Economics MCQs For Lectureship CSS PMS And NTS Part II

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Economics MCQs For Lectureship CSS PMS And NTS Part II


1 Who developed Wages-fund Theory?

John Stuart Mill

2 Under monopoly in the labor market, what will be the position of the supply curve of labor facing the firm?

Upward-sloping to the right

3 To whom economic rent can accrue?

Any of the factors of production

4 What is quasi-rent?

Excess of total receipts over the total variable cost

5 The additional earnings that a factor of production, whose supply is fixed in the short run, may get is called


6 Does savings normally give rise to the demand for loan-able funds?


7 The demand for money for speculative motives mainly depend on what?

Rate of interest

8 What is the another name of the Neo-classical Theory of the rate of interest?

Loanable Funds Theory

9 Classical Theory called interest as a reward for


10 According to Joseph Schumpeter, profit is the reward for what?


11 The term ‘‘Normal Profit’’ refers to

Earnings of management

12 According to whom pure profit can arise only in a dynamic economy?

B. Clark

13  What does fiat money means?

Legal Money

14 When the commodity value of money and its value as money are equal, what it is called?

Full-bodied Money

15 The limited legal tender money stands for that component of money which is legal tender for payments up to what amount?

 a certain maximum amount

16 Keynesian theory stressed which function of money more as compared to the Classical Theory?

Store of value

17 Who presented the idea that bad money drives good money out of circulation?

Thomas Gresham

18 Which country first of all adopted the gold standard?


19 The gold standard was adopted by most of the European countries in eighties of the

Nineteenth century

20 The gold standard was finally abandoned by the UK in


21 The founder of the Modern Quantity Theory of Money is

Milton Friedman

22 The Quantity Theory of Money establishes the relationship between what?

Quantity of money in an economy and the level of prices

23 Pigou’s cash balance equation is

M = KR/P

24 In the Fisher’s equation of exchange, MV = PT, what T stands for?

Volume of trade

25 What cause cost push inflation?

Increases in the prices of inputs

26 The concept of real balance effect was introduced by

C. Pigou

27 The concept of quantity theory of money in cash transaction approach is usually associated with

Irving Fisher

28 What type of relationship exists between the market price of bond and the market rate of interest?


29 Under the liquidity trape conditions the degree of elasticity in respect of speculative demand for money is


30 A retail price index is a good measure of?

Changes in consumer’s cost of living

31 In Monetary policy, taxation is

Not an instrument

32 In Monetary policy, taxation has

No role

33 At a very low rate of interest, the interest elasticity of the speculative demand for money becomes how much?


34 When liquidity trap condition occurs?

At very low rate of interest

35 In deflation, which person can get more benefits?

A pensioner

36 According to classical approach, on what the demand for money primarily depends upon?

Economic transactions

37 What is stagflation?

Sustained price rise and rising unemployment

38 When and who gave the first explanation of stagflation?

In 1931 by Friedrich A. Von Hayek

39 The process of reduction or elimination of inflation is called


40 Supervision of nation’s fiscal policy is not a function of the

Central bank of a country

41 Which country developed banking system in the world?


42 Which country when developed the system of chain banking?

USA in the mid of nineteenth century

43 Which country for the first time introduced the instrument of minimum legal cash reserve ratio for banks?


44 In case of significant decrease in the demand for loans, banks are forced to

Adjust their portfolios         

45 What does open market operations means?

Buying and selling of government securities

46 Bank rate refer to the interest rate at which Central bank gives loans to whom?

 Commercial banks

47 What is the immediate effect of credit creation by banks?

Increase in money supply

48 Credit rationing is one of the instruments of which system?

Qualitative credit control

49 Variable reserve ratio is one of the instruments of what?

Quantitative credit control

50 Commercial banks have always to face a conflict between what?

Liquidity and profitability


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51 Which country first of all employed credit rationing as an instrument of credit control?


52 What does the ‘Terms of Trade’ mean?

Ratio of the index of export prices to the index of import prices

53 Market for very short term loans is called

Money market

54  Keeping other things the same, an increase in exports over imports will have what effect on in come?


55 Who did not favored Free trade?


56 In Balance of Payments, foreign travel is


57 If the elasticity of foreign demand for the country’s export is unity, what will be the shape of the supply curve of foreign exchange?


58 Who employed for the first time the multiple exchange rates?


59 What is the elasticity of demand for foreign exchange for financing capital outflow?


60 The law of Comparative Costs is based on which theory?

Labor Theory of Value

61 Adam Smith’s views on the world’s trade can be best understood if one considers them as a reaction to which other prominent economist views?

Ricardo’s views on trade

62 How business can be defined?

Trade, commerce and industry

63 What is the maximum number of partners in a partnership firm?

Twenty (20)

64 For a capital intensive business which form of business organization would be more suitable?

Joint-stock company

65 According to the systems approach, what is a system?

Orderly arrangements of components in a coordinated manner

66 A business has constant and invisible interaction with whom?

External environment

67 What does vertical combination implies?

Integration of enterprises engaged in different stages of production of a particular product

68 What is an indirect tax?

Points of impact and incidence are different

69 Sale tax is an example of which form of taxation?

Indirect tax

70 Henry Fayol is generally regarded as the father of

Modern management

71 How objectives in the context of management can be defined?

The end result, which an organization tries to attain

72 What are the two key factors in ‘management by objectives?

Democratic goal-setting and verifiable objectives

73 In an informal organization the structure is not prescribed by

The formal authority

74 How planning and control are related?

Both go hand-in-hand with each other in a cyclical manner

75 For a private company it is necessary that it must have at least

Two (2) members

76 A Special Resolution in general meeting is passed by

Three-fourth majority of votes

77 Who can issue a share warrant?

Public companies only

78 The minimum number of shareholders necessary for  a public company are

Seven (7)

79 What does the share capital of a company means?

Equity and preference share capital

80 An agreement concluded by a minor which is beneficial to him/her is a

Valid contract

81 What is the liability of partners in a partnership firm?

Joint and several

82 The maximum number of partners in a partnership firm carrying on banking business are

Five (5)

83 The suit for specific performance in case of breach of contract may be filed only where the subject matter is related to which kind of property?

Immovable property

84 Crossing a cheque ‘Not Negotiable’ provides security against whom?

Theft of cheque

85 The non-registration of partnership does not affect the suit by third parties against whom?

 The firm

86 Organization theory is concerned with study to explain the nature and composition of organization as a

Social or human group

87 What does job-enrichment means?

Change or variation of job after a time period

88 What does an organization structure means?

Flow of authority and responsibility

89 What is Current Ratio?

The ratio of current assets to current liabilities

90 What does Debt Equity Ratio means?

The ratio of long term debt to shareholders’ equity

91 What does trading on equity means?

The use of fixed-interest borrowed funds for getting a higher return on equity

92 Cost of goods sold refers to what?

Sales minus gross profits

93 In the pay-back period method of capital budgeting, investment is divided by what?

Constant annual cash flow

94 What is Break-even-point?

A situation where there is no profit no loss

95 What does under-capitalization means?

A situation where the capital base does not justify the amount of earnings made and needs to be enhanced

96 A scheduled of balances drawn from the ledger is called what?

A trial balance

97 What does goodwill of a firm represents?

Intangible assets

98 A bank account is what type of account?

Personal account

99 Prepaid expenses appearing in a trial balance will figure in which report?

Balance sheet

100 What is called the excess of current assets over current liabilities?

Working capital





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