All Free Economics MCQs with Answers

• A. it is doomed to being relatively poor forever
• B. none of these answers
• C. an increase in capital will likely have little impact on output
• D. it has the potential to grow relatively quickly due to the "catch-up-effect"
• E. It must be a small nation.

Explanation: A country with low GDP per person may grow rapidly through the catch-up effect, because it can adopt existing technologies and gain large…

• A. real GDP per person
• B. nominal GDP per person.
• C. Real GDP
• D. The growth rate of nominal GDP per person

Explanation: Real GDP per person measures the goods and services available per head after removing the effect of price changes.

• A. will always increase the quantity of saving
• B. will always decrease the quantity of saving
• C. will increase the quantity of saving if the substitution effect outweighs the income effect
• D. will increase the quantity of saving if the income effect outweighs the substitution effect

Explanation: A higher interest rate makes future consumption relatively cheaper than current consumption, encouraging saving through the substitution…

• A. but falls short of authorization
• B. with immediate implementation
• C. of the central bank
• D. of implementation through foreign aid

Explanation: An indicative plan sets targets and communicates the government’s expectations without legally authorizing every economic action.

• A. Yugoslavia
• B. Chile
• C. Vietnam
• D. Japan

Explanation: Yugoslavia used a distinctive worker-managed socialist system, in which enterprises were managed by workers’ councils.

• A. the inputs to each industry from other industries and sectors
• B. development planning and the required information on national income growth
• C. the planned public capital divided by feasible actual industrial projects public capital
• D. how the output of each industry is distributed within the sectors of the economy

Explanation: In an input-output table, columns represent the inputs required by each industry from other industries and sectors.

• A. monetary policy, fiscal policy
• B. elections; economics policies
• C. economic policies; political policies
• D. tax collection, tax implementation

Explanation: The distinction concerns political business cycles: parliamentary governments may time elections around economic conditions, while…

• A. governments depend primarily on their colonial masters
• B. excessive controls are used in the private sector
• C. the brain drains cost government substantially
• D. monopolies dominate in the agricultural sector

Explanation: Planning can fail when the public-sector program is incomplete and excessive controls discourage or distort private-sector activity.

• A. indicative plan
• B. central bank policies
• C. central planning
• D. instrument variables

Explanation: Monetary, fiscal, exchange-rate, tariff, tax, subsidy, and investment measures are policy instruments used to achieve economic goals.

• A. achieved only through socialism
• B. target variables
• C. bound by soft budget
• D. recurrent expenditures

Explanation: These are measurable development objectives: a specified growth rate, poverty reduction, and a maximum balance-of-payments deficit.

• A. instrument variable
• B. seasonal expenditure
• C. rolling plan
• D. perspective plan

Explanation: A rolling plan covers a medium-term period but is extended and revised each year, keeping the planning horizon continuous.

• A. commanding heights
• B. entrepreneurial programs
• C. public physical policy
• D. development planning

Explanation: Development planning coordinates government policies and resource allocation to meet national objectives such as growth, employment, and…

• A. dirigiste
• B. Keynesian
• C. Commanding heights
• D. soft budget

Explanation: Dirigisme is a development approach in which the state directs economic activity and intervenes substantially in prices and markets.

• A. Russia, Pakistan Bangladesh and Nigeria
• B. China, India, Indonesia, and Brazil
• C. Russia, China, India, and South Africa
• D. China, Russia, Mexico, and Indonesia

Explanation: Around 2010, the five largest populations were China, India, the United States, Indonesia, and Brazil.

• A. Association of South East Argo Nations
• B. Association of South East Asian Nations
• C. Alliance of South East Asian Neighbors
• D. Alliance of South Eastern African Nations

Explanation: ASEAN stands for the Association of Southeast Asian Nations, a regional organisation formed to promote cooperation among Southeast Asian…

• A. Ghana and Nigeria
• B. Poland and Germany
• C. Cuba and North Korea
• D. China and Hong Kong

Explanation: Cuba and North Korea retained highly centralised communist systems closely associated with the Soviet development model.

• A. Ghana and Mexico
• B. Canada and the United States
• C. Sierra Leone and Nigeria
• D. Taiwan and South Korea

Explanation: Taiwan and South Korea achieved exceptionally rapid sustained growth, often called the East Asian miracle, with real per-capita growth…

• A. a strong Catholic church intervention in the economic decisions
• B. an emphasis on trade restrictions
• C. the use of the medieval economy
• D. the rise of capitalism

Explanation: Modern Western growth was closely associated with the rise of capitalism, which strengthened private property, investment, markets, and…

• A. China
• B. United States
• C. Russia
• D. Europe

Explanation: China contains more than 70 percent of the population of the major fast-growing East Asian economies because of its very large population.

• A. zaibatsu
• B. chaebol
• C. laissez faire
• D. bourgeoisie

Explanation: Chaebol is the Korean term for large, family-controlled corporate conglomerates such as Samsung and Hyundai.