190+ General Economics 2 Solved MCQs

These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Arts in Political Science (BA political science) , Union Public Service Commission (UPSC) , Indian Administrative Service (IAS) .

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1.	Trade as an engine of growth was propounded by :
A.	Hirschman
B.	Nurkse
C.	Marshall
D.	Robinson
Answer» B. Nurkse

2.	A decrease in the domestic currency price of foreign currency is:
A.	Depreciation
B.	Appreciation
C.	Euro currency
D.	Hedging
Answer» B. Appreciation

3.	Normal rate quoted in foreign exchange market is:
A.	Arbitrage
B.	Balance of trade
C.	Exchange rate
D.	Price rate
Answer» C. Exchange rate

4.	Balance of payment consist of:
A.	Trade in visible
B.	Trade in invisibles
C.	International capital flows
D.	All of the above
Answer» D. All of the above

5.	Invisible item are the part of ‐‐‐‐‐‐ account of balance of payment.
A.	Current
B.	Capital
C.	Merchandise
D.	None of the above
Answer» A. Current

6.	Devaluation of currency may result in:
A.	Increase in export
B.	Increase in import
C.	Increased capital flow
D.	Capital outflow
Answer» A. Increase in export

7.	Balance of payment take in to account:
A.	Visible items
B.	Invisible items
C.	Both visible and invisible item
D.	None of the above
Answer» C. Both visible and invisible item

8.	A fall in the price of Rupee in terms of foreign exchange is termed as:
A.	Depreciation
B.	Appreciation
C.	Devaluation
D.	Revaluation
Answer» A. Depreciation

9.	Transaction in travel, transportation and insurance between countries is included under:
A.	Merchandise
B.	Official reserves
C.	Invisibles
D.	None of the above
Answer» C. Invisibles

10.	Which of the following transaction is debit in balance of payment;
A.	Export of merchandise
B.	Export of service
C.	Gift from foreigners
D.	Gift to foreigners
Answer» D. Gift to foreigners

11.	Which is the component of capital account of balance of payment:
A.	Service payments
B.	Portfolio investment
C.	Export
D.	Interest receipts
Answer» B. Portfolio investment

13.	Which one of the following is correct when there is under valuation of domestic currency:
A.	Encouraging exports and inflow of capital
B.	Foreign goods cheaper and exports dearer
C.	Country imports more and exports less
D.	There is outflow of capital
Answer» A. Encouraging exports and inflow of capital

15.	In all balance of payment accounts, there are a fictitious head of account called:
A.	Invisibles
B.	Deficits
C.	Reserves
D.	Errors and omissions
Answer» D. Errors and omissions

17.	When demand for US dollars increases under flexible exchange rate system, then:
A.	The rupee depreciates
B.	The dollar appreciates
C.	Both A and B
D.	None of the above
Answer» C. Both A and B

20.	Assertion (A) : Devaluation in general is resorted to increase the exports. Reason (R) : It makes exports cheaper.
A.	Both (A) and (R) are correct
B.	(A) is correct, but (R) is not correct.
C.	Both (A) and (R) are incorrect
D.	A) is incorrect, but (R) is correct
Answer» A. Both (A) and (R) are correct

12.	Under fixed exchange rate system, when domestic currency is moved to a higher parity in terms of vehicle currency is:
A.	Appreciation
B.	Depreciation
C.	Devaluation
D.	Revaluation
Answer» D. Revaluation

14.	In balance of payment , if current account registers a deficit, the capital and financial account must register a:
A.	Deficit
B.	Balance
C.	Surplus
D.	Capital outflow
Answer» C. Surplus

16.	Balance on merchandise and service trade is called:
A.	Balance of payment
B.	Trade balance
C.	Current account
D.	Balance on goods and services
Answer» C. Current account

18.	An economic transaction is entered in the balance of payment as a credit, if it leads to:
A.	Receipt of payment from foreigners
B.	Either the receipt of payment or making of payment
C.	A payment to foreigners
D.	Neither the receipt nor making of a payment
Answer» A. Receipt of payment from foreigners

19.	Remittances foe abroad is included in which account of balance of payment:
A.	Current account
B.	Capital account
C.	Visible account
D.	Official account
Answer» A. Current account

21.	The continuous deficit in the balance of payments of India is due to
A.	Continued rise in imports
B.	Slow rise in exports
C.	Exchange rate volatility
D.	All of the above
Answer» D. All of the above

22.	The ongoing weakening of Rupee against Dollar will cause
A.	Indian exports to US will rise
B.	Indian exports to US will fall
C.	Import from US to India will remain constant
D.	Indian exports to US remain constant
Answer» A. Indian exports to US will rise

23.	If the Rupees per Dollar($) exchange rate changes from Rs 44 to 46 in an year by the market force, it implies
A.	Appreciation of $
B.	Depreciation of $
C.	Devaluation of $
D.	Revaluation of $
Answer» A. Appreciation of $

24.	Public finance is said to be:
A.	Science of income and expenditure
B.	Science of money and cost
C.	Science of demand and supply of money.
D.	Science of taxes and spending.
Answer» A. Science of income and expenditure

25.	All the accounts of public authority are subject to:
A.	Conceal
B.	Audit and inspection
C.	Publicity
D.	None of above.
Answer» B. Audit and inspection

190+ General Economics 2 Solved MCQs

Trade as an engine of growth was propounded by :

A decrease in the domestic currency price of foreign currency is:

Normal rate quoted in foreign exchange market is:

Balance of payment consist of:

Invisible item are the part of ‐‐‐‐‐‐ account of balance of payment.

Devaluation of currency may result in:

Balance of payment take in to account:

A fall in the price of Rupee in terms of foreign exchange is termed as:

Transaction in travel, transportation and insurance between countries is included under:

Which of the following transaction is debit in balance of payment;

Which is the component of capital account of balance of payment:

Under fixed exchange rate system, when domestic currency is moved to a higher parity in terms of vehicle currency is:

Which one of the following is correct when there is under valuation of domestic currency:

In balance of payment , if current account registers a deficit, the capital and financial account must register a:

In all balance of payment accounts, there are a fictitious head of account called:

Balance on merchandise and service trade is called:

When demand for US dollars increases under flexible exchange rate system, then:

An economic transaction is entered in the balance of payment as a credit, if it leads to:

Remittances foe abroad is included in which account of balance of payment:

Assertion (A) : Devaluation in general is resorted to increase the exports. Reason (R) : It makes exports cheaper.

The continuous deficit in the balance of payments of India is due to

The ongoing weakening of Rupee against Dollar will cause

If the Rupees per Dollar($) exchange rate changes from Rs 44 to 46 in an year by the market force, it implies

Public finance is said to be:

All the accounts of public authority are subject to:

Price revenue is popularly known as:

Who propounded the doctrine of sound finance:

The basic principle of Public Finance is:

A tax is:

Which of the following are direct taxes:

From the following which is not a direct tax:

The name of indirect tax is:

Taxes raised are credited into:

All taxes come under:

Who favoured an unbalanced budget:

The concept of functional finance was first developed by:

Deficit budgeting should be resorted to at a time of:

Fiscal policy is related to:

“The Law of Increase of state Activities” was explained by:

The Critical limit Hypothesis was explained by:

Public debt implies loans raised by a government:

Who is the chairman of the first finance commission?

Loans on projects yielding income is:

When income of the government is greater than its expenditure, the budget is:

Chairman of the Thirteenth Finance Commission is:

Chairman of the Finance Commission is appointed by:

When income and expenditure of the government are equal, the budget is:

Budget is presented in the Parliament as per:

The largest contributing sector to GDP at the time of independence in India is:

The contribution of Primary sector to GDP in 2011‐12 is:

26.	Price revenue is popularly known as:
A.	Market borrowing
B.	Government borrowing
C.	Commercial revenue
D.	Surplus of public undertakings
Answer» C. Commercial revenue

27.	Who propounded the doctrine of sound finance:
A.	German Historical economists
B.	Classical Economists
C.	Neo‐ classical economists
D.	None of the above
Answer» B. Classical Economists

28.	The basic principle of Public Finance is:
A.	Maximum social advantage
B.	Welfare of the government
C.	Welfare of the individual
D.	All the above.
Answer» A. Maximum social advantage

29.	A tax is:
A.	Voluntary contribution with direct benefit
B.	Compulsory contribution with indirect benefit.
C.	Compulsory Contribution with no direct benefit.
D.	None of the above.
Answer» C. Compulsory Contribution with no direct benefit.

30.	Which of the following are direct taxes:
A.	Gift tax
B.	Corporation tax
C.	Income tax
D.	All of the above.
Answer» D. All of the above.

31.	From the following which is not a direct tax:
A.	Tax income
B.	Tax on wealth
C.	Tax on expenditure
D.	Tax on entertainment
Answer» A. Tax income

32.	The name of indirect tax is:
A.	Sales tax
B.	Income tax
C.	Corporation tax
D.	Wealth tax.
Answer» A. Sales tax

33.	Taxes raised are credited into:
A.	Public Accounts
B.	Consolidated Fund
C.	Contingency Fund
D.	Private Accounts.
Answer» B. Consolidated Fund

34.	All taxes come under:
A.	Capital receipts
B.	Public debt
C.	Revenue receipts
D.	Both (b) and (c).
Answer» C. Revenue receipts

35.	Who favoured an unbalanced budget:
A.	German historical economists
B.	Keynesian economists
C.	Neo‐ classical economists
D.	All of the above.
Answer» B. Keynesian economists