Economics Olympiad Qualifier

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Max Marks: 180 Time Allotted: 60 Mins
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Instructions:
 This question paper has 45 questions.
 Each question has four choices (A), (B), (C) and (D) out of which ONLY
ONE is correct.
 + 4 & -1 Marking Scheme

1. ____ examines how people use their scarce resources to satisfy their unlimited
wants.
A) Economics
B) Budgeting
C) Research
D) Prioritizing

2. ____ measures the market value of all final goods and services produced in a
country during a given period, usually a year.
A) Gross domestic product
B) Net production
C) Consumer price index
D) Productivity

3. A combination of high inflation and high unemployment is known as _____.

A) superficial inflation
B) superflation
C) natural rate of unemployment
D) stagflation

4. _____ is an important indicator about the relative scarcity of a product or

service.
A) The "invisible hand"
B) Product popularity
C) Market price
D) Cost of production
5. An increase in the quantity and quality of capital per worker is called _____.
A) capital interest
B) capital growth
C) capital deepening
D) inflated capital

6. The law of _____ states that each additional increment of one good requires the
economy to give up successively larger increments of the other good.
A) supply and demand
B) increasing opportunity cost
C) productivity
D) diminishing return

7. Politicians running for national office are concerned about current _____
conditions.
A) microeconomic
B) macroeconomic
C) consumer behavior
D) personal salary

8. An oligopoly is comprised of _____ firm(s).

A) one
B) many
C) a few
D) most

9. Taxpayers are coerced because they _____.

A) are forced to pay for programs they do not support
B) cannot change things by voting
C) exercise choice when funding programs
D) are forced to obey laws they do not support
10. _____ measures how much output is produced from given inputs.
A) Capital deepening
B) Productivity
C) Standard of living
D) Capital

11. The most important category of investment is new _____.

A) exports
B) physical capital
C) imports
D) stocks

12. As long as the demand curve slopes downward, a leftward shift of the supply
curve _____.
A) increases price but reduces the quantity
B) increases price and increases the quantity
C) decreases demand
D) increases supply

13. Total income for an entire group of people is referred to as _____ income.
A) personal
B) aggregate
C) gross
D) net

14. The government finances goods (roads, schools, etc) and services (care of
the elderly). Which statement represents this concept the best?
A) The government produces the services but not the goods.
B) Government workers perform all the needed tasks.
C) Private firms charge more than the government for the same good or service.
D) The government hires private firms to produce some goods and services.

15. When the marginal tax rate is high it _____.

A) reduces people's incentive to work
B) stimulates the stock market
C) raises the after-tax income
D) encourages people to work longer hours
16. Supply indicates how much of a good producers _____.
A) are willing and able to offer
B) have sold
C) have yet to sell
D) produce

17. Voters adopt a stance of rational ignorance when they _____.

A) vote the wrong way on an issue
B) vote strictly along party lines
C) do not educate themselves on public matters
D) exercise poor judgment

18. All of the following reduce demand except _____.

A) an increase in consumer income
B) a decrease in the price of a substitute
C) a decrease in consumer income
D) a decline in the number of consumers

19. The amount by which actual output in the short run exceeds the economy's
potential is called _____.
A) a contract gap
B) potential output
C) an expansionary gap
D) aggregate supply

20. _____ means being able to do something using fewer resources than other
producers require.
A) Specialization
B) Division of labor
C) Absolute advantage
D) Comparative advantage

21. _____ is an example of a progressive tax.

A) Sales tax
B) Income tax
C) Value added tax
D) Flat tax
22. Macroeconomics are affected positively by _____.
A) lack of consumer confidence
B) government deficit spending
C) increased demand for exports
D) high unemployment rates

23. The process of turning an invention into a marketable product is called _____.
A) intrapreneurship
B) innovation
C) entrepreneurship
D) speculation

24. Elasticity of supply indicates how _____.

A) responsive producers are to a change in price
B) much the product costs
C) many products are in stock
D) adaptable the supply is

25. _____ causes prices to move to reach equilibrium in competitive markets.

A) The government
B) The labor market
C) Individual buyers and sellers
D) The stock market

26. An economy's maximum sustained output in the long run is known as its
_____.
A) resource quotient
B) maximum output
C) fiscal policy
D) potential output

27. Checking the want ads for a job instead of going door to door _____.
A) increases newspaper circulation
B) reduces your transaction costs
C) reduces the number of jobs available
D) increases job competition
28. Newspaper headlines read: Business Orders Down Nationwide/Workers
Laid Off/Households Cutting Back on Spending. What conclusion could be
drawn from the headlines?
A) a possible recession is near
B) interest rates are high
C) a depression is unavoidable
D) consumer confidence is high

29. An excise tax is levied on things like _____.

A) hamburgers
B) housing
C) clothing
D) cigarettes

30. Low demand for a product and high supply will tend to _____ the price.
A) not affect
B) double
C) lower
D) raise

31. Suppose that people hold all their money in checkable deposits, banks do not
hold excess reserves, and the required reserve ratio is 8%. If the Bank of India
buys Rs 1,000,000 of bonds from commercial banks, which of the following
statements is true?
A) The money supply could decrease by Rs 8,000,000 at most.
B) The money supply could decrease by Rs 12,500,000 at most.
C) Banks can make Rs 1,000,000 of additional loans, at most.
D) The money supply could increase by Rs 12,500,000 at most.

32. Under a system of freely floating exchange rates, if India has a trade deficit
with China, this should cause the Rupee to _______ and the Chinese renminbi to
___________ in foreign exchange markets.
a. Appreciate; appreciate
b. Appreciate; depreciate
c. Depreciate; appreciate
d. Depreciate; depreciate
 33. Countries that derive a large percentage of their income from mining oil,
diamonds, or precious metals have difficulty diversifying their economies
into manufacturing and services. This argument is related to which of the
following ideas?

1. Dependency Theory
2. Natural Resource Curse
3. Poverty Trap
4. Negative Externalities

34. What would be the most appropriate response to counteract the

crowding out effect?

1. offer tax benefits to encourage business investment

2. increase government spending to make up for demand shortfall
3. subsidize affected industries in the short term until demand
recovers
4. use contractionary fiscal policy to keep inflation low

35. Bob wants to decide on stocks to invest his money in, so he reviews
stock market records to find only the stocks that have increased in value for
each of the past eight years. He invests all his money in those stocks, but to his
surprise, the value of his stock holdings has decreased by the end of the next
year. Bob’s decision process showed an example of:

a. Irrational Markets Hypothesis

b. Confirmation Bias

c. Survivorship Bias

d. Bandwagon Effect

36. In countries A and B, workers can produce cricket bats and cricket balls as
follows:

Country A Country B
Cricket Bats 2 hours each 4 hours each
Cricket Balls 1 hour each 3 hours each

A standard workday in each country is 8 hours. On the production possibilities

frontier, what is Country B’s substitution rate of bats for balls? (rounded to the
nearest 0.01)

1. 0.75 bats per ball

2. 1.33 bats per ball
3. 1.50 bats per ball
4. 1.67 bats per ball

37. The Rule of 72 is a shorthand method for estimating what?

1. The compounded interest rate

2. The elasticity of demand
3. The relationship between unemployment and inflation
4. The doubling time of an investment

38. Natural’s Ice Cream sells a unique version of ice cream in a market including
other ice cream sellers. Which of the following statements is therefore true?

1. Naturals’s average total cost curve is below her average variable

cost curve
2. Natural produces a socially optimal quantity
3. Natural can charge any price she wants for her ice cream
4. Natural’s marginal revenue curve is less than her demand curve

39. Which country has the highest level of inflation rate?

a. Mexico

b. Venezuela

c. Nigeria

d. Turkey
40. If an economy produces 100 cups of coffee at $2 each in the year 2021, and
200 cups of coffee at $3 each in the year 2022, by what percentage has nominal
GDP increased?

a. 100%

b. 150%

c. 200%

d. 250%

41. Choose a number similar to a group of numbers on the basis of certain

common properties that they possess. 42: 56:: 110:?

A) 18

B) 132

C) 136

D) 140

42. Neha moved a distance of 75 metres towards the work. She then turned to
the left and walking about 25 metres, turned left again, and walked 80 metres.
Finally, she turned to the right at an angle of 45∘. In which direction was she
moving finally?

A) North-East

B) North-West

C) South
D) South-West

43. If Sakshi says, "Amrita's father Rajesh is the only son of my father-in-law
Mahesh", then how is Bindu, who is the sister of Amrita, related to Mahesh?

A) Daughter-in-law

B) None of these

C) Daughter

D) Wife

44. Six persons A, B, C, D, E and F are standing in a circle. B is between D and

C. A is between E and C. F is to the right of D. Who is between A and F?

A) B

B) C

C) D

D) E

45. Find the missing number. 83, 82, 81, ? , 69, 60, 33.

A) 73

B) 80

C) 75

D) 77
Question Ans Key
1 A
2 A
3 D
4 C
5 C
6 B
7 B
8 C
9 A
10 B
11 B
12 A
13 B
14 D
15 A
16 A
17 C
18 A
19 C
20 C
21 B
22 C
23 B
24 A
25 C
26 D
27 B
28 A
29 D
30 C
31 D
32 C
33 B
34 A
35 C
36 A
37 D
38 D
39 B
40 C
41 B
42 D
43 B
44 D
45 D