Practice test

Basics of economics - Test Set 5

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 main feature of a capitalist economy is on-
    1. Expenditure
    2. Exchange
    3. Foreign trade
    4. Taxation
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  2. Question 2

    The book which is at the centrepiece of the study of Macro-Economics was written by-
    1. Prof. Samuelson
    2. Prof. J.M. Keynes
    3. Prof. Benham
    4. Prof. Baumol
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  3. Question 3

    The basic problem studied in Macro Economics is-
    1. Production of income
    2. Usage of income
    3. Flow of income
    4. Distribution of income
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  4. Question 4

    Capacity utilisation-
    1. Is usually near 100 percent
    2. Represents the percent of the labour force that is employed
    3. Is a measure of the proportional of the existing capital stock used for current production
    4. Rises as the economy moves into a recession, since firms must replace unemployed workers with some other resources to maintain production
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  5. Question 5

    Internal economies-
    1. Arise when there is expansion
    2. Arise in an economy as it makes progress
    3. Accure to a firm when it expands its output
    4. Arise when there is expansion in internal trade
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  6. Question 6

    Barter transactions means-
    1. Goods are exchanged with goods
    2. Coins are exchanged for goods
    3. Money acts as a medium
    4. Private ownership
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  7. Question 7

    What are the main components of basic social infrastructure of an economy?
    1. Education, Industry and Agriculture
    2. Education, Health and Civil amenities
    3. Transport; Health and Banks
    4. Industry, Trade and Transport
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  8. Question 8

    Basic infrastructure facilities in Economics are know as-
    1. Human capital
    2. Physical capital
    3. Social overheads capital
    4. Working capital
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  9. Question 9

    The main feature of a capitalist economy is on the basis of raw-materials?
    1. Small Scale - Large scale
    2. Primary and Secondary
    3. Basic and Consumer
    4. Agro-based and Mineral based
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  10. Question 10

    The existence of a parallel economy or Black Money-
    1. Makes the economy more competitive
    2. Makes the monetary policies less effective
    3. Ensures a better distribution of income and wealth
    4. Ensures increasing productive investment
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  11. Question 11

    What is dual pricing?
    1. Expenditure two product
    2. Exchange two product
    3. Foreign trade
    4. Two prices of a product
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  12. Question 12

    A black market is a situation where in-
    1. Goods are loaded by the producers
    2. Goods are sold secretly
    3. Goods are sold at prices higher than what is fixed by the government
    4. Goods are made available only after there is a rise in prices
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  13. Question 13

    A closed economy is one which-
    1. Does not trade with other countries
    2. Does not possess any means of international transport
    3. Does not have a coastal line
    4. Is not a member of the U.N.O
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  14. Question 14

    Free Trade refers to-
    1. Free movement of goods from one country to another
    2. Movement of goods free of cost
    3. Unrestricted exchange of goods and service
    4. Trade free of duty
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  15. Question 15

    With which form of economy is the term ‘Laissez-faire’ associated?
    1. Capitalist economy
    2. Socialist economy
    3. Mixed economy
    4. Command economy
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  16. Question 16

    Externality theory is the basic theory of the following branch of Economics-
    1. Environomics
    2. Fiscal Economics
    3. Unrestricted exchange of goods and service
    4. Trade free duty
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  17. Question 17

    Which of the following is part of tertiary sector?
    1. Power and transportation
    2. Animal Husbandry
    3. Cotton manufacturing
    4. Cultivation of crops
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  18. Question 18

    Economics of a firm is-
    1. An increase in its profits
    2. A reduction in its selling expenses
    3. Its dominance of the market
    4. Saving its production costs
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  19. Question 19

    Short term contractions and expansions in economic activity are called ______.
    1. Expansion
    2. Recession
    3. Deficits
    4. Business cycle
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  20. Question 20

    In terms of economics, if it is possible to make someone better-off without making someone worse-off, then the situation is-
    1. Inefficient
    2. Efficient
    3. Optimal
    4. Pareto-superior
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