MCQ Bank

The Index of Economic Freedom classifies countries into categories such as Free, Mostly Free, Moderately Free, Mostly Unfree, and Repressed. 'Independent' is not an official economic classification category in this system.

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Q41

Which of the following determines price mechanism?

A) Demand
B) Cost
C) Supply
D) Both a & b

AI Explanation

The price mechanism in a market economy is determined by the interaction of demand and supply (alongside cost factors influencing supply curves). Both forces work together to establish market equilibrium prices.

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Q42

John Locke proposed which concept?

A) Free market and justice
B) Restricted market and justice
C) Free market and rights
D) Restricted market and rights

AI Explanation

John Locke famously proposed the theory of natural rights, including life, liberty, and property. These rights form the philosophical bedrock for justifying free markets and private ownership.

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Q43

Which of the following refers to the ability of a person or a country to produce a particular good at a lower opportunity cost than another country?

A) Resource efficiency
B) Comparative advantage
C) Absolute advantage
D) Natural advantage

AI Explanation

Comparative advantage refers to the ability of a party to produce a particular good or service at a lower opportunity cost than its competitors. It serves as the fundamental economic basis for international trade gains.

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Q44

Whatever happens naturally is always for the best. This refers to:

A) Totalitarianism
B) Naturalistic Fallacy
C) Social Darwinism
D) Utilitarianism

AI Explanation

The belief that whatever happens naturally or through evolutionary competition is always for the best is a core ideological tenet of Social Darwinism. It mistakenly applies biological natural selection as a standard of human societal goodness.

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Q45

Who proposed the concept of free market and utility?

A) John Rawls
B) Alasdair MacIntyre
C) Adam Smith
D) John Locke

AI Explanation

Adam Smith proposed the utilitarian argument for free markets, asserting that individuals pursuing their own self-interest inadvertently promote the overall utility and wealth of society. This invisible hand mechanism provides the core economic justification for free enterprise.

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Q46

Who presented the theory of absolute advantage?

A) Murray Roth bard
B) Eric Mack
C) Friedrich A. Hike
D) Adam Smith

AI Explanation

Adam Smith introduced the theory of absolute advantage in 'The Wealth of Nations', arguing that countries should specialize in producing goods where they can use fewer resources than trading partners. Note that option C contains a slight spelling variant for Friedrich A. Hayek.

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Q47

India requires 50 labor hours to produce textile and 100 hours to produce books. Nepal requires 200 labor hours to produce textile and 200 hours to produce books. Which of the following statements is true?

A) Nepal has an absolute advantage in the production of books
B) Nepal has an absolute advantage in the production of both textile and books
C) India has a comparative advantage in the production of textile
D) India should not produce books

AI Explanation

India's opportunity cost of producing textile is 50/100 or 0.5 books, whereas Nepal's is 200/200 or 1.0 book. Because India has a lower opportunity cost for textile, it holds a comparative advantage in its production.

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Q48

On the rightness or wrongness of the policy, institution or behavior is known as?

A) None of the above
B) Moral Judgment
C) Moral Impartiality
D) Moral reasoning

AI Explanation

Moral judgment refers to the evaluation or assessment of whether a policy, institution, or behavior is right or wrong. It involves applying moral standards to specific actions or social structures.

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Q49

Economic system in which land, factories, and other economic resources are more equally split between private and government ownership is known as?

A) Liberal economy
B) Free Economy
C) Mixed Economy
D) None of the above

AI Explanation

A mixed economy features a combination of private enterprise and government ownership or intervention in resource allocation. Economic resources and industries are shared between private individuals and public authorities.

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Q50

John Maynard Keynes arguments were the most influential in economics, when they become less convincing?

A) 1990
B) 1970
C) 1980
D) 1960

AI Explanation

Keynesian economic policies faced severe criticism and became less convincing during the stagflation crisis of the 1970s, when high inflation and high unemployment occurred simultaneously—a phenomenon Keynesian models struggled to explain.

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Q51

Determining factors of the economy include all except?

A) Trade Policy
B) Fiscal burden of the government
C) Education level
D) Property rights

AI Explanation

Standard economic freedom indexes and macroeconomic frameworks evaluate economies using determining factors such as trade policy, the fiscal burden of government, and property rights. Education level is generally categorized as a social or human development indicator rather than a direct determining factor of economic policy.

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Q52

Which of the following discipline argued that economic competition produce human progress and government should not intervene to impede human progress?

A) Utilitarian
B) Social Darwinism
C) Adam Smith
D) Keynesian

AI Explanation

Social Darwinism applied biological evolutionary concepts to human society, arguing that economic competition drives human progress and that government intervention improperly shields the unfit, thereby hindering natural societal evolution.

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Q53

Maldem Mill’s decision to remain in the community and help for his workers by continuing to pay them after the fire is an example of which ethical theory?

A) Distributive justice
B) The ethics of care
C) Compensatory justice
D) Communitarian ethics

AI Explanation

The ethics of care emphasizes nurturing special interpersonal relationships, showing empathy, and taking responsibility for the well-being of those connected to us, such as workers after a crisis. Maldem Mills' choice to support employees directly reflects this relational care approach.

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Q54

Country “B” requires 50 labor hours to produce cloth and 100 hours to produce grain. Country “A” requires 200 labor hours to produce cloth and 200 hours to produce grain. Which of the following statements is true?

A) None of the given options
B) Country “B” has a comparative advantage in the production of cloth
C) Country “A” has an absolute advantage in the production of both cloth and grain
D) Country “A” has an absolute advantage in the production of grain

AI Explanation

Country B requires fewer labor hours to produce both cloth (50 vs 200) and grain (100 vs 200), meaning Country B holds an absolute advantage in both goods, making option C false. For comparative advantage, Country B's opportunity cost of cloth is 50/100 (0.5 grain) and Country A's is 200/200 (1.0 grain), meaning Country B has the comparative advantage in cloth, making option B incorrect.

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Q55

Which of the following system have absolutely no constraints on what one can own and what one can do with it?

A) Pure free market system
B) Command system
C) Communitarian system
D) None of the given options

AI Explanation

Even in a pure free market system, absolute and completely unconstrained property rights do not exist, as legal systems always impose certain restrictions, regulations, and laws regarding what individuals can own and how they can use property.

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Q56

In the recent times, Korea has developed the vehicle manufacturing capability that is best in the world. What type of country specific advantage it is as classified by Adam Smith?

A) Absolute advantage
B) Acquired advantage
C) Natural advantage
D) None of the given options

AI Explanation

Adam Smith classified country-specific advantages into natural advantages (such as climate, soil, or mineral resources) and acquired advantages (such as skills, technology, or manufacturing capabilities). Since manufacturing capability is an acquired advantage rather than absolute or natural, and the specific term 'acquired advantage' is not listed under that exact label in the options, none of the given options is correct.

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Q57

Who wrote the book “The Wealth of Nations”?

A) Karl Marx
B) John Maynard Keynes
C) Adam Smith
D) John Locke

AI Explanation

Adam Smith wrote 'The Wealth of Nations', published in 1776, which is widely considered the foundational text of classical economics and free-market theory.

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Q58

Which of the following are essential when moral questions arise that involve persons embedded in a web of relationships?

A) Standards of justice
B) Standards of caring
C) Utilitarian standards
D) Standards that specify how individuals must be treated

AI Explanation

Standards of caring are essential when addressing moral questions involving persons embedded in networks of personal relationships, as they prioritize nurturing connections and responsibilities toward others.

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Q59

Which of the following is/are classification of countries with respect to economy?

A) All of the given options
B) Free
C) Mostly unfree
D) Mostly free

AI Explanation

Economic freedom indexes classify countries into multiple tiers, including Free, Mostly Free, and Mostly Unfree. Therefore, all the listed choices are valid classifications.