Economics MCQs

Aggregate Demand and Aggregate Supply MCQs

Economics MCQs

Aggregate Demand MCQs/Aggregate Supply MCQs/ Macroeconomics MCQs/Introduction to Economics MCQs/ Economics MCQs/ Economics Lecturer MCQs/ MCQs of Economics/ Most repeated MCQs of Economics/ Economics Lecturer Solved Past Papers/ Previous Test of Economics Lecturer/ SS Economics Previous Tests/ Lecturer Economics Previous Tests

Aggregate Demand and Aggregate Supply MCQs

1. Keynesians assume that the Aggregate Supply curve is

a. Horizontal

b. Relatively flat

c. Relatively Steeper

d. Both (a) and (b)

ANS: D

Monetarist short-run Aggregate Supply curve: Horizontal axis

a. Horizontal axis

b. Vertical axis

c. Positively slope

d. None of the above

ANS: C

Neo-classical Aggregate Supply curve has the:

a. Upward sloping

b. Horizontal Segments

c. Vertical segments

d. Both (a) and (c)

ANS: D

According to Stanley Fisher, “SRASS curve is:

a Flat

b. Vertical

c. Horizontal

d. Steeper

ANS: A

The supply side economists believe that increase in employment opportunities. The remove problem of stagflation.

a. Aggregate demand

b. Aggregate supply

c. Both of them

d. None of them

ANS: B

The aggregate production function implied under classical theory is:

a. Long run

b. Short run

c. No time element

d. None of the above

ANS: A

The classical aggregate supply curve is:

a. Perfectly elastic

b. Horizontal straight line

c. Perfectly inelastic

d. Both (a) and (b)

ANS: C

According to Keynes, the level of income and employment is determined where

a. AD >AS

b. AD < AS

c. AD = AS

d. Both (a) and (b)

ANS: C

If at the level of full employment AD > AS it will result in:

a. Inflationary gap

b. Deflationary gap

c. Effective gap

d. Both (a) and (b)

ANS: A

When the level of full employment AD < AS, it will result in:

a. Inflationary gap

b. Deflationary gap

c. Effective gap

d. Both (a) and (b)

ANS: B

The classical aggregate supply curve is:

a. Perfectly elastic

b. Perfectly inelastic

c. More elastic

d. Unitary elastic

ANS: B

Keynesian model of income determination is:

a. Demand-side factors

b. Supply-side factors

c. Both (a) and (b)

d. None of the above

ANS: A

The Keynesian model assumes the general price level is:

a. Flexible

b. Dynamic

c. Remain constant

d. None of the above

ANS: C

The classical theory of output and employment stresses the role of the:

a. Demand-side factors

b. Supply-side factors

c. Both (a) and (b)

d. None of the above

ANS: B

In 1931 and 1940 the unemployment rate averaged:

a. 14.8 percent

b. 18.8 percent

c. 22.8 percent

d. 26.8 percent

ANS: A

During the Great, Depression prices dropped by:

a. One-third

b. One-fourth

c. One-fifth

d. One-seventh

ANS: B

The 1973 OPEC oil embargo is an example of such a shock.

a. Classical

b. Modern

c. Keynesian

d. All of the above

ANS: A

According to Stanley Fisher, output level above potential output, the AS curve is:

a. Flat

b. Steeper

c. Straight line

d. None of the above

ANS: B

According to Stanley Fisher, AS curve is a ___not a___:

a. vertical, straight line

b. horizontal, straight line

c. straight line, Curve

d. Curve, straight line

ANS: D

In the Keynesian AS curve, the price level does not depend on:

a. GNP

b. NNP

c. GDP

d. Both (a) and (b)

ANS: C

The Potential GDP is also called:

a. SRAS

b. LRAS

c. LRAD

d. Both (a) and (c)

ANS: B

Contractionary fiscal policy cause a shift AD curve is

a. Upward (Downward)

b. Upward (Rightward)

c. Left (downward)

d. Left (Rightward)

ANS: C

Contractionary Monetary Policy causes shift AD curve:

a. Downward (Leftward)

b. Downward (Rightward)

c. Upward (Leftward)

d. Upward (Rightward)

ANS: A

Expansionary Monetary Policy cause shift AD curve:

a. Downward (Leftward)

b. Downward (Rightward)

c. Upward (Leftward)

d. Upward (Rightward)

ANS: D

Expansionary fiscal policy causes a shift in the AD curve is:

a. Right (downward)

b. Right (upward)

c. Left (upward)

d. Left (downward)

ANS: B

According to a very small increase in aggregate supply and a relatively large increase in aggregate demand.

a. Classical side policy

b. Keynesian side policy

c. Monetarist side policy

d. Supply-side policy

ANS: D

According to modern economists, only increase output. can permanently

a. Supply-side policies

b. demand-side politics

c. both (a) and (b)

d. none of the above

ANS: C

according to modern economists, Supply-side policies are useful for:

a. short-run

b. long-run

c. both (a) and (b)

d. none of the above

ANS: C

According to modern economists, demand-side policies are useful only for:

a. short-run

b. long-run

c. both (a) and (b)

d. none of the above

ANS: D

Monetarist long-run Aggregate Supply curve is:

a. Horizontal axis

b. Vertical axis

c. Positively slope

d. None of the above

ANS: B

 

Elasticity of Demand and Supply MCQs

Economics MCQs

Elasticity of Demand and Supply MCQs/ MCQs of Elasticity of Demand and Supply / Economics MCQs/ Microeconomics MCQs/ Economics Lecturer MCQs/ MCQs of Economics/ Most repeated MCQs of Economics/ Economics Lecturer Solved Past Papers/ Previous Test of Economics Lecturer/ SS Economics Previous Tests/ Lecturer Economics Previous Tests

Elasticity of Demand and Supply MCQs

The concept of elasticity of demand was introduced by:
a. Alfred Marshall
b. Adam Smith
c. R. G. D Allen
d. J. R. Hicks
ANS: A

A line demand curve has as:
a. Varying elasticity throughout225
b. Constant elasticity throughout
c. Zero elasticity throughout
d. Positive elasticity throughout
ANS: A

If the demand curve is flatter, the value of elasticity is:
a. less than one
b. unitary elastic
c. greater than one
d. near to infinity
ANS: C

If the value of elasticity is less than one, then the demand curve is:
a. flatter
b. steeper
c. vertical
d. horizontal
ANS: B

According to modern economists, the slope of the demand curve is:
a. varying elasticity
b. absolute elasticity
c. zero elasticity
d. both (a) and (c)
ANS: B

If the demand curve is horizontal and the value of elasticity is infinity. Then:
a. Relatively elastic demand
b. Relatively inelastic demand
c. Perfect elasticity demand
d. Perfect inelasticity demand
ANS: C

The elasticity of demand for cigarettes by a non-smoker is:
a. Unitary price elastic
b. Relatively price inelastic
c. Perfect price elastic
d. Perfectly price inelastic
ANS: D

Benedict purchases product Y for which his income elasticity of demand is negative, apparently product Y is:
a. A necessity
b. A substitute
c. An inferior good
d. A luxury good
ANS: C

The market demand curve is:
a. Vertical summation of individual demand curves
b. Upward summation of individual demand curves
c. Downward summation of individual demand curves
d. Horizontal summation of individual demand curves
ANS:D

At the midpoint on a straight-lined demand curve, demand is
a. Elastic
b. Inelastic
c. Unit elastic
d. Zero
ANS: C

The income elasticity of demand:
a) Is positive only
b) Is negative only
c) Must lie between -1 and +1
d) Can be positive, negative, or zero
ANS: D

When Q = f (P), the elasticity coefficient is measured by:
a) AQ/AP/P/Q
b) AP/AQ * Q/P
c) AQ/AP * P/Q
d) P/AQ/Q/P
ANS: C

In the case of complementary goods, the cross elasticity of demand is:
a. Positive
b. Negative
c. Zero
d. Infinity
ANS: B

In the case of perfect substitute goods, the cross elasticity of demand is:
a. Positive
b. Negative
c. Infinity
d. Zero
ANS: C

In the case of un-related goods, the cross elasticity of demand is:
a. Negative
b. Positive
c. Infinity
d. Zero
ANS: D

A perfectly elastic supply curve will be:
a. Parallel to Y axis
b. Parallel to X axis
c. U shaped
d. Downward sloping
ANS: B

The point elasticity concept was propounded by:
a. R.G. Lipsey
b. R. G. D. Allen
c. Alfred Marshall
d. J. R. Hicks
ANS: A

Income elasticity is positive but less than unity in the case of:
a. Necessity
b. Luxury
c. Inferior
d. Substitutes
ANS: A

In the case of substitutes, cross elasticity of demand is:
a. Zero
b. Negative
c. Positive
d. Infinity
ANS: C

The arc elasticity concept was propounded by:
a. R.G. D. Allen.
b. R.G. Lipsey
c. R. G. D. Allen
d. Alfred Marshall
e. All of them
ANS: C

The Giffen paradox is an exception to:
a. Law of demand
b. Law of Supply
c. Law of Diminishing Marginal Utility
d. Law of Diminishing return to scale
ANS: A

The ‘Revenue Method of elasticity” was introduced by:
a. Joan Robinson
b. Alfred Marshall
c. Prof. R.G. D. Allen.
d. R.G. Lipsey
ANS: A

The elasticity of demand for luxuries tends to be:
a. Greater than one
b. Less than one
c. Equal to one
d: Equal to zero
ANS: A

Demand is elastic if elasticity is:
a. Less than one
b. Equal to one
c. Equal to zero
d. Greater than one
ANS: D

A more elastic supply curve means that the incidence falls more on the:
a. Consumer
b. Supplier
c. Both (a) and (b)
d. None of the above
ANS: A

Demand is inelastic if elasticity is:
a. Less than one
b. Equal to one
c. Greater than one
d. Equal to zero
ANS: A

Demand is unit elastic if elasticity is:
a. Less than one
b. Greater than one
c. Equal to one
d. Equal to zero
ANS: B

The fiancé minister levied tax with on less elastic goods to increase government income.
a. Less rate
b. More rate
c. Both (a) and (b)
d. Don’t change tax rate
ANS: B

Which of the following is not a method of measurement of price elasticity of demand in economics
a. Total Outlay
b. Total savings
c. Point method
d. Arc method
ANS: B

As per the total outlay method, demand is said to be elastic if a result of change in price total outlay:
a. Increases
b. Decrease
c. Remain the same
d. None
ANS: C

If the demand for a commodity is less elastic then an entrepreneur will make its price to increase its profiles:
a. Increase
b. Decrease
c. Both (a) and (b)
d. None of the above
ANS: A

A less elastic supply curve means the incidence falls more on the:
a. Consumer
b. Supplier
c. Both (a) and (b)
d. None of the above

ANS:

 

Supply MCQs

Economics MCQs

MCQs on Supply with Answers/ Supply MCQs/ MCQs on Demand and Supply with Answers/ Economics MCQs with Answers/ MCQs of Economics with Answers/ Microeconomics MCQs with Answers/ Economics Lecturer MCQs/ Most repeated MCQs of Economics/ Economics Lecturer Solved Past Papers/ Previous Test of Economics Lecturer/ SS Economics Previous Tests/ Lecturer Economics Previous Tests

Supply MCQs

Supply is a part of the:
a. Stock
b. Flow
c. Both of them
d. None of them
ANS: A

The standard form of Supply function is:
a. Q = a – bp
b. Q = b + ap
c. X = a – bp
d. Y = b+ ap
ANS: B

The positive relationship between price and quantity demanded is known as:
a. Law of demand
b. Law of supply
c. Law of market
d. Both (a) and (b)
ANS: B

In the case of supply, quantity is the increasing function of:
a. Demand
b. Income
c. Price
d. Both (a) and (c)
ANS: C

The law of diminishing returns is commonly referred to as the reason for the positive slope of the:
a. Demand function
b. Supply function
c. Both of them
d. None of them
ANS: B

A market supply curve is the:
a. Vertical summation of individual supply curves
b. Horizontal summation of individual supply curves
c. Positively summation of individual supply curves
d. Either (b) or (c)
ANS: B

According to Marshall, the long-run supply curve is:
a. Positive slope
b. Negative slope
c. Horizontal-axis
d. Vertical-axis
ANS: C

According to Modern economics, Alan S. Blinder, Paul. A. Samuelson, W. J. Baumol, G. Stigler, etc. very long-run supply curve is:
a. Perfectly elastic
b. Perfectly inelastic
c. Infinitely elastic
d. Both (a) and (c)
ANS: D

The market period supply function curve is
a. Positive slope
b. Negative slope
c. Horizontal-axis
d. Vertical-axis
ANS: D

The elasticity of the market-period supply function is:
a. Positive
b. Negative
c. Zero
d. Infinity
ANS: C

The short-run supply function curve is:
a. Positive slope
b. Negative slope
c. Horizontal-axis
d. Vertical-axis
ANS: A

According to Marshall, the elasticity of the short-run supply curve is:
a. Positive
b. Negative
c. Infinity
d. Zero
ANS: A

According to H. Evan Drummond and John W. Goodwin, the quantity supplied is a:
a. Zero-dimensional concept
b. One-dimensional concept
c. Two-dimensional concept
d. Neither (a) nor (b)
ANS: B

According to modern economists, the supply curve is a:
a. Zero-dimensional concept
b. One-dimensional concept
c. Two-dimensional concept
d. Neither (a) nor (c)
ANS: C

Which of the following shifting factor of the supply curve?
a. Taxes
b. Subsidies
c. Both of them
d. None of them
ANS: C

The supplier will always chase the:
a. Higher price
b. Low price
c. Mediate priced. All of the above
ANS: A

Which of the following shifting factor of the supply curve?
a. Price of substitute products and price of a joint product
b. Technology and capital per worker
c. The number of producers and factors costs
d. All of the above
ANS: D

The supply side of a market can be represented by a market supply curve:
a. Market demand curve
b. Market supply curve
c. Both of them
d. None of them
ANS: B

According to Marshall, the ‘short-run Market supply curve is:
a. Horizontal-axis
b. Vertical-axis
c. Positive
d. Negative
ANS: C

If the supply is more inelastic, you should draw the supply curve
a. Flatter
b. Steeper
c. Perfect inelastic
d. Both (a) and (b)
ANS: B

Over a longer period, the supply of the product becomes:
a. More elastic
b. More inelastic
c. Perfectly inelastic
d. Perfectly elastic
ANS: A

Supply is a Concept.
a. Stock
b. Flow and stock
c. Flow
d. None of the above
ANS: C

According to Alfred Marshall, ‘Demand curve sloped downward due to law of:
a. Law of equi-marginal utility
b. Law of diminishing marginal utility
c. Both (a) and (b)
d. None of the above
ANS: B

With very elastic supply and very inelastic demand, the burden of the tax on:
a. Buyers
b. Sellers
c. Both of both
d. None of them
ANS: A

With very inelastic supply and very elastic demand, the burden of the tax on:
a. Buyers
b. Sellers
c. Both of them
d. None of them
ANS: B

The ‘horizontal summation of individual demand is known as:
a. Market demand curve
b. Market supply curve
c. Both of them
d. None of them
ANS: A

If the supply curve is vertical, the deadweight loss of a:
a. Tax is positive
b. Tax is negative
c. Tax is zero
d. Both (a) and (b)
ANS: C

If the demand curve is vertical while the supply curve slopes upward, a tax imposed in this market will end up being paid:
a. Totally by producers
b. Totally by consumers
c. Both of them
d. Neither (a) nor (b)
ANS: A

Fresh vegetable market is market.
a. Very short period
b. Short period
c. Long period
d. Very long period.
ANS: A

According to modern economists, the most basic tools of economics are:
a. Price and quantity
b. Demand and supply
c. Monetary and fiscal policy
d. The elasticity of demand and supply
ANS: B

Price ceiling and price floor are also known as:
a. Equilibrium pricing
b. Disequilibrium pricing
c. Both (a) and (b)
d. None of the above
ANS: B

According to Alfred Marshall, the price of perishable goods is determined in:
a. Short period
b. Very short period
c. Market period
d. Long term period
ANS: B

Demand MCQs

Economics MCQs

Demand MCQs/ MCQs on Demand with Answers/ MCQs on Demand supply with Answers/ Economics MCQs with Answers/ MCQs of Economics with Answers/ Microeconomics MCQs with Answers/ Economics Lecturer MCQs/ Most repeated MCQs of Economics/ Economics Lecturer Solved Past Papers/ Previous Test of Economics Lecturer/ SS Economics Previous Tests/ Lecturer Economics Previous Tests

Demand MCQs

What is the relationship between Demand and Price?
a. Positive
b. Negative
c. Both (a) and (b)
d. None of the above
ANS: B

Antoine Augustine Cournot first developed a mathematical model of supply and demand in his book Researches on Mathematical Principles of the Theory of Wealth”
a. 1828
b. 1838
c. 1848
d. None of the above
ANS: B

The price elasticity of demand for a Giffen good is would be:
a Positive
b. Negative
c. Zero
d. None of the above
ANS: A

The law of demand refers to:
a. Price-supply relationship
b. Price-cost relationship
c. Price-demand relationship
d. Price-income relationship
ANS: C

The standard form of demand function is:
a. Q = a-bp
b. Q = b + ap
c. X= a – bp
d. Y= b + ap
ANS: A

The high the price, the lower the quantity demanded. This relationship is sometimes called the:
a. Law of positive-sloping demand
b. Law of negative-sloping demand
c. Law of constant-sloping demand
d. Law of increasing-sloping demand
ANS: B

Why the demand curve slopes downward:
a. income effect
b. substitute effect
c. price effect
d. both (a) and (b)
ANS: C

The Hicksian demand curve includes:
a. Just substitute effect
b. Just income effect
c. Price effect
d. Both (a) and (b)
ANS: A

The hicksian demand curve is also known as:
a. Compensated demand curve
b. Uncompensated demand curve
c. Cost indifference curve
d. all of the above
ANS: A

In the case of a normal good, the Marshallian demand curve is always flatter than the:
a. Hicksian demand curve
b. Slutsky demand curve
c. Samuelson demand curve
d. Both (a) and (b)
ANS: A

In the case of inferior and Giffen goods, Hicksian demand curves cannot be upward-sloping for
a. Normal goods
b. Giffen goods
c. Both (a) and (c)
d. None of the above
ANS: C

An ordinary demand curve is based upon:
a. Price effect & substitution effect
b. Substitution effect & Income effect
c. Only substitution effect
d. Only Income effect
ANS: B

The uncompensated demand curve is more sensitive to changes in price. So demand curve is:
a. Perfectly elastic
b. Perfectly inelastic
c. More elastic
d. Less elastic
ANS: C

The compensated demand curve is less sensitive to changes in price, as a result, the demand curve is:
a. Perfectly elastic
b. Perfectly inelastic
c. More elastic
d. Less elastic
ANS: D

In the case of normal goods, the relationship between income and quantity demanded is:
a. Negative
b. Positive
c. Zero
d. Infinite
ANS: B

In the case of normal goods, the relationship between own price of the commodity and its quantity demanded is:
a. Constant
b. Inverse
c. Positive
d. None of these
ANS: B

If there is a price floor, there will be:
a. Surplus
b. Shortage
c. Equilibrium
d. None of the above
ANS: A

Which of the following shifting factor of the demand curve:
a. Test and preferences of Consumers
b. Related good8 (Price of)
c. Income of the consumer
d. All of the above
ANS: D

If the demand curve is very inelastic relative to the supply curve, the burden of the tax183 falls mostly on:
a. Buyers
b. Sellers
c. Both of them
d. None of them
ANS: A

If the demand curve is very elastic relative to the supply curve, it falls mostly on the:
a. Sellers
b. Buyers
c. Both of them
d. None of them
ANS: A

A typical demand curve cannot be:
a. Convex to the origin
b. Concave to the origin
c. A straight line
d. Rising upwards to the right
ANS: D

Where demand is equal to supply (D=S). This phenomenon is also known as:
a. Hicksian Cross
b. Walrasian Cross
c. Marshallian Cross
d. Both (a) and (c)
ANS: C

In Economics when demand for a commodity increases with a fall in its price it is known as:
a. Contraction of demand
b. Expansion of demand
c. No change in demand
d. None of the above
ANS: B

The demand side can be represented by:
a. Market demand curve
b. Market supply curve
c. Both of them
d. None of them
ANS: A

The Marshallian model (demand-supply) is a:
a. Stable equilibrium
b. Dynamic equilibrium
c. Stead-state equilibrium
d. Both (a) and (b)
ANS: A

When the price rises and quantity demand is large quantity supply (Qd>Qs), the excess demand is:
a. Negative
b. Positive
c. Equal
d. Both (a) and (b)
ANS: B

Both Marshallian and Walrasian demand-supply models are:
a. Static stability
b. Dynamic stability
c. Steady-state stability
d. Neutral stability
ANS: A

The Marshallian demand curve downward sloping. While the Walrasian demand curve is:
a. Horizontal axis
b. Vertical axis
c. Upward sloping
d. Downward sloping
ANS: D

The Marshallian supply curve upward sloping. While the Walrasian supply curve is:
a. Downward sloping
b. Horizontal axis
c. Upward sloping
d. Vertical axis
ANS: C

The fluctuations in price and output are called:
a. Marshallian fluctuation
b. Hicksian fluctuation
c. Keynesian fluctuation
d. Cobweb fluctuation
ANS: D

According to Lester O. Bumas, vertical supply function is associated with:
a. Land
b. Capital
c. Labor
d. All of them
ANS: A

According to classical economists, The market is equilibrium. When there is”:
a. Imperfect competition in the market
b. Perfect competition in the market
c. Monopoly and free market economy
d. None of the above
ANS: B

Alfred Marshall broke conceptual periods time into:
a. Two-period
b. Three-period
c. Four-period
d. Five period
ANS: B

Change in demand occurs due to the change in:
a. Income
b. Prices of related goods
c. Taste and preference
d. All of these
ANS: D

Good A is a normal good. The demand curve for good A:
a. Backward X-axis
b. Backward Y-axis
c. Slopes downward
d. Slopes upward
ANS: C

An exception to the law of demand is:
a. Normal good
b. Giffen good
c. Article of distinction
d. Both (b) and (c)
ANS: D

Distribution of income is a determinant of
a. Individual demand function
b. Market demand function
c. Both (a) and (c)
d. None of these
ANS: B

The equilibrium price is o ten called:
a. Market clearing price
b. Market price
c. Both of them
d. None of them
ANS: C

A tax that is levied on producers shifts the supply curve:
a. Upward
b. Downward
c. Remain constant
d. Both (a) and (b)
ANS: A

A tax that is levied on consumers shifts the demand curve:
a. Upward
b. Downward
c. Remain constant
d. Both (a) and (b)
ANS: B

The specific quantity to be purchased against a specific price of the commodity is called:
a. Demand
b. Quantity demand
c. Movement along the demand curve
d. Shift in demand
ANS: B

In the case of normal goods, the demand curve shows:
a. A negative slope
b. A positive slope
c. Zero slope
d. None of these
ANS: A

Law of demand must fail in case of
a. Normal goods
b. Giffen goods
c. Inferior goods
d. None of these
ANS: B

In the case of Giffen’s paradox, the slope of the demand curve is:
a. Negative
b. Positive
c. Parallel to X-axis
d. Parallel to Y-axis
ANS: B

In the case of Giffen goods, the demand curve is:
a. Upward sloping
b. Downward sloping
c. Parallel to X-axis
d. Parallel to Y-axis
ANS: A

Which of the following shifting factor of the demand curve?
a. Buyers (Number of)
b. Expected Future Prices (EFP)
c. Expected Income of Consumers (EYP)
d. All of the above
ANS: D

If two goods are complementary then a rise in the price of one results in:
a. Rise in demand for the other
b. Fall in demand for the other
c. Rise in demand for both
d. None of these
ANS: B

A demand curve is upward-sloping for:
a. Normal goods
b. Inferior goods
c. Giffen goods
d. None of these
ANS: C

When the increase in the price of one good causes an increase in demand for the other, the goods are:
a. Substitutes
b. Complementary
c. Inferior
d. Giffen
ANS: A

The stable cobweb model is:
a. Dynamic model
b. Steady-state model
c. Simple model
d. Both (a) and (c)
ANS: D

A fall in the income of the consumer (in the case of normal goods) will cause:
a. Upward movement on the demand curve
b. Downward movement on the demand curve
c. The rightward shift of the demand curve
d. The leftward shift of the demand curve
ANS: D

Change in quantity demanded of a commodity due to change in its price, other things remaining constant, is called:
a. Cross-price effect
b. Price effect
c. Income effect
d. Substitution effect
ANS: B

Change in quantity demanded of a commodity due to a change in the real income of the consumer caused by the change in own price of the commodity is called:
a. Cross-price effect
b. Price effect
c. Income effect
d. Substitution effect
ANS: C

The Marshallian demand and supply model resolved the:
a. Air-diamond paradox
b. Pigouian-paradox
c. Water-diamond paradox
d. Hicksian paradox
ANS: C

Marshall’s demand-supply model represents the:
a. General equilibrium
b. Partial equilibrium
c. Both of them
d. None of them
ANS: B

The ‘Law’ of Downward-Sloping Demand therefore always applies to:
a. Inferior goods
b. Giffen goods
c. Normal goods
d. Both (a) and (c)
ANS: C

Hicksian (compensated) demand curves cannot be upward-sloping, because:
a. Substitution effect, cannot be positive
b. Substitution effect cannot be negative
c. Both (a) and (c)
d. None of the above
ANS: A

According to modern economists, maximum price (or price ceiling) as part of an:
a. Anti-inflationary economic policy
b. Anti-deflationary economics policy
c. Both (a) and (b)
d. None of the above
ANS: A

The substitution effect takes place when the price of the commodity becomes:
a. Relatively cheaper
b. Relatively dearer
c. Stable
d. Both (a) and (b)
ANS: D

Different quantities purchased at different possible prices of a commodity are called:
a. Demand schedule
b. Quantity demanded
c. Demand function
d. Individual demand
ANS: A

Diagrammatic presentation of the demand schedule of an individual buyer of a commodity in the market yields:
a. Market demand schedule
b. Individual demand curve
c. Individual demand scheduled. Market demand curve
ANS: B

Complementary goods:
a. Complete the demand for each other
b. Are substituted for each other
c. Are demanded together
d. Both (a) and (c)
ANS: D

 

Macroeconomics MCQs

Economics MCQs

Macroeconomics MCQs for all exams

What is Gross Domestic Product (GDP)?
a) The value of all goods and services produced within a country’s borders in a specific period.
b) The value of all goods and services produced by a country’s citizens in a specific period.
c) The value of all goods and services consumed by a country’s citizens in a specific period.
Answer: a

What is inflation?
a) The rate at which the general level of prices for goods and services is increasing.
b) The rate at which the general level of prices for goods and services is decreasing.
c) The rate at which the supply of money in the economy is increasing.
Answer: a

What is fiscal policy?
a) The use of government spending and taxation to influence the economy.
b) The use of interest rates to influence the economy.
c) The use of trade policies to influence the economy.
Answer: a

What is monetary policy?
a) The use of interest rates to influence the economy.
b) The use of government spending and taxation to influence the economy.
c) The use of trade policies to influence the economy.
Answer: a

Macroeconomics MCQs

What is the Phillips curve?
a) A curve that shows the relationship between unemployment and inflation.
b) A curve that shows the relationship between GDP and inflation.
c) A curve that shows the relationship between interest rates and inflation.
Answer: a

What is the difference between nominal and real GDP?
a) Nominal GDP is adjusted for inflation, while real GDP is not.
b) Real GDP is adjusted for inflation, while nominal GDP is not.
c) Nominal GDP is adjusted for population growth, while real GDP is not.
Answer: b

What is the unemployment rate?
a) The percentage of the total population that is employed.
b) The percentage of the labor force that is unemployed.
c) The percentage of the total population that is not in the labor force.
Answer: b

What is the difference between a recession and a depression?
a) A recession is a mild economic contraction, while a depression is a severe economic contraction.
b) A recession is a severe economic contraction, while a depression is a mild economic contraction.
c) There is no difference between a recession and a depression.
Answer: a

Macroeconomics MCQs

What is the difference between a trade deficit and a trade surplus?
a) A trade deficit occurs when a country’s imports exceed its exports, while a trade surplus occurs when a country’s exports exceed its imports.
b) A trade deficit occurs when a country’s exports exceed its imports, while a trade surplus occurs when a country’s imports exceed its exports.
c) There is no difference between a trade deficit and a trade surplus.
Answer: a

What is the difference between absolute advantage and comparative advantage?
a) Absolute advantage refers to a country’s ability to produce a good more efficiently than another country, while comparative advantage refers to a country’s ability to produce a good at a lower opportunity cost than another country.
b) Absolute advantage refers to a country’s ability to produce a good at a lower opportunity cost than another country, while comparative advantage refers to a country’s ability to produce a good more efficiently than another country.
c) There is no difference between absolute advantage and comparative advantage.
Answer: a

What is the difference between monetary policy and fiscal policy?
a) Monetary policy involves the use of interest rates and the money supply to influence the economy, while fiscal policy involves the use of government spending and taxation.
b) Monetary policy involves the use of government spending and taxation to influence the economy, while fiscal policy involves the use of interest rates and the money supply.
c) There is no difference between monetary policy and fiscal policy.
Answer: a

Macroeconomics MCQs past papers mcqs

What is the difference between demand-side and supply-side economics?
a) Demand-side economics focuses on stimulating aggregate demand to boost economic growth, while supply-side economics focuses on increasing the production capacity of the economy.
b) Supply-side economics focuses on stimulating aggregate demand to boost economic growth, while demand-side economics focuses on increasing the production capacity of the economy.
c) There is no difference between demand-side and supply-side economics.
Answer: a

What is the difference between a fixed exchange rate and a floating exchange rate?
a) A fixed exchange rate is determined by the government and remains constant, while a floating exchange rate is determined by the market and can fluctuate.
b) A floating exchange rate is determined by the government and remains constant, while a fixed exchange rate is determined by the market and can fluctuate.
c) There is no difference between a fixed exchange rate and a floating exchange rate.
Answer: a

What is the difference between a budget deficit and a national debt?
a) A budget deficit occurs when government spending exceeds government revenues in a single year, while a national debt is the total amount of money owed by the government.
b) A budget deficit occurs when government revenues exceed government spending in a single year, while a national debt is the total amount of money owed by the government.
c) There is no difference between a budget deficit and a national debt.
Answer: a

Macroeconomics MCQs

What is the difference between economic growth and economic development?
a) Economic growth refers to an increase in the quantity of goods and services produced in an economy, while economic development refers to an improvement in the quality of life and well-being of a society.
b) Economic development refers to an increase in the quantity of goods and services produced in an economy, while economic growth refers to an improvement in the quality of life and well-being of a society.
c) There is no difference between economic growth and economic development.
Answer: a

What is the difference between the short-run and the long-run in macroeconomics?
a) The short-run is a period of time when some factors of production are fixed, while the long-run is a period of time when all factors of production are variable.
b) The short-run is a period of time when all factors of production are variable, while the long-run is a period of time when some factors of production are fixed.
c) There is no difference between the short-run and the long-run in macroeconomics.
Answer: a

What is the difference between nominal and real interest rates?
a) Nominal interest rates are the stated interest rates on a loan or investment, while real interest rates are adjusted for inflation.
b) Real interest rates are the stated interest rates on a loan or investment, while nominal interest rates are adjusted for inflation.
c) There is no difference between nominal and real interest rates.
Answer: a

Macroeconomics MCQs Questions and answers

What is the difference between a public good and a private good?
a) A public good is non-excludable and non-rivalrous, while a private good is excludable and rivalrous.
b) A public good is excludable and rivalrous, while a private good is non-excludable and non-rivalrous.
c) There is no difference between a public good and a private good.
Answer:

What is the difference between a recession and a depression?
a) A recession is a decline in economic activity that lasts for at least two consecutive quarters, while a depression is a severe and prolonged recession.
b) A depression is a decline in economic activity that lasts for at least two consecutive quarters, while a recession is a severe and prolonged recession.
c) There is no difference between a recession and a depression.
Answer: a

What is the Phillips curve?
a) A curve that shows the relationship between inflation and unemployment.
b) A curve that shows the relationship between interest rates and economic growth.
c) A curve that shows the relationship between government spending and taxation.
Answer: a

Macroeconomics MCQs solved

What is the difference between a trade deficit and a trade surplus?
a) A trade deficit occurs when a country imports more than it exports, while a trade surplus occurs when a country exports more than it imports.
b) A trade deficit occurs when a country exports more than it imports, while a trade surplus occurs when a country imports more than it exports.
c) There is no difference between a trade deficit and a trade surplus.
Answer: a

What is the difference between GDP and GNP?
a) GDP measures the value of goods and services produced within a country’s borders, while GNP measures the value of goods and services produced by a country’s citizens, regardless of their location.
b) GDP measures the value of goods and services produced by a country’s citizens, regardless of their location, while GNP measures the value of goods and services produced within a country’s borders.
c) There is no difference between GDP and GNP.
Answer: a

What is the difference between a recessionary gap and an inflationary gap?
a) A recessionary gap occurs when aggregate output is below potential output, while an inflationary gap occurs when aggregate output is above potential output.
b) A recessionary gap occurs when aggregate output is above potential output, while an inflationary gap occurs when aggregate output is below potential output.
c) There is no difference between a recessionary gap and an inflationary gap.
Answer: a

Macroeconomics MCQs with Answers

What is the difference between a progressive tax and a regressive tax?
a) A progressive tax is a tax that takes a larger percentage of income from higher earners, while a regressive tax takes a larger percentage of income from lower earners.
b) A progressive tax is a tax that takes a larger percentage of income from lower earners, while a regressive tax takes a larger percentage of income from higher earners.
c) There is no difference between a progressive tax and a regressive tax.
Answer: a

What is the difference between a demand shock and a supply shock?
a) A demand shock is a sudden change in consumer spending, while a supply shock is a sudden change in the availability of goods and services.
b) A supply shock is a sudden change in consumer spending, while a demand shock is a sudden change in the availability of goods and services.
c) There is no difference between a demand shock and a supply shock.
Answer: a

What is the difference between the nominal wage and the real wage?
a) The nominal wage is the amount of money paid for a job, while the real wage is the nominal wage adjusted for inflation.
b) The real wage is the amount of money paid for a job, while the nominal wage is the real wage adjusted for inflation.
c) There is no difference between the nominal wage and the real wage.
Answer: a

Macroeconomics MCQs for KPPSC Economics Lecturer

What is the difference between fiscal policy and monetary policy?
a) Fiscal policy refers to changes in government spending and taxation, while monetary policy refers to changes in the money supply and interest rates.
b) Fiscal policy refers to changes in the money supply and interest rates, while monetary policy refers to changes in government spending and taxation.
c) There is no difference between fiscal policy and monetary policy.
Answer: a

What is the difference between frictional unemployment and structural unemployment?
a) Frictional unemployment is unemployment that results from changes in the economy, while structural unemployment is unemployment that results from a mismatch between workers’ skills and available jobs.
b) Structural unemployment is unemployment that results from changes in the economy, while frictional unemployment is unemployment that results from a mismatch between workers’ skills and available jobs.
c) There is no difference between frictional unemployment and structural unemployment.
Answer: a

What is the difference between a stock and a bond?
a) A stock represents ownership in a company, while a bond represents a loan to a company or government.
b) A bond represents ownership in a company, while a stock represents a loan to a company or government.
c) There is no difference between a stock and a bond.
Answer: a

Macroeconomics MCQs/ Economics MCQs for Competitive Exams

What is the difference between expansionary monetary policy and contractionary monetary policy?
a) Expansionary monetary policy involves increasing the money supply and lowering interest rates to stimulate economic growth, while contractionary monetary policy involves decreasing the money supply and raising interest rates to reduce inflation.
b) Expansionary monetary policy involves decreasing the money supply and raising interest rates to reduce inflation, while contractionary monetary policy involves increasing the money supply and lowering interest rates to stimulate economic growth.
c) There is no difference between expansionary monetary policy and contractionary monetary policy.
Answer: a

What is the difference between a budget deficit and a national debt?
a) A budget deficit occurs when a government spends more than it collects in taxes in a given year, while a national debt is the total amount of money a government owes to its creditors.
b) A budget deficit occurs when a government collects more in taxes than it spends in a given year, while a national debt is the total amount of money a government owes to its creditors.
c) There is no difference between a budget deficit and a national debt.
Answer: a

Macroeconomics MCQs for Lecturer Economics

What is the difference between a fixed exchange rate and a floating exchange rate?
a) A fixed exchange rate is a system in which a country’s currency is pegged to the currency of another country or to a commodity, while a floating exchange rate is a system in which a country’s currency is determined by market forces.
b) A floating exchange rate is a system in which a country’s currency is pegged to the currency of another country or to a commodity, while a fixed exchange rate is a system in which a country’s currency is determined by market forces.
c) There is no difference between a fixed exchange rate and a floating exchange rate.
Answer: a

What is the difference between a recession and stagflation?
a) A recession is a decline in economic activity that is typically accompanied by falling prices, while stagflation is a situation in which the economy experiences both high inflation and high unemployment.
b) Stagflation is a decline in economic activity that is typically accompanied by falling prices, while a recession is a situation in which the economy experiences both high inflation and high unemployment.
c) There is no difference between a recession and stagflation.
Answer: a

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Microeconomics MCQs

Economics MCQs

Microeconomics MCQs with Answers

What is the definition of microeconomics?
a. The study of the economy as a whole
b. The study of individual economic agents and their interactions
c. The study of government policies and their effects on the economy
d. The study of international trade and exchange rates
Answer: b. The study of individual economic agents and their interactions

What is the law of supply?
a. The higher the price, the less people are willing to buy a good or service
b. The lower the price, the more people are willing to buy a good or service
c. The higher the price, the more firms are willing to supply a good or service
d. The lower the price, the less firms are willing to supply a good or service
Answer: c. The higher the price, the more firms are willing to supply a good or service

What is the difference between a normal good and an inferior good?
a. Normal goods are always more expensive than inferior goods
b. Normal goods are those that people buy more of when their income increases, while inferior goods are those that people buy less of when their income increases
c. Inferior goods are always of lower quality than normal goods
d. Normal goods are those that people buy less of when their income increases, while inferior goods are those that people buy more of when their income increases
Answer: b. Normal goods are those that people buy more of when their income increases, while inferior goods are those that people buy less of when their income increases

Microeconomics MCQs for Lecturer Economics

What is the difference between a monopoly and a perfectly competitive market?
a. In a monopoly, there is only one seller, while in a perfectly competitive market, there are many sellers
b. In a monopoly, there is only one buyer, while in a perfectly competitive market, there are many buyers
c. In a monopoly, there are no barriers to entry, while in a perfectly competitive market, there are high barriers to entry
d. In a monopoly, the seller has complete control over the price, while in a perfectly competitive market, the price is set by the market
Answer: a. In a monopoly, there is only one seller, while in a perfectly competitive market, there are many sellers

What is the difference between explicit costs and implicit costs?
a. Explicit costs are those that require a monetary payment, while implicit costs do not require a monetary payment
b. Explicit costs are those that are incurred in the short run, while implicit costs are incurred in the long run
c. Explicit costs are those that are incurred by firms, while implicit costs are incurred by individuals
d. Explicit costs are those that are easy to calculate, while implicit costs are difficult to calculate
Answer: a. Explicit costs are those that require a monetary payment, while implicit costs do not require a monetary payment

What is the difference between a price floor and a price ceiling?
a. A price floor is a legal minimum price for a good or service, while a price ceiling is a legal maximum price
b. A price floor is a legal maximum price for a good or service, while a price ceiling is a legal minimum price
c. A price floor is set by the market, while a price ceiling is set by the government
d. A price ceiling is set by the market, while a price floor is set by the government
Answer: a. A price floor is a legal minimum price for a good or service, while a price ceiling is a legal maximum price

Microeconomics MCQs Past Paper MCQs

What is the law of demand?
a. The higher the price, the less people are willing to buy a good or service
b. The lower the price, the more people are willing to buy a good or service
c. The higher the price, the more firms are willing to supply a good or service
d. The lower the price, the less firms are willing to supply a good or service
Answer: b. The lower the price, the more people are willing to buy a good or service

What is the difference between a positive and a normative statement?
a. A positive statement is a statement of fact, while a normative statement is a statement of opinion
b. A positive statement is a statement of opinion, while a normative statement is a statement of fact
c. A positive statement is a statement about what ought to be, while a normative statement is a statement about what is
d. A positive statement is a statement about the future, while a normative statement is a statement about the past
Answer: a. A positive statement is a statement of fact, while a normative statement is a statement of opinion

Microeconomics MCQs for FPSC Economics Tests

What is the difference between a fixed cost and a variable cost?
a. A fixed cost is a cost that does not change with the level of output, while a variable cost is a cost that changes with the level of output
b. A fixed cost is a cost that changes with the level of output, while a variable cost is a cost that does not change with the level of output
c. A fixed cost is a short-term cost, while a variable cost is a long-term cost
d. A fixed cost is a cost that is easy to calculate, while a variable cost is difficult to calculate
Answer: a. A fixed cost is a cost that does not change with the level of output, while a variable cost is a cost that changes with the level of output

What is the difference between a private good and a public good?
a. Private goods are provided by the government, while public goods are provided by private companies
b. Private goods are excludable and rival, while public goods are non-excludable and non-rival
c. Private goods are non-excludable and non-rival, while public goods are excludable and rival
d. Private goods are non-rival, while public goods are rival
Answer: b. Private goods are excludable and rival, while public goods are non-excludable and non-rival

Microeconomics MCQs for KPPSC, PPSC, SPSC

What is the difference between marginal cost and average cost?
a. Marginal cost is the cost of producing one more unit of output, while average cost is the total cost divided by the total output
b. Marginal cost is the total cost divided by the total output, while average cost is the cost of producing one more unit of output
c. Marginal cost is a long-term cost, while average cost is a short-term cost
d. Marginal cost is a variable cost, while average cost is a fixed cost

What is the difference between perfect competition and monopolistic competition?
a. Perfect competition has many buyers and many sellers, while monopolistic competition has many buyers but few sellers
b. Perfect competition has few buyers but many sellers, while monopolistic competition has many buyers and few sellers
c. Perfect competition has identical products, while monopolistic competition has differentiated products
d. Perfect competition is a market structure with only one seller, while monopolistic competition is a market structure with only one buyer
Answer: c. Perfect competition has identical products, while monopolistic competition has differentiated products

Microeconomics MCQs ETEA, PTS, NTS, ATS

What is the difference between a normal good and an inferior good?
a. A normal good is a good that people buy more of when their income increases, while an inferior good is a good that people buy less of when their income increases
b. A normal good is a good that people buy less of when their income increases, while an inferior good is a good that people buy more of when their income increases
c. A normal good is a luxury good, while an inferior good is a necessity
d. A normal good is always more expensive than an inferior good
Answer: a. A normal good is a good that people buy more of when their income increases, while an inferior good is a good that people buy less of when their income increases

What is the difference between a firm’s total revenue and its profit?
a. Total revenue is the amount of money a firm makes from selling its products, while profit is the difference between total revenue and total cost
b. Total revenue is the difference between total cost and total profit, while profit is the amount of money a firm makes from selling its products
c. Total revenue is the amount of money a firm makes from selling its products minus its fixed costs, while profit is the amount of money a firm makes from selling its products minus all its costs
d. Total revenue is the amount of money a firm makes from selling its products plus its fixed costs, while profit is the amount of money a firm makes from selling its products minus its variable costs
Answer: a. Total revenue is the amount of money a firm makes from selling its products, while profit is the difference between total revenue and total cost

Microeconomics MCQs

What is the difference between a perfectly elastic demand curve and a perfectly inelastic demand curve?
a. A perfectly elastic demand curve is a demand curve that is horizontal, while a perfectly inelastic demand curve is a demand curve that is vertical
b. A perfectly elastic demand curve is a demand curve that is vertical, while a perfectly inelastic demand curve is a demand curve that is horizontal
c. A perfectly elastic demand curve is a demand curve that is steep, while a perfectly inelastic demand curve is a demand curve that is flat
d. A perfectly elastic demand curve is a demand curve that is flat, while a perfectly inelastic demand curve is a demand curve that is steep
Answer: a. A perfectly elastic demand curve is a demand curve that is horizontal,

What is the difference between a price floor and a price ceiling?
a. A price floor is a minimum price set by the government, while a price ceiling is a maximum price set by the government
b. A price floor is a maximum price set by the government, while a price ceiling is a minimum price set by the government
c. A price floor is a price set by the market, while a price ceiling is a price set by the government
d. A price floor and a price ceiling are the same thing
Answer: a. A price floor is a minimum price set by the government, while a price ceiling is a maximum price set by the government

Microeconomics MCQs

What is the difference between a positive externality and a negative externality?
a. A positive externality is a cost that is borne by a third party, while a negative externality is a benefit that is received by a third party
b. A positive externality is a benefit that is received by a third party, while a negative externality is a cost that is borne by a third party
c. A positive externality is a cost that is borne by the producer, while a negative externality is a benefit that is received by the producer
d. A positive externality is a benefit that is received by the producer, while a negative externality is a cost that is borne by the producer
Answer: b. A positive externality is a benefit that is received by a third party, while a negative externality is a cost that is borne by a third party

Microeconomics MCQs

What is the difference between a budget deficit and a national debt?
a. A budget deficit is the amount by which government spending exceeds government revenue in a single year, while a national debt is the total amount of money that a government owes
b. A budget deficit is the total amount of money that a government owes, while a national debt is the amount by which government spending exceeds government revenue in a single year
c. A budget deficit is the total amount of money that a government spends, while a national debt is the total amount of money that a government collects in taxes
d. A budget deficit and a national debt are the same thing
Answer: a. A budget deficit is the amount by which government spending exceeds government revenue in a single year, while a national debt is the total amount of money that a government owes

What is the difference between a public good and a private good?
a. A public good is a good that is provided by the government, while a private good is a good that is provided by a private company
b. A public good is a good that is non-rival and non-excludable, while a private good is a good that is rival and excludable
c. A public good is a good that is provided for free, while a private good is a good that is sold in the market
d. A public good is a good that is provided to individuals, while a private good is a good that is provided to the society
Answer: b. A public good is a good that is non-rival and non-excludable, while a private good is a good that is rival and excludable

Microeconomics MCQs

What is the difference between a monopoly and a perfectly competitive market?
a. A monopoly is a market with only one seller, while a perfectly competitive market is a market with many sellers
b. A monopoly is a market with many buyers, while a perfectly competitive market is a market with only one buyer
c. A monopoly is a market with no government intervention, while a perfectly competitive market is a market with government intervention
d. A monopoly and a perfectly competitive market are the same thing
Answer: a. A monopoly is a market with only one seller, while a perfectly competitive market is a market with many sellers

What is the difference between a normal good and an inferior good?
a. A normal good is a good for which demand increases as income increases, while an inferior good is a good for which demand decreases as income increases
b. A normal good is a good for which demand decreases as income increases, while an inferior good is a good for which demand increases as income increases
c. A normal good is a luxury good, while an inferior good is a necessity good
d. A normal good and an inferior good are the same thing
Answer: a. A normal good is a good for which demand increases as income increases, while an inferior good is a good for which demand decreases as income increases

Microeconomics MCQs

What is the difference between a short-run and a long-run in microeconomics?
a. The short-run is a period of time in which all inputs are fixed, while the long-run is a period of time in which some inputs can be varied
b. The short-run is a period of time in which some inputs can be varied, while the long-run is a period of time in which all inputs are fixed
c. The short-run is a period of time in which the market is not in equilibrium, while the long-run is a period of time in which the market is in equilibrium
d. The short-run and the long-run are the same thing
Answer: a. The short run is a period of time in which all inputs are fixed, while the long-run is a period of time in which some inputs can be varied

What is the difference between elasticity and inelasticity in microeconomics?
a. Elasticity refers to the degree of responsiveness of quantity demanded or supplied to changes in price, while inelasticity refers to the degree of unresponsiveness of quantity demanded or supplied to changes in price
b. Elasticity refers to the degree of unresponsiveness of quantity demanded or supplied to changes in price, while inelasticity refers to the degree of responsiveness of quantity demanded or supplied to changes in price
c. Elasticity refers to the degree of responsiveness of price to changes in quantity demanded or supplied, while inelasticity refers to the degree of unresponsiveness of price to changes in quantity demanded or supplied
d. Elasticity and inelasticity are the same thing
Answer: a. Elasticity refers to the degree of responsiveness of quantity demanded or supplied to changes in price, while inelasticity refers to the degree of unresponsiveness of quantity demanded or supplied to changes in price

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