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General Economics


Q.1. Which of the following statements is correct?
(a) Employment and economic growth are studied in micro economics.
(b) Micro economics deals with balance of trade
(c) Economic condition of a section of the people is studied in Micro Economics
(d) External value of money is dealt with in micro-economics

Q.2. Identify the correct statement :
(b) In socialist economy the right to work is guaranteed but the choice of occupation gets restricted
(c) In socialist economy a relative inequality in income is an important feature.
(d) In today’s world only U.S.A. is a purely socialist country

Q.3. When quantity demanded changes by larger percentage than does price, elasticity is termed as:
(a) inelastic
(b) perfectly elastic
(c) elastic
(d) perfectly inelastic

Q.4. Which of the following statement is not correct?
(a) GDP at market price = GNP at market price – Net income from abroad
(b) GDP at factor cost = GDP at market price – net indirect taxes
(c) NDP at factor cost = NDP at market price – net indirect taxes
(d) NNP at factor cost = NNP at market price – net income from abroad

Q.5. Identify the item which is not a factor payment :
(a) Free uniform to defence personnel
(b) Salaries to the members of Parliament
(c) Imputed rent of an owner occupied building
(d) Scholarships given to scheduled caste students

Q.6. Money in dynamic sense:
(a) Serves as encouragement to division of labour
(b) Serves as smooth transformer of saving into investments
(c) Serves as both (a) and (b) of the above
(d) Serves neither as (a) or (b) of the above.

Q.7. Which of the following is not a quantitative measure of credit control?
(a) Bank Rate Policy
(b) Open Market Operation
(c) Consumer Credit Regulation
(d) Variable Reserve Requirement

Q.8. Integration of the domestic economy with the world economy is called:
(a) disinvestment
(b) privatization
(c) liberalisation
(d) globalisation

Q.9. Which of the following is not an indirect tax reform:
(a) reducing the peak rate of custom duties
(b) rectifying anomalies like inverted duty structure
(c) the tax rate on foreign companies has also been reduced from 55% to 40%
(d) introduction of value added tax for achieving harmonized taxation regime

Q.10. Which of the following statements is against Privatization?
(a) Privatization will help reducing the burden on exchequer
(b) It will help the profit making public sector units to modernize and diversity their business.
(c) It will help in making public sector units more competitive
(d) None of the above

Q.11. Which of the following statements is incorrect:
(a) Workers employed in Sugar Mills face seasonal unemployment
(b) Due to introduction of new machinery, labour saving device etc. some workers tend to be replaced by machine is termed as structural unemployment
(c) Frictional unemployment is temporary phenomenon
(d) Disguised unemployment refers to a situation where removal of some workers will not affect the volume of total output

Q.12. If the price of good A increases relative to the price of substitute B and C, the demand for:
(a) B will increase
(b) C will increase
(c) B and C will increase
(d) B and C will decrease

Q.13. If income elasticity for the household for good A is 2 then it is a:
(a) necessity item
(b) inferior goods
(c) luxurious item
(d) comfortable item

Q.14. FRBM Act Stands for :
(a) Foreign responsibility and Business Management
(b) Foreign Responsibility and Budget Management
(c) Fiscal Revenue and Budget Management
(d) Fiscal Responsibility and Budget Management

Q.15. Which of the following statements is incorrect?
(a) Most of the big industrial units in India are sick
(b) The industrial pattern on the eve of independence was not balanced
(c) During the planning period, Indian Industrial structure has shifted in favour of basic and capital goods and intermediate sector.
(d) None of the above

Q.16. If the elasticity of supply is zero then supply curve will be.
(a) Horizontal
(b) Downward Sloping
(c) Upward sloping to the right
(d) Vertical

Q.17. It is ___ that deals with the problem of allocation of resources
(a) statistics
(b) macro-economic theory
(c) econometrics
(d) micro-economic theory

Q.18. Lesser production of___ would lead to lesser production in future
(a) Public goods
(b) Consumer goods
(c) Capital goods
(d) Agriculture goods

Q.19. ___ viewed economics as a science of dynamic growth and development
(a) Robbins
(b) Adam Smith
(c) Paul A. Samuelson
(d) Pigou

Q.20. At present, Bank rate is ___ per cent (Sept. 2014).
(a) 9
(b) 7.0
(c) 6.5
(d) 7.5

Q.21. RBI makes advances to the Central and State Government repayable within from the date of advance.
(a) 60 days
(b) 45 days
(c) 90 days
(d) 75 days

Q.22. At present there are ___ Nationalised Banks in India (2012).
(a) 14
(b) 6
(c) 21
(d) 19

Q.23. In ___ we remove tariff, subsidies on the flow of goods and services
between countries.
(a) globalisation
(b) liberalisation
(c) privatisation
(d) disinvestment

Q.24. In Fiscal deficit we add borrowings and other liabilities to the ___.
(a) Primary deficit
(b) Capital deficit
(c) Budget deficit
(d) Money deficit

Q.25. When more money chases relatively too less quantity of goods, the resulting situation is called ___.
(a) Stagnation
(b) Cost-Push Inflation
(c) Deflation
(d) Demand pull inflation

Q.26. TRAI is regulatory authority for ___ in India
(a) tourism
(b) technical Education
(c) transport
(d) telecom

Q.27. When contribution to the production is almost zero/nil is called ___ unemployment
(a) disguised
(b) cyclical
(c) chronic
(d) structural

Q.28. NABARD is the apex bank for ___ credit in India
(a) combined sector
(b) industrial sector
(c) agriculture sector
(d) tertiary sector

Q.29. International Monetary Fund commenced its operation in ___.
(a) April 1947
(b) March 1946
(c) April 1946
(d) March 1947

Q.30. In perfect competition the firm’s ___ above AVC has the identical shape of the firm’s supply curve
(a) Marginal revenue curve
(b) Marginal cost curve
(c) Average cost curve
(d) None of the above

Q.31. When ___, we know that the firms must be producing at the minimum point of average cost curve and so there will be productive efficiency
(a) MC = MR
(b) MC = AC
(c) AC = AR
(d) AR = MR

Q.32. According to the Planning Commission, based on Tendulkar Commitee estimation, ___ % people were below poverty line in 2011-12.
(a) 21.9%
(b) 25.2
(c) 26.2
(d) 27.8

The following data gives the production possibilities frontier of an economy that produces two types of goods, guns and bread. Read the following table and answer questions 133–135.
Table 1 : Production Possibilities
Guns Bread
A 0 105
B 10 100
C 20 90
D 30 75
E 40 55
F 50 30
G 60 0
H 70 45


According to table 1, the opportunity cost of increasing gun’s production from 20 to 30 units is equal to
(a) 10 units of bread
(b) 15 units of bread
(c) 25 units of bread
(d) 24 units of bread

Q.34. Given the data in table 1, one moves successively from point A to point B, C, D, E and F, the opportunity cost of guns:
(a) Increases as more of guns are produced
(b) Decreases as more of guns are produced
(c) Remains constant as more of guns are produced
(d) Nothing can be said

Q.35. Point D is efficient while point H (30 guns and 45 loaves of bread) is inefficient. Why?
(a) Point D is outside the PPF while point H is on the PPF
(b) Point D is inside the PPF while point H is on the PPF
(c) Point D is on the PPF while point H is inside the PPF
(d) Nothing can be said

Q.36. What is Disinvestment?
(a) It refers to the disposal of Public Sectors equity in the market
(b) It refers to the transfer of assets from private to public ownership
(c) It means integrating the domestic economy with the world economy
(d) None of the above

Q.37. Which of the following statements is incorrect regarding Disinvestment ?
(a) Government has not failed to raise the budget disinvestments in the capital market
(b) The procedure adopted for disinvestment has suffered from adhocism in the absence of a long term policy
(c) It means selling of Govt. Share in the PSU to other PSU or Private Sector or Banks
(d) It has been too insignificant to affect either the structure of management or the working environment of the PSU in India

A competitive firm sells his product at market price of Rs. 51 per unit. The fixed cost is Rs. 300 and variable cost for different level of production are shown in the following table 2. Use table No.2 to answer questions 138 – 141.
Quantity Variable
0 0
10 470
20 980
30 1850
40 3400
50 5950


When production is 30 units, the average variable cost is:
(a) 70.6
(b) 60.6
(c) 61.6
(d) 71.6

Q.39. When production is 50 units, marginal cost is:
(a) 265
(b) 255
(c) 245
(d) 275

Q.40. To maximize profit, the firm should produce
(a) 30 units
(b) 10 units
(c) 20 units
(d) 40 units

Q.41. If the market price drops from Rs. 51 to Rs. 47, the firm should
(a) Close down
(b) produce 10 units
(c) Produce 30 units
(d) Produce 20 units
Read the following data and answer Questions 142-147
X, Y and Z are three commodities where X and Y are complementary goods whereas X and Z are substitutes.
A shop keeper sells commodity X at Rs. 20 per piece. At this price he is able to sell 100 pieces of X per month. After some time, he decreases the price of X to Rs. 10 per piece.
Following the price decrease.

He is able to sell 150 pieces of X per month.
The demand for Y increases from 25 units to 50 units.
The demand for commodity Z decreases from 75 units to 50 units.

Q.42. The price elasticity of demand when price of X decreases from Rs. 20 per piece to Rs. 10 per piece will be equal to: (use arc Elasticity Method)
(a) 0.6
(b) 1.6
(c) 0.5
(d) 1.5

Q.43. The cross elasticity of demand for commodity Y when the price of X decreases from Rs. 20 per piece to Rs. 10 per piece will be equal to:
(a) –1.5
(b) +1.5
(c) +1
(d) 1

Q.44. The cross elasticity of commodity Z when the price of X decreases from Rs. 20 per piece to Rs. 10 per piece will be equal to:
(a) + 1.66
(b) + 0.6
(c) – 1.66
(d) – 0.6

Q.45. What can be said about the price elasticity of demand for commodity X?
(a) Demand is unit elastic
(b) Demand is highly elastic
(c) Demand is inelastic
(d) Demand is perfectly elastic

Q.46. Suppose income of the consumers increases by 50% and the demand for commodity X increases by 20% what will be the income elasticity of demand for commodity X?
(a) .04
(b) 0.4
(c) 4.00
(d) -4.00

Q.47. We can say that commodity X in economic sense is a / an
(a) Inferior foods
(b) Giffen Goods
(c) Normal Goods
(d) Luxury Goods.

Q.48. Suppose the total cost of producing commodity X is Rs. 1,25000. Out of this cost implicit cost is Rs. 35000 and normal profit is Rs. 25000. What will be explicit cost of commodity X?
(a) 90,000
(b) 65,000
(c) 60,000
(d) 1,00,000

Q.49. Use table 3 to answer questions 149 – 150.
Hours of
Table 3
0 -- --
1 350 350
2 -- 230
3 670 --
What is the total output when 2 hrs of labour are employed
(a) 500
(b) 580
(c) 600
(d) 680

Q.50. What is the marginal product if the third hour of labour is employed?
(a) 90
(b) 110
(c) 100
(d) 120

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