand
Answer: (C)

When marginal utility of money is constant, then –
(A) Utility decreases
(B) Price remains constant
(C) Income increases
(D) Consumer equilibrium is not possible
Answer: (B)

Which of the following is a normative statement?
(A) Inflation reduces purchasing power
(B) High inflation is bad for the economy
(C) Prices rose by 4% last year
(D) GDP grew by 6.2%
Answer: (B)

A perfectly elastic supply curve is –
(A) Horizontal
(B) Vertical
(C) U-shaped
(D) Downward sloping
Answer: (A)

Production function shows –
(A) Relationship between cost and revenue
(B) Input-output relationship
(C) Marginal cost
(D) Cost-price relationship
Answer: (B)

“Consumer surplus” is the difference between –
(A) Total utility and total expenditure
(B) Total cost and price
(C) Income and savings
(D) Expenditure and profit
Answer: (A)

Which sector is referred to as the “organised sector”?
(A) Agriculture
(B) Government and large private firms
(C) Informal retail
(D) Street vendors
Answer: (B)

Which one of the following can reduce fiscal deficit?
(A) Increase in subsidies
(B) Reduction in tax collection
(C) Disinvestment in PSUs
(D) Increase in expenditure
Answer: (C)

A decrease in reserve ratio by RBI leads to –
(A) Increase in money supply
(B) Decrease in money supply
(C) Increase in interest rate
(D) Decrease in investment
Answer: (A)