1.
The term 'Economy' refers to:
A) A group of economists
B) A system that solves the central problems
C) A government office
D) An individual’s budget
2. Which of the following is a feature of a capitalist economy?
A) Government ownership of resources
B) Central planning
C) Profit motive
D) Absence of private property
3. Microeconomics deals with:
A) Inflation
B) Aggregate demand
C) Price of a specific commodity
D) National income
4. Macroeconomics studies:
A) Behavior of individual consumers
B) Production decisions of a firm
C) Whole economy
D) Pricing of one product
5. Which of the following best describes the scope of economics?
A) Unlimited resources and limited wants
B) Limited wants and limited means
C) Unlimited wants and limited means
D) Unlimited wants and unlimited means
6. The economy is divided into how many basic sectors?
A) One
B) Two
C) Three
D) Four
7. In which type of economy are decisions taken by the government?
A) Mixed economy
B) Socialist economy
C) Capitalist economy
D) Market economy
8. The basic economic activities include:
A) Voting and education
B) Production, consumption, and distribution
C) Shopping and entertainment
D) Investment in shares
9. What is the main cause of economic problems?
A) Abundance of resources
B) Scarcity of resources
C) Less demand
D) Unlimited supply
11. Which of the following is not a central problem of an economy?
A) What to produce
B) How to produce
C) How to earn more profit
D) For whom to produce
12. What to produce refers to the problem of:
A) Choosing technique
B) Choice of goods and services
C) Choosing distribution method
D) Determining price level
13. The problem of ‘How to produce’ arises due to:
A) Unlimited wants
B) Scarce resources
C) Availability of different production techniques
D) Government policies
14. ‘For whom to produce’ involves the issue of:
A) Income distribution
B) Method of production
C) Resource allocation
D) Product pricing
15. Opportunity cost means:
A) The actual cost of an item
B) The monetary cost
C) The value of next best alternative foregone
D) Extra cost due to inflation
16. Which of the following economies face the central problems?
A) Capitalist economies
B) Socialist economies
C) Mixed economies
D) All of the above
17. In a market economy, allocation of resources is determined by:
A) Government decisions
B) Central planning authority
C) Market forces of demand and supply
D) Local authorities
18. A production possibility curve (PPC) represents:
A) Unlimited production capacity
B) Different combinations of two goods that can be produced
C) Government budget
D) Import-export balance
19. Movement along the PPC is caused by:
A) Change in resources
B) Change in production level of one good
C) Unemployment
D) Natural calamities
20. PPC is concave to the origin due to:
A) Increasing costs
B) Decreasing costs
C) Constant costs
D) External benefits
21. An economy operates inside the PPC when:
A) Resources are fully employed
B) There is inefficiency or unemployment
C) Resources are abundant
D) Output is maximized
22. The concept of ‘marginal opportunity cost’ is shown by:
A) National budget
B) Central bank
C) Production possibility curve
D) Tax revenue
23. Which point on the PPC indicates underutilization of resources?
A) A point on the curve
B) A point outside the curve
C) A point inside the curve
D) All points on the curve
24. If a country is producing at a point outside the PPC, it means:
A) Efficient use of resources
B) Unattainable level of output
C) Full employment
D) Overproduction
25. Which of the following helps solve the central problems in a mixed economy?
A) Government only
B) Market forces only
C) Both government and market
D) External economies
