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Questions on Economics :: MCQs in English - Part 6

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Questions on Economics :: MCQs in Hindi/English - Part 6

Questions on Economics :: MCQs in English - Part 6

Q251. An individual’s actual standard of living can be assessed by

(a) Gross National Income

(b) Net National Income

(c) Per Capita Income

(d) Disposable Personal Income

Sol. C

Explanation: With the help of Per capita income an individual’s actual standard of living can be assessed.

Q252. When there is an official change in the exchange rate of domestic currency, then it is called:

(a) Appreciation

(b) Depreciation

(c) Revaluation

(d) Deflation

Sol. C

Explanation : When there is an official change in the exchange rate of domestic currency, then it is called Revaluation.

Q253. Inflation redistributes income and wealth in favour of:

(a) Pensioners

(b) Poor

(c) Middle class

(d) Rich

Sol. D

Explanation: It is in favour of rich peoples.

Q254. The first computer made available for commercial use was:

(a) MANIAC

(b) ENIAC

(c) UNIVAC

(d) EDSAC

Sol. C

Explanation: UNIVAC is the name of a line of electronic digital stored-program computers starting with the products of the Eckert-Mauchly Computer Corporation. Later the name was applied to a division of the Remington Rand company and successor organizations. UNIVAC is an acronym for universal Automatic Computer.

Q255. When was the Jawahar Rozgar Yojana launched?

(a) 1985

(b) 1987

(c) 1989

(d) 1991

Sol. C

Explanation: Jawahar Rozgar Yojana (JRY) was launched on April 1, 1989 by merging National Rural Employment Programme NREP and Rural Landless Employment Guarantee Programme by Prime Minister Rajiv Gandhi.

Q256. Who is authorized to issue coins in India?

(a) Reserve Bank of India

(b) Ministry of Finance

(c) State Bank of India

(d) Indian Overseas Bank

Sol. B

Explanation: Ministry of Finance.

Q257. The ‘break-even’ point is where

(a) Marginal revenue equals marginal cost

(b) Average revenue equals average cost

(c) Total revenue equals total cost

(d) None of the above

Sol. C

Explanation: When TR = TC, it deemed as break-even point.

Q258. Rate of interest is determined by

(a) The rate of return on the capital invested

(b) Central Government

(c) Liquidity preference

(d) Commercial Banks

Sol. D

Explanation: Rate of interest is determined by commercial banks.

Q259. The total value of goods and services produced in a country during a given period is

(a) Disposable income

(b) National income

(c) Per capita income

(d) Net national income

Sol. B

Explanation: National income is the total value a country’s final output of all new goods and services produced in one year.

Q260. Which one of the following is not a function of the central bank in an economy?

(a) Dealing with foreign exchange 

(b) Controlling monetary policy

(c) Controlling government spending

(d) Acting as a banker’s bank

Sol. C

Explanation: Controlling government spending is not a function of the central bank in an economy.

Q261. The government set up a committee headed by the Chairman; Central Board of Direct Taxes some time back to go into-

(a) Codification of tax laws

(b) The entire structure of tax laws including the question of imposition of bank tax

(c) The concerns of the foreign investors in India with regard to taxation matters

(d) Aspects of generation of black money, its transfer abroad and bringing back such money into India’s legitimate financial system

Sol. D

Explanation: Aspects of generation of black money, its transfer abroad and bringing back such money into India’s legitimate financial system.

Q262. Per capita income is equal to

(a) National Income Total Population of the country

(b) National Income + Population

(c) National Income - Population

(d) National Income Population

Sol. A

Explanation: National Income Total Population of the country.

Q263. A favourable Balance of Trade of a country implies that

(a) Imports are greater than Exports

(b) Exports are greater than Imports

(c) Both Imports and Exports are equal

(d) Rising Imports and Falling Exports

Sol. B

Explanation: When exports are greater than imports, it implies favourable balance of a country.

Q264. The value of a commodity expressed in terms of money is known as

(a) Price

(b) Utility

(c) Value

(d) Wealth

Sol. A

Explanation: The value of a commodity expressed in terms of money is known as its price.

Q265. Reserve Bank of India was nationalized in

(a) 1948

(b) 1947

(c) 1949

(d) 1950

Sol. C

Explanation: The Reserve Bank of India was nationalised with effect from 1st January, 1949 on the basis of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948. All shares in the capital of the Bank were deemed transferred to the Central Government on payment of a suitable compensation.

Q266. National Social Assistance Programme is aimed at providing

(a) Financial support to Scheduled Castes and Scheduled Tribes

(b) Old age pension to very poor

(c) Insurance for the poor

(d) All of the above

Sol. B

Explanation: The main aim of National Social Assistance Programme is to provide old age pension to very poor peoples.

Q267. In a Capitalistic Economy, the prices are determined by:

(a) Demand and Supply

(b) Government Authorities

(c) Buyers in the Market

(d) Sellers in the Market

Sol. A

Explanation: In Capitalistic economy, the prices are determined by demand and supply.

Q268. Tooth paste is a product sold under:

(a) Monopolistic Competition

(b) Perfect Competition

(c) Monopoly

(d) Duopoly

Sol. C

Explanation: A market structure characterized by a single seller, selling a unique product in the market. In a monopoly market, the seller faces no competition, as he is the sole seller of goods with no close substitute. Tooth paste is a product sold under Monopoly.

Q269. In a period of inflation and price rises the supply of money remains

(a) The same

(b) Increases 

(c) Decreases

(d) Increases or decreases proportionately/

Sol. B

Explanation: In a period of inflation and price rises the supply of money remains increases.

Q270. ‘Personal Income’ equals

(a) The household sector's income

(b) Private income minus savings of the corporate sector minus corporation tax

(c) Personal disposable income plus miscellaneous receipts of the Government

(d) All of the above/??? ?? ???

Sol. C

Explanation: Personal Income is equal to Personal disposable income plus miscellaneous receipts of the Government.

Q271. What is dual pricing?

(a) Wholesale price and Retail pricing

(b) Pricing by agents and Pricing by retailers

(c) Price fixed by Government and Price in open market

(d) Daily prices and Weekly prices

Sol. C

Explanation: Price fixed by Government and Price in open market.

Q272. If the price of Pepsi decreases relative to the price of Coke and 7-Up, the demand for

(a) Coke will decrease

(b) 7-Up will decrease

(c) Coke and 7-Up will increase

(d) Coke and 7-Up will decrease

Sol. D

Explanation: Demand for Coke and 7-Up will decrease.

Q273. The demand curve shows that price and quantity demanded are

(a) Directly related only

(b) Directly proportional and also directly related

(c) Inversely proportional and also inversely related

(d) Inversely related only

Sol. C

Explanation: Because of their nature, In demand curve it shows that price and quantity demanded are inversely proportional and also inversely related.

Q274. As output increases, average fixed cost

(a) Increases

(b) Falls

(c) Remains constant

(d) First increases, then falls

Sol. B

Explanation: AFC (Average fixed cost) will fall.

Q275. Which of the following is a part of tertiary sector?

(a) Power and transportation

(b) Animal Husbandry

(c) Cotton manufacturing

(d) Cultivation of crops

Sol. A

Explanation: The tertiary industry is the segment of the economy that provides services to its consumers; this includes a wide range of businesses such as financial institutions, schools and restaurants. It is also known as the tertiary sector or service industry/sector. Power and transportation is also a part of it.

Q276. Fixed cost is known as

(a) Special cost

(b) Direct cost

(c) Prime cost

(d) Overhead cost

Sol. D

Explanation : A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold. Fixed costs are expenses that have to be paid by a company, independent of any business activity. It is one of the two components of the total cost of running a business, along with variable cost. Fixed cost is known as Overhead cost.

Q277. What was the objective of Command Area Development Programme?

(a) To ensure that land is given to the tillers

(b) To ensure better utilization of irrigation potential

(c) To develop the areas under the command of Army

(d) Poverty alleviation in selected areas

Sol. B

Explanation : To ensure better utilization of irrigation potential.

Q278. A mixed economy refers to an economic system where

(a) The economy functions with foreign collaboration

(b) Only the private sector operates under government control

(c) Both the government and the private sectors operate sectors operate simultaneously

(d) No foreign investment is allowed

Sol. C

Explanation : A mixed economy refers to an economic system where Both the government and the private sectors operate sectors operate simultaneously.

Q279. The demand for which of the Following commodity will not rise in spite of a fall in its price?

(a) Television

(b) Refrigerator

(c) Salt

(d) Meat

Sol. C

Explanation : In case of salt, the price of salt is decreases and the demand is always constant.

 Q280. In the long-run equilibrium, a competitive firm earns

(a) Super-normal profit

(b) Profits equal to other firms

(c) Normal profit

(d) No profit

Sol. C

Explanation : In the long-run equilibrium, a competitive firm earns Normal profit.

Q281.Production function relates

(a) Cost to output

(b) Cost to input

(c) Wages to profit

(d) Inputs to output

Sol. D

Explanation : In economics, a production function relates physical output of a production process to physical inputs or factors of production. The production function is one of the key concepts of mainstream neoclassical theories, used to define marginal product and to distinguish allocative efficiency, the defining focus of economics.

 Q282. According to the classical system, saving is a function of

(a) Income

(b) The interest rate

(c) The real wage

(d) The Price level

Sol.A

Explanation : According to the classical system, saving is a function of Income.

 Q283. A Black Market is a situation Where in

(a) Goods are loaded by the producers

(b) Goods are sold secretly

(c) Goods are sold at prices higher than what is fixed by the Government

(d) Goods are made available (sold) only after there is a rise in prices

Sol.B

Explanation : Black market transactions usually occur “under the table” to let participants avoid government price controls or taxes. The black market is also the venue where highly controlled substances or products such as drugs and firearms are illegally traded.

 Q284. Distribution of food rains operates under a two tier system with the introduction of

(a) Targetted Public Distribution System

(b) The Consumers Cooperatives

(c) The Cooperative Marketing Societies

(d) Tire Service Cooperatives

Sol. A

Explanation : Distribution of food rains operates under a two tier system with the introduction of Targetted Public Distribution System.

Q285. If total utility is maximum at a point, then marginal utility is

(a) positive

(b) zero

(c) negative

(d) positive but decreasing

Sol. B

Explanation : If total utility is maximum at a point, then marginal utility is zero.

 Q286. Which one of the following items is included in the national income account?

(a) Services of housewives

(b) Income of smugglers

(c) Services of Sadhus

(d) Services of night-watchmen

Sol. D

Explanation : Services of night-watchmen is included in the national income account.

 Q287. The situation in which total revenue is equal to total cost, is known as

(a) monopolistic competition 

(b) equilibrium level of output

(c) break-even point

(d) perfect competition

Sol. C

Explanation : The point at which the income from sale of a product or service equals the invested costs, resulting in neither profit nor loss; the stage at which income equals expenditure.

Q288. The relationship between price of a commodity and the demand for it

(a) is a positive relationship

(b) is an inverse relationship

(c) They are independent of each other

(d) They do not have any relationship

Sol.B

Explanation : There is a inverse relationship in case of price of a commodity and the demand of a commodity.

 Q289. An increase in national income because of an increase in price is called

(a) an increase in national income in real terms

(b) an increase in national income at constant prices

(c) an increase in money national income

(d) an increase in national income at base year prices

Sol.D

Explanation : An increase in national income because of an increase in price is called an increase in money national income.

 Q290. Commercialization of agriculture implies

(a) cultivation of timbers

(b) plantation

(c) production of crops for sale

(d) production of crops like wheat or rice

Sol. C

Explanation : Commercialization of agriculture implies production of crops for sale.

 Q291. Payment of water charges by the fanners to the government represents

(a) intermediate consumption

(b) final consumption

(c) fixed investment

(d) inventory investment

Sol. A

Explanation : Intermediate consumption is a national accounts concept which measures the value of the goods and services consumed as inputs by a process of production. It excludes fixed assets whose consumption is recorded as consumption of fixed capital.

 Q292. In accounting terms, what constitutes the ‘closings stock’?

(a) Net Investment

(b) Gross Investment-Capital Losses

(c) Opening Stock-Capital Losses

(d) Opening Stock + Net Investment -Capital Losses

Sol. D

Explanation : Opening Stock + Net Investment -Capital Losses.

 Q293. ‘Quota’ is

(a) tax levied on imports

(b) imports of capital goods

(c) limit on the quantity of imports

(d) limit on the quantity of exports

Sol. C

Explanation : A quota is a government-imposed trade restriction that limits the number, or monetary value, of goods that can be imported or exported during a particular time period. Quotas are used in international trade to help regulate the volume of trade between countries.

 Q294. The ‘Canons of Taxation’ were propounded by

(a) Edwin Canon

(b) Adam Smith

(c) J.M. Keynes

(d) Dalton

Sol. B

Explanation : The ‘Canons of Taxation’ were propounded by Adam Smith.

 Q295. 'PROTECTION' means

(a) Restrictions imposed on import trade

(b) Protection to home industries

(c) No free exchange of goods and services between two countries

(d) All of the above/ ??? ?? ???

Sol. D

Explanation : In economics, protectionism is the economic policy of restraining trade between states (countries) through methods such as tariffs on imported goods, restrictive quotas, and a variety of other government regulations.

 Q296. National income accounting is the study of the income and expenditure of the entire

(a) family

(b) state

(c) economy

(d) organization

[showhide type="links46" more_text="Show Answer" less_text="Hide Answer"]

Sol. C

Explanation : National income accounting is the study of the income and expenditure of the entire economy.

Q297. The problem of Economics arises from

(a) Plenty

(b) Scarcity of goods

(c) More wants and less goods

(d) All of the above

Sol. C

Explanation : The BASIC ECONOMIC PROBLEM arises because resources are scarce, but human wants are unlimited. Any resources that are not scarce are called FREE GOODS. 

Q298. Agricultural income tax is a source of revenue to

(a) Central Government

(b) State Government

(c) Local Administration

(d) Centre and State Governments

Sol. B

Explanation : Agricultural income tax is a source of revenue to State Government.

Q299. Beyond a certain point deficit financing will certainly lead to

(a) inflation

(b) deflation

(c) recession

(d) economic stagnation

Sol. A

Explanation : Inflation is the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Central banks attempt to limit inflation, and avoid deflation, in order to keep the economy running smoothly.

 Q300. In public budgets, zero-base budgeting was first introduced in

(a) United States of America

(b) United Kingdom 

(c) France

(d) Sweden

Sol. A

Explanation : Zero Base Budgeting (ZBB) in the public sector versus the private sector is a different process. ... “Zero-Base Budgeting (ZBB) was an executive branch budget formulation process introduced into the federal government in 1977. Its main focus was on optimizing accomplishments available at alternative budgetary levels. In public budgets, zero-base budgeting was first introduced in United States of America.