All Free Economics MCQs with Answers

• A. increased proportionally to economic growth
• B. increased geometrically, outstripping food supply which grew arithmetically
• C. increased stagnantly with food supply and economic development
• D. increased disproportionately surpassing agricultural production

Explanation: Malthus argued that population tends to grow geometrically, while food production can expand only arithmetically.

• A. 80%
• B. 50%
• C. 25%
• D. 35%

Explanation: Roughly four-fifths of the world's population lives in less-developed countries.

• A. increasing returns to natural resources with a direct impact on average food consumption
• B. increased urbanization and congestion
• C. a higher labor force growth rate and higher unemployment
• D. a working population that must support a large number of dependents

Explanation: High fertility can create congestion, rapid labour-force growth, unemployment, and a heavy dependent burden.

• A. 10%
• B. 0.002%
• C. 2%
• D. 0.5%

Explanation: For most of human history, high mortality kept population growth almost stagnant, at an extremely small annual rate of about 0.002%.

• A. demographic transition
• B. population maturity
• C. demobilizing population
• D. birth-death transformation

Explanation: Demographic transition describes the movement from high birth and death rates to low birth and death rates, usually with a temporary…

• A. the percentage increase in the consumption growth of the poor divided by percentage increase in the consumption growth of the nonpoor
• B. the percentage increase in the poor times percentage increase in the nonpoor
• C. the percentage increase in the poverty of the poor divided by percentage increase in the poverty of the nonpoor
• D. the percentage increase in the poor people in the Urban divided by percentage increase in the nonpoor in the urban

Explanation: The elasticity of pro-poor growth compares the percentage change in the poor's consumption growth with the percentage change in the…

• A. 50
• B. 100
• C. 1000
• D. 5

Explanation: The Human Development Report 2003 noted that about 50 countries had lower income or development outcomes in 2003 than in 1990.

• A. quientiles
• B. percentiles
• C. simulation
• D. relative ratio measures

Explanation: Sala-i-Martin estimated the global income distribution by constructing and simulating distributions from available national income data…

• A. 0
• B. 2
• C. 6
• D. 0.5

Explanation: The cited UNDP estimate used a rule of thumb that a 1 percent rise in per-capita consumption, with inequality unchanged, reduces the…

• A. low inequality
• B. maximum inequality
• C. 10/10 000% inequality
• D. 1% inequality

Explanation: The Gini index ranges from 0 to 1, where 0 represents complete equality and 1 represents the theoretical maximum inequality, with all…

• A. absolute poverty
• B. economic growth
• C. relative poverty
• D. standard of living

Explanation: Income-distribution indices compare how income is shared across people and therefore indicate relative deprivation or relative poverty.

• A. Income inequality
• B. Absolute poverty
• C. sen's poverty index
• D. purchasing power poverty

Explanation: Absolute poverty means having income or consumption below the minimum needed for basic food, clothing, and shelter.

• A. dollar
• B. mark
• C. franc
• D. euro

Explanation: The euro became the common currency for participating European Monetary Union countries in 1999 for accounting purposes and in 2002 as…

• A. made it harder for Americans of compete against the Germans in the British market
• B. made it easier for Americans to compete against the Germans in the British market
• C. made it harder for Americans to compete against the Japanese in the British market
• D. made it easier for Americans to compete against the Japanese in the British

Explanation: EU members trade with one another without internal tariffs, while American goods face the EU's common external tariff in Britain.

• A. customs union
• B. economic union
• C. common market
• D. free trade area

Explanation: The EU developed beyond a free-trade area and customs union by permitting the movement of goods, services, capital and labour among…

• A. adopted a common fiscal policy for member nations
• B. established a common system of agricultural price supports
• C. disbanded all tariffs between its member countries
• D. levied common tariffs on products imported from nonmembers

Explanation: The EU has a common agricultural policy, internal free trade and common external tariffs, but member states have not adopted one common…

• A. amount the which the EU's support price exceeds the world price
• B. amount by which the world price exceeds the EU's support price
• C. support price of the EU
• D. world price

Explanation: The variable import levy closes the gap between the EU support price and the lower world price, so it equals the EU support price minus…

• A. a country moves from autarky to free trade
• B. a movement to a customs union reduces the cost of trade through standardization
• C. economic integration results in a movement in product origin to a lower-cost member country
• D. economic integration results in a shift in product origin from a lower cost nonmember country to a member country having higher costs

Explanation: Trade creation occurs when integration shifts production or imports from a higher-cost domestic source to a lower-cost member country.

• A. trade creation
• B. trade diversion
• C. dynamic welfare effects
• D. comprehensive welfare effects

Explanation: Replacing a cheaper outside supplier with a more expensive member supplier because of the customs union's common external tariff is trade…

• A. free-trade area
• B. customs union
• C. common market
• D. monetary union

Explanation: A free-trade area removes trade barriers among members while allowing each member to set its own tariffs against nonmembers.