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: Expansionary fiscal policy leads to
A) Trade restrictions
B) Increased spending
C) Deflation
D) Decreased demand
✅ Correct Answer: B
Explanation: It boosts economic activity through government expenditure.
Q: Market economy decisions are made by
A) Government
B) Courts
C) Banks
D) Buyers and sellers
✅ Correct Answer: D
Explanation: Market forces determine production and prices.
Q: Imports are discouraged by
A) Tariffs
B) Tax cuts
C) Loans
D) Subsidies
✅ Correct Answer: A
Explanation: Tariffs make imports costlier, protecting local industries.
Q: Deflation signifies
A) Export surplus
B) Rising wages
C) Falling prices
D) Economic boom
✅ Correct Answer: C
Explanation: It reflects a sustained decrease in general price levels.
Q: Free rider problem occurs with
A) Public goods
B) Luxury goods
C) Inferior goods
D) Private goods
✅ Correct Answer: A
Explanation: Public goods can be used without paying, causing inefficiency.