Economics MCQs
Economics MCQs for CSS, PMS, and competitive exams covering microeconomics, macroeconomics, market structures, fiscal and monetary policy, development, and trade. Test conceptual clarity, analytical skills, and real-world application of economic principles.
Q: Depreciation of currency increases
A) Domestic price
B) Investment risk
C) Exports competitiveness
D) Imports
✅ Correct Answer: C
Explanation: Weaker currency makes exports cheaper, boosting demand.
Q: Price elasticity is unitary when
A) % change in price = % change in quantity
B) Price stays fixed
C) Demand is zero
D) Demand is infinite
✅ Correct Answer: A
Explanation: Unitary elasticity means proportional change in price and demand.
Q: Cost-push inflation is caused by
A) Tax cuts
B) Money supply drop
C) Rising demand
D) Higher production costs
✅ Correct Answer: D
Explanation: Increases in production costs lead to higher prices.
Q: Mixed economy features both
A) Imports and exports
B) Public and private sectors
C) Inflation and deflation
D) Agriculture and industry
✅ Correct Answer: B
Explanation: It combines government and market-based decision-making.
Q: Microeconomics focuses on
A) Trade balances
B) Individual units
C) National issues
D) Currency exchange
✅ Correct Answer: B
Explanation: It studies behavior of consumers, firms, and industries.
Q: Law of demand assumes
A) All variables change
B) Income doubles
C) Other factors constant
D) Government controls
✅ Correct Answer: C
Explanation: It assumes no changes in factors like income or taste.
Q: Fixed capital includes
A) Machinery
B) Labor
C) Fuel
D) Raw materials
✅ Correct Answer: A
Explanation: Machinery and buildings used over time are fixed capital.
Q: Money serves as a
A) Production factor
B) Wage determinant
C) Medium of exchange
D) Luxury item
✅ Correct Answer: C
Explanation: Money facilitates trade by serving as a common medium.
Q: Profit maximization is a goal of
A) NGOs
B) Governments
C) Consumers
D) Firms
✅ Correct Answer: D
Explanation: Firms aim to produce at levels where profits are highest.
Q: Central bank regulates
A) Wages
B) Stock prices
C) Prices of goods
D) Money supply
✅ Correct Answer: D
Explanation: One of its primary roles is controlling the supply of money.