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Basic Economics Fundamentals MCQ

1. Among the costs of integration for states is __________.

A potential cultural backlash against homogenizing effects

The declined ability to take advantage of foreign trade

A declining sense of community as integration proceeds

A greater diversity of cultures

Answer

Correct Answer: A potential cultural backlash against homogenizing effects

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2. A flexible exchange rate is one that _______

Is determined by a decision of the government or the central bank and is achieved by central bank intervention in the foreign exchange market to block the unregulated forces of demand and supply

Is determined by demand and supply in the foreign exchange market with no direct intervention by the central bank

Follows a path determined by a decision of the government or the central bank and is achieved by central bank intervention in the foreign exchange market

Operated in the world economy from the end of World War II to the early 1970s

Answer

Correct Answer: Is determined by demand and supply in the foreign exchange market with no direct intervention by the central bank

Note: This Question is unanswered, help us to find answer for this one

3. Situational characteristics related to time are known as _____.

Temporal

Sequential

Atmospheric

Spatial

Epistemic

Answer

Correct Answer: Temporal

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4. Marginal cost is average variable cost when .

Marginal costs must be increasing; average total

Equal to; average variable cost is minimized.

Both

None of these

Answer

Correct Answer: Equal to; average variable cost is minimized.

Note: This Question is unanswered, help us to find answer for this one

5. In the factor market, firms and households .

The tools and instruments used to produce other goods and services

The goods market and the factor market

Pay rent, wages, interest, and profit; earn rent, wages, interest, and profit

Antonio, the manager of the local Taco Hut, purchases a new deep fryer

Answer

Correct Answer: Pay rent, wages, interest, and profit; earn rent, wages, interest, and profit

Note: This Question is unanswered, help us to find answer for this one

6. In the _, the perfectly competitive firm will seek out ________________ .

Long run; reducing production or shutting down

Accounting profit; excluding opportunity cost

Short run; the quantity of output where profits are highest

Long run; increasing its production

Answer

Correct Answer: Short run; the quantity of output where profits are highest

Note: This Question is unanswered, help us to find answer for this one

7. In many large u.s. cities, taxicab companies operate as near monopolies because of_____.

Single seller

Licenses

Price is greater than marginal cost

Differences among buyers' elasticities of demand

Answer

Correct Answer: Licenses

Note: This Question is unanswered, help us to find answer for this one

8. In most developing countries, ________.

Birth rates are much higher than death rates, so the population is growing rapidly

Population size grows faster and faster as the population gets bigger.

The population stops increasing in size.

Advocates mixed-species plantings and rotating crops

Answer

Correct Answer: Birth rates are much higher than death rates, so the population is growing rapidly

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9. The vertical distance between the average total cost curve and the average variable cost curves tends to __________ as the production increases beyond a point.

Diminish

Increase

Remain constant

Answer

Correct Answer: Diminish

Note: This Question is unanswered, help us to find answer for this one

10.
________________ is a market structure in which many sellers sell differentiated products.

Monopolistic competition

Pure competition

Oligopoly

All of the above

Answer

Correct Answer:

Monopolistic competition

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11.
Consider the following information:
National Income at current prices for the year Y1 = $30 billion USD
National Income at current prices for the year Y2 = $80 billion USD
Price Index for Y1 = 150
Price Index for Y2 = 200
What should be the National Income at constant prices for the year Y2?

$40 billion USD

$60 billion USD

$53 billion USD

None of the above

Answer

Correct Answer:

$60 billion USD

Note: This Question is unanswered, help us to find answer for this one

12. When the production process is subject to increasing returns to scale, the returns to a variable factor of production:

Increase

Decrease.

Are impossible to determine without knowing the strength of the increasing returns to scale.

Are constant.

Answer

Correct Answer: Are impossible to determine without knowing the strength of the increasing returns to scale.

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13. Which among the following hinders economic development?

Industrial growth

Internal savings

Agricultural growth

Low rate of capital formation

Answer

Correct Answer: Low rate of capital formation

Note: This Question is unanswered, help us to find answer for this one

14.
The breakdown of the gold standards was the result of which of the following factors?
1. Deflation policies caused considerable difficulties.
2. Some gold standard countries did not obey the gold standard rules.
3. Sterling was over valued.
4. The export of gold became impossible.

1 and 2

1, 2 and 3 only

2, 3 and 4 only

1, 2, 3 and 4

Answer

Correct Answer:

1, 2 and 3 only

Note: This Question is unanswered, help us to find answer for this one

15. _______________ is a tariff that maximizes a country

Prohibitive tariff

Optimum tariff

Effective tariff

Protective tariff

Answer

Correct Answer: Optimum tariff

Note: This Question is unanswered, help us to find answer for this one

16. Which of the following would you include when calculating the GNP?

Roof repair work done by the owner of a house himself.

Household work done by a housewife.

Vegetables grown by a farmer for his personal consumption.

A surgery carried out at a hospital.

Answer

Correct Answer: A surgery carried out at a hospital.

Note: This Question is unanswered, help us to find answer for this one

17. In response to an increase in the demand for its goods, a firm takes a bank overdraft, buys raw materials with the money so raised, and increases production. The firm can be said to have resorted to:

A financial adjustment.

A long-term adjustment.

A short-term adjustment.

None of the above.

Answer

Correct Answer: A short-term adjustment.

Note: This Question is unanswered, help us to find answer for this one

18. The main area of application implementation of the Cobb-Douglas production function is:

Agriculture

Industries

Experiments in agricultural institutions

None of the above

Answer

Correct Answer: Industries

Note: This Question is unanswered, help us to find answer for this one

19. Per Capita Real Income is calculated by dividing:

Real National Income by the Working Population

Real National Income by the Total Population

Real National Income by the Number of Workers

None of these.

Answer

Correct Answer: Real National Income by the Total Population

Note: This Question is unanswered, help us to find answer for this one

20. Why are intermediate goods used to make final goods NOT included in the Net National Product?

To avoid double counting.

To avoid the inclusion of inferior goods.

To avoid cheating of the consumer.

None of the above.

Answer

Correct Answer: To avoid double counting.

Note: This Question is unanswered, help us to find answer for this one

21. Which of the following represents the marginal propensity to import?

ΔM / ΔX

ΔX / ΔY

ΔM/ ΔY

ΔM /Y

Answer

Correct Answer: ΔM/ ΔY

Note: This Question is unanswered, help us to find answer for this one

22. _____________ refers to the change in the output of a firm or industry in the long run, when all inputs are increased or decreased simultaneously in the same ratio.

Returns to scale

Constant returns to scale

Decreasing returns to scale

None of the above

Answer

Correct Answer: Returns to scale

Note: This Question is unanswered, help us to find answer for this one

23. Economics can be defined as:

A branch of knowledge concerned with the production, distribution, and consumption of goods and services.

The study of the processes, principles, and structure of government, and of political institutions.

The study of the mind and behavior.

The analysis and interpretation of the past that enables us to study continuity and change over time.

Answer

Correct Answer: A branch of knowledge concerned with the production, distribution, and consumption of goods and services.

Note: This Question is unanswered, help us to find answer for this one

24. Which of the four equations given below is INCORRECT?

National income = Consumption + Investment

National income = Effective demand consumption + Savings

National income = Consumption + Savings

National income = Gross National Product

Answer

Correct Answer: National income = Gross National Product

Note: This Question is unanswered, help us to find answer for this one

25. Isoquant maps _____________:

Do not depend on input prices.

Depend on the inputs prices.

Do not depend on the quantity of the inputs.

None of the above.

Answer

Correct Answer: Do not depend on input prices.

Note: This Question is unanswered, help us to find answer for this one

26. Indices of the physical volume of production are NOT widely used to measure development because:

It is not possible to measure physical volumes.

They do not allow for quality improvements.

It is not possible to compare physical volumes.

None of the above.

Answer

Correct Answer: They do not allow for quality improvements.

Note: This Question is unanswered, help us to find answer for this one

27. From where does the demand for funds arise according to the loanable fund theory?

Business

Consumer

Government

All of the above

Answer

Correct Answer: All of the above

Note: This Question is unanswered, help us to find answer for this one

28. If the supply of labour and capital of a country grow in the same proportion as before but the technology remains the same, the production possibility curve of the country would shift outwards:

Evenly along its entire length.

More along the axis measuring the Labour-intensive commodity.

More along the axis measuring the Capital-intensive commodity.

Any of the above.

Answer

Correct Answer: Any of the above.

Note: This Question is unanswered, help us to find answer for this one

29. Fixed and variable costs are distinguished from each other in terms of:

Whether it is possible to change the costs during the life of the plant.

Whether the costs are contracted legally or not.

Whether the costs are taken into account or not when calculating the total costs.

Whether the costs vary or remain unchanged with the quantity or output produced in the short run.

Answer

Correct Answer: Whether the costs vary or remain unchanged with the quantity or output produced in the short run.

Note: This Question is unanswered, help us to find answer for this one

30. What would be the National Product at market prices for a certain year, if the National Product at factor cost is 4 billion USD, Indirect taxes are $1 billion USD and subsidies are $0.25 billion USD?

$5.50 billion USD

$5.25 billion USD

$4.75 billion USD

$2.50 billion USD

Answer

Correct Answer: $4.75 billion USD

Note: This Question is unanswered, help us to find answer for this one

31. There are _____________ approaches to analyze devaluation.

Four

Six

Two

Three

Answer

Correct Answer: Three

Note: This Question is unanswered, help us to find answer for this one

32. When in an economy, all decisions relating to what goods and services to produce, how to produce, and what quantities to produce are made by a central authority, it is known as:

Centralized planning

Decentralized planning

Fiscal planning

Financial planning

Answer

Correct Answer: Centralized planning

Note: This Question is unanswered, help us to find answer for this one

33. _____________ is a deliberate downward adjustment in the official exchange rates of a country relative to a foreign reference currency.

Devaluation

Depreciation

Revaluation

Redenomination

Answer

Correct Answer: Devaluation

Note: This Question is unanswered, help us to find answer for this one

34. An economy in which two distinct economic systems marked by varying levels of technological advancement and development co-exist is known as a:

Sectoral economy

Dual economy

Pluralistic economy

Regional economy

Answer

Correct Answer: Dual economy

Note: This Question is unanswered, help us to find answer for this one

35. The supply of the capital goods in the economy:

Is fixed except if there is a change in the government's tax policies.

Is fixed once and for all because capital goods are irreproducible economic goods.

Is fixed in the very short run only. The reason being if the capital is allowed to wear out, its supply decreases, while whenever there is a new investment, its supply increases.

Can vary in the short run depending on factors like their frequency of use in a week, the intensity with they are used, etc.

Answer

Correct Answer: Is fixed in the very short run only. The reason being if the capital is allowed to wear out, its supply decreases, while whenever there is a new investment, its supply increases.

Note: This Question is unanswered, help us to find answer for this one

36. The optimum tariff of a country is the highest when the elasticity of the offer curve of the opposite country is:

More than one

One

Less than one

Infinite

Answer

Correct Answer: Less than one

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37. _____________ is a situation in which different sectors of an economy experience simultaneous and coordinated expansion.

Deflation

Economic efficiency

Opportunity cost

Balanced Growth

Answer

Correct Answer: Balanced Growth

Note: This Question is unanswered, help us to find answer for this one

38. At a given price, the demand for a certain commodity is 1000 units, whereas the quantity supplied is 2000 units. What happens to the price?

It increases.

It decreases.

It remains unchanged.

None of the above.

Answer

Correct Answer: It decreases.

Note: This Question is unanswered, help us to find answer for this one

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Basic Economics Fundamentals MCQ

1. Among the costs of integration for states is __________.

2. A flexible exchange rate is one that _______

3. Situational characteristics related to time are known as _____.

4. Marginal cost is ________ average variable cost when ________.

5. In the factor market, firms ________ and households ________.

6. In the _________, the perfectly competitive firm will seek out ________________________ .

7. In many large u.s. cities, taxicab companies operate as near monopolies because of_____.

8. In most developing countries, ________.

9. The vertical distance between the average total cost curve and the average variable cost curves tends to __________ as the production increases beyond a point.

10. ________________ is a market structure in which many sellers sell differentiated products.

11. Consider the following information:National Income at current prices for the year Y1 = $30 billion USDNational Income at current prices for the year Y2 = $80 billion USDPrice Index for Y1 = 150Price Index for Y2 = 200What should be the National Income at constant prices for the year Y2?

12. When the production process is subject to increasing returns to scale, the returns to a variable factor of production:

13. Which among the following hinders economic development?

14. The breakdown of the gold standards was the result of which of the following factors?1. Deflation policies caused considerable difficulties.2. Some gold standard countries did not obey the gold standard rules.3. Sterling was over valued.4. The export of gold became impossible.

15. _______________ is a tariff that maximizes a country

16. Which of the following would you include when calculating the GNP?

17. In response to an increase in the demand for its goods, a firm takes a bank overdraft, buys raw materials with the money so raised, and increases production. The firm can be said to have resorted to:

18. The main area of application implementation of the Cobb-Douglas production function is:

19. Per Capita Real Income is calculated by dividing:

20. Why are intermediate goods used to make final goods NOT included in the Net National Product?

21. Which of the following represents the marginal propensity to import?

22. _____________ refers to the change in the output of a firm or industry in the long run, when all inputs are increased or decreased simultaneously in the same ratio.

23. Economics can be defined as:

24. Which of the four equations given below is INCORRECT?

25. Isoquant maps _____________:

26. Indices of the physical volume of production are NOT widely used to measure development because:

27. From where does the demand for funds arise according to the loanable fund theory?

28. If the supply of labour and capital of a country grow in the same proportion as before but the technology remains the same, the production possibility curve of the country would shift outwards:

29. Fixed and variable costs are distinguished from each other in terms of:

30. What would be the National Product at market prices for a certain year, if the National Product at factor cost is 4 billion USD, Indirect taxes are $1 billion USD and subsidies are $0.25 billion USD?

31. There are _____________ approaches to analyze devaluation.

32. When in an economy, all decisions relating to what goods and services to produce, how to produce, and what quantities to produce are made by a central authority, it is known as:

33. _____________ is a deliberate downward adjustment in the official exchange rates of a country relative to a foreign reference currency.

34. An economy in which two distinct economic systems marked by varying levels of technological advancement and development co-exist is known as a:

35. The supply of the capital goods in the economy:

36. The optimum tariff of a country is the highest when the elasticity of the offer curve of the opposite country is:

37. _____________ is a situation in which different sectors of an economy experience simultaneous and coordinated expansion.

38. At a given price, the demand for a certain commodity is 1000 units, whereas the quantity supplied is 2000 units. What happens to the price?

4. Marginal cost is average variable cost when .

5. In the factor market, firms and households .

6. In the _, the perfectly competitive firm will seek out ________________ .

10.
________________ is a market structure in which many sellers sell differentiated products.

11.
Consider the following information:
National Income at current prices for the year Y1 = $30 billion USD
National Income at current prices for the year Y2 = $80 billion USD
Price Index for Y1 = 150
Price Index for Y2 = 200
What should be the National Income at constant prices for the year Y2?

14.
The breakdown of the gold standards was the result of which of the following factors?
1. Deflation policies caused considerable difficulties.
2. Some gold standard countries did not obey the gold standard rules.
3. Sterling was over valued.
4. The export of gold became impossible.