MCQs on Economics -23

1. The Bretton – Woods system
(A) set up a code of rules for nations to follow their conduct of international trade
(B) set up borrowing facilities for nation’s temporary balance of payments problems
(C) Evolved over the years in several important ways
(D) All of the above

2. Full employment and balance of payments equilibrium will be automatically achieved in an optimum currency area
(A) if exchange rates are flexible
(B) foreign capital flows into the country
(C) if labour and capital move freely
(D) if trade is liberalized

3. Examples of economic integration
I. Free trade area
II. Customs union
III. Common market
IV. Cartel
(A) I and II are correct
(B) II and III are correct
(C) I, II and IV are correct
(D) I, II and III are correct

4. Maximum rate of tariff India can levy on edible oil under WTO Agreement on Agriculture is
(A) 100%
(B) 150%
(C) 200%
(D) 300%

5. WTO Agreement on Agriculture consists of
I. Domestic support
II. Export subsidies
III. Market access
IV. Input subsidies
(A) I and IV are correct.
(B) II and IV are correct.
(C) I, II and III are correct.
(D) I, II and IV are correct.

6. In Harrod’s growth model, neutral technical progress implies technical progress as
(A) Capital augmenting
(B) Labour augmenting
(C) Both labour and capital augmenting
(D) Productivity increasing

7. Which are the two gaps affecting growth process of an economic system in the two gap model of growth ?
(A) Saving gap and investment gap
(B) Income gap and consumption gap
(C) Foreign exchange gap and domestic saving gap
(D) Export gap and import gap

8. The ‘Golden Age’ model was developed by
(A) Nicholas Kaldor
(B) Joan Robinson
(C) J.R. Hicks
(D) R.F. Harrod

9. Terms of Trade of the developing countries are unfavourable due to the fact that whenever income in developed countries increases the demand for primary goods reduces because
(A) Income elasticity of demand for primary goods is high.
(B) Income elasticity of demand for primary goods is low.
(C) Income elasticity of demand is neutral towards primary goods.
(D) None of the above

10. T.W. Schultz has given the following ratios in relation to education for economic growth:
(A) Education capital and labour ratio
(B) Education labour ratio
(C) Education-income ratio
(D) Education labour ratio, education income ratio and education investment ratio

11. The cost incurred by the firm in hiring labour is called as
(A) Explicit Cost
(B) Implicit Cost
(C) Marginal Cost
(D) Total Cost

12. The locus of Pareto Optimality in Production and Consumption is given by
(A) The Social Welfare Function
(B) The Utility Possibility Curve
(C) The Transformation Curve
(D) The Grand Utility Possibility Curve

13.   List – I                   List – II
a. Tea and Coffee        1. Veblen goods
b. Car and Petrol          2. Substitutes
c. Gold and Diamonds  3. Giffen goods
d. Ragi and Bajra          4. Complementary
      a b c d
(A) 2 1 3 4
(B) 2 4 1 3
(C) 4 1 2 3
(D) 4 3 1 2

14. Assertion (A): In the short run under perfect competition, given the market demand and market supply the industry is in equilibrium at that price which clears the market.
Reason (R): In the long run all the firms in the industry earn profit.
(A) Both (A) and (R) are true and (R) is the correct explanation of (A).
(B) Both (A) and (R) are true, but (R) is not the correct explanation of (A).
(C) (A) is true, but (R) is false.
(D) (A) is false, but (R) is true.

15. Put the following in chronological order on the basis of development:
i. Law of Demand
ii. Revealed Preference Analysis
iii. Indifference Curve Analysis
iv. Law of Diminishing Marginal Utility
(A) i iii ii iv
(B) i iv iii ii
(C) i ii iv iii
(D) i iii iv ii



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