Below are some of the important MCQs of Economics that we have collected from different sources. We hope that you will find these MCQs useful and it will help you in your preparation. Please let us know if you find any mistake in the given below MCQs.
1 Wages-fund Theory was developed by
John Stuart Mill
2 Under monopoly in the labour market, the supply curve of labour facing the firm will be
Upward-sloping to the right
3 Economic rent can accrue to
Any of the factors of production
4 In the context of the firm as a whole, quasi-rent is defined as the excess of total receipts over the total
5 A factor of production, whose supply is fixed in the short run, may get additional earnings. These earnings are generally referred to as
6 Savings normally does not give rise to the demand for
7 The demand for money for speculative motives mainly depend on
Rate of interest
8 The Neo-classical Theory of the rate of interest is also called as
Loanable Funds Theory
9 The Classical Theory explained interest as a reward for
10 According to Joseph Schumpeter, profit is the reward for
11 The term ‘‘Normal Profit’’ as used in the analysis of equilibrium of the firm under perfect competition, refers to
Earnings of management
12 Who argued that pure profit can arise only in a dynamic economy?
- B. Clark
13 Fiat money refer to
14 When the commodity value of money and its value as money are equal, it is called
15 The limited legal tender money stands for that component of money which
Is legal tender for payments up to a certain maximum amount
16 As compared to the Classical Theory, which function of money was stressed more in the Keynesian theory?
Store of value
17 Bad money drives good money out of circulation. With whose name is this law associated?
18 Identify the country which was the first to adopt the gold standard.
19 During which decades of the nineteenth century did most of the European countries adopted the gold standard?
20 When did the UK finally abandon the gold standard?
21 Who is generally regarded as the founder of the Modern Quantity Theory of Money?
22 The Quantity Theory of Money establishes the relationship between the quantity of money in an economy and the level of
23 What is Pigou’s cash balance equation?
M = KR/P
24 In the Fisher’s equation of exchange, MV = PT, what does T denotes?
Volume of trade
25 Cost push inflation is caused by
Increases in the prices of inputs
26 Who introduced the concept of the real balance effect?
- C. Pigou
27 The cash transaction approach to the quantity theory of money is usually associated with the name of
28 The relationship between the market rate of interest and the market price of a bond is
29 The degree of elasticity in respect of speculative demand for money, under the liquidity trape conditions is
30 A retail price index is a good measure of changes in
Consumer’s cost of living
31 Which of the following is not an instrument of monetary policy?
32 Taxation is not an instrument of
33 At a very low rate of interest, the interest elasticity of the speculative demand for money becomes
34 The liquidity trap condition occurs at a
Very low rate of interest
35 In which capacity does a person stand to gain from deflation?
As a pensioner
36 According to the classical approach the demand for money primarily depends upon
37 Stagflation refer to a situation which is characterised by
Sustained price rise and rising unemployment
38 The first explanation of stagflation was offered originally in 1931 by
Friedrich A. Von Hayek
39 The reduction or elimination of inflation is known as
40 Which is not a function of the central bank of a country?
Supervisor of nation’s fiscal policy
41 The banking system was developed in
42 The chain banking system was developed in the mid of nineteenth century in
43 In which country was the instrument of minimum legal cash reserve ratio for banks first introduced?
44 If there is significant decrease in the demand for loans, banks will be forced to
Adjust their portfolios
45 Open market operations refer to the buying and selling of
46 Bank rate refer to the interest rate at which
Central bank gives loans to commercial banks
47 The immediate effect of credit creation by banks is
Increase in money supply
48 Credit rationing is one of the instruments of
Qualitative credit control
49 Variable reserve ratio is one of the instruments of
Quantitative credit control
50 Commercial banks have always to face a conflict between
Liquidity and profitability
51 The country that first employed credit rationing as an instrument of credit control is
52 The ‘Terms of Trade’ refer to
Ratio of the index of export prices to the index of import prices
53 The market for very short term loans is known as
54 If the increase in exports exceeds the increase in imports and other things remain the same, then the level of income will
55 Free trade was not favoured by the
56 Foreign travel is invisible in the
Balance of payments
57 If the elasticity of foreign demand for the country’s export is unity, the supply curve of foreign exchange will be
58 The multiple exchange rates were first employed by
59 The elasticity of demand for foreign exchange for financing capital outflow is
60 The law of Comparative Costs is based on
Labour Theory of Value
61 Adam Smith’s views on world’s trade can be best understood if one considers them as a reaction to
Ricardo’s views on trade
62 Business can be define as
Trade, commerce and industry
63 What can be the maximum number of partners in a partnership firm?
64 Which form of business organization would be most suitable for a capital intensive business?
65 According to the systems approach, a system is the
Orderly arrangements of its components in a coordinated manner
66 A business has constant and invisible interaction with its
67 Vertical combination implies
Integration of enterprises engaged in different stages of production of a particular product
68 An indirect tax is one where
Points of impact and incidence are different
69 Sale tax is an example of
70 Who is generally regarded as the father of modern management?
71 Objectives in the context of management may be defined as
The end result, which an organization tries to attain
72 The two key factors in ‘management by objectives are
Democratic goal-setting and verifiable objectives
73 An informal organization is one where
The structure is not prescribed by the formal authority
74 Planning and control are related in such a way that
Both go hand-in-hand with each other in a cyclical manner
75 A private company must have at least
Two (2) members
76 A Special Resolution is one which is passed in a general meeting by
Three-fourth majority of votes
77 A share warrant can be issued by
Public companies only
78 What is the minimum number of shareholders necessary for a public company?
79 The share capital of a company refers to
Equity and preference share capital
80 Any agreement by a minor which is beneficial to him is a
81 The liability of partners in a partnership firm is
Joint and several
82 What is the maximum number of partners necessary in a partnership firm carrying on banking business?
83 The suit for specific performance in case of breach of contract may be filed only where the subject matter relates to
84 Crossing a cheque ‘Not Negotiable’ affords security against
Theft of cheque
85 Non-registration of partnership does not affect the
Suit by third parties against the firm
86 Organization theory is concerned with the
Study to explain the nature and composition of organization as a social or human group
87 Job-enrichment means
Change or variation of job after a time period
88 An organization structure refers to the
Flow of authority and responsibility
89 Current Ratio is the ratio
Current assets to current liabilities
90 Debt Equity Ratio refers to the ratio of
Long term debt to shareholders’ equity
91 Trading on equity means
Use of fixed-interest borrowed funds for getting a higher return on equity
92 Cost of goods sold refers to
Sales minus gross profits
93 In the pay-back period method of capital budgeting, investment is divided by
Constant annual cash flow
94 Break-even-point is a situation where
There is no profit no loss
95 Under-capitalisation refers to 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
A trial balance
97 Goodwill of a firm represents
98 A bank account is a
99 Prepaid expenses appearing in a trial balance will figure in the
100 The excess of current assets over current liabilities is called