economics Mcqs
1. the national economy2. profit maximizing under perfect competition and monopoly3. application of economics4. the aggregate demand aggregate supply model5. surplus6. money interest rates and output7. average and total cost8. stabilization adjustment reform and privatization9. risks and diversification efficient market hypothesis10. the phillips curve11. supply and demand12. capital formation investment choice information technology and technical progress13. aggregate supply unemployment and inflation14. elasticity15. comparative gdp16. roots of modern macroeconomics17. production factors18. poverty malnutrition and income inequality19. trade regulations and industrial policies20. monetary union21. exchange rate systems and currency crises22. economic development in historical perspective23. exchange rate determination24. monopoly competition25. the balance of payments26. inflation productivity27. macroeconomic issues and analysis28. employment migration and urbanization29. macroeconomic policy tools30. supply side policies31. exchange rate adjustments and the balance of32. miscellaneous33. taxation34. trade policies for the developing nations35. markets efficiency and the public interest36. the external debt and financial crises37. budget deficits and the trade balance38. alternative theories of the firm39. public goods40. the meaning and measurement of economic development41. characteristics and institutions of developing countries42. agriculture irrigation system of pakistan43. education health and human capital44. economic problems of developing countries45. theories of economic development46. basic of economics47. consumer theory vs real consumers48. applied microeconomics49. long term economic growth50. externality internality51. fiscal and monetary policy52. prices wages taxes53. balance of payments aid and foreign investment54. international factor movements and multinational corporations55. entrepreneurship organization and innovation56. the international economy and globalization57. population and development58. non tariff trade barriers59. foundations of modern trade theory60. global economic development61. market62. rural poverty and agricultural transformation63. regional trading arrangements64. foreign exchange65. introduction to economics66. world economy miscellaneous67. sources of comparative advantage68. natural resources and the environment toward sustainable development69. monopoly70. asymmetric information71. income inequality72. labour market73. tariffs74. development planning and policy making the state and the market75. oligopoly76. industrial development77. costs supply and perfect competition78. human capital79. monetary fiscal and incomes policy and inflation80. stocks
1001. If marginal utility is zero ?
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A. An additional unit of consumption will increase total utility

B. Total utility is zero

C. An additional unit of consumption will decrease total utility

D. Total utility is maximized
1002. Medical care clearly enhance peoples lives. Therefore, we should consume medical care until ?
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A. the benefit buyers place on medical care is equal to the cost of producing it

B. we must cut back on the consumption of other goods.

C. buyers receive no benefit from another unit of medical care.

D. everyone has as much as they would like

1003. The law of demand implies that ?
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A. as prices rise, demand decrease

B. as prices fall, quantity demanded increase

C. as prices fall demand increases

D. as prices rise, quantity demanded increases

1004. An upward shift in marginal cost _____ output and an upward shift in marginal revenue ______ output?
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A. increases; reduces

B. reduces; reduces

C. reduces; increases

D. increases; increases

1005. The income elasticity is +2 and income increases by 20% sales were 5000 units, what will they be now ?
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A. 4500

B. 7000

C. 5500

D. 3000

1006. The extra utility from consuming one more unit of a good is called ?
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A. Marginal utility

B. Surplus utility

C. Additional utility

D. Bonus utility

1007. An increase in the budget deficit that causes the government to increase its borrowing ?
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A. Shift the supply of loanable funds to the left

B. Shift the demand for loandbale funds to the left

C. Shifts the supply of loanable funds to the right

D. Shift the demand for loanable funds to the right

1008. Which of the following would likely cause the greatest deadweight loss ?
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A. a tax on cruise line tickets

B. a tax on petrol

C. a tax on salt

D. a tax on cigarettes

1009. A buyers willingness to pay is that buyers ?
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A. maximum amount they are willing to pay for a good

B. producer surplus.

C. none of these answers

D. minimum amount they are willing to pay for a good

E. consumer surplus

1010. If the Supply of loanable funds is very inelastic (steep) Which policy would likely increase saving and investment the most ?
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A. an increase in the budget deficit

B. None of the above

C. a reduction in the budget deficit

D. an investment tax credit

1011. Suppose that the nominal tariff rate on finished computers is 12 percent and that the weighted average of the nominal tariff rates on the inputs used in producing computers is 18 percent. Thus, the effective rate of protection for the computer industry must ?
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A. exceed 30 percent

B. be less than 12 percent and can be negative

C. equal 6 percent

D. be less than 12 percent but must be greater than zero

1012. The price decrease from Rs 2,000 to Rs 1,800 Quantity demanded per year increases 5000 to 6000 units. Which of the following is correct ?
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A. Income elasticity is + 2

B. Income elasticity is + 0.5

C. The price elasticity of demand is -2

D. The good is inferior

1013. Suppose the economy is initially is long run equilibrium Then suppose there is a drought that destroys much of the wheat crop According to the model of aggregate demand and aggregate supply, what happens of prices and output in the short run ?
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A. Price rise; output rises

B. Price fall; output rises

C. Price rise; output falls

D. Price fall; output falls

1014. An increase in the budget deficit is ?
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A. an increase in public saving

B. a decrease in public savings

C. None of these answers

D. a decrease in private saving

1015. A critic of Shock therapy to transition economies. Vladamir Popov, contends that shock therapists put a heavy emphasis on ?
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A. attempts to gradually remake institutions

B. agricultural reform rather than industrial reforms to overcome food insecurity

C. the creation of a small-scale private sector ans small independent banks

D. introducing the reform package at once to ensure that it became too late and costly to reverse the reforms
1016. Which of the following financial market securities would probably pay the highest interest rate ?
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A. A bond issued by a startup company

B. A bond issued by a blue-chip company

C. An investment funds with portfolio of corporate bonds issued by blue chip companies

D. A government bond issued by the government of France.

1017. Which of the following would be considered a supply-side policy ?
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A. An increase in the minimum wage that would cause consumer spending to increase

B. An increase in government spending that would lead to increased aggregate demand

C. Restrictions placed on the amount that can be imported.

D. investment tax credits for businesses to encourage investment
1018. A tax for which high income taxpayers pay a smaller fraction of their income than do low income taxpayers is known as ?
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A. a proportional tax

B. a regressive tax

C. a progressive tax

D. an equitable tax

1019. Specific tariffs are collected as ?
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A. fixed amount of money per unit traded

B. a percentage of money per unit traded

C. a percentage of the quantity of imports

D. All of the above

1020. Demand curves are derived while holding constant ?
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A. incomes, tastes, and the price of other goods.

B. income and tastes

C. income, tastes, and the price of the good.

D. tastes and the price of other goods

1021. If Pakistani citizens become less concerned with the future and save less at each real interest rate ?
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A. Real interest rates rise and investment falls

B. Real interest rates fall and investment rises

C. Real interest rates rise and investment rises

D. Real interest rates fall and investment falls

1022. The national security argument for protection is more likely to be valid when ?
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A. The industry is characterized by increasing returns to scale

B. The protected industry provides invaluable goods during periods of war

C. The purpose is to maintain protection for an indefinite time period

D. The economy operates during a recession

1023. State-owned enterprises (SOEs) are also called ?
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A. public enterprises

B. centralized firms

C. market economies

D. government oligopolies

1024. Suppose there is no tariff on imported inputs and the ratio of the value of imported inputs the value of the final product is 0.5 If the nominal tariff rate on the final product is 10 percent, the effective tariff rate equals ?
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A. 10 percent

B. 20 percent

C. 5 percent

D. 15 percent

1025. Intra-industry trade theory ?
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A. Explains why the United States might export and import differentiated versions of the same product such as different types of autos

B. Explains why the United States might export autos and import clothing

C. Assumes that transport costs are very low or do not exist

D. ignores seasonal considerations for agricultural goods

1026. Countries such as ________ that failed to adjust to a persistent external disequilibrium were more vulnerable to poverty displacement and even war ?
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A. Singapore and Malaysia

B. Japan and Korea

C. Brazil and Argentina

D. Algeria and Yugoslavia
1027. If the Pakistani government runs a budget surplus there is ?
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A. an excess of government receipts over government spending.

B. an equality of government spending and receipts.

C. a surplus of government workers.

D. an excess of government spending over government receipts.

1028. S = Savings, I = domestic investment, X = exports of goods and services, and M = imports of goods and services Which of the following is true ?
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A. S + I = X + M

B. S = I (X+M)

C. S I = X = M

D. S-I = X/M

1029. According to Supply-side economists. if taxes are cut so that people have an increased incentive to work and businesses have an increased incentive to invest ?
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A. aggregate supply will increase will increase aggregate demand will decrease and the price level will decrease

B. aggregate supply will increase will increase aggregate output will increase and the price level will decrease

C. aggregate supply will increase will increase aggregate output will increase and the price level will increase

D. both aggregate supply and demand will increase will increase and the price level will increase

1030. If the cross elasticity of demand is -2 ?
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A. The products are complements and demand is cross price elastic

B. The products are substitutes and demand is cross price elastic

C. The products are substitutes and demand is cross price inelastic

D. The products are complements and demand is cross price inelastic

1031. If demand is __________ then price cuts will _________ spending?
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A. elastic; increase

B. elastic, decrease

C. none of the above

D. inelastic; increase

1032. Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers allow the economy to adjust to the long run natural rate on its own, ?
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A. People will reduce their price expectations and the short run aggregate supply will shift right

B. People will raise their price expectations and the short run aggregate supply will shift left

C. People will raise their price expectations and aggregate demand will shift left

D. People will reduce their price expectations and aggregate demand will shift right

1033. Firms are assumed to ________ costs and to ________ profits?
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A. pay, make

B. incur, desire

C. minimize, maximize

D. charge earns

1034. The price of burgers increase by 22% and the quantity of burgers demanded falls by 25% This indicates that demand for burgers is ?
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A. elastic

B. inelastic.

C. perfectly elastic

D. unitarily elastic

1035. According to the interest rate effect aggregate demand slopes downward (negatively) because ?
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A. lower prices increase money holdings decrease lending interest rates rise, and investment spending falls

B. lower prices reduce money holdings increase lending interest rates fall, and investment spending increase

C. lower prices increase the value of money holding and consumer spending increases

D. lower prices decrease the value of money holdings and consumers spending decreases

1036. Refer to Exhibit 4. If there is no tax placed on the product in this market total surplus is the area ?
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A. A + B + C + D + E + F

B. A + B + C + D

C. E + F

D. B + C + E + F

1037. According to the wealth effect aggregate demand slopes downward (negatively) because ?
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A. lower prices increase the value of money holding and consumers spending increase

B. lower prices increase money holding decrease lending, interest rates rise and investment spending falls

C. lower prices reduce money holding increase lending, interest rates fall and investment spending increase

D. lower prices decrease the value of money holding and consumers spending decrease

1038. If government spending exceeds tax collections?
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A. there is a budget deficit

B. There is a budget surplus

C. None of these answers

D. private saving is positive

1039. Most tariffs have ?
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A. only revenue effects

B. only protective effects

C. Both protective and revenue effects

D. neither protective or revenue effects

1040. National Saving (or just saving) is equal to ?
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A. GDP government purchases

B. none of these answers

C. investment + consumption expenditures

D. private saving + public saving
1041. A supply curve that starts at the origin has ?
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A. A price elasticity of supply greater than one

B. A positive price elasticity of supply

C. A price elasticity of supply equal to one

D. A price elasticity of supply less than one

1042. If the demand for coffee decreases as income decreases, coffee is ?
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A. a substitute good

B. a complementary good

C. an inferior good

D. a normal good
1043. A fall in price ?
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A. Leads to a higher level of production

B. Will cause an outward shift of supply

C. Will cause an inward shift of demand

D. May be caused by a fall in demand
1044. Suppose that the offshore assembly provisions (OAP) of the United States are granted to finished computers that are imported and produced domestically This policy will tend to ?
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A. cause foreign assemblers of computers to use more computer components that are supplied by countries other than the United States

B. Increase the Production of computers in the United States

C. Increase the production of computer components in the United States

D. Increase the Price of computers to consumers in the United States

1045. Domestic producers gain ________ because on the tariff?
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A. $120,000

B. $150,000

C. $50,000

D. $75,000
1046. A firm that breaks even after all economic costs are paid is earning ?
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A. Normal profit

B. Economic profit

C. Supernormal profit

D. Accounting profit

1047. Suppose the economy is initially in long run equilibrium Then suppose there is a drought that destroys much of the wheat crop if policymakers allow the economy to adjust to long-run equilibrium on its own, according to the model to aggregate demand and aggregate supply what happens to prices and output in the long run ?
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A. Output and the price level are unchanged from their initial values

B. Output falls; prices are unchanged from the initial value

C. Prices fall; output is unchanged from its initial value

D. Output rises; prices are unchanged from the initial value

1048. Which of the following would increase aggregate demand ?
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A. Increasing import spending

B. Increased taxation revenue

C. Increased saving

D. increased investment

1049. Adding up the quantities demanded of a good by different people facing the same price gives us the ?
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A. Supply curve

B. Demand curve

C. Market supply curve

D. Market demand curve
1050. A group of economists argue that the real problem with the economy is high rates of taxation and heavy regulation that reduce the incentives to work, save and invest. These economists are?
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A. rational-expectations economists.

B. new classical economists.

C. Supply-side economics

D. neo-Keynesian economists