All Free Economics MCQs with Answers

• A. Certificates
• B. Sureties
• C. Security bonds
• D. Bond

Explanation: A bond is an interest-bearing debt certificate issued by a government or corporation to borrow money.

• A. Bill of Exchange BE
• B. Bill of Lading
• C. Bearer Cheque
• D. None of them

Explanation: A bill of exchange is a written and generally unconditional order requiring one party to pay a specified sum to a named person or order.

• A. Payable to anyone
• B. payable to person holding it
• C. payable through account only
• D. payable after specific period

Explanation: A bearer cheque is payable to whoever possesses or presents it, without the need for the payee's name to be endorsed.

• A. Profit in a year
• B. Statements of accounts that shows debit and credit accounts under the broad heads
• C. Performance of a company
• D. Accurate economic position

Explanation: A balance sheet is a statement showing a firm's financial position through broad categories such as assets, liabilities and owners'…

• A. Assembly line
• B. Production line
• C. Both of them
• D. None of them

Explanation: An assembly line or production line moves a product successively through specialised operations until it is finished.

• A. Adam Smith
• B. Ricardo
• C. Hicks
• D. Barron

Explanation: David Ricardo presented the theory of comparative advantage, showing that countries can gain from trade by specialising according to…

• A. Equal
• B. Different
• C. Undetermined
• D. Decreasing

Explanation: Comparative advantage makes trade beneficial when countries face different relative costs or cost ratios for producing goods.

• A. The sale of the sub-standard commodity
• B. Sale in a foreign market of a commodity at a price below marginal cost
• C. Sale in a foreign market of a commodity just at marginal cost without too much of profit
• D. Smuggling of goods without paying any customs duty

Explanation: Dumping involves selling a product in a foreign market at an abnormally low price, commonly described in elementary economics as below…

• A. Shareholders
• B. Creditors
• C. Debtors
• D. Directors

Explanation: A debenture is a debt instrument issued by a company, so its holder has lent money to the company and is therefore a creditor.

• A. A share
• B. A debenture
• C. Invest
• D. Capital

Explanation: A share represents a unit of ownership in a company, however small the holding may be.

• A. Shares
• B. Debentures and bonds
• C. Commercial paper
• D. Government securities

Explanation: Credit-rating agencies assess debt and money-market instruments such as bonds, debentures, commercial paper and government securities for…

• A. Bearer cheques
• B. Credit Cards
• C. Demand Drafts
• D. Gift Cheques

Explanation: Credit cards are called plastic money because they are plastic payment cards that allow purchases on credit.

• A. an even distribution of income
• B. an incentive to innovate
• C. a wide range of public goods
• D. full employment of labor

Explanation: Competition and the possibility of earning profit give firms in a free market an incentive to develop new products and production methods.

• A. Diversification
• B. horizontal integration
• C. monopoly
• D. vertical integration

Explanation: Horizontal integration occurs when firms operating at the same stage and in the same industry combine, such as one textile manufacturer…

• A. Internal laws
• B. By laws
• C. Character
• D. Memorandum of articles

Explanation: Bylaws are the internal rules and procedures that govern an organization's management and operations.

• A. Payment made for the use of another person's money
• B. Payment made for the use of bank's money
• C. Share in profit
• D. Devaluation in the Currency

Explanation: Interest is the return paid for borrowing or using someone else’s money, usually stated as a percentage of the principal.

• A. Floor price
• B. Fixed price
• C. Bid Price
• D. Basic Price

Explanation: A floor price is a government-set minimum price, often used to protect producers from very low market prices.

• A. to make in a smaller size
• B. to make in actual size
• C. To make in half size
• D. None of these

Explanation: Downsizing means reducing the size or scale of an organisation, commonly through cuts in its workforce or operations.

• A. cash goods
• B. consumer items
• C. consumer goods
• D. cash items

Explanation: Consumer goods directly satisfy human wants, such as food, clothing, and household items.

• A. Relative Advantage
• B. Complete Advantage
• C. Comparative Edge
• D. Comparative Advantage

Explanation: Comparative advantage means specializing in goods with the lowest opportunity cost, even when another country can produce every good more…