All Free Economics MCQs with Answers

• A. groups of affiliated companies loosely organized around a large bank
• B. horizontal manufacturing groups consisting of a core company and its partners
• C. State-assisted entrepreneurs
• D. financial cliques

Explanation: A keiretsu is a network of affiliated firms linked through cross-shareholding and commonly organized around a major bank.

• A. Japan
• B. The four tigers
• C. Vietnam
• D. Thailand

Explanation: The World Bank’s eight high-performing Asian economies included Japan, Hong Kong, Singapore, South Korea, Taiwan, Indonesia, Malaysia and…

• A. income per capita is the same regardless of poor or rich countries
• B. income per capita in poor countries grows faster than in rich countries
• C. income per capita in rich countries grows faster than in poor countries
• D. income per capita in poor countries grows conditional upon foreign aid

Explanation: Conditional convergence means that when countries have the same fertility, education and government-spending conditions, poorer countries…

• A. the monarchy
• B. the central planners of the Soviet Union
• C. the capitalist and middle class
• D. the aristocrats of wealthy nations

Explanation: The bourgeoisie traditionally means the capitalist class that owns or controls productive assets, and in broader usage it includes the…

• A. total market reliance for resource allocation
• B. economic restructuring by Gorbachev
• C. intensified central planning
• D. None of the above

Explanation: Perestroika means “restructuring” and was Mikhail Gorbachev’s programme for reforming the Soviet economic and political system.

• A. diverting savings from agriculture to industry
• B. state assisted entrepreneurs
• C. state monopolized trading
• D. markets for allocating resources

Explanation: The Soviet model relied on central state direction, industrialization financed partly by agriculture, and state-controlled trade.

• A. Japan
• B. Four tigers
• C. Vietnam
• D. Thailand

Explanation: The eight high-performing Asian economies listed in the World Bank study included Japan, the four tigers, Indonesia, Malaysia and…

• A. South Korea
• B. China
• C. Taiwan
• D. Singapore

Explanation: The classic East and Southeast Asian newly industrialized economies are South Korea, Taiwan, Singapore and Hong Kong.

• A. declined
• B. increased
• C. remained the same
• D. cannot be determined

Explanation: The income gap widened because Western Europe industrialized and achieved sustained productivity growth much earlier and faster than most…

• A. changes in industrial structure over time
• B. specific barriers to development and how to overcome them
• C. The impact of international trade structures on developing countries
• D. the caste of class structure and discrimination in the labor market

Explanation: Structuralist economists examine the specific institutional and economic barriers that keep developing countries from growing, then…

• A. Food shortages
• B. Foreign debt
• C. Rapid population growth
• D. Labor shortages

Explanation: Food shortages, foreign debt and rapid population growth are common development problems, whereas developing countries generally have…

• A. mechanization
• B. land reform
• C. import substitution
• D. produce marketing boards

Explanation: Land reform can raise agricultural output by giving cultivators stronger incentives to invest, work efficiently and improve the land.

• A. The constraints imposed by dependency on the already-developed nations
• B. A steady rate of capital formation
• C. An adequate level of social overhead capital
• D. The supply of human resources is too high

Explanation: Dependency theory argues that poor nations can remain underdeveloped because their economic relationships with richer countries limit…

• A. the prices of the goods they imported were falling
• B. the price of goods they exported were increasing
• C. their terms of trade were deteriorating
• D. their terms of trade were improving

Explanation: Import substitution became attractive when developing countries faced deteriorating terms of trade, meaning export prices weakened…

• A. 80%
• B. 65%
• C. 50%
• D. 25%

Explanation: A commonly cited development statistic is that high-income countries, despite containing a small share of the world’s population, consume…

• A. a lower rate of illiteracy
• B. a greater degree of equality in the income distribution
• C. a lower infant mortality rate
• D. a smaller percentage of the labor force in urban areas

Explanation: Developing countries generally have higher illiteracy and infant mortality, greater income inequality, and a smaller share of the labour…

• A. money lent to the country being immediately invested abroad
• B. People investing their money in urban business rather than agriculture
• C. money moving around financial institutions rather than being invested in production
• D. people investing money abroad rather than in their own country

Explanation: Capital flight occurs when residents transfer or invest their financial assets abroad instead of investing them domestically.

• A. an agreement with the World Bank to turn some of a debt into other forms
• B. a change in debt repayment due to inability to pay
• C. regular payments of interest and repayments of capital
• D. a program of austerity measures agreed with the IMF to make repayment possible

Explanation: Debt rescheduling changes the timing or terms of repayment, usually because the borrower cannot meet the original schedule.

• A. The colonial period
• B. The early 1950s
• C. most debt was incurred during the oil shocks of the 1970s
• D. the early 1960s

Explanation: A large share of developing-country debt accumulated during and after the oil shocks of the 1970s, when oil exporters deposited surplus…

• A. modern sector and traditional sector
• B. town and country
• C. men and women
• D. rich people and poor people

Explanation: A dualistic economy contains a modern, relatively productive sector alongside a traditional sector using older methods and technologies.