All Free Economics MCQs with Answers

• A. Money flight
• B. Capital drain
• C. Free flow
• D. Capital flight

Explanation: Capital flight means the large-scale transfer of investment funds or wealth from one country to another, often because of political or…

• A. All wealth of a nation
• B. Annual Income of the central government
• C. All income of the people on a year
• D. Income derived from taxes by the central government

Explanation: National income is the total income earned by a country's people or factors of production during a year.

• A. Monetary policy
• B. Fiscal policy
• C. Commercial policy
• D. Finance policy

Explanation: Commercial policy covers government measures regulating international trade, especially exports and imports, such as tariffs, quotas and…

• A. Business inventory accumulate
• B. Unemployment exists
• C. Price of consumer goods rise
• D. People save more than they intended to save

Explanation: When aggregate supply exceeds aggregate demand, firms cannot sell all current output, so unintended inventories accumulate.

• A. Inflation
• B. Deflation
• C. Social change
• D. Price stability

Explanation: Economic development is broader than economic growth: it combines rising output with social and structural improvements such as better…

• A. Capital
• B. Deposit
• C. Hoarding
• D. Profit

Explanation: Hoarding refers to holding income as idle money rather than spending or investing it.

• A. Underemployment
• B. Disguised unemployment
• C. Temporary unemployment
• D. Cyclical unemployment

Explanation: A downturn in the business cycle reduces production and the demand for labour, creating cyclical unemployment.

• A. South Africa
• B. UK
• C. Canada
• D. Australia

Explanation: The branch banking system, in which one bank operates through multiple branches, was first developed in the United Kingdom and later…

• A. Buying and selling bills of exchange
• B. Buying and Selling govt. securities
• C. Buying and selling shares of companies
• D. Buying and selling foreign exchanges

Explanation: Open-market operations are the central bank's purchases and sales of government securities in the financial market.

• A. Clearing house
• B. Open-market operations
• C. Discount rate
• D. Issuing of notes

Explanation: Open-market operations are widely used because the central bank can adjust the money supply and interest rates by buying or selling…

• A. As a pensioner
• B. As a debtor
• C. As an entrepreneur
• D. As an equity-holder

Explanation: Deflation increases the real value of fixed nominal income, so a pensioner can buy more goods with the same pension.

• A. Taxation
• B. Bank rate
• C. Open-market operations
• D. Credit rationing

Explanation: Taxation is a fiscal policy instrument used by the government, whereas bank rate, open-market operations and credit rationing are tools…

• A. Liability
• B. Assets
• C. Both assets and liabilities
• D. None

Explanation: A bank records money lent to customers as an asset because it represents a claim from which the bank expects repayment and interest.

• A. Increased employment
• B. Increased unemployment allowance
• C. More progressive taxes
• D. More regressive taxes

Explanation: Regressive taxes take a larger proportion of income from low-income groups than from high-income groups, widening income disparities.

• A. Acceptability
• B. Divisibility
• C. Durability
• D. Portability

Explanation: Paper money is accepted, divisible into denominations and easy to carry, but it can be damaged or destroyed and is therefore not fully…

• A. Increasing demand for goods
• B. Increasing supply of goods
• C. Increasing money supply
• D. Decreasing taxes

Explanation: Inflation can be reduced by increasing the supply of goods, because greater output helps meet demand and eases upward pressure on prices.

• A. Bearish
• B. Bullish
• C. Crash
• D. Fall down

Explanation: A falling stock market is described as bearish, reflecting expectations of declining prices and weak investor confidence.

• A. Reduce the deficit on the balance of trade
• B. Reduce the repayment of loans
• C. Reduce the surplus on the capital account
• D. Reduce the volume of exports

Explanation: The current account includes the balance of trade, so reducing a trade deficit directly improves the current account position.

• A. For examine
• B. Foreign exchange
• C. Foreign exports
• D. None of these

Explanation: Forex is the standard abbreviation for foreign exchange, meaning the buying and selling of one currency in terms of another.

• A. Gross domestic product
• B. National income
• C. Gross domestic income
• D. Gross national income

Explanation: National income is the total factor income earned from labour, land and capital, usually measured as net national product at factor cost.