Economics (Part – I) - Mock Test 365

1. Malthusian Theory is associated with which of the following? [S.S.C. Online C.G.L.(T-I) 8.09.2016 (Shift-I)]

(a) Poverty
(b) Employment
(c) Diseases
(d) Population

Correct Answer: (d) Population

Solution:At the end of the 18th century, Thomas Malthus concluded that if not stopped, population growth would outpace the increase in food production, leading to increased poverty and famine. T R Malthus in his book "An Essay on the Principle of Population" which was published in 1798 AD, stated that population grows in geometrical proportion (1, 2, 4, 8, 16, 32, 64) while food Supply increases in the Arithmetical ratio (1, 2, 3, 4, 5, 6). Thomas Malthus is seen as the intellectual father of overpopulation ideas.

2. According to Malthusian theory which of the following grows in geometric progression? [S.S.C. Online C.G.L. (T-I) 18.08.2021 (Shift-III)]

(a) Food supply
(b) Population
(c) Poverty
(d) Employment

Correct Answer: (b) Population

Solution:At the end of the 18th century, Thomas Malthus concluded that if not stopped, population growth would outpace the increase in food production, leading to increased poverty and famine. T R Malthus in his book "An Essay on the Principle of Population" which was published in 1798 AD, stated that population grows in geometrical proportion (1, 2, 4, 8, 16, 32, 64) while food Supply increases in the Arithmetical ratio (1, 2, 3, 4, 5, 6). Thomas Malthus is seen as the intellectual father of overpopulation ideas.

3. According to Malthusian theory of population- [S.S.C. Online C.G.L.(T-I) 3.09.2016 (Shift-II)]

(a) Population increases in geometric ratio, food supply increases in an arithmetic ratio
(b) Population increases in arithmetic ratio, food supply increases in geometric ratio
(c) Population increases in a harmonic mean, food supply increases in geometric ratio
(d) Population increases in a harmonic ratio, food supply increases in an arithmetic ratio

Correct Answer: (a) Population increases in geometric ratio, food supply increases in an arithmetic ratio

Solution:At the end of the 18th century, Thomas Malthus concluded that if not stopped, population growth would outpace the increase in food production, leading to increased poverty and famine. T R Malthus in his book "An Essay on the Principle of Population" which was published in 1798 AD, stated that population grows in geometrical proportion (1, 2, 4, 8, 16, 32, 64) while food Supply increases in the Arithmetical ratio (1, 2, 3, 4, 5, 6). Thomas Malthus is seen as the intellectual father of overpopulation ideas.

4. Trickle down theory ignores the impact of eco-nomic growth on- [S.S.C. Online C.G.L.(T-I) 27.08.2016 (Shift-I)]

(a) Investment
(b) Savings
(c) Income distribution
(d) Consumption

Correct Answer: (c) Income distribution

Solution:According to the trickle-down theory, policies made keeping the wealthy class in mind accelerate the economy and benefit everyone, including the poor. The trickle-down theory was a theory given by pro-capitalist economists of the free market. According to them, the accumulation of capital in the hands of the wealthy classes is in the interest of society, because this capital is used by the rich class in production activities, which employs the people. But the findings suggest that this theory could not solve the income distribution problem. The rich got richer and the poor got poorer. Therefore, it can be said that this theory ignores 'income distribution'.

5. The innovation theory of profit was proposed by- [S.S.C. Online C.G.L.(T-I) 4.09.2016 (Shift-II)]

(a) Marshall
(b) Clark
(c) Schumpeter
(d) Joan Robbinson

Correct Answer: (c) Schumpeter

Solution:The Innovation Theory of Profit was proposed by Joseph. A. Schumpeter, who believed that an entrepreneur could earn economic profits by introducing successful innovations. In other words, innovation theory of profit posits that the main function of an entrepreneur is to introduce innovations and the profit in the form of reward is given for his performance.

6. Who among the following first argued that in the face of high deficits, people save more? [S.S.C. Online CGL (T-1) 12.04.2022 (Shift-I)]

(a) Amartya Sen
(b) Esther Duflo
(c) Adam Smith
(d) David Ricardo

Correct Answer: (d) David Ricardo

Solution:David Ricardo (1772-1823) was an English econo-mist and political theorist in the 19th century, argued that when government deficits are high, individuals and businesses will tend to save more in anticipation of higher taxes or inflation in the future. This phe-nomenon is known as the "Ricardian Equivalence" theory .

7. Which law states that bad money drives good money out of circulation? [S.S.C.OnlineCHSL (T-I) 11.01.2017(Shift-III)]

(a) Wagner's Law
(b) Grimm's Law
(c) Gresham's Law
(d) Keynes' Law

Correct Answer: (c) Gresham's Law

Solution:Gresham's law is a monetary principle stating that "bad money drives out good". In currency valuation, the law states that if a new coin (bad money) is assigned the same face value as an older coin containing a higher amount of precious metal (good money), then the new coin will be used in circulation while the old coin will be hoarded and will disappear from circulation.

8. Which of the following is an exception to the principle of demand? [S.S.C. Online C.P.O. S.I. 11.06.2016 (Shift-I)]

(a) public property
(b) Basic or essential property
(c) Club property
(d) Common Pool Resources

Correct Answer: (b) Basic or essential property

Solution:There are some situations in which the law of demand is not effective, that is, the law of demand does not apply in every situation. These circumstances are said to be exceptions to the law of demand. Under these circumstances, even if the price of a commodity increase, its demand does not decrease. Such items are as follows prestige goods, essential commodities, inferior goods, intoxicants etc.

9. Demand in Economics means _________. [S.S.C. Online MTS (T-I)30.10.2017 (Shift-I)]

(a) Aggregate Demand
(b) Market demand
(c) Individual demand
(d) Demand backed by purchasing power

Correct Answer: (d) Demand backed by purchasing power

Solution:Demand in economics means demand backed by purchasing power. The concept of demand refers to "the quantity of a commodity which the consumer is ready to buy at a given time and a fixed price". The essential elements for demand are fixed price, fixed time, income and ability to buy etc. The 'law of demand' is considered an important law of economics.

10. According to the law of demand, if all other goods remain equal, then what is the relationship between the demand for a commodity and its price? [S.S.C. Online MTS (T-I) 21.08.2019 (Shift-III)]

(a) negative
(b) no relation
(c) can be positive or negative
(d) positive

Correct Answer: (a) negative

Solution:According to the law of demand, there is a negative (inverse) relationship between the demand for a commodity and its price if all other goods remain the same.

Economics (Part – I)