TEST NO. 130
1. Which of the following is a characteristic of perfect competition?
a) Few sellers and many buyers
b) Few buyers and many sellers
c) Homogeneous product
d) Differentiated product
2. The Law of Diminishing Marginal Utility states that:
a) Total utility always increases
b) Total utility may decrease
c) Marginal utility falls as more is consumed
d) Marginal utility rises as more is consumed
3. Which concept describes the opportunity cost of capital?
a) Interest rate
b) Inflation rate
c) Real GDP
d) Nominal GDP
4. The study of how households and firms make choices in a single market is part of:
a) Microeconomics
b) Macroeconomics
c) Econometrics
d) Development economics
5. What is the primary objective of monetary policy?
a) Price stability
b) Increase exports
c) Decrease public debt
d) Increase employment
6. The slope of the Production Possibility Frontier represents:
a) Marginal Rate of Transformation
b) Total utility
c) Elasticity
d) Average product
7. Which of the following is an example of a positive externality?
a) Pollution
b) Overfishing
c) Education
d) Traffic congestion
Read More: Test No. 125
8. GDP calculated at current prices is called:
a) Real GDP
b) Nominal GDP
c) Gross National Income
d) Net National Income
9. The concept of elasticity is used to measure:
a) Revenue
b) Profit
c) Responsiveness of quantity demanded to a change in price
d) Total expenditure
10. Inflation which is caused by an increase in production costs is termed as:
a) Demand-pull inflation
b) Cost-push inflation
c) Structural inflation
d) Hyperinflation
11. The Phillips curve represents the relationship between:
a) Inflation and unemployment
b) Consumption and savings
c) Interest rate and investment
d) Money supply and output
12. The Lorenz curve is used to represent:
a) Income distribution
b) Production possibility
c) Interest rates
d) Consumption patterns
13. The Keynesian consumption function claims that as income rises:
a) Consumption will decrease
b) Savings will decrease
c) Consumption will rise but by less than the rise in income
d) Consumption will rise more than income
14. Who introduced the concept of the 'Invisible Hand'?
a) John Maynard Keynes
b) Karl Marx
c) Alfred Marshall
d) Adam Smith
15. Which of the following is not a determinant of demand?
a) Income of the consumer
b) Taste and preferences
c) Price of the product
d) Production technology
16. In which market structure is there a single seller?
a) Monopoly
b) Monopolistic competition
c) Oligopoly
d) Perfect competition
17. Which of the following is considered a leakage from the circular flow of income?
a) Investment
b) Government spending
c) Savings
d) Export
18. The short-run aggregate supply curve is:
a) Vertical
b) Horizontal
c) Upward sloping
d) Downward sloping
19. The term 'ceteris paribus' means:
a) Holding all else constant
b) Changes in equilibrium
c) Comparative advantage
d) Increasing returns to scale
20. Human-made resources in an economy are referred to as:
a) Land
b) Labour
c) Capital
d) Entrepreneurship