Basic Concepts in Economics: Nature, Meaning & Definitions: 29 MCQs with answers

A systematic body of knowledge

The chapter defines science as a systematic body of knowledge, which is then divided into natural and social sciences.

Natural sciences

Natural sciences have universally acceptable laws testable in a laboratory under controlled conditions; Mathematics, Physics and Chemistry are the examples given.

The mental aspect

The chapter states Psychology is related to the 'mental' aspect of human behaviour, while Sociology studies the 'social' aspect.

Oikonomia

'Oikonomia' means management of the household, which is the origin of the term Economics.

Paul Samuelson

Paul Samuelson gave Economics the title 'Queen of Social Sciences'.

Wealth

Artha means 'Wealth' and Shastra means 'Science'; together Arthashastra implies the science of acquiring and managing wealth.

Adam Smith

Adam Smith, a classical economist, is regarded as the 'Father of Economics' and gave the wealth-oriented definition.

True

Economics is a social science whose laws are statements of general human tendencies, not universal laws, because human behaviour cannot be empirically tested or studied in a laboratory.

Management of the household

The term 'Oikonomia' originates from Greek, meaning 'management of the household', which reflects the core problem of managing unlimited wants with limited means.

A social science

Economics is classified as a social science because it studies human behavior, which cannot be tested in a laboratory like natural sciences.

Adam Smith

Adam Smith is regarded as the 'Father of Economics' due to his foundational contributions to the discipline.

Unlimited wants and limited means

Economics focuses on the problem of unlimited wants versus limited means, examining how choices are made under this constraint.

Science of acquiring and managing wealth

Kautilya's 'Arthashastra' is defined as the science of acquiring and managing wealth, emphasizing its role in political economy.

They are statements of general human tendencies

Laws of social sciences, including economics, are statements of general human tendencies and not universal laws due to the variability of human behavior.

Queen of Social Sciences

Paul Samuelson famously referred to Economics as the 'Queen of Social Sciences', highlighting its central role and analytical rigor among social sciences.

Wealth as the organizing subject

Adam Smith's definition places wealth at the center of economic inquiry, making it the organizing subject of Economics.

Testable in controlled conditions

Social sciences, including Economics, are not testable in controlled conditions like natural sciences, which is a key distinction.

Science of acquiring wealth

In Kautilya's context, Political Economy refers to the science of acquiring and managing wealth, as outlined in his work 'Arthashastra'.

Economic laws are statements of general human tendencies, not universal laws

Because human behaviour cannot be empirically tested or studied in a laboratory, social science laws — including economic laws — are only statements of general human tendencies.

Psychology studies the mental aspect; Sociology studies the social aspect

The chapter states Psychology is related to the 'mental' aspect, while Sociology studies the 'social' aspect of man as a member of society.

Because it studies the economic aspect of human behaviour, which cannot be lab-tested

Economics studies the economic aspect of human behaviour. Human behaviour cannot be empirically tested or studied in a laboratory, so Economics is a social science.

A treatise on Political Economy in its broadest sense

The chapter describes Arthashastra as a treatise on Political Economy in its broadest sense — the science of acquiring and managing wealth.

Because efficient administration is needed for good governance

Kautilya stressed the need for efficient administrative machinery for good governance, alongside the crucial role of the state and wealth creation for welfare.

It places wealth at the centre as the organising subject of Economics

Smith's wealth-oriented definition made wealth — its creation and accumulation — the organising subject of economic enquiry.

I and II only

Statements I and II are correct. Statement III is wrong because Economics is a social science, not a natural science.

Both A and R are true, and R correctly explains A

Economic laws are statements of general human tendencies, not universal laws, precisely because human behaviour cannot be empirically tested or studied in a laboratory — so R explains A.

Economic predictions reflect general human tendencies and vary under different conditions.

The correct option is that economic predictions reflect general human tendencies and vary under different conditions, highlighting the nature of Economics as a social science.

Kautilya emphasizes the role of the state in wealth generation, while Smith focuses on wealth as the primary subject of economic study.

The correct option highlights that Kautilya emphasizes the role of the state in wealth generation, while Smith focuses on wealth as the primary subject of economic study.

It implies that Economics deals with the management of resources in a household context, reflecting broader economic principles.

The correct option indicates that 'Oikonomia' implies that Economics deals with the management of resources in a household context, reflecting broader economic principles.