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Basic of Economics – MCQs
428 questions. Click to practice.
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Correct options are highlighted when revealed.
1.
Which of the following is used to assess economic development?
Growth in nominal Gross National Product
Growth in real Gross National Product
Rise in individual income levels
Increase in government earnings
2.
What term describes a market condition when stock prices are increasing?
Bear market
Bull market
Peak market
Market surge
None of the above
3.
Which factor is likely to lead to a depreciation of a nation's currency exchange rate?
A rise in foreign demand for the country's exported goods
A surge in the country's demand for imported products
A larger amount of foreign investment entering the country
None of the options listed
4.
What is the primary reason for inflation?
A rise in the amount of money circulating in the economy
A decline in the overall production output
Both an increase in money supply and a decrease in production
A reduction in money supply combined with lower production
5.
According to the law of demand, what happens when the price of a good rises?
Demand falls as the price goes up
Demand drops as the price goes down
Demand rises when the price increases
None of the above
6.
Why is Gross National Income (GNI) consistently higher than Net National Income (NNI)?
Income earned from abroad
Allowance for depreciation of capital assets
Taxes imposed on goods and services
Taxes levied directly on individuals or corporations
7.
What does a budget deficit indicate?
Overall spending exceeds overall income
Operating expenses surpass operating income
Investment spending is greater than investment income
Total expenses are higher than operating income
8.
Which factor is most effective in promoting a fairer distribution of income?
A rise in indirect taxation
An increase in executive compensation
A higher rate of progressive taxes
An acceleration in inflation rates
9.
What does economic development primarily refer to?
It is identical to economic growth
It signifies an enhancement in living standards
It occurs when income is distributed equally
All the statements above are correct
10.
Which of the following represents a leakage from the circular flow of income?
Capital expenditure
Government grants
Taxes
Household spending
Savings
11.
Which of the following is not considered part of consumption expenditure?
Buying food for personal use by a household
A household purchasing a new automobile
Rent payments made by a household for their apartment
A household acquiring shares in XYZ company
Household expenses on utilities like electricity and water
12.
What does net investment represent?
Total investment minus personal investment
Total investment minus government expenditure on investment
Total investment after subtracting depreciation of capital
All of the above
13.
What does GNP represent?
The overall sales volume within the economy
The sum of all financial exchanges in the economy
The total market value of all goods and services generated by an economy
The aggregate expenditure in the economy
14.
Which approach is used to calculate the national income?
Spending approach
Earnings approach
Output approach
All of these methods
15.
How is the term 'stagflation' best defined?
A decrease in prices resulting from reduced money supply
A reduction in jobs caused by a drop in manufacturing output
A situation where high inflation occurs alongside high unemployment and steady consumer demand
None of the above
16.
What does the price elasticity of demand indicate?
How price varies due to shifts in demand
The speed at which sales fluctuate
How sensitive demand is to variations in price
The total sales revenue at a specific price point
17.
Which action would lead to a decrease in central planning within an economy?
Raising government expenditures
Expanding state ownership of companies
Enhancing the influence of market forces
Eliminating the incentive for profit
18.
What are transfer payments?
Loans provided by banks
Payments given without any exchange of labor
Payments made as taxes
Compensation to all production factors
19.
Which indicator best reflects the standard of living within a country?
Total national income
Income per person
Level of poverty
Not applicable
20.
What is the term for a tax that is borne and paid directly by the individual on whom it is imposed?
Municipal tax
Indirect levy
Direct tax
Tax rate
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