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: Surplus budget implies
A) Loans increase
B) Imports exceed exports
C) Income exceeds expenditure
D) Expenditure equals income
✅ Correct Answer: C
Explanation: A surplus budget means the government's revenue is more than its spending.
Q: Bank interest rate hike may lead to
A) Stock rise
B) Reduced borrowing
C) Inflation
D) More demand
✅ Correct Answer: B
Explanation: Higher interest rates discourage borrowing, slowing down spending.
Q: Fiscal policy involves
A) Taxation and government spending
B) Currency printing
C) Interest rate setting
D) Stock market trading
✅ Correct Answer: A
Explanation: Governments use fiscal tools like taxation and expenditure to manage the economy.
Q: Inflation reduces
A) Purchasing power
B) Money supply
C) Employment
D) Tax rates
✅ Correct Answer: A
Explanation: When prices rise, the value of money falls, reducing purchasing power.
Q: Invisible hand refers to
A) Market forces
B) Banking rules
C) Government control
D) Business monopoly
✅ Correct Answer: A
Explanation: Coined by Adam Smith, it describes how self-interest leads to societal benefit.