Economics is a very important subject for competitive exams like UPSC, SSC, Railways, State PSCs, and other government job tests. It helps us understand how people, companies, and the government use limited resources to meet their needs. Learning about topics like microeconomics, macroeconomics, types of economy, production, investment, and different market types is helpful for both studies and exams. To make your revision easier, here are some multiple-choice questions (MCQs) with answers on important economics topics.
Economics is known as a social science because it studies how people allocate limited resources to satisfy wants and needs. What is the correct definition of economics?
a) Study of politics and society
b) Science of wealth creation only
c) Science that studies the allocation of scarce resources for consumer wants, producer profits, and social welfare
d) Study of only government and public finance
Answer: c) Science that studies allocation of scarce resources for consumer wants, producer profits, and social welfare
Who is regarded as the Father of Economics, known for his famous work The Wealth of Nations, published in 1776?
a) Karl Marx
b) Adam Smith
c) Alfred Marshall
d) John Maynard Keynes
Answer: b) Adam Smith
Restaurants, hairdressers, hotels, and pubs usually fall under which type of market, which has features of both monopoly and perfect competition?
a) Monopoly
b) Perfect competition
c) Monopolistic competition
d) Oligopoly
Answer: c) Monopolistic competition
Which economic system allows private businesses to control resources and production factors with minimal government intervention?
a) Socialism
b) Capitalism
c) Mixed economy
d) Gig economy
Answer: b) Capitalism
Which sector directly depends on natural resources like agriculture, fishing, dairy, and forestry?
a) Secondary sector
b) Quaternary sector
c) Primary sector
d) Quinary sector
Answer: c) Primary sector
According to the Periodic Labour Force Survey (PLFS) 2022–23, what percentage of India’s total workforce is engaged in agriculture and allied activities?
a) 25.10%
b) 35.28%
c) 45.76%
d) 55.82%
Answer: c) 45.76%
Jobs in the secondary sector, also called the industrial sector, are usually associated with manual and skilled industrial work. These types of jobs are called:
a) White-collar jobs
b) Blue-collar jobs
c) Red-collar jobs
d) Green-collar jobs
Answer: b) Blue-collar jobs
What was the contribution of the industrial sector to India’s GDP in 1950–51, which later increased to 24.6% in 1990–91?
a) 10%
b) 13%
c) 18%
d) 20%
Answer: b) 13%
The tertiary sector is also called the service sector and supports the growth of primary and secondary sectors. Which type of jobs are mostly associated with this sector?
a) White-collar jobs
b) Red-collar jobs
c) Blue-collar jobs
d) Green-collar jobs
Answer: a) White-collar jobs
Which sector of the economy deals with high-level knowledge work, decision-making, and creating new ideas and technologies?
a) Quinary sector
b) Primary sector
c) Secondary sector
d) Quaternary sector
Answer: a) Quinary sector
In India, employment terms that are fixed, regular, and covered under laws and regulations fall under which type of sector?
a) Public sector
b) Unorganised sector
c) Organised sector
d) Informal sector
Answer: c) Organised sector
Small, scattered, low-income units with irregular employment and little protection from laws and trade unions in India are characteristics of which sector?
a) Organised sector
b) Public sector
c) Unorganised sector
d) Quinary sector
Answer: c) Unorganised sector
Which economic system combines features of both capitalism and socialism, allowing private property along with government regulation?
a) Mixed economy
b) Socialist economy
c) Capitalist economy
d) Gig economy
Answer: a) Mixed economy
The main aim of the private sector in an economy, where assets are owned by individuals or companies, is to:
a) Provide social welfare
b) Ensure government regulation
c) Earn profit
d) Support agriculture
Answer: c) Earn profit
Which economic principle explains that when two kinds of currency circulate together, the less valuable one tends to replace the more valuable one?
a) Law of Demand
b) Gresham’s Law
c) Marshall’s Law
d) Ricardian Law
Answer: b) Gresham’s Law
Which model explains how resources cannot be reallocated to make one person better off without making someone else worse off?
a) Solow–Swan model
b) Pareto efficiency
c) Heckscher–Ohlin model
d) Circular economy
Answer: b) Pareto efficiency
Gross Investment is the total expenditure made on buying capital goods over a time period. Which formula correctly represents it?
a) Gross Investment = Net Investment – Depreciation
b) Gross Investment = Net Investment + Depreciation
c) Gross Investment = Consumption + Savings
d) Gross Investment = Capital – Income
Answer: b) Gross Investment = Net Investment + Depreciation
Example of a stock variable in economics?
a) Profit of a company in a year
b) Amount of money in a bank account on 1st January
c) Production of rice in one season
d) Imports of cloth in 2022
Answer: b) Amount of money in a bank account on 1st January
The Solow–Swan model, mainly analyzes:
a) Short-term inflation control
b) Long-run economic growth with changes in savings, population, and technology
c) Demand-side unemployment
d) Consumer equilibrium and utility
Answer: b) Long-run economic growth with changes in savings, population, and technology
Which type of capital refers to people’s knowledge, skills, expertise, and education that help in production processes?
a) Financial capital
b) Human capital
c) Social capital
d) Natural capital
Answer: b) Human capital
The group that helps in the maintenance of human capital, such as families and social networks, is referred to as:
a) Human capital
b) Social capital
c) Financial capital
d) Natural capital
Answer: b) Social capital
Which concept in economics explains that only those business activities that can be expressed in monetary terms are recorded in accounts, while qualities like skills or personal services are not included?
a) Pareto principle
b) Monetary principle
c) Solow principle
d) Input-output principle
Answer: b) Monetary principle
Indian Railways and Microsoft are classic examples of which type of market structure?
a) Monopolistic competition
b) Oligopoly
c) Monopoly
d) Perfect competition
Answer: c) Monopoly
A market structure where a few large sellers dominate and are interdependent in pricing and output decisions is known as:
a) Perfect competition
b) Oligopoly
c) Monopoly
d) Monopolistic competition
Answer: b) Oligopoly
In which market structure do numerous buyers and sellers trade identical products at a uniform price determined by supply and demand?
a) Oligopoly
b) Monopoly
c) Perfect competition
d) Monopolistic competition
Answer: c) Perfect competition