All Free Economics MCQs with Answers

• A. Increase in taxation
• B. Increase in savings
• C. Increase in govt. spending
• D. Decrease in consumption spending

Explanation: Government spending directly adds to aggregate expenditure and raises income through the expenditure multiplier.

• A. A loan from a bank
• B. A loan from one's parents
• C. Gifts and donations
• D. A broker's commission

Explanation: A broker's commission is payment for a current productive service, so it is included in national output and GNP.

• A. To add up the values of goods and services for one year
• B. Add up all savings
• C. To count all imports
• D. To add up the value of semi-finished goods

Explanation: GNP is estimated by adding the value of final goods and services produced by a country's residents during a year, with appropriate…

• A. Budget for a surplus
• B. Cut taxes
• C. Encourage savings
• D. Reduce its expenditure

Explanation: Cutting taxes raises households' disposable income, allowing consumption and aggregate demand to increase.

• A. a fall in living standards
• B. a more youthful population
• C. an ageing population
• D. an increase in population

Explanation: If births fall while deaths remain unchanged, fewer young people enter the population and the average age rises over time.

• A. Net foreign investment
• B. Private investment
• C. Per capita income of citizens
• D. None of the above

Explanation: GNP is calculated from national output or income measures, including relevant investment and foreign-income adjustments, but per capita…

• A. Per capita income
• B. Industrial development
• C. Number of people who have been lifted above the poverty line
• D. National income

Explanation: The growth rate of an economy is conventionally measured by the percentage change in real national income over time.

• A. Currency traded in foreign exchange market for which demand is persistently relative to the supply
• B. Currency Which is used in times of war
• C. Currency which loses its value very fast
• D. None of these

Explanation: Hard currency is a currency that is widely demanded and trusted in foreign-exchange markets, often because its demand persistently exceeds…

• A. The taxes earned by the State
• B. The sum of all factors of income
• C. Personal incomes of all the citizens
• D. Surplus of exports over imports

Explanation: National income is the total income earned by the factors of production, including wages, rent, interest and profit.

• A. the currency exchange rate
• B. the difference between the value of visible exports and visible imports
• C. The government's policies to increase exports
• D. the rate at which exports are exchanged for imports

Explanation: Terms of trade measure the rate at which a country's exports exchange for imports, usually expressed through export prices relative to…

• A. Government pensioners
• B. Creditors
• C. Savings Bank Account holders
• D. Debtors

Explanation: Inflation reduces the real value of money owed, so debtors repay loans with money that buys less than when it was borrowed.

• A. Money lenders
• B. Central Bank
• C. Private entrepreneurs
• D. Government policy

Explanation: The central bank conducts monetary policy by influencing interest rates, money supply and credit conditions.

• A. Inflation
• B. Hyper-inflation
• C. Deflation
• D. Disinflation

Explanation: Hyperinflation is an exceptionally rapid and uncontrolled rise in prices that severely destroys money's purchasing power.

• A. Fall in production
• B. Increase in prices
• C. Stagflation
• D. None of these

Explanation: Inflation is fundamentally a sustained rise in the general price level, so an increase in prices is its essential feature.

• A. Embargoes
• B. Foreign exchange controls
• C. Quotas
• D. Tariffs

Explanation: A tariff is a tax on imports, and the added cost normally raises their domestic price.

• A. after tax
• B. allowing for change in prices.
• C. Plus, benefits in kind
• D. plus, overtime payments.

Explanation: Real wage measures the purchasing power of a money wage after allowing for changes in the price level.

• A. Certificate issued by a company promising the payment of a specified amount at a fixed rate of interest after a specified period
• B. Certificate for the investment in shares
• C. Certificate for the preference share
• D. None of these

Explanation: A debenture is a company's debt certificate promising repayment of a specified principal, usually with fixed interest, at a stated…

• A. Rise in budget deficit
• B. Rise in money supply
• C. Rise in general price index
• D. Reflection

Explanation: Inflation is identified by a sustained rise in the general price index, not merely by a larger budget deficit or money supply.

• A. Sending of money to someone at distance
• B. The sum of money sent
• C. Both of them
• D. None of them

Explanation: Remittance can mean both the act of sending money and the money sent, commonly by a worker to people in another place or country.

• A. Domestication
• B. Protectionism
• C. Localization
• D. National interest

Explanation: Protectionism is the policy of shielding domestic producers from foreign competition through measures such as tariffs, quotas, or import…