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

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. 

The correct answer is combination of interest rate, collateral and documentation requirement, and the mode of repayment.

Key Points

•  The terms of credit is combination of interest rate, collateral and documentation requirement, and the mode of repayment.
• The terms of credit vary
  • substantially from one credit arrangement to another.
  • depending on the nature of the lender and the borrower.
• The different type of terms of credit are : 
  • Billing cycle
  • Principal balance
  • Interest rate
  • Annual Percentage Rate (APR)
  • Minimum amount due
  • Payoff amount
  • Refinance
  • Down payment
• All these terms are fixed before the credit is given to a borrower.

The correct answer is Collateral is an asset that the borrower owns (such as land, building, vehicle, live stocks, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid.

Key Points

• Every loan agreement specifies an interest rate.
• The borrower must pay the specified interest to the lender along with the repayment of the principal. 
• Lenders may demand a security against loans. This type of security is known as collateral. 
• By definition, collateral is an asset that the borrower owns (such as land, building, vehicle, jewelry, deposits with banks) and uses this as a guarantee to a lender until the loan is repaid.
• The borrower might fail to repay the loan,
  • He might be able to pay the principal but not the interest rate 
  • In some cases it is possible that the borrower is able to repay the interest rate every month, but unable to pay the principal
• the lender has the right to sell the asset or collateral to obtain payment.
• For example, property such as land titles, deposits with banks, livestock are some common examples of collateral.

The correct answer is Securities are purchased by the central bank. Important Points

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.

Key Points

 Monetary and fiscal policy tools that can be used to fight deflation and keep prices:

Monetary Policy Tools:

• Lowering bank reserve limits
• Open market operations (OMO)
• Lowering the target interest rate 
• Quantitative easing 
• Negative interest rates 

Fiscal Policy Tools:

• Increasing government spending  
• Cutting tax rates 

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.

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 correct answer is 'caste system'.

Key Points

• Meaning of social exclusion
  • Social exclusion implies a process through which individuals or groups are excluded from facilities, benefits and opportunites that others (the betters) enjoy.
  • A typical example of social exclusion is the prevalence of caste system in India in which people belonging to certain classes or castes are excluded from equal opportunites.
  • Social exclusion describes a state in which individuals are unable to participate fully in economic, social, political and cultural events, as well as the process leading to and sustaining such a state in an economy.
  • Social exclusion may lead to but can cause more damage than having a low income level.

Important Points

• Impact of social exclusion
  • Social exclusion leads to various kinds of deprivations,i.e., economic, cultural and social.
  • It leads to the impoverishment of human lives and develops a poor sense of well-being.
  • It leads to social and economic inequality, poverty, unemployment and involuntary migration.
  • It imposes restrictions on the excluded regarding their free and full participation in the economic, cultural and political activities.
  • On the whole, social exclusion puts a negative impact on the quality of life.

Thus, caste system causes social exclusion in the society.

The correct answer is D2D (Distributor-to-Distributor).Key Points

• B2C (Business-to-Consumer):
  • Business-to-consumer marketing describes the practice of companies selling goods and services directly to customers without the use of a middleman.
  • B2C mainly refers to online merchants who use the internet to sell goods and services to customers.
• C2C (Consumer-to-Consumer):
  • A business model known as "consumer to consumer" (C2C) allows for private customers to deal for goods or services without the involvement of a business on either end of the transaction.
  • Today, online businesses handle the majority of C2C transactions.
• B2B (Business-to-Business):
  • Business-to-business (B2B) refers to a deal or transaction made between two companies, like a wholesaler and a retailer.
  • B2B transactions typically take place in the supply chain, where one business buys raw materials from another in order to utilise them in the production process.
  • Companies in the auto business, as well as those in property management, housekeeping, and industrial cleanup, frequently engage in B2B transactions.

Additional Information

• E-commerce is the electronic purchase or sale of goods through online stores or the Internet.
• E-commerce makes use of technology like supply chain management, mobile commerce, electronic payments transfer, Internet marketing, etc.
• Online retail, electronic markets, and online auctions are the three subfields of e-commerce.
• Electronic business provides a foundation for e-commerce.
• There are five essential categories of E-commerce:
  • Business to Business
  • Business to Consumer
  • Business to Government
  • Consumer to Business
  • Consumer to Consumer

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

The correct answer is The principle of National Income.

Key Points

• Principle of National Income:
  • The value of the commodities and services a nation produces in a fiscal year is referred to as national income.
  • As a result, it represents the sum of all economic activity carried out in a nation over the course of a year.
  • It is valued in monetary terms.
  • The terms "national income" and "national dividend," as well as "national output" and "national spending," are ambiguous.
• Macro Economics:
  • It is the study of how economies function, including changes in the balance of payments, inflation, interest and foreign exchange rates, and economic production.
  • Only with solid monetary and fiscal policy are poverty alleviation, social equality, and sustainable growth conceivable.

Additional Information

• Consumer theory:
  • Microeconomics includes the field of consumer theory.
  • It investigates how people choose what to buy with their money based on their tastes and financial restrictions.
• Producer theory:
  • The producers theory looks at how businesses recruit and combine productive inputs to produce goods at reasonable rates. 

The correct answer is agricultural rural hinterland.

Key Points

• Industrially developed urban centers are usually surrounded by an "agricultural rural hinterland."
• In geographical terms, a 'hinterland' refers to the area surrounding a town or port, which is served by the port or town for the transportation of goods.
• In context, an agricultural rural hinterland serves as the region that supplies the urban center with agricultural products or raw materials and in return, it receives industrial goods and services.
• However, it's important to note that the exact nature and characteristics of the hinterland can change based on specific geographical or economic contexts.
• For instance, a seaport city might indeed have a "seaport hinterland" where the surrounding areas rely on the port for trade and transportation access.

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 correct answer is The Muri Alumina Plant.Key Points

The Muri Alumina Plant

• Muri Works of Hindalco Industries Limited is India’s first alumina refinery commissioned in 1948 by the erstwhile Indian Aluminium Company (INDAL).
• In 2005, Hindalco merged the plant with itself after acquiring INDAL.
• The plant is located on the banks of Swarnarekha River at Chota Muri, 65km from Ranchi, the capital city of Jharkhand state.
• Muri Works is India’s first alumina refinery commissioned in 1948 by the Indian Aluminium Company.
• Later in 2005, Hindalco acquired Indian Aluminium Company (INDAL) and merged the plant with itself.
• Primary products include standard and special grades of Alumina and Alumina-hydrate.
• The present capacity of plant stands at 450 Kilo tonne per annum (KTPA).
• The plant and residential colony together cover an area of 334.2 acres.

The correct answer is fall.Key Points

• Interest Rate:-
  • When the interest rate increases, borrowing becomes more expensive, and people tend to save more and borrow less.
  • So, the demand for money falls.
  • The higher interest rate increases the cost of borrowing, which in turn discourages people from taking loans and investing.
  • Hence, the demand for money decreases.
  • When the interest rate rises, people can earn more by saving their money in the bank.
  • Hence, they tend to save more, and the demand for money falls.
  • The rise in interest rate reduces the purchasing power of consumers.
  • Thus, they tend to cut back on their spending, leading to a fall in demand for money.
  • The demand for money may also depend on factors such as inflation, economic growth, and availability of credit.

Additional Information

• The demand for money may initially rise due to the expectation of higher returns, but as interest rates increase, borrowing becomes more expensive, leading to a fall in demand.
• The demand for money does not rise when the interest rate increases.
  • It falls because borrowing becomes more expensive.
• The demand for money may remain the same only if the increase in interest rate is offset by other factors such as inflation or economic growth.
• The rise in interest rate leads to a fall in demand for money due to the increased cost of borrowing and reduced purchasing power of consumers.

The correct answer is agglomeration economies.Key Points

• Agglomeration economies refer to the benefits that arise from the clustering of industries in urban centers. These benefits include:
  • Economies of scale: Firms can share infrastructure and resources, reducing costs and increasing efficiency.
  • Access to skilled labor: A concentration of industries in one area can attract a skilled workforce, making it easier for firms to find and hire qualified employees. 
  • Innovation: Proximity to other firms can lead to knowledge spillovers and collaboration, fostering innovation and growth.
  • Reduced transportation costs: By locating near other firms and suppliers, firms can reduce transportation costs and increase speed of delivery.

Additional Information

• Rural economies refer to economies that are based on agriculture and natural resources.
• Amalgamation economies refer to the benefits that arise from the consolidation of firms in a particular industry.
• Urban economies refer to the overall economic activity and growth of urban areas.

 The correct answer is Bandhan Bank.

Key Points

• Scheduled Public Sector Banks in India:
  • These are banks that are included in the Second Schedule of the Reserve Bank of India Act, 1934.
  • These banks are eligible for loans from the RBI at the bank rate and can also avail of other facilities like deposits and clearing.
• Canara Bank, UCO Bank, and Indian Overseas Bank are all scheduled public sector banks in India.
• Bandhan Bank is not a scheduled public sector bank in India, it is a private sector bank.​

Additional Information

Canara Bank 

• It is a public sector bank that was established in 1906.
• It has a network of over 10,000 branches and ATMs across India.

UCO Bank

• It is also a public sector bank that was established in 1943.
• It has a strong presence in Eastern India and has over 3,000 branches and ATMs.

Indian Overseas Bank

• It is a public sector bank that was established in 1937.
• It has a network of over 3,400 branches and ATMs across India.