Economics Concepts MCQs — GDP, Inflation, Fiscal Policy & Trade
195+ solved Economics Concepts MCQs — GDP, GNP, inflation, fiscal & monetary policy, trade barriers, exchange rates & every key term for PPSC, FPSC, NTS, CSS & PMS.
Green Economy — System ensuring growth with environmental protection and reduced carbon emissions.
Blue Economy — Sustainable use of oceans and marine resources.
Circular Economy — Economy based on reuse, recycling, and waste minimization.
Sharing Economy — Sharing goods/services via digital platforms (access over ownership).
Gig Economy — Short-term contracts and freelance work instead of permanent jobs.
Sustainable Development — Meeting present needs without compromising future generations.
Microeconomics — Study of individual consumers and firms behavior.
Macroeconomics — Examines the economy as a whole (inflation, GDP, unemployment).
Capitalism — System based on private ownership and profit motive.
Socialism — State or community ownership of production for collective welfare.
Communism — Extreme socialism with complete state ownership and no private property.
Mixed Economy — Combines public and private sectors side by side.
Market Economy — Operates through demand and supply with minimal intervention.
Command Economy — Controlled by government via centralized planning.
Welfare State Economy — Emphasizes social security and income redistribution.
Subsistence Economy — Production mainly for self-consumption.
Informal Economy — Unregulated activities outside official oversight.
Black Economy — Illegal or hidden activities evading taxes and regulation.
Grey Economy — Partially reported or unregulated semi-legal activities.
White Economy — Fully legal, transparent, and tax-compliant activities.
Traditional Economy — Based on customs and inherited practices.
Digital Economy — Driven by digital technologies and e-commerce.
Knowledge Economy — Based on production and use of knowledge as a key resource.
Bear Market — Prolonged period of falling stock prices.
Bear Market Strategy — Investors often liquidate assets to limit losses.
Bull Market — Characterized by rising stock prices and investor optimism.
Dutch Disease — Resource boom that weakens other economic sectors.
Pure Play — Firm operating in only one line of business.
Business Cycle — Expansion, peak, contraction, and recovery phases.
Comparative Advantage — Producing goods at a lower opportunity cost than others.
Division of Labour — Increases efficiency through specialization of tasks.
Elasticity of Demand — Responsiveness of demand to price changes.
Inelastic Goods — Little demand change despite price variation.
GDP — Total domestic production value of an economy.
Real GDP — GDP adjusted for inflation (unlike Nominal GDP).
Growth Rate — Percentage increase in output over time.
GDP per capita — Average income and living standards indicator (GDP ÷ population).
GNP — Includes income earned abroad by nationals (unlike GDP).
Opportunity Cost — Value of the next best alternative forgone.
Marginal Utility — Additional satisfaction from one extra unit consumed.
Diminishing Marginal Utility — Utility falls with each additional unit consumed.
Inflation — Sustained rise in general price levels.
Hyperinflation — Extremely rapid inflation (50%+ per month).
Deflation — Persistent fall in prices linked to weak demand.
Stagflation — Combines inflation, unemployment, and stagnant growth.
Inflation Rate Measurement — Measured by CPI or WPI.
CPI (Consumer Price Index) — Tracks consumer-basket prices.
PPI (Producer Price Index) — Tracks prices received by producers.
Keynesian Economics — Supports state intervention during recessions.
Classical Economics — Favors free markets and minimal government role.
Laissez-faire — Advocates minimal or no government intervention (‘let do’).
Monetarism — Stresses control of money supply (Milton Friedman).
Law of Demand — Price and demand move inversely.
Law of Supply — Supply rises with higher prices.
Invisible Hand — Self-interest guiding markets (Adam Smith).
Fiscal Policy — Uses taxes and spending to manage the economy.
Monetary Policy — Controls money supply and interest rates.
Fiscal Deficit — Government spending exceeds revenue.
Budget Surplus — Government revenue exceeds spending.
Budget Deficit Consequence — Often leads to borrowing or inflation.
Public Debt — Total government borrowing.
Crowding Out Effect — Reduces private investment due to public borrowing.
Inflation Targeting — Central bank sets explicit inflation goals.
Quantitative Easing — Central bank injects liquidity via asset purchases.
Financial Markets — Trade in stocks, bonds, and securities.
Money Markets — Instruments with under one-year maturity.
Capital Markets — Deal in long-term securities.
Primary Market — Issues new securities.
Secondary Market — Trades existing securities.
Interest Rate — Cost of borrowing capital.
Principal — Original borrowed or invested amount.
Multicollinearity — Correlation among regression variables.
Trade Barriers — Restrict international trade (tariffs, quotas).
Tariff — Tax on imports.
Quota — Limits the quantity of imports.
Subsidy — Government financial support to producers.
Dumping — Selling exports below cost in foreign markets.
Free Trade — Exchange of goods without restrictions.
Protectionism — Policy that shields domestic industries.
Balance of Trade — Exports minus imports.
Trade Deficit — Imports exceed exports.
Trade Surplus — Exports exceed imports.
Terms of Trade — Ratio of export prices to import prices.
Balance of Payments — Records all external economic transactions.
Current Account — Includes goods, services, and transfers.
Capital Account — Records financial flows and investments.
Hot Money — Short-term, mobile capital seeking quick profits.
Cold Money — Long-term investment seeking stable returns.
FDI (Foreign Direct Investment) — Long-term investment with ownership and control.
Portfolio Investment — Purchase of financial assets without managerial control.
Speculative Capital — Investment motivated by expected price changes.
Capital Flight — Rapid outflow of capital due to instability.
Exchange Rate — Price of one currency in terms of another.
Fixed Exchange Rate — Government maintains currency at a predetermined value.
Floating Exchange Rate — Determined by market forces of supply and demand.
Managed Float — Market-determined but with some central bank intervention.
Currency Peg — Fixes a currency to another (usually the US Dollar).
Devaluation — Official reduction in a fixed currency’s value.
Revaluation — Official increase in a fixed currency’s value.
Currency Appreciation — Gain in currency value due to market forces.
PPP (Purchasing Power Parity) — Compares currencies based on domestic purchasing power.
Gold Standard — Currencies directly convertible into gold.
Fiat Currency — Government-issued money not backed by commodities.
Reserve Currency — Globally accepted currency held by central banks.
US Dollar Role — Primary global reserve and settlement currency.
Dollarization — Adoption of the US Dollar by another country.
Petrodollar System — Global oil trade priced in US Dollars.
De-dollarization — Effort to reduce reliance on the US Dollar.
Euro — Official currency of the Eurozone.
Eurozone — EU member states using the Euro.
Currency Union — Multiple states sharing a single currency.
BoP Purpose — Systematic record of all economic transactions with the world.
Forex Reserves — Foreign currencies and gold held by central banks.
Capital Controls — Restrictions on cross-border capital flows.
Currency War — States devalue currency to gain trade advantage.
Exchange-Rate Manipulation — Deliberate distortion of currency value.
Currency Swaps — Agreements to exchange currencies for a fixed period.
SDRs (Special Drawing Rights) — IMF reserve assets based on a basket of currencies.
Renminbi Internationalization — China’s strategy to expand the Yuan’s global role.
China’s Yuan Strategy — Promotes Yuan trade settlement and swap lines.
CBDC (Central Bank Digital Currency) — State-issued digital form of money.
Digital Yuan — China’s central bank digital currency.
Cryptocurrency — Decentralized digital asset on blockchain.
Bitcoin — First cryptocurrency, often called ‘digital gold’.
Major Cryptos — Ethereum, Tether, Ripple.
Crypto Market Size — Thousands of active cryptocurrencies.
Crypto vs Fiat — Crypto is decentralized; Fiat is government-issued.
Major World Currencies — USD, Euro, Yen.
WTO — Regulates global trade.
GATT — Replaced by the WTO in 1995.
OECD — Promotes growth among developed economies.
SDRs (Institution) — IMF reserve assets.
FDI (Investment) — Involves long-term ownership and control.
Portfolio Investment (Inv) — Purchase of financial assets without control.
Remittances — Income sent home by migrant workers.
HDI (Human Development Index) — UN index ranking health, education, and income.
Progressive Tax — Tax rate rises with income.
Proportional Tax — Tax rate remains constant across incomes.
Regressive Tax — Tax burden falls as income rises.
Direct Taxes — Paid directly by individuals or firms (Income, Corporate).
Indirect Taxes — Collected through prices of goods (Sales, VAT).
Income Tax — Direct tax on individual or entity income.
Corporate Tax — Direct tax on company profits.
Wealth Tax — Direct tax on net assets.
Sales Tax — Indirect tax on sales of goods.
VAT (Value Added Tax) — Tax on value added at each production stage.
Excise Duty — Tax on manufactured or domestically produced goods.
Customs Duty — Tax on imports and exports.
GST (Goods and Services Tax) — Comprehensive indirect tax replacing several others.
Credit Rating — Measures debt repayment ability of a borrower.
Fitch Ratings — Global credit-rating agency.
Moody’s — Provides bond credit ratings.
S&P Global — Publishes credit and market analysis.
SWF (Sovereign Wealth Fund) — State-owned investment fund.
Venture Capital — Finances high-growth startups.
Budget — Annual financial statement of revenue and expenditure.
Fiscal Year — A 12-month accounting/budget period.
Revenue Budget — Receipts and expenditure not creating assets.
Capital Budget — Receipts and expenditure that create assets.
Revenue Receipts — Income not leading to asset creation.
Capital Receipts — Funds from loans or asset sales.
Tax Revenue — Government income from taxes.
Non-Tax Revenue — Income from fines, fees, and profits.
Direct Tax Definition — Tax levied on income or wealth.
Indirect Tax Definition — Tax imposed on goods and services.
Development Expenditure — Spending on infrastructure and projects.
Non-Development Expenditure — Spending on defense, salaries, and debt service.
Budget Deficit — Government expenditure exceeds total revenue.
Fiscal Deficit Definition — Expenditure exceeds revenue including grants.
Primary Deficit — Fiscal deficit excluding interest payments.
Surplus Budget — Revenue exceeds expenditures.
Public Debt Definition — Total amount borrowed by the government.
Debt Servicing — Payment of interest and principal on debt.
Subsidy Definition — Financial assistance to reduce production or consumer cost.
Grants-in-Aid — Transfers without obligation of repayment.
Supplementary Budget — Covers unforeseen expenditures.
Finance Bill — Gives legal effect to tax proposals.
Appropriation Bill — Authorizes withdrawal of funds from the treasury.
Balanced Budget — Government revenue equals expenditure.
Deficit Financing — Financing a deficit via borrowing or printing money.
Economic Globalization — Links economies via trade and finance.
Open Economy — Country that engages in international trade.
Absolute Advantage — Lower production cost than others.
Banana Republic — Unstable, export-dependent economy.
OPEC+ — Manages oil supply beyond OPEC members.
Shanghai Exchange — Among the world’s largest stock exchanges.
Nikkei 225 — Index tracking Japanese stocks.
Dow Jones — Index tracking major US equities.
Book Value — Equity divided by shares outstanding.
Payback Period — Time required to recover an investment.
Geometric Mean — Measures compounded growth rates.
Money Market Instruments — Mature in under one year.
Low Book-to-Market — Growth-oriented stocks with lower risk.
Blockchain — Enables secure, decentralized digital ledgers.
South Asian Trade — Linked to regional political stability.
What is the definition of Green Economy?
Green Economy is defined as: System ensuring growth with environmental protection and reduced carbon emissions.
What is the definition of Blue Economy?
Blue Economy is defined as: Sustainable use of oceans and marine resources.
What is the definition of Circular Economy?
Circular Economy is defined as: Economy based on reuse, recycling, and waste minimization.
What is the definition of Sharing Economy?
Sharing Economy is defined as: Sharing goods/services via digital platforms (access over ownership).
What is the definition of Gig Economy?
Gig Economy is defined as: Short-term contracts and freelance work instead of permanent jobs.
What is the definition of Sustainable Development?
Sustainable Development is defined as: Meeting present needs without compromising future generations.
What is the definition of Microeconomics?
Microeconomics is defined as: Study of individual consumers and firms behavior.
What is the definition of Macroeconomics?
Macroeconomics is defined as: Examines the economy as a whole (inflation, GDP, unemployment).
What is the definition of Capitalism?
Capitalism is defined as: System based on private ownership and profit motive.
What is the definition of Socialism?
Socialism is defined as: State or community ownership of production for collective welfare.
What is the definition of Communism?
Communism is defined as: Extreme socialism with complete state ownership and no private property.
What is the definition of Mixed Economy?
Mixed Economy is defined as: Combines public and private sectors side by side.
What is the definition of Market Economy?
Market Economy is defined as: Operates through demand and supply with minimal intervention.
What is the definition of Command Economy?
Command Economy is defined as: Controlled by government via centralized planning.
What is the definition of Welfare State Economy?
Welfare State Economy is defined as: Emphasizes social security and income redistribution.
What is the definition of Subsistence Economy?
Subsistence Economy is defined as: Production mainly for self-consumption.
What is the definition of Informal Economy?
Informal Economy is defined as: Unregulated activities outside official oversight.
What is the definition of Black Economy?
Black Economy is defined as: Illegal or hidden activities evading taxes and regulation.
What is the definition of Grey Economy?
Grey Economy is defined as: Partially reported or unregulated semi-legal activities.
What is the definition of White Economy?
White Economy is defined as: Fully legal, transparent, and tax-compliant activities.
What is the definition of Traditional Economy?
Traditional Economy is defined as: Based on customs and inherited practices.
What is the definition of Digital Economy?
Digital Economy is defined as: Driven by digital technologies and e-commerce.
What is the definition of Knowledge Economy?
Knowledge Economy is defined as: Based on production and use of knowledge as a key resource.
What is the definition of Bear Market?
Bear Market is defined as: Prolonged period of falling stock prices.
What is the definition of Bear Market Strategy?
Bear Market Strategy is defined as: Investors often liquidate assets to limit losses.
What is the definition of Bull Market?
Bull Market is defined as: Characterized by rising stock prices and investor optimism.
What is the definition of Dutch Disease?
Dutch Disease is defined as: Resource boom that weakens other economic sectors.
What is the definition of Pure Play?
Pure Play is defined as: Firm operating in only one line of business.
What is the definition of Business Cycle?
Business Cycle is defined as: Expansion, peak, contraction, and recovery phases.
What is the definition of Comparative Advantage?
Comparative Advantage is defined as: Producing goods at a lower opportunity cost than others.
What is the definition of Division of Labour?
Division of Labour is defined as: Increases efficiency through specialization of tasks.
What is the definition of Elasticity of Demand?
Elasticity of Demand is defined as: Responsiveness of demand to price changes.
What is the definition of Inelastic Goods?
Inelastic Goods is defined as: Little demand change despite price variation.
What is the definition of GDP?
GDP is defined as: Total domestic production value of an economy.
What is the definition of Real GDP?
Real GDP is defined as: GDP adjusted for inflation (unlike Nominal GDP).
What is the definition of Growth Rate?
Growth Rate is defined as: Percentage increase in output over time.
What is the definition of GDP per capita?
GDP per capita is defined as: Average income and living standards indicator (GDP ÷ population).
What is the definition of GNP?
GNP is defined as: Includes income earned abroad by nationals (unlike GDP).
What is the definition of Opportunity Cost?
Opportunity Cost is defined as: Value of the next best alternative forgone.
What is the definition of Marginal Utility?
Marginal Utility is defined as: Additional satisfaction from one extra unit consumed.
What is the definition of Diminishing Marginal Utility?
Diminishing Marginal Utility is defined as: Utility falls with each additional unit consumed.
What is the definition of Inflation?
Inflation is defined as: Sustained rise in general price levels.
What is the definition of Hyperinflation?
Hyperinflation is defined as: Extremely rapid inflation (50%+ per month).
What is the definition of Deflation?
Deflation is defined as: Persistent fall in prices linked to weak demand.
What is the definition of Stagflation?
Stagflation is defined as: Combines inflation, unemployment, and stagnant growth.
What is the definition of Inflation Rate Measurement?
Inflation Rate Measurement is defined as: Measured by CPI or WPI.
What is the definition of CPI (Consumer Price Index)?
CPI (Consumer Price Index) is defined as: Tracks consumer-basket prices.
What is the definition of PPI (Producer Price Index)?
PPI (Producer Price Index) is defined as: Tracks prices received by producers.
What is the definition of Keynesian Economics?
Keynesian Economics is defined as: Supports state intervention during recessions.
What is the definition of Classical Economics?
Classical Economics is defined as: Favors free markets and minimal government role.
What is the definition of Laissez-faire?
Laissez-faire is defined as: Advocates minimal or no government intervention (‘let do’).
What is the definition of Monetarism?
Monetarism is defined as: Stresses control of money supply (Milton Friedman).
What is the definition of Law of Demand?
Law of Demand is defined as: Price and demand move inversely.
What is the definition of Law of Supply?
Law of Supply is defined as: Supply rises with higher prices.
What is the definition of Invisible Hand?
Invisible Hand is defined as: Self-interest guiding markets (Adam Smith).
What is the definition of Fiscal Policy?
Fiscal Policy is defined as: Uses taxes and spending to manage the economy.
What is the definition of Monetary Policy?
Monetary Policy is defined as: Controls money supply and interest rates.
What is the definition of Fiscal Deficit?
Fiscal Deficit is defined as: Government spending exceeds revenue.
What is the definition of Budget Surplus?
Budget Surplus is defined as: Government revenue exceeds spending.
What is the definition of Budget Deficit Consequence?
Budget Deficit Consequence is defined as: Often leads to borrowing or inflation.
What is the definition of Public Debt?
Public Debt is defined as: Total government borrowing.
What is the definition of Crowding Out Effect?
Crowding Out Effect is defined as: Reduces private investment due to public borrowing.
What is the definition of Inflation Targeting?
Inflation Targeting is defined as: Central bank sets explicit inflation goals.
What is the definition of Quantitative Easing?
Quantitative Easing is defined as: Central bank injects liquidity via asset purchases.
What is the definition of Financial Markets?
Financial Markets is defined as: Trade in stocks, bonds, and securities.
What is the definition of Money Markets?
Money Markets is defined as: Instruments with under one-year maturity.
What is the definition of Capital Markets?
Capital Markets is defined as: Deal in long-term securities.
What is the definition of Primary Market?
Primary Market is defined as: Issues new securities.
What is the definition of Secondary Market?
Secondary Market is defined as: Trades existing securities.
What is the definition of Interest Rate?
Interest Rate is defined as: Cost of borrowing capital.
What is the definition of Principal?
Principal is defined as: Original borrowed or invested amount.
What is the definition of Multicollinearity?
Multicollinearity is defined as: Correlation among regression variables.
What is the definition of Trade Barriers?
Trade Barriers is defined as: Restrict international trade (tariffs, quotas).
What is the definition of Tariff?
Tariff is defined as: Tax on imports.
What is the definition of Quota?
Quota is defined as: Limits the quantity of imports.
What is the definition of Subsidy?
Subsidy is defined as: Government financial support to producers.
What is the definition of Dumping?
Dumping is defined as: Selling exports below cost in foreign markets.
What is the definition of Free Trade?
Free Trade is defined as: Exchange of goods without restrictions.
What is the definition of Protectionism?
Protectionism is defined as: Policy that shields domestic industries.
What is the definition of Balance of Trade?
Balance of Trade is defined as: Exports minus imports.
What is the definition of Trade Deficit?
Trade Deficit is defined as: Imports exceed exports.
What is the definition of Trade Surplus?
Trade Surplus is defined as: Exports exceed imports.
What is the definition of Terms of Trade?
Terms of Trade is defined as: Ratio of export prices to import prices.
What is the definition of Balance of Payments?
Balance of Payments is defined as: Records all external economic transactions.
What is the definition of Current Account?
Current Account is defined as: Includes goods, services, and transfers.
What is the definition of Capital Account?
Capital Account is defined as: Records financial flows and investments.
What is the definition of Hot Money?
Hot Money is defined as: Short-term, mobile capital seeking quick profits.
What is the definition of Cold Money?
Cold Money is defined as: Long-term investment seeking stable returns.
What is the definition of FDI (Foreign Direct Investment)?
FDI (Foreign Direct Investment) is defined as: Long-term investment with ownership and control.
What is the definition of Portfolio Investment?
Portfolio Investment is defined as: Purchase of financial assets without managerial control.
What is the definition of Speculative Capital?
Speculative Capital is defined as: Investment motivated by expected price changes.
What is the definition of Capital Flight?
Capital Flight is defined as: Rapid outflow of capital due to instability.
What is the definition of Exchange Rate?
Exchange Rate is defined as: Price of one currency in terms of another.
What is the definition of Fixed Exchange Rate?
Fixed Exchange Rate is defined as: Government maintains currency at a predetermined value.
What is the definition of Floating Exchange Rate?
Floating Exchange Rate is defined as: Determined by market forces of supply and demand.
What is the definition of Managed Float?
Managed Float is defined as: Market-determined but with some central bank intervention.
What is the definition of Currency Peg?
Currency Peg is defined as: Fixes a currency to another (usually the US Dollar).
What is the definition of Devaluation?
Devaluation is defined as: Official reduction in a fixed currency’s value.
What is the definition of Revaluation?
Revaluation is defined as: Official increase in a fixed currency’s value.
What is the definition of Currency Appreciation?
Currency Appreciation is defined as: Gain in currency value due to market forces.
What is the definition of PPP (Purchasing Power Parity)?
PPP (Purchasing Power Parity) is defined as: Compares currencies based on domestic purchasing power.
What is the definition of Gold Standard?
Gold Standard is defined as: Currencies directly convertible into gold.
What is the definition of Fiat Currency?
Fiat Currency is defined as: Government-issued money not backed by commodities.
What is the definition of Reserve Currency?
Reserve Currency is defined as: Globally accepted currency held by central banks.
What is the definition of US Dollar Role?
US Dollar Role is defined as: Primary global reserve and settlement currency.
What is the definition of Dollarization?
Dollarization is defined as: Adoption of the US Dollar by another country.
What is the definition of Petrodollar System?
Petrodollar System is defined as: Global oil trade priced in US Dollars.
What is the definition of De-dollarization?
De-dollarization is defined as: Effort to reduce reliance on the US Dollar.
What is the definition of Euro?
Euro is defined as: Official currency of the Eurozone.
What is the definition of Eurozone?
Eurozone is defined as: EU member states using the Euro.
What is the definition of Currency Union?
Currency Union is defined as: Multiple states sharing a single currency.
What is the definition of BoP Purpose?
BoP Purpose is defined as: Systematic record of all economic transactions with the world.
What is the definition of Forex Reserves?
Forex Reserves is defined as: Foreign currencies and gold held by central banks.
What is the definition of Capital Controls?
Capital Controls is defined as: Restrictions on cross-border capital flows.
What is the definition of Currency War?
Currency War is defined as: States devalue currency to gain trade advantage.
What is the definition of Exchange-Rate Manipulation?
Exchange-Rate Manipulation is defined as: Deliberate distortion of currency value.
What is the definition of Currency Swaps?
Currency Swaps is defined as: Agreements to exchange currencies for a fixed period.
What is the definition of SDRs (Special Drawing Rights)?
SDRs (Special Drawing Rights) is defined as: IMF reserve assets based on a basket of currencies.
What is the definition of Renminbi Internationalization?
Renminbi Internationalization is defined as: China’s strategy to expand the Yuan’s global role.
What is the definition of China’s Yuan Strategy?
China’s Yuan Strategy is defined as: Promotes Yuan trade settlement and swap lines.
What is the definition of CBDC (Central Bank Digital Currency)?
CBDC (Central Bank Digital Currency) is defined as: State-issued digital form of money.
What is the definition of Digital Yuan?
Digital Yuan is defined as: China’s central bank digital currency.
What is the definition of Cryptocurrency?
Cryptocurrency is defined as: Decentralized digital asset on blockchain.
What is the definition of Bitcoin?
Bitcoin is defined as: First cryptocurrency, often called ‘digital gold’.
What is the definition of Major Cryptos?
Major Cryptos is defined as: Ethereum, Tether, Ripple.
What is the definition of Crypto Market Size?
Crypto Market Size is defined as: Thousands of active cryptocurrencies.
What is the definition of Crypto vs Fiat?
Crypto vs Fiat is defined as: Crypto is decentralized; Fiat is government-issued.
What is the definition of Major World Currencies?
Major World Currencies is defined as: USD, Euro, Yen.
What is the definition of WTO?
WTO is defined as: Regulates global trade.
What is the definition of GATT?
GATT is defined as: Replaced by the WTO in 1995.
What is the definition of OECD?
OECD is defined as: Promotes growth among developed economies.
What is the definition of SDRs (Institution)?
SDRs (Institution) is defined as: IMF reserve assets.
What is the definition of FDI (Investment)?
FDI (Investment) is defined as: Involves long-term ownership and control.
What is the definition of Portfolio Investment (Inv)?
Portfolio Investment (Inv) is defined as: Purchase of financial assets without control.
What is the definition of Remittances?
Remittances is defined as: Income sent home by migrant workers.
What is the definition of HDI (Human Development Index)?
HDI (Human Development Index) is defined as: UN index ranking health, education, and income.
What is the definition of Progressive Tax?
Progressive Tax is defined as: Tax rate rises with income.
What is the definition of Proportional Tax?
Proportional Tax is defined as: Tax rate remains constant across incomes.
What is the definition of Regressive Tax?
Regressive Tax is defined as: Tax burden falls as income rises.
What is the definition of Direct Taxes?
Direct Taxes is defined as: Paid directly by individuals or firms (Income, Corporate).
What is the definition of Indirect Taxes?
Indirect Taxes is defined as: Collected through prices of goods (Sales, VAT).
What is the definition of Income Tax?
Income Tax is defined as: Direct tax on individual or entity income.
What is the definition of Corporate Tax?
Corporate Tax is defined as: Direct tax on company profits.
What is the definition of Wealth Tax?
Wealth Tax is defined as: Direct tax on net assets.
What is the definition of Sales Tax?
Sales Tax is defined as: Indirect tax on sales of goods.
What is the definition of VAT (Value Added Tax)?
VAT (Value Added Tax) is defined as: Tax on value added at each production stage.
What is the definition of Excise Duty?
Excise Duty is defined as: Tax on manufactured or domestically produced goods.
What is the definition of Customs Duty?
Customs Duty is defined as: Tax on imports and exports.
What is the definition of GST (Goods and Services Tax)?
GST (Goods and Services Tax) is defined as: Comprehensive indirect tax replacing several others.
What is the definition of Credit Rating?
Credit Rating is defined as: Measures debt repayment ability of a borrower.
What is the definition of Fitch Ratings?
Fitch Ratings is defined as: Global credit-rating agency.
What is the definition of Moody’s?
Moody’s is defined as: Provides bond credit ratings.
What is the definition of S&P Global?
S&P Global is defined as: Publishes credit and market analysis.
What is the definition of SWF (Sovereign Wealth Fund)?
SWF (Sovereign Wealth Fund) is defined as: State-owned investment fund.
What is the definition of Venture Capital?
Venture Capital is defined as: Finances high-growth startups.
What is the definition of Budget?
Budget is defined as: Annual financial statement of revenue and expenditure.
What is the definition of Fiscal Year?
Fiscal Year is defined as: A 12-month accounting/budget period.
What is the definition of Revenue Budget?
Revenue Budget is defined as: Receipts and expenditure not creating assets.
What is the definition of Capital Budget?
Capital Budget is defined as: Receipts and expenditure that create assets.
What is the definition of Revenue Receipts?
Revenue Receipts is defined as: Income not leading to asset creation.
What is the definition of Capital Receipts?
Capital Receipts is defined as: Funds from loans or asset sales.
What is the definition of Tax Revenue?
Tax Revenue is defined as: Government income from taxes.
What is the definition of Non-Tax Revenue?
Non-Tax Revenue is defined as: Income from fines, fees, and profits.
What is the definition of Direct Tax Definition?
Direct Tax Definition is defined as: Tax levied on income or wealth.
What is the definition of Indirect Tax Definition?
Indirect Tax Definition is defined as: Tax imposed on goods and services.
What is the definition of Development Expenditure?
Development Expenditure is defined as: Spending on infrastructure and projects.
What is the definition of Non-Development Expenditure?
Non-Development Expenditure is defined as: Spending on defense, salaries, and debt service.
What is the definition of Budget Deficit?
Budget Deficit is defined as: Government expenditure exceeds total revenue.
What is the definition of Fiscal Deficit Definition?
Fiscal Deficit Definition is defined as: Expenditure exceeds revenue including grants.
What is the definition of Primary Deficit?
Primary Deficit is defined as: Fiscal deficit excluding interest payments.
What is the definition of Surplus Budget?
Surplus Budget is defined as: Revenue exceeds expenditures.
What is the definition of Public Debt Definition?
Public Debt Definition is defined as: Total amount borrowed by the government.
What is the definition of Debt Servicing?
Debt Servicing is defined as: Payment of interest and principal on debt.
What is the definition of Subsidy Definition?
Subsidy Definition is defined as: Financial assistance to reduce production or consumer cost.
What is the definition of Grants-in-Aid?
Grants-in-Aid is defined as: Transfers without obligation of repayment.
What is the definition of Supplementary Budget?
Supplementary Budget is defined as: Covers unforeseen expenditures.
What is the definition of Finance Bill?
Finance Bill is defined as: Gives legal effect to tax proposals.
What is the definition of Appropriation Bill?
Appropriation Bill is defined as: Authorizes withdrawal of funds from the treasury.
What is the definition of Balanced Budget?
Balanced Budget is defined as: Government revenue equals expenditure.
What is the definition of Deficit Financing?
Deficit Financing is defined as: Financing a deficit via borrowing or printing money.
What is the definition of Economic Globalization?
Economic Globalization is defined as: Links economies via trade and finance.
What is the definition of Open Economy?
Open Economy is defined as: Country that engages in international trade.
What is the definition of Absolute Advantage?
Absolute Advantage is defined as: Lower production cost than others.
What is the definition of Banana Republic?
Banana Republic is defined as: Unstable, export-dependent economy.
What is the definition of OPEC+?
OPEC+ is defined as: Manages oil supply beyond OPEC members.
What is the definition of Shanghai Exchange?
Shanghai Exchange is defined as: Among the world’s largest stock exchanges.
What is the definition of Nikkei 225?
Nikkei 225 is defined as: Index tracking Japanese stocks.
What is the definition of Dow Jones?
Dow Jones is defined as: Index tracking major US equities.
What is the definition of Book Value?
Book Value is defined as: Equity divided by shares outstanding.
What is the definition of Payback Period?
Payback Period is defined as: Time required to recover an investment.
What is the definition of Geometric Mean?
Geometric Mean is defined as: Measures compounded growth rates.
What is the definition of Money Market Instruments?
Money Market Instruments is defined as: Mature in under one year.
What is the definition of Low Book-to-Market?
Low Book-to-Market is defined as: Growth-oriented stocks with lower risk.
What is the definition of Blockchain?
Blockchain is defined as: Enables secure, decentralized digital ledgers.
What is the definition of South Asian Trade?
South Asian Trade is defined as: Linked to regional political stability.
Economics Concepts — Complete Reference for Competitive Exams
Economics concepts make up a major part of the general-knowledge section of PPSC, FPSC, NTS, CSS, PMS, OTS and current-affairs papers. This page covers 195+ MCQs on every essential concept — from Microeconomics, Macroeconomics, GDP, GNP, Inflation through Fiscal Policy, Monetary Policy, Trade Barriers, Exchange Rates and modern topics like Cryptocurrency, Blockchain & CBDCs. For broader reference practice, also try our GK Economics One-Liner and the full General Knowledge MCQs Hub.
Economy Types at a Glance
| Type | Definition |
|---|---|
| Capitalism | Private ownership and profit motive |
| Socialism | State/community ownership of production |
| Communism | Complete state ownership; no private property |
| Mixed Economy | Public + private sectors side by side |
| Market Economy | Demand & supply with minimal intervention |
| Command Economy | Government central planning |
| Welfare State | Social security & income redistribution |
| Green Economy | Growth + environmental protection |
| Blue Economy | Sustainable use of oceans & marine resources |
| Circular Economy | Reuse, recycling & waste minimisation |
| Gig Economy | Short-term contracts & freelance work |
| Digital Economy | Driven by digital tech & e-commerce |
Key Macroeconomic Indicators
| Indicator | Meaning |
|---|---|
| GDP | Total value of production within a country’s borders |
| GNP | GDP + net income earned abroad by nationals |
| Real GDP | Nominal GDP adjusted for inflation |
| GDP per capita | Living-standards proxy (GDP ÷ population) |
| Inflation | Sustained rise in general prices |
| Hyperinflation | Extreme inflation (50%+ monthly) |
| Stagflation | Inflation + unemployment + stagnant growth |
| CPI / WPI / PPI | Price indices used to measure inflation |
| HDI | UN index of health + education + income |
Policy Tools & Schools of Thought
- Fiscal Policy — government uses taxes and spending (Ministry of Finance).
- Monetary Policy — central bank manages money supply and interest rates.
- Keynesian — supports state intervention during recessions.
- Classical / Laissez-faire — favours free markets and minimal government.
- Monetarism (Friedman) — stresses control of money supply.
- Invisible Hand (Adam Smith) — self-interest guides efficient markets.
For authoritative reading, see the IMF — About the Institution and the World Bank’s Glossary of Key Economics Terms.
Practice More MCQs on Related Topics
Keep your prep momentum going — explore these related topics that frequently appear alongside Economics in PPSC, FPSC, NTS, CSS & PMS papers: