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: A tariff is a type of
A) Export subsidy
B) Tax on imports
C) Foreign loan
D) Quota
✅ Correct Answer: B
Explanation: Tariffs are imposed by governments on imported goods to restrict trade and raise revenue.
Q: Subsidies are provided by governments to
A) Raise prices
B) Discourage production
C) Encourage consumption or production
D) Tax the poor
✅ Correct Answer: C
Explanation: Governments use subsidies to reduce costs and promote production or consumption of specific goods.
Q: Monopoly exists when
A) Many firms sell differentiated products
B) Only one seller controls the market
C) Prices are fixed by government
D) Free trade occurs
✅ Correct Answer: B
Explanation: A monopoly features a single producer dominating the entire market without competition.
Q: An indifference curve shows combinations of goods
A) That increase total utility
B) Providing equal satisfaction
C) That are affordable
D) That maximize revenue
✅ Correct Answer: B
Explanation: Indifference curves represent all combinations of two goods giving the same level of consumer satisfaction.
Q: A budget deficit arises when
A) Revenue exceeds expenditure
B) Expenditure exceeds revenue
C) Revenue equals expenditure
D) Taxes are lowered
✅ Correct Answer: B
Explanation: Budget deficits occur when government spending surpasses its income.