All Free Economics MCQs with Answers

• A. Ethiopia
• B. Rwanda
• C. Somalia
• D. Singapore

Explanation: Ethiopia, Rwanda, and Somalia have been classified among low-income economies, whereas Singapore is a high-income economy.

• A. [(GDP2002 + GDP2001)/GDP2001]100
• B. [(GDP2002 - GDP2001) GDP2001]100
• C. [(GDP2002 - GDP2001)/GDP2001]100
• D. [(GDP2001 - GDP2002]100

Explanation: Growth is calculated as the change in GDP divided by the initial GDP, multiplied by 100: (GDP2002 − GDP2001) / GDP2001 × 100.

• A. 4%
• B. 1.11%
• C. 0.011%
• D. 11%

Explanation: Real growth is (364 − 360) / 360 × 100 = 1.11%. Because the figures are already at constant prices, this measures real rather than…

• A. 2000 - 890
• B. 200/890
• C. 200,000,000/890
• D. 200

Explanation: Per-capita GNP equals total GNP divided by population: €200,000,000 / 890, approximately €224,719 per person.

• A. [(GDPc - GDPp)/ DGPp]100
• B. [(GDPc - GDPp) DGPp]100
• C. GNPc - DGPp100)
• D. [GDPp - GDPc]100

Explanation: Growth compares the change in GDP with the previous year's GDP: (GDPc − GDPp) divided by GDPp, multiplied by 100.

• A. 1000
• B. 260
• C. 0.001
• D. 259740

Explanation: GDP per capita is total GDP divided by population: $260,000,000 ÷ 260,000 = $1,000. The population units cancel, leaving dollars per person.

• A. P = ΣPnqn/Σpoqn
• B. P = ΣPoqo/Σpnqn
• C. P = ΣPnqo/Σpoqo
• D. P = ΣPnqn/Σpoqo

Explanation: The Paasche price index uses current-year quantities as weights, so it divides the cost of the current basket at current prices by its…

• A. equality
• B. poverty
• C. employment
• D. human development

Explanation: Imposing rich-country labor standards and minimum wages in labor-abundant economies can raise labor costs above productivity and reduce…

• A. Most LDCs have less than 1/10 the per capita GNP of the U.S
• B. A greater share of GNP would have to be devoted to education to attain the same primary enrollment rates as in the U.S
• C. Setting up western labor standard and minimum wages in labor-abundant LDCs is sensible
• D. Most LDCs have a greater shortage of qualified teachers than the U.S does

Explanation: In labor-abundant LDCs, imposing Western minimum wages and labor standards is generally not considered sensible because it can reduce…

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

Explanation: The classic NIC group includes South Korea, Taiwan, Singapore and Hong Kong, not Japan.

• A. disparity reduction rate, human resource development rate and the composite index
• B. longevity, education and living standard
• C. minimum schooling, adult literacy and tertiary educational attainment
• D. human resource training development and R&D

Explanation: HDI combines three broad dimensions: a long and healthy life measured through longevity, knowledge measured through education, and a…

• A. Purchasing Power Parity
• B. Physical Quality of Life Index
• C. Human Development Index
• D. The Laspeyres index

Explanation: The Physical Quality of Life Index combines infant mortality, life expectancy and literacy as non-income measures of welfare.

• A. is defined as the annual number of deaths of infant under 1 year old per 1,000 live births
• B. reflects the availability of primary education the rights of employments and social security
• C. is life expectancy up to age 3
• D. reflects the availability of hospitals and childcare facilities and the parents wealth

Explanation: Infant mortality is the number of deaths of children below one year of age per 1,000 live births in a year.

• A. GNP is understated for developed countries, since a number of items included in their national incomes are intermediate goods
• B. The economic contribution of a housewife is a peasant family may not be measured is GNP is poor country
• C. GNP in understated for developing countries since many of their labor intensive good have no impact on exchange rate since they are not traded
• D. GNP is overstated for for countries where the price of foreign exchange is less than market clearing price

Explanation: National income accounting is designed to exclude intermediate goods, so their inclusion does not understate developed countries' GNP.

• A. P = ∑Poqo/∑poqo
• B. P = ∑Poqo/∑pnqn
• C. P = ∑Pnqo/∑poqo
• D. P = ∑Poqn/∑poqo

Explanation: The Laspeyres index holds the base-year quantities constant while comparing current-year prices with base-year prices: ΣPnqo divided by…

• A. less than $900, $900-$9000 and more than $9000
• B. less than $5000, $5000-$15000 and more than $15000
• C. less than $100, $100-$1000 and more than $1000
• D. less than $5000, $5000-$150000 and more than $150000

Explanation: This older World Bank classification uses per-capita GNP below $900 for low-income countries, $900 to $9,000 for middle-income countries…

• A. the United Kingdom
• B. Singapore
• C. Japan
• D. Hungary

Explanation: The United Kingdom, Singapore, and Japan are high-income economies. Hungary is generally classified as upper-middle-income, making it the…

• A. The boundary between rich and poor countries has become clearer in 1990s
• B. The fastest growing countries must be the ones with the highest per capita GNP
• C. A few poor countries like South Korea and Malaysia in the 1950s grew much more rapidly than some higher-income countries like Uruguay and New Zealand
• D. Today all high and Upper-middle income countries are Western.

Explanation: South Korea and Malaysia experienced rapid growth despite being relatively poor in the 1950s, while higher-income Uruguay and New Zealand…

• A. 276,000
• B. 1576,086
• C. 0.276
• D. 3.623

Explanation: Population equals total GDP divided by GDP per capita: $435,000,000 ÷ $1,576.087, which is approximately 276,000 people.

• A. 6500
• B. 130
• C. 0.0065
• D. 650

Explanation: GDP per capita is total GDP divided by population: $130,000,000 ÷ 20,000 = $6,500.