Economics

Economics MCQs with Answers and Explanations | Microeconomics & Macroeconomics Objective Questions.

Strengthen your knowledge of Economics with a rich collection of MCQs with answers and detailed explanations. Topics include microeconomics, macroeconomics, demand and supply, national income, inflation, monetary policy, fiscal policy, international trade, economic growth, and development economics. These multiple-choice questions are designed for students, teachers, and candidates preparing for competitive exams (CSS, PMS, NTS, FPSC, PPSC, UPSC, MBA, BBA, etc.). Each MCQ is supported by a clear solution and explanation to improve conceptual clarity, analytical ability, and exam performance. Perfect for self-assessment, practice, and revision in the field of Economics.

164. What best explains a shift in market supply curve to the right?

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An advertising campaign is successful in promoting the good
A new technique makes it cheaper to produce the good
The government introduces a tax on the good
The price of raw materials increases
✅ The correct answer is B.
A new technique makes it cheaper to produce the good best explains a shift in market supply curve to the right. A rightward shift in the supply curve, say from a new production technology, leads to a lower equilibrium price and a greater quantity.

165. According to Keynes, interest is a payment for

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Consumer’s preference
Producer’s preference
Liquidity preference
State Bank’s preference
✅ The correct answer is C.
According to Keynes, interest is a payment for Liquidity preference. The Liquidity Preference Theory says that the demand for money is not to borrow money but the desire to remain liquid. In other words, the interest rate is the ‘price’ for money.

167. Which of the following input factor takes risk, innovates and coordinates

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Capital
Labour
Productivity
Entrepreneur
✅ The correct answer is D.
Entrepreneur input factor takes risk, innovates and coordinates. An entrepreneur is an individual who creates a new business, bearing most of the risks and enjoying most of the rewards. The entrepreneur is commonly seen as an innovator, a source of new ideas, goods, services, and business/or procedures.

168. As for the cost of production of an individual farmer, the rent paid by him

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Enters into the price of his product
Does not enter into price of his product
Is unjustified
None of the above
✅ The correct answer is A.
As for the cost of production of an individual farmer, the rent paid by him enters into the price of his product. The classical political economists found value to be determined in production; since most of the cost of production could be reduced to labor, this approach was refined into the Labor Theory of Value.