Q.1 What is the primary aim of political economy?
To study the relationship between politics and economics
To predict election outcomes
To analyze historical events only
To study cultural trends
Explanation - Political economy examines how political institutions, the political environment, and economic systems influence each other.
Correct answer is: To study the relationship between politics and economics
Q.2 Which thinker is considered the father of modern political economy?
Adam Smith
Karl Marx
John Locke
Max Weber
Explanation - Adam Smith, through works like 'The Wealth of Nations', laid the foundations of modern economic thought and its connection to politics.
Correct answer is: Adam Smith
Q.3 What does 'laissez-faire' economics advocate?
Government control of all industries
Minimal government intervention in economic affairs
High taxation to redistribute wealth
State ownership of property
Explanation - 'Laissez-faire' is a French term meaning 'let do', emphasizing free markets with minimal state interference.
Correct answer is: Minimal government intervention in economic affairs
Q.4 Which concept emphasizes the collective ownership of resources?
Capitalism
Socialism
Feudalism
Mercantilism
Explanation - Socialism advocates for collective or governmental ownership of the means of production to reduce inequality.
Correct answer is: Socialism
Q.5 What is the main focus of Keynesian economics?
Free market without intervention
Government intervention to stabilize the economy
Maximizing exports
Reducing labor rights
Explanation - John Maynard Keynes advocated using government policies, such as spending and taxation, to manage economic fluctuations.
Correct answer is: Government intervention to stabilize the economy
Q.6 Which economic system is characterized by private ownership and profit motive?
Communism
Capitalism
Socialism
State socialism
Explanation - Capitalism is based on private property, free markets, and the profit motive, allowing individuals to own and operate businesses.
Correct answer is: Capitalism
Q.7 The term 'mixed economy' refers to:
An economy with no government involvement
An economy combining private and public sector roles
An economy solely controlled by the state
An economy without markets
Explanation - A mixed economy incorporates both private enterprise and government regulation to balance efficiency and social welfare.
Correct answer is: An economy combining private and public sector roles
Q.8 Which theory links economic power with political authority?
Pluralism
Marxism
Realism
Liberalism
Explanation - Marxist theory argues that economic structures determine political power and that the ruling class uses politics to maintain economic dominance.
Correct answer is: Marxism
Q.9 What is 'rent-seeking' in political economy?
Investing in real estate
Seeking profits without contributing to productivity
Government subsidies for farmers
Reducing taxes for corporations
Explanation - Rent-seeking occurs when individuals or firms attempt to gain economic advantages through manipulation or exploitation of the political environment rather than creating value.
Correct answer is: Seeking profits without contributing to productivity
Q.10 Which institution plays a key role in regulating the economy at the global level?
United Nations
World Bank
NATO
OECD
Explanation - The World Bank provides financial and technical assistance to developing countries, influencing global economic policies.
Correct answer is: World Bank
Q.11 Which concept describes the state controlling key industries for public welfare?
Nationalization
Privatization
Liberalization
Deregulation
Explanation - Nationalization involves government takeover of private industries to ensure public control and welfare objectives.
Correct answer is: Nationalization
Q.12 Who argued that economic base determines political superstructure?
John Locke
Karl Marx
Adam Smith
Milton Friedman
Explanation - Marx theorized that the economic base (means of production) shapes the political and ideological structures of society.
Correct answer is: Karl Marx
Q.13 Which economic principle encourages competition to increase efficiency?
Monopolism
Capitalism
Protectionism
Mercantilism
Explanation - Competition in capitalist systems drives innovation and efficiency, benefiting consumers and the economy.
Correct answer is: Capitalism
Q.14 What is the main criticism of laissez-faire policies?
They limit individual freedom
They can increase economic inequality
They reduce market efficiency
They increase government spending
Explanation - Without regulation, laissez-faire systems may lead to wealth concentration and social inequalities.
Correct answer is: They can increase economic inequality
Q.15 Which economic system is associated with Karl Marx?
Capitalism
Socialism
Mercantilism
Feudalism
Explanation - Marx advocated for socialism, emphasizing collective ownership and the end of class exploitation.
Correct answer is: Socialism
Q.16 Which concept involves reducing barriers to trade between countries?
Protectionism
Free trade
Monopolization
Nationalization
Explanation - Free trade promotes international exchange of goods with minimal tariffs, encouraging economic efficiency and growth.
Correct answer is: Free trade
Q.17 What is the role of central banks in political economy?
Regulate monetary policy
Control political campaigns
Distribute subsidies
Manage social welfare programs
Explanation - Central banks manage money supply, interest rates, and inflation to stabilize the economy and influence government policy.
Correct answer is: Regulate monetary policy
Q.18 Which term refers to excessive influence of corporations over politics?
Cronyism
Corporate capture
Rent-seeking
Monopolism
Explanation - Corporate capture occurs when private corporations exert undue influence over political decisions to serve their interests.
Correct answer is: Corporate capture
Q.19 Which concept advocates wealth redistribution to reduce inequality?
Capitalism
Liberalism
Social democracy
Mercantilism
Explanation - Social democracy combines democratic governance with policies that redistribute wealth and provide social welfare.
Correct answer is: Social democracy
Q.20 What is 'political capitalism'?
Economy run entirely by the state
Economic success linked to political power
A free market with no regulations
Wealth redistribution system
Explanation - Political capitalism refers to situations where economic benefits are gained primarily through political connections rather than market competition.
Correct answer is: Economic success linked to political power
Q.21 Which thinker emphasized the importance of institutions in economic performance?
Douglass North
Karl Marx
Adam Smith
John Maynard Keynes
Explanation - Douglass North highlighted how institutions, rules, and governance structures shape economic outcomes.
Correct answer is: Douglass North
Q.22 Which economic approach focuses on long-term planning and state-led development?
Keynesianism
Developmental state model
Laissez-faire
Mercantilism
Explanation - The developmental state model emphasizes proactive government planning to drive economic growth and industrialization.
Correct answer is: Developmental state model
Q.23 What does 'fiscal policy' involve?
Government spending and taxation
Money supply and interest rates
Regulating international trade
Price controls in markets
Explanation - Fiscal policy refers to the use of government expenditure and tax policies to influence economic activity.
Correct answer is: Government spending and taxation
Q.24 Which term describes a situation where economic elites dominate political decisions?
Plutocracy
Democracy
Oligarchy
Technocracy
Explanation - Plutocracy is a political system where the wealthy elite hold significant power over policy-making.
Correct answer is: Plutocracy
Q.25 Which policy aims at controlling inflation through government measures?
Monetary policy
Fiscal policy
Trade policy
Industrial policy
Explanation - Monetary policy, managed by central banks, uses tools like interest rates and money supply to control inflation and stabilize the economy.
Correct answer is: Monetary policy