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Economics MCQs

  • When we assume that what is true for the part is also true for the whole, we are committing

    (A) the post hoc fallacy
    (B) failure to hold other things constant
    (C) the fallacy of composition
    (D) normative fallacy

    The answer is: (C) the fallacy of composition

  • The three fundamental economic problems every human society must confront and resolve are

    (A) what, how and when
    (B) what, where and when
    (C) what, how, and for whom
    (D) how, where, and for whom

    The answer is: (C) what, how, and for whom

  • The three fundamental economic problems of what, how, and for whom are solved by

    (A) supply
    (B) demand
    (C) consumption
    (D) markets

    The answer is: (D) markets

  • Fiscal policy consists of government’s

    (A) revenue and taxation
    (B) taxation and credit control
    (C) expenditure and investment
    (D) expenditure and taxation

    The answer is: (D) expenditure and taxation

  • The maximum quantity of goods that can be efficiently produced by an economy using its scarce resources and available technology is called

    (A) the supply curve
    (B) the demand curve
    (C) production-possibility frontier
    (D) the supply-demand equilibrium

    The answer is: (C) production-possibility frontier

  • Which economic term is used to measure the overall performance of an economy?

    (A) GDP
    (B) GNP
    (C) Gini
    (D) HDI

    The answer is: (A) GDP

  • Productive efficiency occurs when an economy cannot produce _____ of one good without producing _____ of another good.

    (A) more, more
    (B) more, less
    (C) less, less
    (D) none of these

    The answer is: (B) more, less

  • The concept of invisible hand in the organization of supply and demand in a well-functioning market mechanism refers to the

    (A) self-regulating economy
    (B) government-controlled economy
    (C) command economy
    (D) socialism

    The answer is: (A) self-regulating economy

  • The increase in economic integration among nations is termed as

    (A) specialization
    (B) market economy
    (C) globalization
    (D) equilibrium condition

    The answer is: (C) globalization

  • The price elasticity of demand is the percentage change in _____ demanded divided by the percentage change in _____.

    (A) supply, price
    (B) quantity, price
    (C) price, supply
    (D) price, quantity

    The answer is: (B) quantity, price