Economics, Trade & Industry (30 MCQs): NRB Officers and Other Competitive Exams

This set of 30 MCQs offers a comprehensive review for candidates preparing for the Nepal Rastra Bank (NRB) Officer and other competitive civil service exams in Nepal. Covering essential topics from Microeconomics, such as the laws of demand and production functions, to Macroeconomics and the Nepalese Economy, these questions bridge the gap between theoretical concepts and practical exam requirements. Whether you are analysing the Ricardian theory of rent, understanding Keynesian liquidity traps, or identifying the role of the National Planning Commission, this practice set is designed to sharpen your objective reasoning and boost your confidence for the banking sector's rigorous selection process.

1) The country producing the highest amount of rubber in the world is:

a) Brazil     

b) Mexico  

c) South Korea

d) Malaysia

 

2) The national planning commission in Nepal is chaired by:

a) Finance Minister

b) NRB Governor

c) Prime Minister

d) Chief economic advisor

 

3) Which is not among the Tour tigers?

a) Japan     

b) South Korea    

c) Taiwan   

d) Hong Kong

 

4) ''I like ice cream, but after eating homemade ice cream last night, I want to have something else for dessert today'' this statement most clearly reflects:

a) The budget constraint

b) Consumer irrationality

c) The second law of demand: price elasticity increases with time

d) The law of diminishing marginal utility

 

5) The nation whose demand for inputs depends on the demand for output is termed:

a)  Inverse demand        

b) Proportional demand

c) Derived demand        

d)  Notational demand

 

6) Price discrimination is a situation in which a producer:

a) Charges different prices in different markets   

b) Charges many prices

c) Charges the same price   

d) All of the above

 

7) A monopolist produces.... the combined production in a perfectly competitive market:

a) More than       

b) The same as

c) Less than

d) One-third of

 

8) According to the Ricardian theory of rent, the rent arises due to the:

a) Land is available for planning      

b) Difference in fertility of land

c) Scarcity of land

d) Supply of land is fixed

 

9) If income alone increases, then the budget line will:

a) Shift towards the right, upwards 

b) Rotates in the clockwise direction

c) Shift towards the right, downwards                          

d) Rotates in the anti-clockwise direction

 

10) The producer's equilibrium refers to:

a) Profit maximization  

b) Output maximization

c) Cost minimization

d) All of the above

11) Equi-distant Iso-quants imply:

a) Constant returns to scale    

c) Decreasing returns to scale

b) Increasing returns to scale  

d) All of the above

 

12) In the case of the Cobb-Douglas production function, the output elasticity of an input is:

a) A constant       

b) Unity

c) A function of all the inputs 

d) Indeterminate

 

13) The nature if Engel curve for an inferior good is:

a) A straight line parallel to the X-axis  

b) Positively sloped curve

c) A straight line parallel to the Y-axis   

d) Negatively sloped curve

 

14) The expansion path of production theory is analogous in consumption theory to the:

a) Price consumption curve    

b) Engel curve

c) Income-consumption curve

d) Budget-constraint line

15) Other things being equal, a rise in quantity supplied can be caused by:

a) A rise in the price of the commodity      

b) An increase in the income of the seller

c) A rise in the income of the consumer     

d) All of the above

 

16) The equality of income in an economy arises due to:

a) The system of inheritance

b) The system of private property

c) Differences in ability

d) All of the above

 

17) Welfare is an ethical term; all welfare propositions:

a) Are also ethical

b) Are concerned with policy measures    

c) Involve value judgement

d) All of the above

 

18) Which of the following is a method of public debt redemption?

a) Repudiation of debt  

b) Debt conversion       

c) Sinking fund    

d) All of the above

 

19) The main cause of deficit financing in Nepal is:

a) Increasing non-development expenditure

b) Unpopularity and narrow base of taxation

c) Both of the above

d) None of the above

 

20) Per capita income refers to:

a) National income/population

b) Population/national income

c) Real income/population

d) Disposable income/population

 

21) Classical theory of employment is characterized by:

a) Full employment equilibrium

b) Under employment equilibrium

c) No employment equilibrium

d) Unemployment equilibrium

 

22) The  value of MPC is assumed to be:

a) Positive and less than unity

b) Negative

c) Positive and greater than unity

d) Negative and less than one 

 

23) Instead of current income, Friedman in the permanent income hypothesis, uses:

a) Future income

b) Permanent and transitory income

c) Permanent and future income

d) None of the above

 

24) Autonomous investment made on social overhead is:

a) Government investment only

b) Private investment only

c) Government and private investment

d) None of the above

 

25) Induced investment is:

a) Influenced by demand

b) Influences demand

c) Influenced by supply

d) None of the above

26) According to Keynes, the desire to hold money is because of:

a) 2 motives        

b) 3 motives

c) 4 motives

d) 5 motives

 

27) The concept of liquidity trap is associated with:

a) Keynes   

b) Simon Kuznets

c) Jacob Viner

d) Simons

 

28) What is excluded from the GDP?

a) Household services   

b) The value of intermediate products

c) Underground market activities     

d) All of the above

 

29) Economic growth is required to:

a) Reduce unemployment

b) Increase the national income

c) Increase the standard of living

d) All of the above

 

30) Higher anticipated inflation:

a) Decreases the economy's price level      

b) Increases economic growth

c) Decreases unemployment

d) Decreases  economic growth

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Answer Key:

Q.No	Correct Option	Answer Description
1	d) Malaysia	Note: While Thailand is currently the top producer, Malaysia is the traditional answer in many older South Asian question banks.
2	c) Prime Minister	The PM of Nepal is the ex-officio Chairman of the National Planning Commission.
3	a) Japan	The "Four Asian Tigers" are South Korea, Taiwan, Hong Kong, and Singapore.
4	d) The law of DMU	The Law of Diminishing Marginal Utility explains why the satisfaction from a good decreases as consumption increases.
5	c) Derived demand	Demand for factors of production (like labor) is derived from the demand for the final product.
6	a) Charges different prices	Price discrimination involves charging different prices to different consumers for the same product.
7	c) Less than	A monopolist restricts output to keep prices high compared to a competitive market.
8	b) Difference in fertility	Ricardo stated that rent is the result of the inherent and indestructible powers of the soil.
9	a) Shift towards right	An increase in income (with prices constant) causes a parallel outward shift.
10	d) All of the above	Equilibrium involves maximizing profit/output or minimizing cost.
11	a) Constant returns	If iso-quants are equi-distant, it indicates that output increases in the same proportion as inputs.
12	a) A constant	In $Q = AL^\alpha K^\beta$, the exponents ($\alpha$ and $\beta$) represent constant output elasticities.
13	d) Negatively sloped	For inferior goods, as income increases, the quantity demanded decreases.
14	c) Income-consumption	Both show the path of equilibrium as income/scale changes.
15	a) Rise in price	According to the Law of Supply, quantity supplied rises as price rises.
16	d) All of the above	Wealth inheritance, private property, and skill gaps all contribute to inequality.
17	d) All of the above	Welfare economics is normative and involves ethics and value judgements.
18	d) All of the above	These are all standard methods for a government to repay or manage debt.
19	c) Both of the above	Low tax revenue and high unproductive spending drive Nepal's deficit.
20	a) NI / Population	PCI is the average income per person in a given country.
21	a) Full employment	Classicals believed the economy always gravitates toward full employment.
22	a) Positive/Less than 1	$0 < MPC < 1$; people spend a part of their increased income.
23	b) Permanent/Transitory	Friedman’s hypothesis splits income into these two components.
24	a) Govt investment only	Social overhead capital (roads, dams) is typically a public sector investment.
25	a) Influenced by demand	Induced investment changes based on income or demand levels.
26	b) 3 motives	Transactionary, Precautionary, and Speculative motives.
27	a) Keynes	Refers to a situation where interest rates are so low that everyone prefers holding cash.
28	d) All of the above	GDP excludes non-marketed services, intermediate goods, and illegal/hidden trade.
29	d) All of the above	Growth is the fundamental driver for living standards and employment.
30	d) Decreases growth	High, unpredictable inflation creates uncertainty and discourages investment.