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

The correct answer is Marriage.

Key Points

• Migration is the movement of people from one place to another with the intentions of settling permanently or temporarily at a new location.
• The most common reason for Migration in India is marriage.
• According to the 2011 cenus, 46% of the total migrants moved because of marriage and out of this, 97% were women.
• Therefore, Marriage is the main reason for highest percentage of female migration in India.
• As many as 20.58 crore women migrated because of marriage.

 Thus, we can say that Marriage is the reason responisble for highest percentage of female migration in India.

The correct answer is (a) - (ii), (b) - (i), (c) - (iii).

Key Points

• People around us are working on varieties of activities, viz producing goods and services. An economy is divided into three sectors based on the   
• Primary Sector: 
  • Activities that involved natural resources belong to the primary sector. 
  • By definition, 'when we produce a good by exploiting natural resources, it is an activity of the primary sector.' 
  • The sector is named 'primary' because it forms the base for all other products that we subsequently make. 
  • Since we get most of the natural products from agriculture, dairy, fishing, forestry, this sector is also called agriculture and related sector.
  • Agricultural activity is a primary activity. 
• Secondary Sector: 
  • It is a next step after primary sector. 
  • Here, the natural resources get changed or modified into other forms of activities through ways of manufacturing that we associate with industrial activity.
  • Products that are produced in this sector do not come from nature, some sort of manufacturing is required.
  • This could be in a factory, a workshop or at home. 
  • For example, in primary sector, the earth is converted into bricks. In secondary sector, bricks are used to make buildings. 
  • The sector being associated with different industries is also known as industrial sector.
  • Automobile production is an activity that happened in secondary sector. 
• Tertiary Sector: 
  • This is the third category of activities in an economy. 
  • This sector in turn helps the primary and secondary sectors to develop. 
  • Activities happened in tertiary sector provides an aid and support in the process. 
  • For example, trucks for transporting the goods that are produced in the primary or secondary sector; storage area to store the products.
  • Similarly, communication infrastructures, banking sector are also considered as tertiary sector activities. 
  • Since these activities generate services rather than goods, the tertiary sector is also called the service sector. 
  • Public administration is an activity of tertiary sector. 

Hence, the correct match are (a) - (ii), (b) - (i), (c) - (iii).

The correct answer is a - ii, b - i, c - iii.

Key Points

The correct answer is The Reserve Bank of India.

Key Points

•  The Reserve Bank of India issues currency notes on behalf of the Central Government of India.

Important Points

• The Reserve Bank of India, chiefly known as RBI
  • India's central bank and regulatory body regulates of the Indian banking system.
  • It is under the ownership of Ministry of Finance, Government of India.
  • It is responsible for the control, issue and maintaining supply of the Indian rupee.
• Current Governor of RBI is Shaktikanta Das
• Founded in 1 April 1935 
• Headquarter is in Mumbai, Maharashtra

The correct answer is 15 percent.

Key Points

•  Bank should always be able to pay the depositors who might come to withdraw money from their bank account.
• This is why all Indian banks generally holds 15 percent of their deposits as cash as a provision. 

Important Points

•  What does banks do? 
  • a bank borrows money from their depositors by using the deposited funds
  • to lend money to other customers.
  • In turn, the bank pays the depositor interest for their savings account balance 
  • simultaneously charging their loan customers a higher interest rate than what was paid to their depositors.

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

Macroeconomics is also called the theory of income.

Key Points

•  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 correct answer is The rate of inflation would increase.

Important Points 

• When the actual unemployment rate is less than the natural rate, inflation increases.
• When the actual unemployment rate exceeds its natural rate, inflation decreases.
• So, the natural rate of unemployment can be seen as the rate of unemployment required to keep inflation constant.

Key Points 

• The natural rate of unemployment:
  • The natural rate of unemployment is the unemployment rate that would exist in a growing and healthy economy.
  • In other words, the natural rate of unemployment includes only frictional and structural unemployment and not cyclical unemployment.
  • The natural rate of unemployment is related to two other important concepts: full employment and potential real GDP.
  • The economy is considered to be at full employment when the actual unemployment rate is equal to the natural rate.
  • When the economy is at full employment, real GDP is equal to potential real GDP.
  • When the economy is below full employment, the unemployment rate is greater than the natural unemployment rate and real GDP is less than potential.
  • When the economy is above full employment, then the unemployment rate is less than the natural unemployment rate and real GDP is greater than potential.

Additional Information

• Inflation:
  • Inflation is the rate of increase in prices over a given period of time.
  • Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.
  • But it can also be more narrowly calculated—for certain goods, such as food, or for services, such as a haircut, for example.
• Deflation:
  • Deflation is a serious economic issue that can exacerbate a crisis and turn a recession into a full-blown depression.
  • When prices fall and are expected to drop in the future, businesses and individuals choose to hold on to money rather than spend or invest.
  • This leads to a drop in demand, which in turn forces businesses to cut production and sell off inventories at even lower prices.
  • In order to correct the situation of deflation Securities are purchased by the central bank.
• Stagflation:
  • Stagflation refers to an economic condition where economic growth is very slow or stagnant and prices are rising. 
  • The term stagflation was coined by British politician Iain Macleod, who used the phrase in his speech to parliament in 1965.
• Hyperinflation:
  • Hyperinflation is a situation where the price increases are too sharp. 
  • Hyperinflation often occurs when there is a large increase in the money supply, which is not supported by growth in Gross Domestic Product (GDP). 
  • Such a situation results in an imbalance in the supply and demand for money. 

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”.

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.

Casual work is a temporary and flexible position with a company that has no set requirements beyond completing a specific project. 

• Casual employment differs from traditional full-time employment in various forms.

Important Points

1. Casual employment can include flexible work, contract work, or temporary work, and some people refer to these positions interchangeably. 
2. Casual work is a type of employment where professionals work on a temporary or as-needed basis for a company.it has no set working hours or regular pay periods.
3. Workers are called only when the employees need them.

Hence, Casual employment is when Workers are called only when the employees need them. 

Food security means availability, accessibility and affordability of food to all people at all times.

• Poor households are more vulnerable to food insecurity whenever there is a problem with the production or distribution of food crops.
• Food security depends on the Public Distribution System (PDS) and government vigilance and action at times, when this security is threatened.

Important Points

Food is as essential for living as air is for breathing.

• But food security means something more than getting two square meals.
• Food security has the following dimensions
  • availability of food means food production within the country, food imports and the previous years stock stored in government granaries.
  • accessibility means food is within reach of every person.
  • affordability implies that an individual has enough money to buy sufficient, safe and nutritious food to meet one's dietary needs.
• Thus, food security is ensured in a country only if
  • enough food is available for all the persons
  • all persons have the capacity to buy food of acceptable quality
  • there is no barrier to access to food. 

From the above, we can conclude that statement 4 is true regarding food security.

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 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.