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Economics Past Paper MCQs
Economics-I 2025 MCQs
1 / 20
Disposable income is:
This is the income available for consumption and saving.
2 / 20
Which of the following is not a basic assumption of perfect competition?
This is actually a basic assumption. The correct answer should be one that is not a basic assumption — but all listed (A-D) are correct assumptions. However, sometimes trick questions intend to confuse. If this is an error, then none is the right answer; otherwise, the question might be flawed.
3 / 20
According to Keynes, the relationship between money supply and rate of interest is:
An increase in money supply leads to lower interest rates.
4 / 20
Monopolistic Competition is different from Perfect Competition because of:
Firms sell similar but not identical products.
5 / 20
The relationship between inflation and unemployment is represented by:
Shows an inverse relationship (short-run).
6 / 20
Which of the following is not a component of GDP?
Unemployment is a labor market metric, not part of the GDP calculation.
7 / 20
______ is unemployment directly related to swings in the business cycle.
Cyclical unemployment increases during recessions and falls during booms.
8 / 20
The LM curve represents:
It shows combinations of interest rates and income where money supply = money demand.
9 / 20
Which of the following does not apply to Pareto efficiency?
Pareto efficiency is about allocation efficiency, not fairness or equity.
10 / 20
The doctrine of comparative advantage says that there are gains from international trade:
11 / 20
An increase in the supply of money will positively affect:
More money in the economy often leads to higher prices.
12 / 20
The elasticity of demand for cigarettes by a non-smoker is
Non-smokers do not buy cigarettes at any price, so their demand is perfectly price elastic (horizontal demand curve).
13 / 20
Automatic stabilizers are one of the ______ policy tools.
E.g., progressive taxes and unemployment benefits.
14 / 20
A country that makes large net income payments to investors in another country is likely to:
Because net income payments abroad reduce GNP relative to GDP.
15 / 20
The marginal utility of a good refers to the:
Marginal utility is the additional satisfaction from one more unit.
16 / 20
The account in the balance of payment that consists of all transactions in financial assets is known as:
It includes FDI, portfolio investment, loans, etc.
17 / 20
The Human Development Index (HDI) ranks all countries on the scale of:
0 is the lowest development, 1 is the highest.
18 / 20
The World Bank classifies countries into four groups. This classification is based upon:
It uses GNI per capita to categorize countries.
19 / 20
Trade based on absolute advantage was presented by:
He introduced the concept of absolute advantage.
20 / 20
Classical economics is the:
Classical economists emphasize production and supply factors.
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