Economics MCQ & Objective Questions
Economics is a crucial subject for students preparing for school and competitive exams in India. Understanding economic principles not only helps in scoring better but also enhances your analytical skills. Practicing MCQs and objective questions is an effective way to reinforce your knowledge and identify important questions that frequently appear in exams.
What You Will Practise Here
Basic concepts of microeconomics and macroeconomics
Supply and demand analysis
Market structures: perfect competition, monopoly, and oligopoly
National income and its measurement
Inflation, unemployment, and economic growth
Government policies and their impact on the economy
International trade and balance of payments
Exam Relevance
Economics is a significant part of the curriculum for CBSE, State Boards, NEET, and JEE exams. Students can expect questions that test their understanding of economic theories, definitions, and real-world applications. Common patterns include multiple-choice questions that require critical thinking and application of concepts, making it essential to practice thoroughly.
Common Mistakes Students Make
Confusing microeconomics with macroeconomics concepts
Misinterpreting graphs and diagrams related to supply and demand
Overlooking the assumptions behind economic models
Failing to connect theoretical knowledge with practical examples
FAQs
Question: What are some important Economics MCQ questions for exams?Answer: Important questions often include topics like market equilibrium, elasticity, and the effects of government intervention.
Question: How can I improve my performance in Economics objective questions?Answer: Regular practice of MCQs and understanding the underlying concepts will significantly enhance your performance.
Start solving practice MCQs today to test your understanding and boost your confidence in Economics. Remember, consistent practice is key to mastering this subject and achieving your academic goals!
Q. A bank offers an interest rate of 5% per annum. How much interest will be earned on a deposit of $2000 after 3 years?
A.
$300
B.
$200
C.
$150
D.
$100
Show solution
Solution
Interest = Principal * Rate * Time = 2000 * 0.05 * 3 = $300
Correct Answer:
A
— $300
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Q. A bank offers an interest rate of 5% per annum. If you invest $1000, how much interest will you earn in one year?
A.
$50
B.
$100
C.
$150
D.
$200
Show solution
Solution
Interest = Principal * Rate = 1000 * 0.05 = $50
Correct Answer:
A
— $50
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Q. A bank offers an interest rate of 5% per annum. If you invest $2000, how much interest will you earn in one year?
A.
$50
B.
$100
C.
$150
D.
$200
Show solution
Solution
Interest = Principal * Rate = 2000 * 0.05 = $100
Correct Answer:
A
— $50
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Q. A bank offers an interest rate of 6% per annum. How much interest will be earned on a deposit of $1000 after 3 years?
A.
$180
B.
$150
C.
$200
D.
$160
Show solution
Solution
Interest = Principal * Rate * Time = 1000 * 0.06 * 3 = $180
Correct Answer:
C
— $200
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Q. A company produces 1000 units of a product at a total cost of $5000. What is the average cost per unit?
Show solution
Solution
Average cost per unit = Total cost / Number of units = 5000 / 1000 = $5
Correct Answer:
B
— $5
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Q. A consumer buys 5 kg of rice for $15. What is the price per kg?
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Solution
Price per kg = Total price / Total kg = 15 / 5 = $3
Correct Answer:
B
— $3
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Q. A consumer buys 5 kg of rice for $20. What is the price per kg?
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Solution
Price per kg = Total price / Total kg = 20 / 5 = $4
Correct Answer:
A
— $2
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Q. A country has an inflation rate of 3%. If a product costs $200 now, what will be its cost after one year?
A.
$206
B.
$210
C.
$203
D.
$200
Show solution
Solution
Cost after inflation = 200 * (1 + 0.03) = 200 * 1.03 = $206.
Correct Answer:
A
— $206
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Q. A country's GDP is $2.5 trillion and its population is 250 million. What is the GDP per capita?
A.
$10,000
B.
$12,500
C.
$15,000
D.
$20,000
Show solution
Solution
GDP per capita = 2.5 trillion / 250 million = 10,000.
Correct Answer:
B
— $12,500
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Q. A country’s GDP is $500 billion and its population is 10 million. What is the GDP per capita?
A.
$50,000
B.
$5,000
C.
$500
D.
$5,000,000
Show solution
Solution
GDP per capita = GDP / Population = 500 billion / 10 million = $50,000.
Correct Answer:
B
— $5,000
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Q. A country’s GDP is $500 billion and the population is 10 million. What is the GDP per capita?
A.
$50,000
B.
$5,000
C.
$500
D.
$5,000,000
Show solution
Solution
GDP per capita = GDP / Population = 500 billion / 10 million = $50,000.
Correct Answer:
B
— $5,000
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Q. A firm has fixed costs of $1000 and variable costs of $5 per unit. If it produces 200 units, what is the total cost?
A.
$2000
B.
$2100
C.
$2200
D.
$2300
Show solution
Solution
Total cost = Fixed costs + (Variable cost per unit * Number of units) = 1000 + (5 * 200) = 1000 + 1000 = $2000
Correct Answer:
B
— $2100
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Q. A firm has fixed costs of $1000 and variable costs of $5 per unit. If it sells 200 units, what is its total cost?
A.
$2000
B.
$3000
C.
$4000
D.
$5000
Show solution
Solution
Total cost = Fixed costs + (Variable cost per unit * Number of units) = 1000 + (5 * 200) = 2000
Correct Answer:
B
— $3000
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Q. A firm has fixed costs of $2000 and variable costs of $5 per unit. If it produces 500 units, what are the total costs?
A.
$2500
B.
$3000
C.
$2000
D.
$3500
Show solution
Solution
Total costs = Fixed costs + (Variable cost per unit * Number of units) = 2000 + (5 * 500) = 2000 + 2500 = $4500
Correct Answer:
B
— $3000
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Q. A firm has fixed costs of $2000 and variable costs of $5 per unit. If it produces 500 units, what is the total cost?
A.
$2500
B.
$3000
C.
$3500
D.
$4000
Show solution
Solution
Total cost = Fixed costs + (Variable cost per unit * Number of units) = 2000 + (5 * 500) = 2000 + 2500 = $4500
Correct Answer:
B
— $3000
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Q. A government has a total budget of $1.2 trillion. If it allocates 30% to healthcare, how much is allocated to healthcare?
A.
$360 billion
B.
$300 billion
C.
$400 billion
D.
$500 billion
Show solution
Solution
Amount allocated to healthcare = 1.2 trillion * 0.30 = $360 billion.
Correct Answer:
A
— $360 billion
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Q. A government has a total budget of $200 billion. If it allocates 25% for education, how much is allocated for education?
A.
$50 billion
B.
$40 billion
C.
$60 billion
D.
$30 billion
Show solution
Solution
Amount allocated for education = 200 billion * 0.25 = $50 billion.
Correct Answer:
A
— $50 billion
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Q. A government has a total budget of $200 billion. If it allocates 25% to education, how much is allocated to education?
A.
$50 billion
B.
$40 billion
C.
$60 billion
D.
$30 billion
Show solution
Solution
Amount allocated to education = 200 billion * 0.25 = $50 billion.
Correct Answer:
A
— $50 billion
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Q. A government imposes a tax of $2 on a product that costs $10. What is the new price of the product if the tax is fully passed on to consumers?
A.
$10
B.
$12
C.
$14
D.
$8
Show solution
Solution
New price = Original price + Tax = 10 + 2 = $12
Correct Answer:
B
— $12
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Q. A government imposes a tax of $2 on a product that costs $10. What is the new price of the product?
A.
$10
B.
$12
C.
$14
D.
$8
Show solution
Solution
New price = Original price + Tax = 10 + 2 = $12
Correct Answer:
B
— $12
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Q. A government increases taxes by $200 million, which leads to a decrease in consumer spending by $300 million. What is the marginal propensity to consume?
A.
0.5
B.
0.67
C.
0.75
D.
0.33
Show solution
Solution
Marginal propensity to consume = Change in consumption / Change in income = 300 / 200 = 1.5
Correct Answer:
B
— 0.67
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Q. A government plans to increase its budget by 15% next year. If the current budget is $300 billion, what will be the new budget?
A.
$345 billion
B.
$330 billion
C.
$315 billion
D.
$300 billion
Show solution
Solution
New budget = 300 billion * (1 + 0.15) = 300 billion * 1.15 = $345 billion.
Correct Answer:
A
— $345 billion
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Q. A government plans to increase its budget by 15% next year. If the current budget is $600 billion, what will be the new budget?
A.
$690 billion
B.
$700 billion
C.
$720 billion
D.
$750 billion
Show solution
Solution
New budget = 600 * (1 + 0.15) = 600 * 1.15 = $690 billion.
Correct Answer:
A
— $690 billion
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Q. A government plans to increase its budget by 15% next year. If the current budget is $120 billion, what will be the new budget?
A.
$138 billion
B.
$140 billion
C.
$150 billion
D.
$130 billion
Show solution
Solution
New budget = 120 billion * (1 + 0.15) = 120 billion * 1.15 = $138 billion.
Correct Answer:
A
— $138 billion
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Q. A product's price elasticity of demand is -2. If the price increases by 5%, what will be the percentage change in quantity demanded?
A.
-5%
B.
-10%
C.
-15%
D.
-20%
Show solution
Solution
Percentage change in quantity demanded = Price elasticity * Percentage change in price = -2 * 5% = -10%
Correct Answer:
B
— -10%
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Q. A product's price increased from $150 to $165. What is the percentage increase in price?
A.
10%
B.
15%
C.
20%
D.
5%
Show solution
Solution
Percentage increase = ((165 - 150) / 150) * 100 = (15 / 150) * 100 = 10%.
Correct Answer:
B
— 15%
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Q. A product's price increased from $80 to $88. What is the percentage increase in price?
A.
10%
B.
12%
C.
15%
D.
8%
Show solution
Solution
Percentage increase = ((88 - 80) / 80) * 100 = (8 / 80) * 100 = 10%.
Correct Answer:
B
— 12%
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Q. If a consumer spends $300 on goods and the marginal propensity to consume is 0.75, how much of that income is saved?
A.
$75
B.
$100
C.
$150
D.
$200
Show solution
Solution
Savings = Income - Consumption; Income = Consumption / MPC = 300 / 0.75 = $400; Savings = 400 - 300 = $100
Correct Answer:
B
— $100
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Q. If a country has a budget surplus of $20 billion and it plans to increase its budget by 10%, what will be the new budget surplus?
A.
$22 billion
B.
$20 billion
C.
$18 billion
D.
$25 billion
Show solution
Solution
New budget surplus = 20 billion * (1 + 0.10) = 20 billion * 1.10 = $22 billion.
Correct Answer:
A
— $22 billion
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Q. If a country has a GDP of $1.2 trillion and a population of 300 million, what is the GDP per capita?
A.
$3,500
B.
$4,000
C.
$4,500
D.
$5,000
Show solution
Solution
GDP per capita = 1.2 trillion / 300 million = $4,000.
Correct Answer:
C
— $4,500
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