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Table of Contents
Sr. Particulars Page Number
No
1 Nature and Scope of Business Economics
1.1 Introduction 1.1.1 – 1.1.17
1.2 Basic Problem of an Economy & Role of Price Mechanism 1.2.1 – 1.2.7
2 Theory of Demand and Supply
2.1 Law of Demand & Elasticity of Demand 2.1.1 – 2.1.42
2.2 Theory of Consumer Behavior 2.2.1 – 2.2.18
2.3 Supply 2.3.1 – 2.3.10
3 Theory of Production and Cost
3.1 Theory of Production 3.1.1 – 3.1.26
3.2 Theory of Cost 3.2.1 – 3.2.26
4 Price Determination in Different Markets
4.1 Meaning and Types of Market 4.1.1 – 4.1.32
4.2 Determination of Prices & Price Output Determination Under 4.2.1 – 4.2.16
Different Market Forms
5 Business Cycles 5.1 – 5.13
6 Determination of National Income
6.1 National Income Accounting 6.1.1 – 6.1.5
6.2 The Keynesian Theory of Determination of National Income 6.2.1 – 6.2.3
7 Public Finance
7.1 Fiscal Functions: An Overview, Centre & State Finance 7.1.1 – 7.1.4
7.2 Market Failure/ Government Intervention to correct Market 7.2.1 – 7.2.5
Failure
7.3 The Process of Budget Making: Sources of Revenue, Expenditure 7.3.1 – 7.3.5
Management and Management of Public Debt
7.4 Fiscal Policy 7.4.1 – 7.4.5
8 Money Market
8.1 The Concept of Money Demand 8.1.1 – 8.1.3
8.2 The Concept of Money Supply 8.2.1 – 8.2.4
8.3 Monetary Policy 8.3.1 – 8.3.4
9 International Trade
9.1 Theories of International Trade 9.1.1 – 9.1.3
9.2 The Instruments of Trade Policy 9.2.1 – 9.2.4
9.3 Trade Negotiations 9.3.1 – 9.3.3
9.4 Exchange Rate and Economic Effects 9.4.1 – 9.4.3
9.5 International Capital Movements 9.5.1 – 9.5.3
10 Indian Economy 10.1 – 10.4
 1.1.1

Chapter 1.1
Introduction

Section A: Study Material Questions

1. Economists regard decision making as important because:
(a) The resources required to satisfy our unlimited wants and needs are finite, or scarce.
(b) It is crucial to understand how we can best allocate our scarce resources to satisfy
society’s unlimited wants and needs.
(c) Resources have alternative uses.
(d) All the above.
Answer: (d)

2. Business Economics is -
(a) Abstract and applies the tools of Microeconomics.
(b) Involves practical application of economic theory in business decision making.
(c) Incorporates tools from multiple disciplines.
(d) (b) and (c) above.
Answer: (d)

3. In Economics, we use the term scarcity to mean -

(a) Absolute scarcity and lack of resources in less developed countries.
(b) Relative scarcity i.e. scarcity in relation to the wants of the society.
(c) Scarcity during times of business failure and natural calamities.
(d) Scarcity caused on account of excessive consumption by the rich.
Answer: (b)

4. Which of the following is a normative statement?

(a) Planned economies allocate resources via government departments.
(b) Most transitional economies have experienced problems of falling output and rising prices over
the past decade.
(c) There is a greater degree of consumer sovereignty in market economies than planned
economies.
(d) Reducing inequality should be a major priority for mixed economies.
Answer: (d)

5. In every economic system, scarcity imposes limitations on

(a) households, business firms, governments, and the nation as a whole.
(b) households and business firms, but not the governments.
(c) local and state governments, but not the federal government.
(d) households and governments, but not business firms.
Answer: (a)

6. Macroeconomics is also called——— economics.

(a) applied
(b) aggregate
(c) experimental
(d) none of the above
Answer: (b)

7. An example of ‘positive’ economic analysis would be:

(a) an analysis of the relationship between the price of food and the quantity purchased.
(b) determining how much income each person should be guaranteed.
(c) determining the ‘fair’ price for food.
(d) deciding how to distribute the output of the economy.
Answer: (a)
Chapter 1.1 Introduction
 1.1.2

8. A study of how increases in the corporate income tax rate will affect the national unemployment rate is
an example of -
(a) Macro-Economics.
(b) Descriptive Economics.
(c) Micro-economics.
(d) Normative economics.
Answer: (a)

9. Which of the following does not suggest a macro approach for India?
(a) Determining the GNP of India.
(b) Finding the causes of failure of ABC Ltd.
(c) Identifying the causes of inflation in India.
(d) Analyse the causes of failure of industry in providing large scale employment
Answer: (b)

10. Ram: My corn harvest this year is poor.

Krishan: Don’t worry. Price increases will compensate for the fall in quantity supplied.
Vinod: Climate affects crop yields. Some years are bad, others are good.
Madhu: The Government ought to guarantee that our income will not fall.
In this conversation, the normative statement is made by -
(a) Ram
(b) Krishan
(c) Vinod
(d) Madhu
Answer: (d)

11. Which of the following is not a subject matter of Micro-economies?

(a) The price of mangoes.
(b) The cost of producing a fire truck for the fire department of Delhi, India.
(c) The quantity of mangoes produced for the mangoes market.
(d) The national economy’s annual rate of growth.
Answer: (d)

12. The branch of economic theory that deals with the problem of allocation of resources is-
(a) Micro-Economic theory.
(b) Macro-economic theory.
(c) Econometrics.
(d) None of the above.
Answer: (a)

13. Which of the following is not the subject matter of Business Economics?
(a) Should our firm be in this business?
(b) How much should be produced and at price should be kept?
(c) How will the product be placed in the market?
(d) How should we decrease unemployment in the economy?
Answer: (d)

14. Which of the following is a normative economic statement?

(a) Unemployment rate decreases with industrialization
(b) Economics is a social science that studies human behaviour.
(c) The minimum wage should be raised to ₹ 200/- per day
(d) India spends a huge amount of money on national defence.
Answer: (c)

Chapter 1.1 Introduction

 1.1.3

15. Which of the following would be considered a topic of study in Macroeconomics?

(a) The effect of increase in wages on the profitability of cotton industry
(b) The effect on steel prices when more steel is imported
(c) The effect of an increasing inflation rate on living standards of people in India
(d) The effect of an increase in the price of coffee on the quantity of tea consumed
Answer: (c)

16. The difference between positive and normative Economics is:

(a) Positive Economics explains the performance of the economy while normative Economics finds
out the reasons for poor performance.
(b) Positive Economics describes the facts of the economy while normative Economics involves
evaluating whether some of these are good or bad for the welfare of the people.
(c) Normative Economics describes the facts of the economy while positive Economics involves
evaluating whether some of these are good or bad for the welfare of the people.
(d) Positive Economics prescribes while normative Economics describes.
Answer: (b)

17. Which of the following is not within the scope of Business Economics?
(a) Capital Budgeting
(b) Risk Analysis
(c) Business Cycles
(d) Accounting Standards
Answer: (d)

18. Which of the following statements is incorrect?

(a) Business economics is normative in nature.
(b) Business Economics has a close connection with statistics.
(c) Business Economist need not worry about macro variables.
(d) Business Economics is also called Managerial Economics.
Answer: (c)

19. Economic goods are considered scarce resources because they.

(a) cannot be increased in quantity.
(b) do not exist in adequate quantity to satisfy the requirements of the society.
(c) are of primary importance in satisfying social requirements.
(d) are limited to man made goods.
Answer: (b)

20. In a free market economy the allocation of resources is determined by

(a) voting done by consumers.
(b) a central planning authority.
(c) consumer preferences.
(d) the level of profits of firms.
Answer: (c)

21. Which of the following is considered as a disadvantage of allocating resources using the market system?
(a) Income will tend to be unevenly distributed.
(b) People do not get goods of their choice.
(c) Men of Initiative and enterprise are not rewarded.
(d) Profits will tend to be low.
Answer: (a)

Chapter 1.1 Introduction

 1.1.4

22. Which of the following statements does not apply to a market economy?
(a) Firms decide whom to hire and what to produce.
(b) Firms aim at maximizing profits.
(c) Households decide which firms to work for and what to buy with their incomes.
(d) Government policies are the primary forces that guide the decisions of firms and households.
Answer: (d)

23. In a mixed economy –

(a) all economic decisions are taken by the central authority.
(b) all economic decisions are taken by private entrepreneurs.
(c) economic decisions are partly taken by the state and partly by the private entrepreneurs.
(d) none of the above.
Answer: (c)

24. Macro Economics is the study of ___________.

(a) all aspects of scarcity.
(b) the national economy and the global economy as a whole.
(c) big businesses.
(d) the decisions of individual businesses and people.
Answer: (b)

25. The definition “Science which deals with wealth of Nation” was given by:
(a) Alfred Marshall
(b) A C Pigou
(c) Adam Smith
(d) J B Say
Answer: (c)

26. The managerial economics –

(a) Is Applied Economics that fills the gap between economic theory and business practice
(b) Is just a theory concept
(c) Trains managers how to behave in recession
(d) Provides the tools which explain various concepts
Answer: (a)

27. Which of the following statements is correct?

(a) Micro economics is important for study of a particular household and a particular firm
(b) Macro economics is important for study of economic conditions of a country
(c) None of the above
(d) Both a and b
Answer: (d)

28. Mr. Satish hired a business consultant to guide him for growth of his business. The consultant visited his
factory and suggested some changes with respect to staff appointment, loan availability and so on. Which
approach is that consultant using?
(a) Micro economics
(b) Macro economics
(c) None of the above
(d) Both a and b
Answer: (a)

Chapter 1.1 Introduction

 1.1.5

29. Which of the following statements is/are correct regarding business economics?
(a) Business economics attempts to indicate how business policies are firmly rooted in economic
principles.
(b) Business economics uses micro economic analysis of the business unit and macro economic
analysis of business environment.
(c) Business economics takes a pragmatic approach towards facilitating an integration between
economic theory and business practices.
(d) All the above.
Answer: (d)

Section B (Previous Year Questions)

1. Which of the following in not within the Scope of Business Economics? (MTP 1 Mark, Mar’18)
(a) Capital Budgeting
(b) Accounting Standards
(c) Business Cycles
(d) Risk Analysis
Answer: (b)

2. When we study why saving rates are high or low, we are studying : (MTP 1 Mark, Mar’18)
(a) Macro Economics
(b) Micro Economics
(c) Econometrics
(d) Both (a) and (b)
Answer: (a)

3. expressed the view the “Economics is neutral between end”. (MTP 1 Mark, Aug’18, Nov’22, Apr’24)
(a) Robbins
(b) Marshall
(c) Pigou
(d) Adam Smith
Answer: (a)

4. Which of the following is not micro - economic subject matter? (MTP 1 Mark, Aug’18)
(a) The price of apples.
(b) The cost of producing a fire truck for the fire department of Delhi, India
(c) The quantity of apples produced for the apple market.
(d) The national economy’s annual rate of growth.
Answer: (d)

5. Which of the following statements is incorrect? (MTP 1 Mark, Oct’18)

(a) Unlike normative economics, positive economics is based on objective analysis of economic
issues.
(b) The opportunity cost of a good is the quantity of other goods sacrificed to get another unit
of that good.
(c) Microeconomics emphasizes interactions in the economy as a whole.
(d) None of the above.
Answer: (c)

6. Which of the following is considered production in economics? (MTP 1 Mark, Oct’18)

(a) Tilling of soil.
(b) Singing a song before friends
(c) Preventing a child from falling into a manhole on the road
(d) Painting a picture for pleasure.
Answer: (a)

Chapter 1.1 Introduction

 1.1.6

7. Which of the following is not an economic activity? (MTP 1 Mark, Oct’18)

(a) A son looking after his ailing mother
(b) A chartered accountant doing his own practice,
(c) A soldier serving at the border.
(d) A farmer growing millets
Answer: (a)

8. Which of the following statements is incorrect? (MTP 1 Mark, Mar’19)

(a) The services of doctors, lawyers, teachers etc. are termed as production
(b) Man cannot create matter
(c) Accumulation of capital does not depend solely on income
(d) None of the above
Answer: (d)

9. Economic goods are goods which: (MTP 1 Mark, Mar’19)

(a) Cannot be increased in quantity
(b) Obey the law of Micro Economics
(c) Are limited in supply and are scarce
(d) Are limited to man-made goods.
Answer: (c)

10. Which of the following means an Economic activity? (MTP 1 Mark, Mar’19)
(a) Production of Goods
(b) Production of Services
(c) Consumption of Goods and Services
(d) All of the above
Answer: (d)

11. Macroeconomics is the study of: (MTP 1 Mark, Mar’19)

(a) Inflation
(b) Unemployment
(c) Growth
(d) All of the above
Answer: (d)

12. Questions like what should be the level of national income, what should be the wage rate fall within the
scope of: (MTP 1 Mark, April’19)
(a) Positive Science
(b) Normative Science
(c) Both (a) and (b)
(d) None of the above
Answer: (b)

13. We mainly study the following in Micro Economics: (MTP 1 Mark, April’19)
(a) Location of a Industry
(b) Study of firms
(c) Factor pricing
(d) All of the above
Answer: (d)

14. Which of the following statements is correct? (MTP 1 Mark, April’19)

(a) As normative science, Economics involves value judgments
(b) Robbins has made economics as a form of welfare economics
(c) The Law of Demand is always true
(d) None of the above
Answer: (a)

Chapter 1.1 Introduction

 1.1.7

15. When we are studying how a producer fixes the price of his products we are studying
(MTP 1 Mark, April’19)
(a) Macro Economics
(b) Micro Economics
(c) Both Micro and Marco Economics
(d) None of the above
Answer: (b)

16. Macro economics doesn’t include one example from the following: (MTP 1 Mark, April’19)
(a) National Income and output
(b) Study of firms
(c) General Price Level
(d) Saving and Investment
Answer: (b)

17. A normative economic statement is- (MTP 1 Mark, Oct’19)

(a) Unemployment rate decreases with industrialization
(b) Economics is a social science that studies human behaviour
(c) The minimum wage should be raised to ₹ 200/- per day
(d) India spends a huge amount of money on national defence
Answer: (c)

18. The branch of economic theory that deals with the problem of allocation of resources is
(MTP 1 Mark, May’20)
(a) Micro-Economic theory
(b) Macro-economic theory
(c) Econometrics
(d) none of the above
Answer: (a)

19. Which of the following statements would you consider to be a normative one? (MTP 1 Mark, May’20)
(a) Faster economic growth should result if an economy has a higher level of investment.
(b) Changing the level of interest rates is a better way of managing the economy than using taxation
and government expenditure.
(c) Higher levels of unemployment will lead to higher levels of inflation.
(d) The average level of growth in the economy was faster in the 1990s than the 1980s.
Answer: (b)

20. Which of the following is not within the scope of Business Economics? (MTP 1 Mark, May’20, May’23)
(a) Capital Budgeting
(b) Risk Analysis
(c) Business Cycles
(d) Accounting Standards
Answer: (d)

21. A study of how increases in the corporate income tax rate will affect the national unemployment rate is
an example of (MTP 1 Mark, May’20)
(a) Macro-Economics
(b) Descriptive Economics
(c) Micro-economics
(d) Normative economics
Answer: (a)

Chapter 1.1 Introduction

 1.1.8

22. The difference between Positive and Normative Economics is: (MTP 1 Mark, May’20)
(a) Positive Economics explains the performance of the economy while Normative Economics finds
out the reasons for poor performance.
(b) Positive Economics describes the facts of the economy while Normative Economics involves
evaluating whether some of these are good or bad for the welfare of the people Normative
Economics describes the facts of the economy while Positive Economics involves evaluating
whether some of these are good or bad for the welfare of the people.
(c) Positive Economics prescribes while Normative Economics describes.
Answer: (b)

23. Which of the following statements does not apply to market economy? (MTP 1 Mark Oct’20)
(a) Firms decide whom to hire and what to produce.
(b) Firms aim at maximizing profits.
(c) Households decide which firms to work for and what to buy with their incomes.
(d) Government policies are the primary forces that guide the decisions of firms and households.
Answer: (d)

24. Which of the following is not a subject matter of Micro-economies? (MTP 1 Mark Oct’20)
(a) The price of mangoes.
(b) The cost of producing a fire truck for the fire department of Delhi, India.
(c) The quantity of mangoes produced for the mangoes market.
(d) The national economy’s annual rate of growth
Answer: (d)

25. Which of the following statements is incorrect? (MTP 1 Mark Oct’20)

(a) Business economics is normative in nature.
(b) Business Economics has a close connection with statistics.
(c) Business Economist need not worry about macro variables.
(d) Business Economics is also called Managerial Economics.
Answer: (c)

26. Who expressed the view that “Economics is neutral between end”. (MTP 1 Mark Oct’20)
(a) Robbins
(b) Marshall
(c) Pigou
(d) Adam Smith
Answer: (a)

27. The definition “Science which deals with wealth of Nation” was given by: (MTP 1 Mark Oct’20)
(a) Alfred Marshall
(b) A C Pigou
(c) Adam Smith
(d) J B Say
Answer: (c)

28. The Book “The Wealth of Nations “is written by: (MTP 1 Mark, Mar’21)
(a) Adam Smith
(b) Arthur Pigou
(c) Robinson
(d) Ragnar Nurske
Answer: (a)

Chapter 1.1 Introduction

 1.1.9

29. The Nature of Business Economics: (MTP 1 Mark, Mar’21)

(a) Business Economics is a Science
(b) Incorporate elements of Macro Analysis
(c) Interdisciplinary in Nature
(d) All the above
Answer: (d)

30. Rational decision making requires that: (MTP 1 Mark, Mar’21)

(a) one’s choice be arrived at logically and without error.
(b) one’s choice be consistent with one’s goal.
(c) one’s choice never vary.
(d) the consumer plan’s to attain the highest possible level of satisfaction.
Answer: (d)

31. An Applied Economics that fills the gap between economic theory and business practice:
(MTP 1 Mark, Apr’21)
(a) Business Economics
(b) Macro Economics
(c) Welfare Economics
(d) None of these
Answer: (a)

32. Which of the following is a normative statement? (MTP 1 Mark, Apr’21)

(a) Health care basic facilities to be provided to all citizens.
(b) With Industrialisation, unemployment rate decreases.
(c) On national defence India spent huge amount of money.
(d) None of these
Answer: (a)

33. In mixed economy the feature include existence of (MTP 1 Mark, Oct’21)
(a) Private Sector
(b) Public Sector
(c) Combined Sector
(d) All of these
Answer: (d)

34. Which of the following is included in study of Micro economics: (MTP 1 Mark, Oct’21)
(a) Product Pricing
(b) Factor Pricing
(c) Both (a) and (b)
(d) None of these
Answer: (c)

35. Business Economics in its approach is (MTP 1 Mark, Oct’21)

(a) Pragmatic
(b) Idealistic
(c) Normative
(d) None of these
Answer: (a)

36. In the beginning economics was named as (MTP 1 Mark, Oct’21, Apr’23)
(a) Political Economy
(b) Welfare Economics
(c) Economies of Wealth
(d) None of these
Answer: (a)

Chapter 1.1 Introduction

 1.1.10

37. Normative economics can be explained through: (MTP 1 Mark, Oct’21)

(a) Fairness to tax
(b) Incidence to tax
(c) Effect of tax on incentives to work
(d) None of these
Answer: (a)

38. Which of the following is not a characteristic of capitalist economy: (MTP 1 Mark, Nov’21)
(a) Right to Private Property
(b) Freedom of Enterprise
(c) Consumer Sovereignty
(d) Combined Sector
Answer: (d)

39. Which are the areas that come under Macro economics ___ (MTP 1 Mark, Nov’21)
(a) External Value of currency
(b) The general price level and interest rate
(c) Location of the industry
(d) National Income and National Output
Answer: (c)

40. Business Economics is a: (MTP 1 Mark, Nov’21, Apr’23, May’23)

(a) Normative Science
(b) Interdisciplinary
(c) Pragmatic
(d) All of these
Answer: (d)

41. Allocation of resources is dealt in: (MTP 1 Mark, Nov’21, May’23, Nov’23)
(a) Macro Economic
(b) Micro Economics
(c) Public Finance
(d) None of these
Answer: (b)

42. Which of the following are the characteristics of Business Economics: (MTP 1 Mark, Mar’22)
(a) It is a normative Science
(b) It is inter disciplinary
(c) Pragmatic in Nature
(d) All of the above
Answer: (d)

43. Which branch of economic theory deals with allocation of resources: (MTP 1 Mark, Mar’22)
(a) Macro-economic
(b) Micro economic
(c) Economic Growth
(d) None of these
Answer: (b)

44. Taxation involves which aspects of normative economics: (MTP 1 Mark, Mar’22)
(a) Incidence
(b) Fairness
(c) Incentive to work
(d) All of the above
Answer: (b)

Chapter 1.1 Introduction

 1.1.11

45. A theory is : (MTP 1 Mark, Mar’22)

(a) An assumption
(b) A hypothesis
(c) A validated hypothesis
(d) None of these
Answer: (c)

46. Modern business activities are based on the anticipations of business community and are affected by
waves of optimism or pessimism is opined by_____. (MTP 1 Mark, Mar’22)
(a) Pigou
(b) Keynes
(c) Hawtrey
(d) None of these
Answer: (a)

47. Globalization indicate rapid_______ between Countries: (MTP 1 Mark, Mar’22, Apr’23)
(a) Competition
(b) Investment
(c) Integration
(d) None of these
Answer: (c)

48. Which of the following statements is correct? (MTP 1 Mark, Mar’22)

(a) In a two-good economy, the production possibilities frontier reflects the maximum amount of
one good that can be produced when a given amount of the other good is produced.
(b) Microeconomics is the study of the behavior of the economy as a whole.
(c) Positive economics focuses on welfare of the people of a society
(d) None of the above
Answer: (a)

49. Most of the economic problems are of ____ nature and are affected by ________.
(MTP 1 Mark, Jun’22)
(a) Complex, Several forces
(b) Simple, Several forces
(c) Simple, single factor
(d) Complex, Single factor
Answer: (a)

50. The survival and success of any business depends on sound_____. (MTP 1 Mark, Jun’22)
(a) Mind
(b) Environment
(c) Decisions
(d) None of these
Answer: (c)

51. Management of the firm _____ control over macro-economic factors.

(MTP 1 Mark, Jun’22, Nov’22, Apr’24)
(a) has
(b) has no
(c) has partial
(d) None of these
Answer: (b)

Chapter 1.1 Introduction

 1.1.12

52. In a planned or command economy all the economic decisions are taken by the ____. (MTP 1 Mark, Jun’22)
(a) Workers
(b) Consumers
(c) Voters
(d) Government
Answer: (d)

53. Which of the following statements is/are correct about mixed economic system? (MTP 1 Mark, Jun’22)
(a) Mixed economic system depends on both markets and governments for allocation of resources
(b) Mixed economy is not always a golden path between capitalism and socialism.
(c) It is very difficult to maintain a proper balance between private and public sectors.
(d) All of the above
Answer: (d)

54. In economics, we are concerned with (MTP 1 Mark, Jun’22)

(a) Value in use only
(b) Exchange value only
(c) Both value in use and exchange value
(d) None of the above
Answer: (b)

55. Which of the following statements is true? (MTP 1 Mark, Nov’22)

(a) The study of economics ensures that all problems will be appropriately tackled.
(b) The study of economics cannot ensure that all problems will be appropriately tackled.
(c) The study of economics does not enable a student to examine a problem in its right perspective.
(d) None of these
Answer: (b)

56. Business economics is____. (MTP 1 Mark, Nov’22)

(a) A science
(b) An art
(c) Both science and art
(d) None of these
Answer: (c)

57. is concerned with welfare proposition. (MTP 1 Mark, Nov’22, Nov’23, Dec’23)
(a) Normative Economics
(b) Positive Economics
(c) Both (a) and (b)
(d) None of these
Answer: (a)

58. expressed the view the “Economics is neutral between end” (MTP 1 Mark, Nov’22)
(a) Robbins
(b) Marshall
(c) Pigou
(d) Adam Smith
Answer: (a)

59. Microeconomic theory studies how a free-enterprise economy determines (MTP 1 Mark, Nov’22)
(a) the price of goods
(b) the price of services
(c) the price of economic resources
(d) all of the above.
Answer: (a)

Chapter 1.1 Introduction

 1.1.13

60. Which aspect of taxation involves normative economics? (MTP 1 Mark, Nov’22, Dec’23)
(a) the incidence of (i.e., who actually pays for) the tax
(b) the effect of the tax on incentives to work
(c) the “fairness” of the tax
(d) all of the above.
Answer: (c)

61. Economics is a branch of ______ focused on the production, distribution and consumption of goods and
services. (MTP 1 Mark, Nov’22)
(a) Natural science
(b) Physical science
(c) Social science
(d) None of these
Answer: (c)

62. According to British economist J. M. Keynes ____ was the main cause of massive decline in income and
employment during Great Depression of 1930. (MTP 1 Mark, Nov’22)
(a) Lower aggregate expenditure in the economy.
(b) Banking crises and low money supply.
(c) Overdebtness.
(d) Lower profits & pessimism
Answer: (a)

63. Which of the following is not studied in micro economics? (MTP 1 Mark, Nov’22)
(a) Factor pricing
(b) Location of Industry
(c) Consumer Behaviour
(d) External value of currency
Answer: (d)

64. Which of the following are within the scope of business economies? (MTP 1 Mark, Nov’22)
(a) Capital Budgeting
(b) Risk Analysis
(c) Business cycles
(d) All of the Above
Answer: (d)

65. Management of the firm _______ control over macro-economic factors. (MTP 1 Mark, Nov’22)
(a) has
(b) has no
(c) has partial
(d) None of these
Answer: (b)

66. Business Economics is a: (MTP 1 Mark, Apr’23)

(a) Normative Science
(b) Interdisciplinary
(c) Pragmatic
(d) All of these
Answer: (d)

Chapter 1.1 Introduction

 1.1.14

67. In the beginning economics was named as: (MTP 1 Mark, Apr’23)
(a) Political Economy
(b) Welfare Economics
(c) Economies of Wealth
(d) None of these
Answer: (a)

68. Macroeconomics is also called ______ economics. (MTP 1 Mark, Apr’23)

(a) experimental
(b) aggregate
(c) applied.
(d) none of these
Answer: (b)

69. Normative economics can be best explained through: (MTP 1 Mark, Apr’23)
(a) Fairness to tax
(b) Incidence to tax
(c) Effect of tax on incentives to work
(d) None of these
Answer: (a)

70. Globalization indicate rapid _____ between Countries: (MTP 1 Mark, Apr’23)
(a) Competition
(b) Investment
(c) Integration
(d) None of these
Answer: (c)

71. ‘’The wealth of Nation” Considered as the first modern work of Economics was written by:
(MTP 1 Mark, May’23)
(a) Marx
(b) Adam-Smith
(c) Lipsey
(d) Allen
Answer: (b)

72. Business Economics is: (MTP 1 Mark, May’23)

(a) Normative Science
(b) Interdisciplinary
(c) Pragmatic in approach
(d) All the above
Answer: (d)

73. The ‘communist Manifesto’ was published in: (MTP 1 Mark, May’23)
(a) (a) 1848
(b) (b) 1905
(c) (c) 1952
(d) (d) None of these.
Answer: (a)

74. Which of the following is not within the scope of Business Economies? (MTP 1 Mark, May’23)
(a) Risk Analysis
(b) Accounting Standards
(c) Capital Budgeting
(d) All the Above
Answer: (b)

Chapter 1.1 Introduction

 1.1.15

75. The allocation of resources in a free-market economy is determined by: (MTP 1 Mark, May’23)
(a) Level of Profits of firms
(b) Consumer Preferences
(c) Central Planning Authority
(d) None of these
Answer: (b)

76. Who defined Business economics in terms of the use of economic analysis in the formulation of business
policies? (MTP 1 Mark, May’23, Apr’24)
(a) Adam Smith
(b) Robbins
(c) Joel Dean
(d) Alfred Marshall
Answer: (c)

77. Allocation of resources is dealt in: (MTP 1 Mark, May’23)

(a) Macro-Economic
(b) Microeconomics
(c) Public Finance
(d) None of these
Answer: (b)

78. An example of positive economic analysis would be: (MTP 1 Mark, Nov’23)
(a) an analysis of the relationship between the price of food and quantity purchased
(b) determining how much income each person should be granted
(c) determining the fair price for foo
(d) deciding how to distribute the output of the economy
Answer: (a)

79. Scarcity definition of Economics is given by: (MTP 1 Mark, Nov’23)

(a) Adam Smith
(b) Robinson
(c) Samuelson
(d) Alfred Marshall
Answer: (b)

80. Allocation of resources is dealt in: (MTP 1 Mark, Nov’23)

(a) Macro-Economic
(b) Microeconomics
(c) Public Finance
(d) None of these
Answer: (b)

81. __________ is concerned with welfare proposition. (MTP 1 Mark, Nov’23)

(a) Normative Economics
(b) Positive Economics
(c) Both (a) and (b)
(d) None of these
Answer: (a)

82. Which aspect of taxation involves Normative Economics? (MTP 1 Mark, Dec’23)
(a) the incidence of the tax
(b) the effect of the tax on incentives to work
(c) the “fairness” of the tax
(d) all the above.
Answer: (c)

Chapter 1.1 Introduction

 1.1.16

83. In a market economy, resource allocation is primarily determined by: (MTP 1 Mark, Dec’23)
(a) Central planning by the government
(b) Consumer demand and supply in the marketplace
(c) The decisions of a few large corporations
(d) international trade agreements
Answer: (b)

84. is concerned with welfare proposition. (MTP 1 Mark, Dec’23)

(a) Normative Economics
(b) Positive Economics
(c) Both (a) and (b)
(d) None of these
Answer: (a)

85. Who defined Business economics in terms of the use of economic analysis in the formulation of business
policies? (MTP 1 Mark, Apr’24)
(a) Adam Smith
(b) Robbins
(c) Joel Dean
(d) Alfred Marshall
Answer: (c)

86. Concept of Business Economics was given by: (MTP 1 Mark, Apr’24)
(a) Joel Dean
(b) Alfred Marshall
(c) Adam Smith
(d) L. Robbins
Answer: (a)

87. Which of the following are the features of a mixed economy? (MTP 1 Mark, Apr’24)
(a) Planned economy
(b) Dual system of pricing exists
(c) Balance regional development
(d) All of the above
Answer: (d)

88. Which of the following is NOT a central issue in macroeconomics? (MTP 1 Mark, Apr’24)
(a) How should the central bank of a country fight inflation?
(b) What is responsible for high and persistent unemployment?
(c) How do tax changes influence consumers' buying choices?
(d) What factors determine economic growth?
Answer: (c)

89. expressed the view the “Economics is neutral between end”. (MTP 1 Mark, Apr’24)
(a) Robbins
(b) Marshall
(c) Pigou
(d) Adam Smith
Answer: (a)

90. Which of the following matters is/are fundamentally connected to economic analysis? (MTP 1 Mark, Apr’24)
(a) Economic prosperity
(b) Higher standard of living
(c) Changes in price of a commodity
(d) All of the above
Answer: (d)

Chapter 1.1 Introduction

 1.1.17

91. Management of the firm factors _______________ control over macro-economic Factors
(MTP 1 Mark, Apr’24)
(a) has
(b) has no
(c) has partial
(d) None of these
Answer: (b)

92. Positive economics means: (MTP 1 Mark, May’24)

(a) Does not depend on market interactions,
(b) only looks at the best parts of the economy.
(c) Examines how the economy works (as opposed to how it should work)
(d) is very subjective.
Answer: (c)

93. We can say Indian agriculture has become modern since: (MTP 1 Mark, May’24)
(a) there has been an increase in the use of high yielding varieties of seeds, fertilizers pesticides etc.
(b) there has been noticeable positive change in the attitude of farmers towards new techniques of
production
(c) farmers are increasingly resorting to intensive cultivation, multiple cropping, scientific water
management
(d) all of the above.
Answer: (d)

Chapter 1.1 Introduction