Practice test

Basics of economics - Test Set 1

Review 20 exam-focused questions with detailed explanations, then start the interactive test when you are ready.

20 questions

Questions and explanations

  1. Question 1

    The goods which people consume more, when their price rises are called ______.
    1. Essential goods
    2. Capital goods
    3. Veblen goods
    4. Giffen goods
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  2. Question 2

    ______ is a good whose quantity demanded decreases when consumer income rises.
    1. Veblen good
    2. Normal good
    3. Exclusive good
    4. Inferior good
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  3. Question 3

    If goods A and B are substitutes, a decrease in the price of good B will:
    1. Decrease demand for good B
    2. Decrease demand for both the goods
    3. Increase demand for both the goods
    4. Decrease demand for goods A
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  4. Question 4

    Macro economics deals with:
    1. The circular flow of income
    2. The decision making of a single economic variable like demand
    3. Resource allocation at firm level
    4. Equilibrium prices and quantities
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  5. Question 5

    Which of the following will cause an increase in the demand for coffee?
    1. Price of coffee falling in foreign markets
    2. Coffee prices are expected to fall rapidly in domestic markets
    3. Average income falls in the country
    4. Increase in price of tea
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  6. Question 6

    Goods whose demand is proportional to price are called-
    1. Inferior goods
    2. Veblen goods
    3. Normal goods
    4. Exclusive goods
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  7. Question 7

    Which sector has the highest number of people working in India?
    1. Manufacturing
    2. Agriculture
    3. IT
    4. Services
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  8. Question 8

    Which of the following will cause an increase in demand for a good?
    1. An increase in income if the good is an inferior goods
    2. A decrease in the price of the goods
    3. A decrease in income if the good is a normal goods
    4. An increase in the price of its substitute goods
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  9. Question 9

    Which of the following is NOT a part of the infrastructure sector?

    1. Agriculture
    2. Dams
    3. Highways
    4. Power
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  10. Question 10

    Which of the following is NOT an example of manufacturing activity?
    1. Paper made from wood.
    2. Mutual fund products made by combining debt and equity funds.
    3. Yarn made from cotton.
    4. Sugar made from sugarcane.
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  11. Question 11

    Which of these is related to public goods?
    1. The principle of excludability is applicable to its consumption.
    2. There is a clear link between the producer and consumer which occurs through the payment process.
    3. Its consumption is rivalrous in nature.
    4. There is a possibility of free ridership in its consumption.
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  12. Question 12

    Which of these is not the reason why ‘final’ goods are called so?
    1. They are meant for final use.
    2. They are the last to be consumed.
    3. They will not pass through any more stages of production.
    4. They are not processed or transformed further.
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  13. Question 13

    What was the percentage of women working in the primary sector of India as of 2011–2012?
    1. 61%
    2. 63.08%
    3. 64.5%
    4. 62.8%
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  14. Question 14

    The shares of the public sector and the private sector in the production of steel during 1990-91 were ______ respectively.
    1. 40% and 60%
    2. 46% and 54%
    3. 49% and 51%
    4. 55% and 45%
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  15. Question 15

    Which of the following is NOT true about the circular flow of income in a two-sector economy?
    1. Total production is equal to total consumption.
    2. Factor payment is equal to factor income.
    3. Real Flow is more than money flow.
    4. Consumption expenditure is equal to factor income.
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  16. Question 16

    During the year 1991-92, the industrial production recorded a growth of ______.
    1. Negative; 1.1 Percent
    2. Positive; 1.1 Percent
    3. Negative; 0.9 Percent
    4. Positive; 0.6 Percent
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  17. Question 17

    Final goods are divided into: ______.
    1. Raw materials and semi-finished goods
    2. Single goods and composite goods
    3. Consumption goods and capital goods
    4. War goods and civilian goods
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  18. Question 18

    Which of these is NOT a characteristic of durable goods?

    1. They are capable of repetitive use.
    2. They are not extinguished by immediate consumption.
    3. They are meant for repetitive purchases.
    4. They have a relatively long life.
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  19. Question 19

    Which of these is a component of the tertiary sector of an economy?

    1. Mining and quarrying
    2. Water supply
    3. Electricity
    4. Hotels and restaurants
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  20. Question 20

    Which of the following can be considered a part of a parallel economy?

    1. Under declared income.
    2. Value of domestic work done by the housewife.
    3. Payments made to domestic helpers or housekeepers.
    4. Payments for private tuition.
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