Q. What is the study of economics primarily concerned with?

a) The production and distribution of resources

b) The study of past civilizations

c) The study of the environment

d) The study of the human body

Answer: a) The production and distribution of resources

Q. Which of the following best defines ‘scarcity’ in economics?

a) Limited human wants

b) Limited resources

c) Unlimited resources

d) Unlimited human wants

Answer: b) Limited resources

Q. What does ‘opportunity cost’ refer to?

a) The money spent on a choice

b) The cost of the next best alternative foregone

c) The total cost of all alternatives

d) The cost incurred in an opportunity

Answer: b) The cost of the next best alternative foregone

Q. What is ‘utility’ in economics?

a) Satisfaction obtained from a good or service

b) The cost of a good or service

c) The supply of a good or service

d) The demand for a good or service

Answer: a) Satisfaction obtained from a good or service

Q. What is ‘marginal utility’?

a) Total satisfaction from all units consumed

b) Additional satisfaction from consuming one more unit

c) Utility derived from the first unit

d) Utility derived from the last unit

Answer: b) Additional satisfaction from consuming one more unit

Q. What does the ‘law of demand’ state?

a) As price increases, quantity demanded increases

b) As price decreases, quantity demanded increases

c) As income increases, demand decreases

d) As income decreases, demand increases

Answer: b) As price decreases, quantity demanded increases

Q. What is ‘elasticity of demand’?

a) The responsiveness of demand to changes in price

b) The total demand for a product

c) The fixed demand for a product

d) The variable demand for a product

Answer: a) The responsiveness of demand to changes in price

Q. What is a ‘perfectly competitive market’?

a) A market with a single seller

b) A market with few buyers

c) A market with many buyers and sellers, and no single buyer or seller can affect the market price

d) A market with monopolistic competition

Answer: c) A market with many buyers and sellers, and no single buyer or seller can affect the market price

Q. Which of the following is a characteristic of a monopoly?

a) Many sellers

b) Free entry and exit

c) Single seller

d) Perfect information

Answer: c) Single seller

Q. What is ‘price discrimination’?

 a) Charging the same price to all consumers

 b) Charging different prices to different consumers for the same product

 c) Charging prices based on production costs

 d) Charging prices based on consumer preference

 Answer: b) Charging different prices to different consumers for the same product

Q. What is ‘Gross Domestic Product’ (GDP)?

 a) The total value of all goods and services produced within a country

 b) The total value of all goods and services produced by the nationals of a country

 c) The total income earned by nationals of a country

 d) The total expenditure by the government of a country

 Answer: a) The total value of all goods and services produced within a country

Q. What is ‘inflation’?

 a) A general decrease in prices

 b) A general increase in prices

 c) A decrease in the value of money

 d) Both b and c

 Answer: d) Both b and c

Q. What does ‘monetary policy’ involve?

 a) Government spending and taxes

 b) Control of money supply and interest rates

 c) Regulation of trade policies

 d) Control of labor markets

 Answer: b) Control of money supply and interest rates

Q. What is ‘fiscal policy’?

 a) Management of the money supply

 b) Government spending and taxation policies

 c) Regulation of imports and exports

 d) Management of the labor market

 Answer: b) Government spending and taxation policies

Q. What does the ‘unemployment rate’ measure?

 a) The number of people not working

 b) The number of people working part-time

 c) The percentage of the labor force that is unemployed

 d) The percentage of the population that is unemployed

 Answer: c) The percentage of the labor force that is unemployed

Q. What is ‘deflation’?

 a) A sustained rise in the price level

 b) A sustained fall in the price level

 c) A one-time drop in prices

 d) A one-time increase in prices

 Answer: b) A sustained fall in the price level

Q. What is ‘stagflation’?

 a) High inflation and high unemployment

 b) Low inflation and high unemployment

 c) High inflation and low unemployment

 d) Low inflation and low unemployment

 Answer: a) High inflation and high unemployment

Q. Which of the following is included in the calculation of GDP?

 a) Black market transactions

 b) Intermediate goods

 c) Final goods and services

 d) Second-hand sales

 Answer: c) Final goods and services

Q. What does ‘real GDP’ refer to?

 a) GDP adjusted for inflation

 b) GDP measured at current prices

 c) GDP excluding exports

 d) GDP including only services

 Answer: a) GDP adjusted for inflation

Q. What is a ‘recession’?

 a) A period of increasing economic activity

 b) A period of decreasing economic activity

 c) A period of high inflation

 d) A period of deflation

 Answer: b) A period of decreasing economic activity

Q. What is a ‘monopolistic competition’?

 a) A market with a single seller

 b) A market with many sellers, each selling differentiated products

 c) A market with many buyers and sellers of a homogeneous product

 d) A market with a few sellers

 Answer: b) A market with many sellers, each selling differentiated products

Q. What is ‘oligopoly’?

 a) A market with a single seller

 b) A market with many sellers

 c) A market with a few sellers

 d) A market with no sellers

 Answer: c) A market with a few sellers

Q. Which term describes a market where a single buyer substantially controls the market?

 a) Monopoly

 b) Monopsony

 c) Oligopoly

 d) Perfect competition

 Answer: b) Monopsony

Q. In a perfectly competitive market, firms are:

 a) Price makers

 b) Price takers

 c) Both price makers and price takers

 d) Neither price makers nor price takers

 Answer: b) Price takers

Q. Which type of market structure is characterized by ‘barriers to entry’?

 a) Perfect competition

 b) Monopolistic competition

 c) Monopoly

 d) Oligopoly

 Answer: c) Monopoly

Q. What is ‘comparative advantage’?

 a) The ability to produce a good at a higher opportunity cost than another producer

 b) The ability to produce a good at a lower opportunity cost than another producer

 c) The ability to produce a good with fewer resources

 d) The ability to produce a good with more resources

 Answer: b) The ability to produce a good at a lower opportunity cost than another producer

Q. What is ‘trade deficit’?

 a) When exports exceed imports

 b) When imports exceed exports

 c) When imports equal exports

 d) When trade is balanced

 Answer: b) When imports exceed exports

Q. What is ‘exchange rate’?

 a) The price of one country’s currency in terms of another currency

 b) The interest rate charged on international loans

 c) The rate at which goods are traded internationally

 d) The tax rate on imports and exports

 Answer: a) The price of one country’s currency in terms of another currency

Q. What is ‘balance of payments’?

 a) A record of all economic transactions between residents of a country and the rest of the world

 b) The total amount of debt a country owes

 c) The total value of imports and exports

 d) The difference between a country’s assets and liabilities

 Answer: a) A record of all economic transactions between residents of a country and the rest of the world

Q. What does ‘protectionism’ refer to?

 a) Policies that promote free trade

 b) Policies that restrict free trade to protect domestic industries

 c) Policies that encourage foreign investment

 d) Policies that regulate the stock market

 Answer: b) Policies that restrict free trade to protect domestic industries

Q. What is ‘economic growth’?

 a) An increase in a country’s population

 b) An increase in a country’s GDP over time

 c) An increase in a country’s inflation rate

 d) An increase in a country’s unemployment rate

 Answer: b) An increase in a country’s GDP over time

Q. What is ‘human development index’ (HDI)?

 a) A measure of a country’s economic output

 b) A measure of a country’s social and economic development

 c) A measure of a country’s income inequality

 d) A measure of a country’s environmental sustainability

 Answer: b) A measure of a country’s social and economic development

Q. Which factor is considered a driver of economic development?

 a) Technological innovation

 b) Natural resources

 c) Education

 d) All of the above

 Answer: d) All of the above

Q. What is ‘poverty line’?

 a) The minimum level of income deemed adequate in a particular country

 b) The average income of a country

 c) The maximum income level in a country

 d) The line that separates rural and urban areas

 Answer: a) The minimum level of income deemed adequate in a particular country

Q. What is ‘income inequality’?

 a) The unequal distribution of income within a population

 b) The total income earned by a population

 c) The income earned by the government

 d) The income earned by corporations

 Answer: a) The unequal distribution of income within a population

Q. What is a ‘stock’?

 a) A type of bond

 b) A share of ownership in a company

 c) A loan to a company

 d) A fixed-income security

 Answer: b) A share of ownership in a company

Q. What is a ‘bond’?

 a) A share of ownership in a company

 b) A loan made by an investor to a borrower

 c) A type of stock

 d) A derivative instrument

 Answer: b) A loan made by an investor to a borrower

Q. What is a ‘mutual fund’?

 a) An investment vehicle that pools funds from many investors to invest in securities

 b) A type of bond

 c) A type of stock

 d) A savings account

 Answer: a) An investment vehicle that pools funds from many investors to invest in securities

Q. What is ‘liquidity’?

 a) The ease with which an asset can be converted into cash

 b) The profitability of an asset

 c) The risk associated with an asset

 d) The interest earned on an asset

 Answer: a) The ease with which an asset can be converted into cash

Q. What is ‘diversification’ in investment?

 a) Investing in a single asset

 b) Investing in a variety of assets to reduce risk

 c) Investing in foreign assets only

 d) Investing in high-risk assets only

 Answer: b) Investing in a variety of assets to reduce risk

Q. What is ‘quantitative easing’?

 a) Increasing the money supply by the central bank to stimulate the economy

 b) Reducing the money supply to control inflation

 c) Increasing government spending

 d) Reducing government spending

 Answer: a) Increasing the money supply by the central bank to stimulate the economy

Q. What is a ‘budget deficit’?

 a) When government revenues exceed expenditures

 b) When government expenditures exceed revenues

 c) When government revenues equal expenditures

 d) When government borrows money

 Answer: b) When government expenditures exceed revenues

Q. What is a ‘tariff’?

 a) A tax on imports or exports

 b) A subsidy to domestic producers

 c) A loan to foreign countries

 d) A quota on the quantity of imports

 Answer: a) A tax on imports or exports

Q. What is ‘subsidy’?

 a) A financial aid provided by the government to support an industry

 b) A tax on imports

 c) A tax on exports

 d) A loan from the government

 Answer: a) A financial aid provided by the government to support an industry

Q. What is ‘economic liberalization’?

 a) The process of increasing government control over the economy

 b) The process of reducing government restrictions on economic activities

 c) The process of nationalizing industries

 d) The process of increasing tariffs and quotas

 Answer: b) The process of reducing government restrictions on economic activities

Q. What is ‘minimum wage’?

 a) The lowest salary that an employee can legally be paid

 b) The average salary of workers in an industry

 c) The maximum salary that an employee can be paid

 d) The average cost of living

 Answer: a) The lowest salary that an employee can legally be paid

Q. What is ‘labor force participation rate’?

 a) The percentage of the working-age population that is employed or actively seeking employment

 b) The number of people employed

 c) The number of people unemployed

 d) The number of people not in the labor force

 Answer: a) The percentage of the working-age population that is employed or actively seeking employment

Q. What is ‘structural unemployment’?

 a) Unemployment caused by a lack of jobs in the economy

 b) Unemployment caused by changes in the industry structure or economic shifts

 c) Unemployment caused by seasonal variations

 d) Unemployment caused by short-term fluctuations

 Answer: b) Unemployment caused by changes in the industry structure or economic shifts

Q. What is ‘cyclical unemployment’?

 a) Unemployment caused by a lack of jobs in the economy

 b) Unemployment caused by economic downturns or recessions

 c) Unemployment caused by seasonal variations

 d) Unemployment caused by changes in the industry structure

 Answer: b) Unemployment caused by economic downturns or recessions

Q. What is ‘frictional unemployment’?

 a) Unemployment caused by changes in the industry structure

 b) Unemployment caused by seasonal variations

 c) Unemployment caused by the time taken for people to find new jobs

 d) Unemployment caused by economic downturns

 Answer: c) Unemployment caused by the time taken for people to find new jobs

Q. What is ‘sustainable development’?

 a) Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

 b) Rapid economic development

 c) Development with no regard for environmental impact

 d) Development with a focus on industrial growth only

 Answer: a) Development that meets the needs of the present without compromising the ability of future generations to meet their own needs

Q. What is ‘externality’?

 a) A cost or benefit that affects a third party not involved in an economic transaction

 b) A direct cost of production

 c) A benefit received by the producer

 d) A benefit received by the consumer

 Answer: a) A cost or benefit that affects a third party not involved in an economic transaction

Q. What is ‘carbon tax’?

 a) A tax on carbon emissions to reduce environmental pollution

 b) A tax on all fossil fuels

 c) A tax on renewable energy sources

 d) A tax on international trade

 Answer: a) A tax on carbon emissions to reduce environmental pollution

Q. What is ‘renewable energy’?

 a) Energy from sources that are naturally replenished

 b) Energy from fossil fuels

 c) Energy from nuclear power

 d) Energy from non-renewable resources

 Answer: a) Energy from sources that are naturally replenished

Q. What is a ‘market economy’?

 a) An economic system where the government makes all economic decisions

 b) An economic system based on free trade and competition

 c) An economic system where prices are set by the government

 d) An economic system with no private property

 Answer: b) An economic system based on free trade and competition

Q. What is a ‘command economy’?

 a) An economic system where the government makes all economic decisions

 b) An economic system based on free trade and competition

 c) An economic system where prices are set by supply and demand

 d) An economic system with no government intervention

 Answer: a) An economic system where the government makes all economic decisions

Q. What is a ‘mixed economy’?

 a) An economic system with only private ownership

 b) An economic system with only public ownership

 c) An economic system with both private and public ownership

 d) An economic system with no ownership

 Answer: c) An economic system with both private and public ownership

Q. What is ‘capitalism’?

 a) An economic system based on private ownership and the free market

 b) An economic system based on public ownership and central planning

 c) An economic system with no government intervention

 d) An economic system based on communal ownership

 Answer: a) An economic system based on private ownership and the free market

Q. What is ‘socialism’?

 a) An economic system based on private ownership and the free market

 b) An economic system based on public ownership and central planning

 c) An economic system with no government intervention

 d) An economic system based on communal ownership

 Answer: b) An economic system based on public ownership and central planning

Q. Who is known as the father of modern economics?

 a) Karl Marx

 b) John Maynard Keynes

 c) Adam Smith

 d) Milton Friedman

 Answer: c) Adam Smith

Q. What is ‘Keynesian economics’?

 a) The theory that free markets lead to efficient outcomes

 b) The theory that government intervention is necessary to achieve economic stability

 c) The theory that monetary policy is the most effective tool for managing the economy

 d) The theory that supply creates its own demand

 Answer: b) The theory that government intervention is necessary to achieve economic stability

Q. What is ‘supply-side economics’?

 a) The theory that demand drives economic growth

 b) The theory that lower taxes and decreased regulation will lead to economic growth

 c) The theory that government spending is the most effective tool for economic growth

 d) The theory that increasing money supply leads to economic growth

 Answer: b) The theory that lower taxes and decreased regulation will lead to economic growth

Q. What is ‘monetarism’?

 a) The theory that government spending is the most effective tool for economic stability

 b) The theory that controlling the money supply is the key to economic stability

 c) The theory that free markets lead to efficient outcomes

 d) The theory that labor unions are necessary for economic growth

 Answer: b) The theory that controlling the money supply is the key to economic stability

Q. Who developed the theory of ‘comparative advantage’?

 a) Adam Smith

 b) David Ricardo

 c) John Maynard Keynes

 d) Milton Friedman

 Answer: b) David Ricardo

Q. What is ‘game theory’?

 a) The study of strategic interactions among individuals or firms

 b) The study of market equilibrium

 c) The study of economic history

 d) The study of government policies

 Answer: a) The study of strategic interactions among individuals or firms

Q. What is ‘behavioral economics’?

 a) The study of economic decision-making processes

 b) The study of economic systems

 c) The study of financial markets

 d) The study of government policies

 Answer: a) The study of economic decision-making processes

Q. What is ‘asymmetric information’?

 a) A situation where all parties have equal information

 b) A situation where one party has more or better information than the other

 c) A situation where no party has any information

 d) A situation where information is equally distributed

 Answer: b) A situation where one party has more or better information than the other

Q. What is ‘moral hazard’?

 a) The risk that one party takes more risks because they do not bear the full consequences

 b) The risk of adverse selection in insurance markets

 c) The risk of inflation

 d) The risk of deflation

 Answer: a) The risk that one party takes more risks because they do not bear the full consequences

Q. What is ‘adverse selection’?

 a) The process by which buyers with more information select sellers with less information

 b) The process by which sellers with more information select buyers with less information

 c) The process by which those with higher risk are more likely to purchase insurance

 d) The process by which those with lower risk are more likely to purchase insurance

 Answer: c) The process by which those with higher risk are more likely to purchase insurance