MCQ set-1

Which of the following best defines economics?

A) The study of how people allocate scarce resources

B) The study of how people spend their income

C) The study of how people save their income

D) The study of how people invest their income

Answer: A) The study of how people allocate scarce resources

Which of the following is an example of a capital resource?

A) Money

B) Labor

C) Land

D) Machinery

Answer: D) Machinery

What is the opportunity cost of a decision?

A) The cost of producing a good or service

B) The cost of consuming a good or service

C) The cost of the next best alternative

D) The cost of doing nothing

Answer: C) The cost of the next best alternative

Which of the following is a characteristic of a market economy?

A) Centralized decision-making

B) Government control of prices

C) Private ownership of resources

D) Equal distribution of wealth

Answer: C) Private ownership of resources

Which of the following best describes the law of supply?

A) As price increases, quantity supplied increases

B) As price decreases, quantity supplied increases

C) As price increases, quantity supplied decreases

D) As price decreases, quantity supplied decreases

Answer: A) As price increases, quantity supplied increases

What is the difference between a normal good and an inferior good?

A) Normal goods are always more expensive than inferior goods

B) Normal goods are purchased more frequently than inferior goods

C) Normal goods are purchased less frequently than inferior goods

D) Normal goods are purchased more often as income increases, while inferior goods are purchased less often as income increases

Answer: D) Normal goods are purchased more often as income increases, while inferior goods are purchased less often as income increases

What is inflation?

A) A decrease in the overall price level of goods and services

B) An increase in the overall price level of goods and services

C) A decrease in the supply of money

D) An increase in the supply of money

Answer: B) An increase in the overall price level of goods and services

Which of the following is an example of a progressive tax?

A) Sales tax

B) Excise tax

C) Property tax

D) Income tax

Answer: D) Income tax

What is the difference between a monopoly and an oligopoly?

A) A monopoly is a market with only one supplier, while an oligopoly is a market with only a few suppliers

B) A monopoly is a market with only a few suppliers, while an oligopoly is a market with only one supplier

C) A monopoly is a market with no suppliers, while an oligopoly is a market with multiple suppliers

D) A monopoly is a market with multiple suppliers, while an oligopoly is a market with no suppliers

Answer: A) A monopoly is a market with only one supplier, while an oligopoly is a market with only a few suppliers

Which of the following is a tool used by the Federal Reserve to control the money supply?

A) Fiscal policy

B) Monetary policy

C) Government spending

D) Tax policy

Answer: B) Monetary policy