1. The term “Economics” is derived from which language?
A) Latin
B) Greek
C) French
D) Sanskrit
Answer: B) Greek
Explanation: The word “Economics” comes from the Greek word Oikonomia, meaning “management of household.”
2. Who is regarded as the “Father of Economics”?
A) Karl Marx
B) Adam Smith
C) David Ricardo
D) Alfred Marshall
Answer: B) Adam Smith
Explanation: Adam Smith, through his book “The Wealth of Nations” (1776), laid the foundation of modern economics.
3. “Wealth of Nations” was written in which year?
A) 1756
B) 1776
C) 1789
D) 1800
Answer: B) 1776
Explanation: Adam Smith’s An Inquiry into the Nature and Causes of the Wealth of Nations was published in 1776.
4. Who defined Economics as “Science of Wealth”?
A) Lionel Robbins
B) Adam Smith
C) Marshall
D) Keynes
Answer: B) Adam Smith
Explanation: Adam Smith’s definition focused on wealth creation as the primary concern of economics.
5. Who defined Economics as the “Science of Scarcity”?
A) Karl Marx
B) Robbins
C) Keynes
D) Pigou
Answer: B) Robbins
Explanation: Lionel Robbins defined economics as the science which studies human behavior as a relationship between ends and scarce means.
6. Microeconomics deals with:
A) Economy as a whole
B) Individual units of economy
C) International trade only
D) Government budget
Answer: B) Individual units of economy
Explanation: Microeconomics studies individual economic units such as households, firms, and industries.
7. Macroeconomics deals with:
A) Demand and Supply of a commodity
B) Individual firm pricing
C) Economy as a whole
D) Cost analysis
Answer: C) Economy as a whole
Explanation: Macroeconomics focuses on aggregates like national income, inflation, employment, etc.
8. “Invisible Hand” theory was propounded by:
A) Ricardo
B) Keynes
C) Adam Smith
D) Samuelson
Answer: C) Adam Smith
Explanation: Adam Smith’s concept of the “invisible hand” explained how self-interest leads to economic prosperity.
9. The basic economic problem is:
A) Population growth
B) Unemployment
C) Scarcity of resources
D) Inflation
Answer: C) Scarcity of resources
Explanation: Scarcity arises because human wants are unlimited, but resources are limited.
10. Which of the following is a normative statement?
A) Inflation rate is 6%
B) India’s GDP is growing at 7%
C) Government should reduce poverty
D) Demand equals supply at equilibrium
Answer: C) Government should reduce poverty
Explanation: Normative economics deals with value judgments, i.e., what ought to be.
11. The concept of “Opportunity Cost” means:
A) Cost of producing goods
B) Cost of foregone alternatives
C) Production cost only
D) Total money spent
Answer: B) Cost of foregone alternatives
Explanation: Opportunity cost is the value of the next best alternative forgone.
12. Which of the following is NOT a factor of production?
A) Land
B) Labor
C) Capital
D) Money
Answer: D) Money
Explanation: Money is not a direct factor of production; the main factors are land, labor, capital, and entrepreneurship.
13. The term “Mixed Economy” means:
A) Private sector only
B) Public sector only
C) Both private and public sectors coexist
D) Centralized planning only
Answer: C) Both private and public sectors coexist
Explanation: In a mixed economy, both private enterprises and government control operate.
14. Which is the best example of a centrally planned economy?
A) USA
B) India
C) North Korea
D) UK
Answer: C) North Korea
Explanation: North Korea has a command economy with central planning.
15. In capitalism, the means of production are:
A) Owned by government
B) Owned by individuals
C) Jointly owned
D) Absent
Answer: B) Owned by individuals
Explanation: Capitalism is characterized by private ownership and profit motive.
16. In socialism, the means of production are:
A) Privately owned
B) Owned by government
C) Absent
D) Free from control
Answer: B) Owned by government
Explanation: In socialism, production resources are controlled by the state for welfare.
17. The law of demand shows the relation between:
A) Price and supply
B) Price and demand
C) Demand and income
D) Supply and cost
Answer: B) Price and demand
Explanation: Law of demand states that when price falls, demand rises, other factors constant.
18. Demand curve is generally:
A) Upward sloping
B) Downward sloping
C) Vertical
D) Horizontal
Answer: B) Downward sloping
Explanation: Due to inverse relation between price and demand, demand curve slopes downward.
19. Giffen goods violate which law?
A) Law of supply
B) Law of demand
C) Law of diminishing returns
D) Law of utility
Answer: B) Law of demand
Explanation: For Giffen goods (inferior goods), demand increases with price.
20. Supply curve is generally:
A) Downward sloping
B) Vertical
C) Upward sloping
D) Horizontal
Answer: C) Upward sloping
Explanation: Higher prices encourage producers to supply more, hence upward sloping supply curve.
21. Which is NOT an economic activity?
A) Teaching in school for salary
B) Doctor treating patients for fees
C) A farmer growing crops to sell
D) Cooking food for family
Answer: D) Cooking food for family
Explanation: Economic activities are done for earning income, while personal activities are non-economic.
22. The term “Utility” in economics refers to:
A) Usefulness of a product
B) Satisfaction derived from a product
C) Market value of a product
D) Production cost
Answer: B) Satisfaction derived from a product
Explanation: Utility is the power of a good to satisfy human wants.
23. The “Law of Diminishing Marginal Utility” was given by:
A) Adam Smith
B) Alfred Marshall
C) Gossen
D) Keynes
Answer: C) Gossen
Explanation: Gossen’s first law states that marginal utility declines as consumption increases.
24. Who introduced the concept of Consumer Surplus?
A) Alfred Marshall
B) Adam Smith
C) Karl Marx
D) Pigou
Answer: A) Alfred Marshall
Explanation: Marshall introduced consumer surplus as the difference between willingness to pay and actual price paid.
25. National Income means:
A) Total money in circulation
B) Total goods produced
C) Total value of goods and services produced in a country
D) Total savings
Answer: C) Total value of goods and services produced in a country
Explanation: National income measures the monetary value of all final goods and services produced within a country.
26. GDP stands for:
A) Gross Domestic Product
B) General Development Plan
C) Gross Demand Production
D) Government Development Policy
Answer: A) Gross Domestic Product
Explanation: GDP is the monetary value of all final goods and services produced within a country’s borders in a given period.
27. GNP is obtained by:
A) GDP + Exports – Imports
B) GDP + Net factor income from abroad
C) GDP – Depreciation
D) GDP + Subsidies
Answer: B) GDP + Net factor income from abroad
Explanation: Gross National Product (GNP) includes GDP plus income earned by residents abroad minus income earned by foreigners in the country.
28. Net National Product (NNP) is equal to:
A) GNP – Depreciation
B) GDP – Taxes
C) GNP + Subsidies
D) GDP – Imports
Answer: A) GNP – Depreciation
Explanation: NNP = GNP – Depreciation (wear and tear of capital goods).
29. Which of the following is an example of a “Public Good”?
A) Clothes
B) Food grains
C) National defense
D) Mobile phone
Answer: C) National defense
Explanation: Public goods are non-rival and non-excludable; defense is a classic example.
30. The study of “Welfare Economics” was pioneered by:
A) Adam Smith
B) Pigou
C) Keynes
D) Robbins
Answer: B) Pigou
Explanation: A.C. Pigou is known for his work on welfare economics, emphasizing economic welfare through government intervention.
31. Inflation refers to:
A) Rise in employment
B) Increase in production
C) Rise in general price level
D) Fall in price of goods
Answer: C) Rise in general price level
Explanation: Inflation is a sustained rise in the general level of prices in an economy.
32. Deflation means:
A) Continuous rise in prices
B) Fall in general price level
C) Increase in wages
D) Shortage of goods
Answer: B) Fall in general price level
Explanation: Deflation is a persistent decline in prices, often linked with reduced demand.
33. Which index is commonly used to measure Inflation in India?
A) GDP Deflator
B) CPI (Consumer Price Index)
C) IIP (Index of Industrial Production)
D) WPI (Wholesale Price Index)
Answer: D) WPI (Wholesale Price Index)
Explanation: Traditionally, India used WPI; however, CPI is also widely used now for policy decisions.
34. Stagflation is a situation of:
A) High growth with low inflation
B) Low growth with high inflation
C) High employment with deflation
D) High savings with low investment
Answer: B) Low growth with high inflation
Explanation: Stagflation combines stagnation (low growth) and inflation (rising prices).
35. Which of the following is a direct tax?
A) GST
B) Excise duty
C) Income tax
D) Customs duty
Answer: C) Income tax
Explanation: Direct taxes are levied directly on income or wealth (e.g., income tax), while GST, excise, customs are indirect taxes.
36. Which of the following is an indirect tax?
A) Corporate tax
B) Personal income tax
C) Goods and Services Tax (GST)
D) Wealth tax
Answer: C) Goods and Services Tax (GST)
Explanation: GST is collected indirectly when consumers purchase goods and services.
37. Fiscal Policy is concerned with:
A) Money supply
B) Government revenue and expenditure
C) Controlling inflation through RBI
D) Monetary transactions
Answer: B) Government revenue and expenditure
Explanation: Fiscal policy involves taxation and government spending to influence the economy.
38. Monetary Policy is formulated by:
A) Parliament
B) Supreme Court
C) Reserve Bank of India
D) Ministry of Finance
Answer: C) Reserve Bank of India
Explanation: In India, RBI regulates monetary policy to control money supply, credit, and inflation.
39. Which is NOT an instrument of Monetary Policy?
A) Repo Rate
B) Cash Reserve Ratio
C) Government spending
D) Reverse Repo Rate
Answer: C) Government spending
Explanation: Government spending belongs to fiscal policy, not monetary policy.
40. The “Repo Rate” is:
A) Rate at which RBI lends to commercial banks
B) Rate at which banks lend to RBI
C) Interest on savings accounts
D) Lending rate to customers
Answer: A) Rate at which RBI lends to commercial banks
Explanation: Repo rate is used by RBI to regulate short-term borrowing by banks.
41. The “Reverse Repo Rate” is:
A) Rate at which RBI lends to banks
B) Rate at which RBI borrows from banks
C) Lending rate to customers
D) Bank’s lending to industry
Answer: B) Rate at which RBI borrows from banks
Explanation: Reverse repo absorbs liquidity from the banking system.
42. CRR stands for:
A) Cash Reserve Ratio
B) Credit Rate Ratio
C) Current Reserve Regulation
D) Capital Return Ratio
Answer: A) Cash Reserve Ratio
Explanation: CRR is the proportion of deposits that commercial banks must keep with RBI as reserves.
43. The function of SEBI in India is to regulate:
A) Banking
B) Insurance
C) Stock market
D) Agriculture
Answer: C) Stock market
Explanation: SEBI (Securities and Exchange Board of India) regulates capital markets, protecting investors.
44. Which is called the “Lender of Last Resort”?
A) IMF
B) RBI
C) SBI
D) World Bank
Answer: B) RBI
Explanation: RBI provides emergency financial assistance to banks, hence known as lender of last resort.
45. The largest contributor to India’s GDP is:
A) Agriculture
B) Industry
C) Services
D) Mining
Answer: C) Services
Explanation: Services sector contributes the maximum share to India’s GDP (IT, finance, trade, etc.).
46. The primary sector of the economy includes:
A) Manufacturing
B) Banking
C) Agriculture
D) Software
Answer: C) Agriculture
Explanation: Primary sector covers agriculture, forestry, fishing, and mining.
47. The secondary sector of the economy refers to:
A) Farming
B) Manufacturing
C) Trade and commerce
D) Transport
Answer: B) Manufacturing
Explanation: Secondary sector transforms raw materials into finished goods.
48. The tertiary sector includes:
A) Banking and trade
B) Mining
C) Agriculture
D) Manufacturing
Answer: A) Banking and trade
Explanation: Tertiary sector provides services such as banking, transport, communication, and IT.
49. India is the ____ largest economy in the world (Nominal GDP, 2023).
A) 3rd
B) 5th
C) 7th
D) 10th
Answer: B) 5th
Explanation: According to IMF & World Bank, India is the world’s 5th largest economy by nominal GDP.
50. “Human Development Index (HDI)” is published by:
A) World Bank
B) UNDP
C) IMF
D) WTO
Answer: B) UNDP
Explanation: United Nations Development Programme publishes HDI to measure development beyond GDP (education, health, income).
51. Who introduced the concept of “Gross National Happiness (GNH)”?
A) India
B) Bhutan
C) Nepal
D) Sri Lanka
Answer: B) Bhutan
Explanation: Bhutan uses GNH instead of GDP to measure development, focusing on well-being and sustainability.
52. The “Law of Supply” shows the relationship between:
A) Price and demand
B) Price and supply
C) Demand and income
D) Supply and cost
Answer: B) Price and supply
Explanation: Law of supply states that quantity supplied increases with rise in price, other things being constant.
53. Which of the following is a feature of a Monopoly market?
A) Many buyers, many sellers
B) Only one seller
C) Price determined by market
D) Free entry and exit
Answer: B) Only one seller
Explanation: Monopoly exists when a single seller dominates the market with no close substitutes.
54. In perfect competition, firms are:
A) Price makers
B) Price takers
C) Monopolists
D) Colluders
Answer: B) Price takers
Explanation: In perfect competition, firms cannot influence price; they accept the market price.
55. Oligopoly market is characterized by:
A) One seller
B) Few sellers
C) Many buyers and sellers
D) Only one buyer
Answer: B) Few sellers
Explanation: Oligopoly is a market with a small number of large firms dominating the industry.
56. Cartel formation is commonly found in which type of market?
A) Perfect competition
B) Monopoly
C) Oligopoly
D) Monopolistic competition
Answer: C) Oligopoly
Explanation: In oligopoly, firms sometimes collude to form cartels to control prices and output.
57. Price discrimination is a feature of:
A) Monopoly
B) Perfect competition
C) Monopolistic competition
D) Oligopoly
Answer: A) Monopoly
Explanation: A monopolist may charge different prices for the same product in different markets.
58. Dumping in international trade means:
A) Selling goods at high prices abroad
B) Selling goods below cost price abroad
C) Banning imports
D) Export subsidies
Answer: B) Selling goods below cost price abroad
Explanation: Dumping is when a country exports goods at a price lower than domestic price to capture foreign markets.
59. Balance of Payments (BoP) includes:
A) Only exports and imports
B) Only visible trade
C) All economic transactions with rest of the world
D) Only capital account
Answer: C) All economic transactions with rest of the world
Explanation: BoP records trade in goods, services, capital flows, and transfers between a country and the world.
60. Trade surplus occurs when:
A) Exports > Imports
B) Imports > Exports
C) Exports = Imports
D) No trade takes place
Answer: A) Exports > Imports
Explanation: A positive balance of trade (exports greater than imports) is called trade surplus.
61. Devaluation of currency means:
A) Increase in value of currency
B) Decrease in value of currency against foreign currency
C) Printing more notes
D) Increase in purchasing power
Answer: B) Decrease in value of currency against foreign currency
Explanation: Devaluation is a deliberate downward adjustment in the value of a country’s currency.
62. Appreciation of currency means:
A) Increase in value of currency
B) Decrease in value of currency
C) Government fixing the exchange rate
D) Printing more currency
Answer: A) Increase in value of currency
Explanation: Appreciation makes domestic currency stronger relative to foreign currency.
63. Which institution is called the “World Bank”?
A) IMF
B) IBRD
C) WTO
D) UNDP
Answer: B) IBRD
Explanation: The International Bank for Reconstruction and Development (IBRD) is known as the World Bank.
64. The main function of IMF is:
A) Provide long-term loans
B) Provide short-term balance of payment support
C) Regulate trade agreements
D) Publish HDI
Answer: B) Provide short-term balance of payment support
Explanation: IMF provides financial support to countries facing BoP crises.
65. WTO was established in:
A) 1945
B) 1980
C) 1995
D) 2001
Answer: C) 1995
Explanation: The World Trade Organization (WTO) replaced GATT in 1995 to regulate global trade.
66. The headquarters of WTO is in:
A) Washington DC
B) Geneva
C) Paris
D) New York
Answer: B) Geneva
Explanation: WTO headquarters are located in Geneva, Switzerland.
67. Which among the following is NOT part of the World Bank Group?
A) IBRD
B) IDA
C) IMF
D) IFC
Answer: C) IMF
Explanation: IMF is a separate institution; World Bank Group includes IBRD, IDA, IFC, MIGA, and ICSID.
68. The Phillips Curve shows the relationship between:
A) Inflation and unemployment
B) Inflation and GDP
C) Savings and investment
D) Imports and exports
Answer: A) Inflation and unemployment
Explanation: Phillips Curve illustrates an inverse relationship between inflation and unemployment.
69. “Trickle-down theory” is related to:
A) Socialism
B) Capitalism
C) Mixed economy
D) Public sector
Answer: B) Capitalism
Explanation: Trickle-down theory suggests that benefits to the rich eventually benefit society as a whole.
70. Keynesian economics emphasizes on:
A) Supply-side factors
B) Demand-side factors
C) Only monetary policy
D) Only trade
Answer: B) Demand-side factors
Explanation: Keynes stressed government spending to boost aggregate demand during recessions.
71. “General Theory of Employment, Interest and Money” was written by:
A) Adam Smith
B) J.M. Keynes
C) David Ricardo
D) Alfred Marshall
Answer: B) J.M. Keynes
Explanation: Published in 1936, this book laid the foundation of modern macroeconomics.
72. The concept of “Invisible Hand” is associated with:
A) Keynes
B) Adam Smith
C) Ricardo
D) Pigou
Answer: B) Adam Smith
Explanation: The invisible hand explains how self-interest leads to economic welfare.
73. Which of the following is NOT a type of unemployment?
A) Structural
B) Frictional
C) Seasonal
D) Commercial
Answer: D) Commercial
Explanation: Types of unemployment include structural, frictional, seasonal, and cyclical, but not “commercial.”
74. Disguised unemployment is mostly found in:
A) Agriculture
B) Industry
C) Services
D) Transport
Answer: A) Agriculture
Explanation: In agriculture, more workers are engaged than needed, leading to disguised unemployment.
75. Which of the following is an example of seasonal unemployment?
A) Construction workers in monsoon
B) IT professionals
C) Bank employees
D) Teachers in schools
Answer: A) Construction workers in monsoon
Explanation: Seasonal unemployment occurs when people are jobless at certain times of the year, e.g., agriculture and construction.
76. Which type of unemployment occurs during an economic recession?
A) Frictional unemployment
B) Seasonal unemployment
C) Cyclical unemployment
D) Structural unemployment
Answer: C) Cyclical unemployment
Explanation: Cyclical unemployment arises due to downturns in the business cycle (recessions).
77. Which of the following is NOT a characteristic of underdeveloped economies?
A) Low per capita income
B) High capital formation
C) High population growth
D) Dependence on agriculture
Answer: B) High capital formation
Explanation: Underdeveloped economies usually suffer from low capital formation, not high.
78. Which is NOT included in National Income?
A) Wages of employees
B) Profits of firms
C) Transfer payments
D) Rent of land
Answer: C) Transfer payments
Explanation: Transfer payments (like pensions, subsidies) are not part of production and hence excluded.
79. Which is the largest source of revenue for the Government of India?
A) Income tax
B) GST
C) Customs duty
D) Corporate tax
Answer: B) GST
Explanation: Goods and Services Tax is currently the biggest source of government revenue.
80. Public expenditure on health and education is an example of:
A) Revenue expenditure
B) Productive expenditure
C) Transfer expenditure
D) Wasteful expenditure
Answer: B) Productive expenditure
Explanation: Such spending improves human capital and contributes to economic growth.
81. Which is the largest item of expenditure in the Indian Union Budget?
A) Education
B) Defense
C) Interest payments
D) Subsidies
Answer: C) Interest payments
Explanation: A major part of India’s expenditure is on repayment of debt and interest payments.
82. “Tax as a compulsory payment” is defined by:
A) Keynes
B) Dalton
C) Marshall
D) Pigou
Answer: B) Dalton
Explanation: Dalton defined taxes as compulsory contributions from individuals to the government.
83. Which of the following is a progressive tax?
A) GST
B) Excise duty
C) Income tax
D) Customs duty
Answer: C) Income tax
Explanation: Progressive taxes increase with income, reducing income inequality.
84. Which of the following is a regressive tax?
A) Income tax
B) Wealth tax
C) GST
D) Corporate tax
Answer: C) GST
Explanation: Indirect taxes like GST are regressive because poor people spend a larger share of income on them.
85. Which type of budget shows equal revenue and expenditure?
A) Surplus budget
B) Balanced budget
C) Deficit budget
D) Zero-based budget
Answer: B) Balanced budget
Explanation: When government revenue equals expenditure, it is a balanced budget.
86. Zero-based budgeting was first introduced in:
A) USA
B) India
C) UK
D) Japan
Answer: A) USA
Explanation: Zero-based budgeting was introduced in the USA in the 1960s, later adopted by India in 1983.
87. Which sector is known as the “Primary sector”?
A) Manufacturing
B) Agriculture
C) Services
D) Trade
Answer: B) Agriculture
Explanation: Agriculture and allied activities form the base of the primary sector.
88. Which sector is called the “Engine of Growth” in India?
A) Industry
B) Services
C) Agriculture
D) Banking
Answer: B) Services
Explanation: The services sector has been the main driver of India’s economic growth in recent decades.
89. The Green Revolution in India was mainly related to:
A) Industry
B) Services
C) Agriculture
D) Banking
Answer: C) Agriculture
Explanation: Green Revolution refers to agricultural growth through high-yielding seeds, fertilizers, and irrigation.
90. Who is known as the “Father of Green Revolution in India”?
A) M.S. Swaminathan
B) Norman Borlaug
C) Verghese Kurien
D) C. Subramaniam
Answer: A) M.S. Swaminathan
Explanation: Swaminathan introduced high-yielding varieties in India, revolutionizing agriculture.
91. White Revolution in India is related to:
A) Rice production
B) Milk production
C) Fish production
D) Cotton production
Answer: B) Milk production
Explanation: White Revolution led by Verghese Kurien made India the largest producer of milk.
92. Which is called the “Sunrise Industry”?
A) Textiles
B) Information Technology
C) Coal mining
D) Handicrafts
Answer: B) Information Technology
Explanation: IT is considered a sunrise industry due to its rapid growth and future potential.
93. Which of the following is NOT a feature of developing economies?
A) High per capita income
B) High population growth
C) Unemployment
D) Dependence on agriculture
Answer: A) High per capita income
Explanation: Developing economies generally have low per capita income.
94. Human Capital refers to:
A) Number of machines
B) Money available
C) Skills and abilities of people
D) Natural resources
Answer: C) Skills and abilities of people
Explanation: Human capital is the economic value of education, skills, and health of people.
95. Which plan in India gave priority to agriculture?
A) First Five Year Plan
B) Second Five Year Plan
C) Third Five Year Plan
D) Fifth Five Year Plan
Answer: A) First Five Year Plan
Explanation: The First Plan (1951–56) gave top priority to agriculture and irrigation.
96. The Mahalanobis model was used in which Five Year Plan?
A) First
B) Second
C) Third
D) Fourth
Answer: B) Second
Explanation: The Second Plan (1956–61) was based on the Mahalanobis model, emphasizing heavy industry.
97. Which institution prepares the Human Development Index (HDI)?
A) IMF
B) UNDP
C) World Bank
D) WTO
Answer: B) UNDP
Explanation: UNDP (United Nations Development Programme) prepares HDI annually.
98. India’s Planning Commission was replaced by:
A) Finance Commission
B) NITI Aayog
C) RBI
D) SEBI
Answer: B) NITI Aayog
Explanation: In 2015, Planning Commission was replaced by NITI Aayog to promote cooperative federalism.
99. The Chairman of NITI Aayog is:
A) Finance Minister
B) Prime Minister
C) RBI Governor
D) Home Minister
Answer: B) Prime Minister
Explanation: The Prime Minister of India is the ex-officio Chairman of NITI Aayog.
100. Sustainable development means:
A) Development with unlimited use of resources
B) Development without considering environment
C) Development meeting present needs without harming future generations
D) Development with maximum consumption
Answer: C) Development meeting present needs without harming future generations
Explanation: Sustainable development balances economic growth with environmental protection and social equity.