Economics MCQ Quiz - Objective Question with Answer for Economics - Download Free PDF

• In rural locations around the nation, India has been building all-weather roads and improving existing ones since 2001.
• The Pradhan Mantri Gram Sadak Yojana, the nation's flagship program, has received $2.1 billion in investment from the World Bank. It will directly assist around 19,000 habitations through 48,000 km of village roads.​​​

Key Points

• These roads have made it simpler to access markets, hospitals, and schools while also helping to increase rural incomes and create new livelihood prospects.
• They have increased household incomes, created new livelihood opportunities, and facilitated inhabitants' access to markets, hospitals, and schools as well as a range of recreational opportunities.

• Prime Minister Shri Narendra Modi launched the Pradhan Mantri Jan Aarogya Yojana (AB-PMJAY) on September 23, 2018, in Ranchi, Jharkhand.
• Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) shall be executed in accordance with the Ayushman Bharat vision to ensure that each and every citizen receives his or her fair share of healthcare.

Key Points

•  For secondary and tertiary care hospitalization, the Pradhan Mantri Jan Arogya Yojana (PMJAY) will offer a cover of up to Rs. 5 lakhs per family per year.
• These benefits will be available to around 10.74 crore vulnerable entitled families, or roughly 50 crore people.
• At the moment of service, PMJAY will offer the beneficiary cashless and paperless access to services.

​Hence the correct answer is PMAJAY is implemented in 2018.

• According to the Ministry of Statistics and Program Implementation, the proportion of manufacturing production from micro, small, and medium-sized companies (MSME) in all of India's manufacturing output decreased slightly to 35.98% in 2020–21 from 36.68% in 2019–20.

Key Points

• Minister of State for MSME Bhanu Pratap Singh Verma stated that MSMEs are crucial to the nation's manufacturing industry.
• Ministry of MSME has launched a number of initiatives to encourage entrepreneurship, creativity, and innovation.
• 257 ideas in the MSME Idea Hackathon 2022 have been approved for reimbursement of 1196 Trademarks, 186 Patents, 53 Designs, and 11 Geographical Indications (GI), with a cost estimate of Rs 34.00 Crore, for the current fiscal year 2022–23.

Hence the correct answer is 35.98% is the share of MSME in manufacturing sector in 2020-21.

• Rajasthan ranks highest in providing jobs to migrant workers returning to their native areas during the COVID-19 lockdown, employing 49.52 lakh laborers through the Mahatma Gandhi National Rural Employment Guarantee Scheme.
• Rajasthan has the highest national average of 49.52 lakh workers employed under the MGNREGA.

Key Points

• There has been a 17.27 lakh increase from the 32.25 lakh laborers employed last year.
• Approximately 85% of the more than 10 lakh migrant laborers employed under the program have gotten job cards.
• Till June 30, a special campaign is being undertaken to issue employment cards to migratory laborers.

Hence, the correct answer is 'Apna Khet, Apna Kaam' under MNREGA, was first implemented in Rajasthan.

The correct answer is Hyderabad.

Key Points

• The head office of the Insurance Regulatory and Development Authority of India (IRDAI) is situated in Hyderabad. 
• Insurance Regulatory and Development Authority of India (IRDAI):
  • It was constituted by the recommendations of the Malhotra Committee report, in 1999.
  • It is an autonomous body.
  • It regulates and develops the insurance industry.
  • The IRDA was incorporated as a statutory body in April 2000.
  • Objective: Enhance customer satisfaction through increased consumer choice and lower premiums while ensuring the financial security of the insurance market.
  • Today there are 34 general insurance companies and 24 life insurance companies operating in the country.

Additional Information

The correct answer is GDP - Depreciation.

Key Points

• Net domestic product (NDP) is an annual measure of the economic output of a nation that is adjusted as per the depreciation effect.
• The NDP is calculated by subtracting depreciation from the gross domestic product (GDP).
• An increased NDP indicates growth in economic health, while a decrease would indicate a slowdown of the economy of the country.
• Depreciation is the measure of the decreased monetary value of an asset over time due to use, wear and tear, or obsolescence.

Additional Information Gross National Income (GNI)

• Gross National Income (GNI) is the total amount of money earned by a nation's people and businesses.
• It is used to measure and track a nation's wealth from year to year.
• The number is calculated using the nation's gross domestic product (GDP) plus the income it receives from abroad.
• India GNI per capita for 2020 was $1,900.

Net National Product (NNP)

• Net national product (NNP) is the monetary value of finished goods and services produced by a country's citizens, overseas and domestically, in a given period.
• It is the equivalent of the Gross National Product (GNP), the total value of a nation's annual output, minus the depreciation.
• NNP is often examined on an annual basis as a way to measure a nation's success.

Macroeconomics is also called the theory of income.

• Macroeconomics is the branch of economics that studies the behavior and performance of an economy as a whole.
• It focuses on the aggregate changes in the economy such as unemployment, growth rate, gross domestic product, and inflation.  
• Macroeconomics is also known as the Theory of Income and Employment, or income analysis, as it focuses on how income and employment levels are determined in an economy. The subject of macroeconomics revolves around the determination of income and employment.
• Income and employment theory, a body of economic analysis concerned with the relative levels of output, employment, and prices in an economy. By defining the interrelation of these macroeconomic factors, governments try to create policies that contribute to economic stability.

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) is a flagship Programme of the Government of India.

Important Points MGNREGA:

• The scheme was introduced as a social measure that guarantees “the right to work”.

Solution

The correct answer is Corporation Tax

Key Points

• Corporation tax is a direct tax imposed on the net income or profit those enterprises make from their businesses.
• Companies, both private and public which are registered in India under the Companies Act 1956, are liable to pay corporate tax.
• A company that is established in India and is registered under India’s Companies Act, 2013 is termed a Domestic Corporate.
• In case of a Foreign Corporation, as the name suggests, a company that is situated overseas and not in India is called a foreign corporation. If some part of a foreign company’s management and control is situated outside of India, then also it is called a foreign company.

Sales Tax

• The indirect tax imposed on the selling and purchasing of goods within India is referred to as Sales Tax.
• It is an additional amount paid over and above the base value of the product being purchased.
• It is usually charged from buyers at the point of purchase or the exchange of some specific goods and is chargeable at a certain percentage of the product value
• Sales Tax is levied by the Central Government as well as State Governments. It is decided by the Central Government basis its tax policies.

Excise Duty

• Excise duty is a form of indirect tax that is levied by the Central Government of India for the production, sale, or license of certain goods.
• Excise duty charges are also collected by state governments for alcohol and narcotics.
• There are different types of excise duties such as Basic Excise Duty, Special Excise Duty, Education Cess on Excise Duty, Natural Calamity Contingent Duty, and Excise Duty in case of clearances by Export Oriented Units

Customs Duty

• The Government of India levies a Customs Duty on all the imports within and some of the exports from the country.
• The amount to be paid as customs duty can be determined by several factors such as the value, weight, dimensions, etc. of the item in question.
• Duties levied on import of goods are termed as import duties while duties levied on exported goods are termed as export duties.

Solution

The correct answer is (a) and (b)

Key Points

• An individual who can unable to meet their immediate needs is called Absolute poverty.
• In other words, they are unable to obtain basic necessities such as shelter, water, food, and warmth.
• Relative poverty is when households receive 50% less than average household incomes, so they do have some money but still not enough money to afford anything above the basics.
• This type of poverty is, on the other hand, changeable depending on the economic growth of the country.
• Relative poverty is sometimes described as “relative deprivation” because the people falling under this category are not living in total poverty, but they are not enjoying the same standard of life as everyone else in the country.
• The main difference can be seen as a biological and existential need in absolute poverty, compared to the relative financial income against others in relative poverty.

• The term collateral refers to an asset that a lender accepts as security for a loan.
• Collateral may take the form of real estate or other kinds of assets, depending on the purpose of the loan. The collateral acts as a form of protection for the lender. That is, if the borrower defaults on their loan payments, the lender can seize the collateral and sell it to recoup some or all of its losses.
• Hence, an asset that a borrower owns and uses the same as a guarantee to a lender until the loan is repaid is known as Collateral. It is an item of value used to secure a loan.

• A deposit is a financial term that means money held at a bank. A deposit is a transaction involving a transfer of money to another party for safekeeping. However, a deposit can refer to a portion of the money used as security or collateral for the delivery of a good.
• A guarantee is an agreement by which one person undertakes to secure another in the possession or enjoyment of something.
• A mortgage is a loan that the borrower uses to purchase or maintain a home or other form of real estate and agrees to pay back over time, typically in a series of regular payments. The property serves as collateral to secure the loan.

The correct answer is Both (A) and (R) are individually true but (R) is not the correct explanation of (A).

• A rise in the rate of economic growth due to the rising share of working-age people in the population is called a demographic dividend.
• According to United Nations Population Fund (UNFPA), demographic dividend means, "the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older)".
• It is the potential for economic gains when the share of the working-age population (15 years – 64 years) is higher than the non-working age group.

Key Points

• Jobless Economic growth leads to social unrest.
• Economic growth means an increase in real national income / national output.
• Economic growth is an increase in the production of economic goods and services, compared from one period of time to another.
• Traditionally, aggregate economic growth is measured in terms of gross national product (GNP) or gross domestic product (GDP).

• India has 62.5% of its population in the age group of 15-59 years which is ever increasing and will be at the peak around 2036 when it will reach approximately 65%.
• India has one of the youngest populations in an ageing world.

The correct answer is Geometrically

Key Points

Malthus' theory of population:

• Population and Food Supply: Malthus theorised that any population grows in geometric progression.
•  He believed that a balance between population growth and food supply can be established through preventive and positive checks.

Important Points Major Elements of the Malthusian Theory

Population and Food Supply: 

• The Malthusian theory provided an explanation for why population growth is geometric.
• At this rate, the population would double in 25 years. However, there is an arithmetic increase in the food supply.
• The amount of food available grows more slowly than the population. In other words, there won't be enough food in a few years.
• A growing population is indicated by the food supply shortfall.

Checks on Population:

• Disequilibrium occurs when there is a gap between the rate of population growth and the availability of food.
• People will therefore not have access to even enough food for survival. Due to a scarcity of food, many will perish.
• Malthus referred to the occurrence of adversities like epidemics, wars, starvation, famines, and other natural disasters as positive checks.
• Contrarily, there are artificial checks referred to as preventive checks.

Positive Checks:

• The natural world has its own mechanisms for regulating the expanding human population.
• It raises the population to the level at which food is readily available.
• Famines, earthquakes, floods, diseases, wars, etc. are examples of the positive checks.
• When population expansion becomes out of control, nature becomes more active.

Preventive Checks:

• Late marriage, self Control, and simple living are preventive strategies that help to balance population increase and food availability.
• These procedures not only limit population increase but also have the potential to avoid the terrible effects of positive checks.

Solution

The correct answer is Only (a)

Key Points

• The Reserve Bank of India has the sole authority to issue banknotes in India.
• The Reserve Bank has introduced banknotes in the Mahatma Gandhi Series since 1996.
• The denominations of notes are Rs.5, Rs.10, Rs.20, Rs.50, Rs.100, Rs.500, and Rs.1000 in this series.
• The Government of India is the issuing authority of coins and supplies coins to the Reserve Bank on demand.
• The Reserve Bank puts the coins into circulation on behalf of the Central Government.
• Four printing presses print and supply banknotes. These are at Dewas in Madhya Pradesh, Nasik in Maharashtra, Mysore in Karnataka, and Salboni in West Bengal.
• Narrow money refers to a category of money supply that includes all the real money held by the central bank.
• It includes coins and currency, demand deposits, and other liquid assets.

The correct answer is It involves stripping a currency unit of its status as legal tender.

Key Points

• Demonetization:
  • It is the act of replacing old currency with new currency as legal tender.
  • Notes and coins of a certain denomination were banned by the Central government.
  • In India, Demonetization has taken place three times till now.
    • 1^st Demonetization: In 1946, Rs.1000 and Rs.10000 were removed from circulation.
    • 2^nd Demonetization: In 1978, Rs. 1000, Rs. 5000, and Rs. 10000 were removed from circulation.
    • 3^rd Demonetization: In 2016, Rs. 500 and Rs. 1000 were removed from circulation.

Solution

The correct answer is  (a) and (b)

Key Points

• An important transition in the economic history of countries occurs when they move from a regime of low prosperity, high child mortality, and high fertility to a state of high prosperity, low child mortality, and low fertility.
• Demographic transition posits that with improvements in health, mortality rates start to drop faster than fertility rates.
• Due to the lag between mortality and fertility, the population will increase.
• Population age and gender distribution are mainly affected by birth and death rates, as well as other factors such as migration, economics, war, political and social change, famine, or natural disasters.

Solution

The correct answer is Cyclical

Key Points

• An increase in cyclical unemployment is due to an economic downturn, but if unemployment persists for many years, it can lead to structural unemployment.
• Cyclical unemployment is a lack of employment as a result of changes to an economy’s business cycle.
• Cyclical employment is caused by job losses during downturns or contractions in an economy.
• Technological unemployment occurs when developments in technology and working practices cause some workers to lose their jobs.
• Seasonal unemployment occurs when people are unemployed at particular times of the year when the demand for labor is lower than usual.
• Disguised unemployment or hidden unemployment is a portion of the labor force involved in redundant work with very minimal to no productivity.

The correct answer is q = f(L,K).

Key Points

• In economics, the production function is a method of measuring how efficient production is by considering the relationships between at least two variables.
• The basic production function is: Q = f(KL).
  • Q = output, or the number of goods or services produced
  • f is shorthand for function
  • K = capital or fixed resources (meaning they don't change)
  • L = labor, referring to the human resources a business uses to produce its good or service.

Additional Information

• The production function is a mathematical equation that calculates the maximum output a firm can achieve with a selected number of inputs (capital, labor, and land). 
• The production function can be calculated using the formula: Q = f(Capital, Land, Labour), where the inputs are a function of the output.
• The production function comes in two phases – the short-run and the long-run.

• Hindustan Fluorocarbons Limited (HFL) was incorporated on 14th July, 1983 as a subsidiary company of Hindustan Organic Chemicals Limited (HOCL), a CPSE under the administrative control of the Department of Chemicals and Petrochemicals.
• It is located at Rudraram, District Sangareddy, in Telangana. The company started commercial production in the year 1987 and is engaged in the manufacture of Poly Tetra Fluoro Ethylene (PTFE) and of Chloro Di Fluoro Methane (CFM-22). PTFE is extensively used in chemical, mechanical, electrical and electronic industries and has strategic applications in defence and aerospace sectors. CFM-22 is used as pure or in mixture for refrigeration. The raw materials used by HFL are Chloroform and Anhydrous Hydrofluoric Acid (AHF) which are sourced from public / private firms in the country.

Solution

The correct answer is Trade-Related Intellectual Property Rights (TRIPs)

Key Points

• India amended its Copyright Law in 1994 to comply with its obligations under the Trade-Related Intellectual Property Rights (TRIPS) Agreement.
• The agreement on Trade-Related Aspects of Intellectual Property Rights or TRIPs came into effect in January 1995.
• It is a multilateral agreement on Intellectual Property (IP) rights such as copyright, industrial designs, patents, and the protection of undisclosed information or trade secrets.
• India has until the year 2000 for most products, but until 2005 for some goods, to comply with the TRIPS Agreement but is currently required to provide means for receiving product patent applications in certain areas.
• The number of goods subject to import licensing has been gradually reduced - albeit with an emphasis on industrial and capital goods, rather than consumer products.

Solution

The correct answer is Central Government

Key Points

• The term income tax refers to a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction.
• Income taxes are a source of revenue for governments. They are used to fund public services, pay government obligations, and provide goods for citizens.
• Income Tax is taxing an individual or any taxpayer other than companies, pays on the income received.
• Corporate Tax is the tax that companies pay on the profits they make from their businesses.

The Law of supply states that there is a direct relationship between the price of the commodity and its quantity supplied, ceteris paribus.

Key Points

• The market is in equilibrium when the demand curve and the supply curve of a good intersect each other.
• The demand curve slopes downwards due to the operation of the Law of demand, while the supply curve slopes upward due to the operation of the Law of supply.

Additional Information

• The law of supply is a fundamental principle of economic theory that states that, keeping other factors constant, an increase in price results in an increase in quantity supplied.
• In other words, there is a direct relationship between price and quantity: quantities respond in the same direction as price changes.

Hence we can say that there is a direct relationship between the price of the commodity and its quantity supplied.

• Casual employment refers to a situation in which an employee is only guaranteed work when it is needed.
• There is no expectation that there will be more work in the future.

Important Points

1. Casual employees are only compensated for the time they worked, which means they would not receive paid time off for holidays.
2. Sudakshana gets paid for daily work. Generally, casual workers get paid on a daily or hourly basis.

Additional Information

1. Casual workers don't get a regular salary.
2. They don't have job security.
3. They can't avail benefits of the employee's provident fund.

Hence, Sudakshana is a casual worker and gets paid 350 rs. For 8 hours of work in a day and 50 rs. Extra for late work.

The correct answer is Double Burden.

• The term “double burden refers to the workload of persons (typically women) who work at paid jobs while also having responsibility for a significant portion of unpaid care work.
• Labour market constraints also play a role in determining who does the bulk of unpaid work.

Important Points

1. This phenomenon is also known as the Second Shift as in Arlie Hochschild's book of the same name.
2. In couples where both partners have paid jobs, women often spend significantly more time than men on household chores and caring work, such as childrearing or caring for sick family members.
3. This outcome is determined in large part by traditional gender roles that have been accepted by society over time.
4. In the case of Kavita, she is currently facing a double burden as she is also selling tea and caregiving work to the family at the same time.

Hence, In the above condition, Kavita is facing a Double Burden. She is also working in a tea shop and doing household work too at the same time.