Economics is a study of the usage of resources and how valuable we can make those resources under distinct captivity. It involves an intense study of the production, distribution & consumption of goods and services. Given below are important Economics MCQs with answers, that will be beneficial for competitive examinations and tests (PPSC Test, FPSC Test, SPSC Test, KPPSC Test, BPSC Test, Etea Test) as well. MCQs on Economics covers the topic like Basic Economic MCQs, Indirect Tax and Economic Welfare, Analysis of Interest Rate Changes, Carbon Trading, Changing Market Price  – and much more. Also, check Auditing MCQs with answers here. 

41. A recession is ?

A. a period of declining prices.
B. a period of declining unemployment
C. a period during which aggregate output declines.
D. a period of very rapidly declining prices.

42. The concept of opportunity cost ?

A. is relevant only for a capitalist economy like the United States.
B. Suggests a major increase in public health care spending means an expansion in other areas will be harder to achieve.
C. Suggests all our wants can be achieved.
D. Would be relevant if we eliminated poverty

43. A graph showing all the combinations of goods and services that can be produced if all of society’s resources are used efficiently is a ?

A. capital consumption frontier.
B. Lorenz curve.
C. Circular-flow diagram.
D. Production possibility curve.

44. The circular flow of goods and incomes shows the relationship between?

A. Wages and salaries.
B. income and money
C. goods and services.
firms and households

45. In a planned or command economy, all the economics decisions are taken by the ?

A. Consumers
B. voters
C. government
D. Workers

46. Which of the following involves a trade – off ?

A. Taking a nap
B. All of these answers involve trade-offs
C. Watching a football game on Saturday afternoon
D. Going to university

47. Economics is the study of ?

A. how society manages its unlimited resource
B. how to reduce our wants until we are satisfied.
C. how to fully satisfy our unlimited wants
D. how to avoid having to make trade-offs

48. Raising taxes and increasing welfare payments ?

A. reduces market power
B. Proves that there is such a thing as a free lunch
C. improves efficiency at the expense of equity.
D. improves equity at the expense of efficiency.

49. Foreign trade ?

A. increase the scarcity of resources.
B. makes a country more equitable.
C. allows a country to have a greater variety of products at a lower cost than if it tried to produce everything to home.
D. None of these

50. Which of the following activities is most likely to produce an externality?

A. A student eats a hamburger in the student union.
B. A student reads a novel for pleasure
C. A student sits at home and watches T.V
D. A student has a party in her room in the student hall of residence.

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