Microeconomics: Demand, Supply & Utility
1. What does the theory of distribution mainly relate to?
a) Asset distribution
b) Income distribution
c) Distribution of factor payments
d) Equality in income and wealth distribution
Answer: d
2. Average revenue refers to:
a) Revenue per unit sold
b) Total revenue from all items sold
c) Profit from marginal unit sold
d) Profit from total sales
Answer: a
3. When marginal utility becomes zero, total utility is:
a) Minimum
b) Increasing
c) Maximum
d) Decreasing
Answer: c
4. The ‘break-even point’ occurs when:
a) Marginal revenue = marginal cost
b) Average revenue = average cost
c) Total revenue = total cost
d) None of the above
Answer: b
5. A key condition of monopolistic competition is:
a) Many buyers, one seller
b) Price discrimination
c) Product differentiation
d) Homogeneous products
Answer: c
6. “Other things remain constant” in the law of demand implies:
a) No change in consumer income
b) No change in prices of other goods
c) No change in consumer taste
d) All of the above
Answer: d
7. The production function reflects:
a) Technological relation between inputs and output
b) Financial relation between inputs and output
c) Relationship between finance and technology
d) Relationship between factors of production
Answer: a
8. “Interest is a reward for parting with liquidity” – who said this?
a) Keynes
b) Marshall
c) Haberler
d) Ohlin
Answer: a
9. Demand for which product doesn’t rise despite a price drop?
a) Television
b) Refrigerator
c) Salt
d) Meat
Answer: c
10. The four basic factors of production are:
a) Land, Labour, Capital, Organisation
b) Land, Electricity, Water, Labour
c) Labour, Capital, Land, Rainfall
d) Labour, Climate, Land, Tools
Answer: a
Elasticity, Price, and Market Structures
11. If demand changes faster than price, demand is:
a) Perfectly inelastic
b) Elastic
c) Perfectly elastic
d) Inelastic
Answer: c
12. A fall in demand or rise in supply will:
a) Increase price
b) Decrease price
c) Neutralize price
d) Affect price elasticity
Answer: b
13. The demand curve of a firm under perfect competition is:
a) Horizontal to x-axis
b) Negatively sloped
c) Positively sloped
d) U-shaped
Answer: a
14. The main objective of devaluation is to:
a) Promote imports
b) Promote exports
c) Promote both exports and imports
d) Discourage both
Answer: b
15. What does “narrow money” include?
a) Currency in circulation + demand deposits
b) M1 + time deposits
c) Public-held currency + bank cash reserves
d) Value of public stockholdings
Answer: a
16. Devaluation of money means:
a) Fall in internal value
b) Fall in external value
c) Fall in both internal and external value
d) Withdrawal of currency
Answer: b
17. Devaluation typically leads to:
a) Price fall
b) Price rise
c) No change in price
d) None of the above
Answer: c
Banking and Monetary System
18. “Dear Money” refers to:
a) Low interest rate
b) High interest rate
c) Depression
d) Inflation
Answer: b
19. Legal tender money refers to:
a) Cheques
b) Drafts
c) Bills of exchange
d) Currency notes
Answer: d
20. Gresham’s Law is related to:
a) Consumption and demand
b) Supply and demand
c) Money circulation
d) Deficit financing
Answer: c
21. During inflation, tax rates should:
a) Increase
b) Decrease
c) Remain unchanged
d) Fluctuate
Answer: a
22. “Cheap money” means:
a) Low interest rate
b) Low savings
c) Low income
d) Excess black money
Answer: a
23. Which is not a function of the central bank?
a) Managing foreign exchange
b) Controlling monetary policy
c) Controlling government spending
d) Acting as bankers’ bank
Answer: c
24. A smaller Cash Reserve Ratio (CRR) implies:
a) More lending capacity
b) Less lending capacity
c) Weaker banks
d) Less deposits
Answer: a
25. Who benefits most during inflation?
a) Corporate employees
b) Creditors
c) Entrepreneurs
d) Government servants
Answer: c
Financial Markets & Planning
26. Which does not help control money supply?
a) Free market policy
b) CRR
c) Bank rate
d) Margin requirement change
Answer: a
27. Which of these is not a banking term?
a) CRR
b) NEER
c) SLR
d) Fixed deposit
Answer: b
28. “Smart Money” usually refers to:
a) Credit card
b) Internet banking
c) e-Banking
d) Public cash
Answer: a
29. Structural unemployment is due to:
a) Deflation
b) Heavy industry focus
c) Raw material shortage
d) Lack of productive capacity
Answer: d
30. NIFTY is associated with:
a) Cloth market index
b) Consumer price index
c) BSE index
d) NSE index
Answer: d
Banking, Schemes, and Regulatory Bodies
31. Scheduled banks in India must be registered with:
a) SEBI
b) RBI
c) Ministry of Finance
d) SBI
Answer: b
32. The Kisan Credit Card scheme was launched in:
a) 1991
b) 1996
c) 1998
d) 2000
Answer: c
33. Bank cheques are processed using:
a) OCR
b) MICR
c) OMR
d) PMR
Answer: b
34. The Minimum Wages Act in India was enacted in:
a) 1936
b) 1948
c) 1951
d) 1956
Answer: b
35. Coins in India are issued by:
a) RBI
b) Ministry of Finance
c) SBI
d) Indian Overseas Bank
Answer: b
36. The Reserve Bank of India was nationalized in:
a) 1948
b) 1947
c) 1949
d) 1950
Answer: c
37. Who controls the money supply in India?
a) Planning Commission
b) Finance Commission
c) Reserve Bank of India
d) Commercial Banks
Answer: c
38. AGMARK guarantees:
a) Quality
b) Quantity
c) Weight
d) Size
Answer: a
Economic Systems & National Income
39. India’s planned economy is based on:
a) Gandhian principles
b) Socialist system
c) Capitalist system
d) Mixed economy system
Answer: d
40. The best example of a capital-intensive industry in India is:
a) Textile industry
b) Steel industry
c) Tourism industry
d) Spare parts industry
Answer: b
41. A “mixed economy” includes:
a) Rural and urban sectors
b) Private and public sectors
c) Large and small industries
d) Developed and underdeveloped sectors
Answer: b
42. A “closed economy” is one that:
a) Does not trade with other countries
b) Lacks international transport
c) Has no coastline
d) Is not a UN member
Answer: a
43. “Laissez-faire” is a term associated with:
a) Capitalist economy
b) Socialist economy
c) Mixed economy
d) Command economy
Answer: a
44. Which of the following is not a method to calculate National Income?
a) Value-added method
b) Income method
c) Investment method
d) Expenditure method
Answer: c
45. Per capita income is calculated as:
a) National Income ÷ Total Population
b) National Income + Population
c) National Income − Population
d) National Income × Population
Answer: a
46. The difference between GNP and NNP is:
a) Consumer spending on durable goods
b) Direct tax revenue
c) Indirect tax
d) Capital depreciation
Answer: d
47. A “gilt-edged” market refers to the market for:
a) Bullion
b) Government securities
c) Arms
d) Pure metals
Answer: b
48. A tax is considered regressive when:
a) Burden is more on the poor than the rich
b) Equal burden on rich and poor
c) Burden is less on the poor
d) None of the above
Answer: a
Economic Reforms, Policies & Planning
49. Who proposed the PURA model to eradicate rural poverty?
a) M.S. Swaminathan
b) Maulana Abul Kalam Azad
c) Dr. A.P.J. Abdul Kalam
d) A.M. Khusro
Answer: c
50. The concept of the “Rolling Plan” in national planning was introduced by:
a) Indira Gandhi Government
b) National Front Government
c) Janata Party Government
d) Rajiv Gandhi Government
Answer: c