economics MCQs – Page 236

Practise multiple-choice questions from economics for competitive examinations and subject revision. Review each marked answer and report any item that may be outdated or unclear.

economics Mcqs

1. the national economy 2. profit maximizing under perfect competition and monopoly 3. application of economics 4. the aggregate demand aggregate supply model 5. surplus 6. money interest rates and output 7. average and total cost 8. stabilization adjustment reform and privatization 9. risks and diversification efficient market hypothesis 10. the phillips curve 11. supply and demand 12. capital formation investment choice information technology and technical progress 13. aggregate supply unemployment and inflation 14. elasticity 15. comparative gdp 16. roots of modern macroeconomics 17. production factors 18. poverty malnutrition and income inequality 19. trade regulations and industrial policies 20. monetary union 21. exchange rate systems and currency crises 22. economic development in historical perspective 23. exchange rate determination 24. monopoly competition 25. the balance of payments 26. inflation productivity 27. macroeconomic issues and analysis 28. employment migration and urbanization 29. macroeconomic policy tools 30. supply side policies 31. exchange rate adjustments and the balance of 32. miscellaneous 33. taxation 34. trade policies for the developing nations 35. markets efficiency and the public interest 36. the external debt and financial crises 37. budget deficits and the trade balance 38. alternative theories of the firm 39. public goods 40. the meaning and measurement of economic development 41. characteristics and institutions of developing countries 42. agriculture irrigation system of pakistan 43. education health and human capital 44. economic problems of developing countries 45. theories of economic development 46. basic of economics 47. consumer theory vs real consumers 48. applied microeconomics 49. long term economic growth 50. externality internality 51. fiscal and monetary policy 52. prices wages taxes 53. balance of payments aid and foreign investment 54. international factor movements and multinational corporations 55. entrepreneurship organization and innovation 56. the international economy and globalization 57. population and development 58. non tariff trade barriers 59. foundations of modern trade theory 60. global economic development 61. market 62. rural poverty and agricultural transformation 63. regional trading arrangements 64. foreign exchange 65. introduction to economics 66. world economy miscellaneous 67. sources of comparative advantage 68. natural resources and the environment toward sustainable development 69. monopoly 70. asymmetric information 71. income inequality 72. labour market 73. tariffs 74. development planning and policy making the state and the market 75. oligopoly 76. industrial development 77. costs supply and perfect competition 78. human capital 79. monetary fiscal and incomes policy and inflation 80. stocks

4701. 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

4702. 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 raise their price expectations and the short run aggregate supply will shift left

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

C. People will reduce their price expectations and the short run aggregate supply will shift right

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

4703. Which of the following events shifts the short run aggregate supply curve to the right ?
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A. a decrease in the money supply

B. an increase in government spending on military equipment

C. a drop-in oil prices

D. an increase in price expectations

E. None of these answers

4704. Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers wished to move output to its long run natural rate they should attempt to ?
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A. Shift aggregate demand to the left

B. Shift short run aggregate supply to the left

C. shift short-run aggregate supply to the right

D. shift aggregate demand to the right

4705. Suppose the price level falls but suppliers only notice that the price of their particular product has fallen Thinking there has been a fall in the relative price of their product they cut back on production, This is a demonstration of the ?
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A. classical dichotomy theory of the short run aggregate supply curve

B. sticky price theory of the short run aggregate supply curve

C. misperceptions theory of the short run aggregate supply curve

D. sticky wage theory of the short run aggregate supply curve

4706. 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. Output rises; prices are unchanged from the initial value

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

4707. Suppose the price level falls but because of fixed nominal wage contracts the real wage rises and firms cut back on production This is a demonstration of the ?
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A. sticky-wage theory of the short-run aggregate supply curve

B. sticky-price theory of the short run aggregate supply curve

C. classical dichotomy theory of the short-run aggregate supply curve

D. misperceptions theory of the short-run aggregate supply curve

4708. Which of the following is not a reason why the aggregate demand curve slopes downward ?
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A. The classical dichotomy/monetary neutrality effect

B. The interest-rate effect

C. The wealth effect

D. The exchange-rate effect

4709. In the model of aggregate demand and aggregate supply, the initial impact of an increase in consumer optimism is to ?
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A. shift the aggregate demand curve to the right

B. shift the short-run aggregate supply curve to the right

C. shift the aggregate demand curve to the left

D. shift the short-run aggregate supply curve to the left

4710. Which of the following statements is true regarding the long-run aggregate supply curve? The long-run aggregate supply cruve ?
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A. shifts right when the government raises the minimum wage

B. Is vertical because an equal change in all prices and wages leaves output unaffected

C. shifts left when the natural rate of unemployment falls

D. is positively sloped because price expectations and wages tend to be fixed is the long run

4711. Which of the following statements about economic fluctuations is true ?
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A. None of these answers

B. A recession is when output rises above the natural rate of output

C. A variety of spending income, and output measures can be used to measure economic fluctuation because most macroeconomic quantitties tend to fluctuate together

D. A depression is a mild recession

4712. According to the interest rate effect aggregate demand slopes downward (negatively) because ?
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A. lower prices increase the value of money holding and consumer spending increases

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

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

D. lower prices increase money holdings decrease lending interest rates rise, and investment spending falls

4713. A buyers willingness to pay is that buyers ?
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A. consumer surplus

B. none of these answers

C. producer surplus.

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

E. maximum amount they are willing to pay for a good