Q.1 What does GDP stand for in economics?
Gross Domestic Product
Global Demand Price
Government Development Plan
General Domestic Policy
Explanation - GDP stands for Gross Domestic Product, which measures the total value of goods and services produced in a country within a specific period.
Correct answer is: Gross Domestic Product
Q.2 Which organization calculates India’s GDP?
World Bank
Reserve Bank of India
Central Statistics Office
IMF
Explanation - In India, the Central Statistics Office (CSO) is responsible for calculating GDP and related national accounts.
Correct answer is: Central Statistics Office
Q.3 What is inflation?
Decrease in prices
Increase in unemployment
Sustained rise in general price levels
Increase in exports
Explanation - Inflation refers to a sustained increase in the general price level of goods and services over time.
Correct answer is: Sustained rise in general price levels
Q.4 Which type of unemployment occurs when workers’ skills do not match available jobs?
Cyclical unemployment
Structural unemployment
Seasonal unemployment
Frictional unemployment
Explanation - Structural unemployment occurs when workers’ skills do not match job requirements, often due to changes in technology or industry.
Correct answer is: Structural unemployment
Q.5 Which of the following is NOT a component of GDP?
Consumption
Investment
Government Spending
Imports
Explanation - GDP includes Consumption, Investment, Government Spending, and Net Exports (Exports minus Imports). Imports are subtracted in the calculation.
Correct answer is: Imports
Q.6 Who is known as the father of modern macroeconomics?
Adam Smith
John Maynard Keynes
David Ricardo
Karl Marx
Explanation - John Maynard Keynes is regarded as the father of modern macroeconomics for his work in developing Keynesian economics.
Correct answer is: John Maynard Keynes
Q.7 The Phillips Curve shows the relationship between:
Inflation and Unemployment
GDP and Population
Taxes and Spending
Savings and Investment
Explanation - The Phillips Curve demonstrates an inverse relationship between inflation and unemployment in the short run.
Correct answer is: Inflation and Unemployment
Q.8 Fiscal policy is primarily concerned with:
Money supply
Taxation and government spending
Exchange rates
Stock market regulation
Explanation - Fiscal policy refers to government decisions on taxation and spending to influence the economy.
Correct answer is: Taxation and government spending
Q.9 Which institution in India manages monetary policy?
Ministry of Finance
Reserve Bank of India
NITI Aayog
SEBI
Explanation - The Reserve Bank of India manages the country's monetary policy, including money supply and interest rates.
Correct answer is: Reserve Bank of India
Q.10 A period of negative GDP growth for two consecutive quarters is called:
Depression
Stagflation
Recession
Inflation
Explanation - Recession is defined as a decline in GDP for at least two consecutive quarters.
Correct answer is: Recession
Q.11 Which of these is a leakage in the circular flow of income?
Consumption
Exports
Savings
Government spending
Explanation - Savings are considered a leakage because they remove money from the spending cycle, unless reinvested.
Correct answer is: Savings
Q.12 Stagflation refers to a situation of:
High growth and low unemployment
High inflation and high unemployment
Low inflation and low unemployment
High exports and low imports
Explanation - Stagflation is the rare condition where both inflation and unemployment are high.
Correct answer is: High inflation and high unemployment
Q.13 Which type of inflation is caused by excessive demand?
Cost-push inflation
Demand-pull inflation
Hyperinflation
Creeping inflation
Explanation - Demand-pull inflation occurs when aggregate demand exceeds aggregate supply, pushing prices up.
Correct answer is: Demand-pull inflation
Q.14 The unemployment that exists even at full employment is called:
Natural rate of unemployment
Seasonal unemployment
Cyclical unemployment
Structural unemployment
Explanation - The natural rate of unemployment includes frictional and structural unemployment that exists even at full employment.
Correct answer is: Natural rate of unemployment
Q.15 If the government reduces taxes, aggregate demand will:
Increase
Decrease
Remain constant
Fall sharply
Explanation - Lower taxes increase disposable income, raising consumer spending and aggregate demand.
Correct answer is: Increase
Q.16 Which of the following is a lagging indicator of economic performance?
Unemployment rate
Stock market prices
Business investment
Consumer confidence
Explanation - The unemployment rate lags behind economic changes, reflecting past conditions.
Correct answer is: Unemployment rate
Q.17 The term 'monetary policy' refers to:
Government spending
Management of money supply and interest rates
Regulation of imports and exports
Price controls
Explanation - Monetary policy is the central bank’s regulation of money supply and interest rates to control inflation and stabilize the economy.
Correct answer is: Management of money supply and interest rates
Q.18 Which of the following is included in India’s monetary policy tools?
GST
Cash Reserve Ratio
Subsidies
Exports
Explanation - Cash Reserve Ratio (CRR) is a monetary tool where banks keep a portion of deposits with the RBI.
Correct answer is: Cash Reserve Ratio
Q.19 What is the main objective of supply-side policies?
Increase demand
Increase long-term productive capacity
Reduce imports
Control inflation directly
Explanation - Supply-side policies aim to improve efficiency, productivity, and long-term economic growth.
Correct answer is: Increase long-term productive capacity
Q.20 Which concept explains the total planned expenditure in an economy?
Aggregate demand
Aggregate supply
National income
Disposable income
Explanation - Aggregate demand is the total planned expenditure on domestic goods and services in an economy at a given level of income.
Correct answer is: Aggregate demand
Q.21 Which organization publishes the World Economic Outlook?
World Bank
IMF
UNDP
WTO
Explanation - The International Monetary Fund publishes the World Economic Outlook twice a year.
Correct answer is: IMF
Q.22 If exports exceed imports, the balance of trade is:
Positive
Negative
Neutral
Zero
Explanation - A positive balance of trade occurs when exports are greater than imports, leading to a trade surplus.
Correct answer is: Positive
Q.23 Which of these is considered a measure of standard of living?
GDP per capita
Total exports
Government revenue
Population growth
Explanation - GDP per capita measures average income per person and is used as an indicator of standard of living.
Correct answer is: GDP per capita
Q.24 The business cycle consists of which phases?
Boom and inflation
Expansion, peak, recession, trough
Growth and decline
Inflation and deflation
Explanation - The business cycle has four main phases: expansion, peak, recession, and trough.
Correct answer is: Expansion, peak, recession, trough
Q.25 Which type of budget deficit arises when government spending exceeds revenue?
Revenue deficit
Fiscal deficit
Primary deficit
Trade deficit
Explanation - Fiscal deficit occurs when total government spending exceeds total revenue excluding borrowings.
Correct answer is: Fiscal deficit