economics MCQs – Page 239

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 Review each marked answer and report any item that may be outdated or unclear.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

4761. Which of the following policy actions by a central bank is likely to increase the money supply ?
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A. All of these will increase the money supply

B. Increasing reserve requirements

C. Increasing the refinancing rate

D. Buying government bonds in open market operations

4762. Suppose the central bank purchases a government bond from a person who deposits the entire amount received from the sale in her bank the money supply will ?
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A. be unchanged

B. rise by less than the amount of the deposit

C. fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio

D. rise by an amount that depends on the banks reserve ratio

E. fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio

4763. If planned investment becomes more sensitive to interest rate changes the crowding out effect will ?
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A. be reduced

B. fall to zero

C. not be affected

D. be increased

4764. The primary function of bank is to ?
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A. Provide notes and coins for trade

B. Make a profit

C. Provide a cheque clearing system

D. Control the money supply

4765. The three main tools of monetary policy are ?
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A. fiat, commodity and deposit money

B. Open-market operations reserve requirements and the refinancing rate

C. The money supply, government purchases and taxation

D. Government expenditures taxation and reserve requirements

E. Coin, currency and demand deposits

4766. One of the transmission mechanisms of monetary policy is through consumer demand when interest rates ________ household wealth ________ and consumption _________?
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A. rise, falls, increase

B. rise, increase, falls

C. rise, falls, falls

D. rise; increase, increase

4767. When economies speak of the demand for money which of the following are they asking ?
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A. What proportion of your financial assets do you want to hold in non-interest-bearing forms

B. How much cash do you wish you could have?

C. How much wealth would you like?

D. How much income would you like to earn?

4768. If the central bank increases the money supply at the same time as the government increasing spending, it is suggested that investment will ?
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A. Suffer even more

B. be replaced by consumer spending

C. not be reduced as much as it would have been

D. be replaced by foreign investment

4769. Which of the following activities is one of the responsibilities of the Bank of England to the banking system ?
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A. Issuing new bonds to finance the PSBR.

B. Loaning money to other countries that are friendly to the UK.

C. Assisting Banks that are in a difficult financial position

D. Auditing the various agencies and department of the government

4770. Banks create money by ?
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A. issuing debit cards

B. printing it

C. accepting cheques

D. lending out part of their deposits

4771. Each point on the LM curve represents the equilibrium point in the ?
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A. money market for the given level of the money supply

B. money market for different combinations of interest rates and output

C. goods market for the given interest rate

D. goods market for the given level of government spending

4772. If there is a general shortage of liquidity in the money market then ?
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A. The short-term interest rate at which the economys commercial banks lend to and borrow from each other will fall and the central bank may be expected to reduce the supply of liquidity to the banks

B. The short-term interest rate at which the economys commercial banks lend to and borrow from each other will rise and the central bank may be expected to increase the supply of liquidity to the banks.

C. The banks will increase their lending

D. the long-term interest rate in the economy will rise and the central bank will raise its interest rate in response

E. The short-term interest rate at which the economys commercial banks lend to and borrow from each other will rise and the long-term interest rate may be expected to rise as a result

4773. Reserve requirements that may be imposed on an economys banks by its central bank specify that banks by its central bank specify that banks reserve must be a minimum percentage of them ?
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A. assets

B. loans

C. deposits

D. government bonds

4774. Which of the following is included in broad money, but not included in narrow money ?
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A. Automatic-transfer savings accounts

B. savings accounts

C. Travelers checks

D. Currency held outside banks

4775. Assume that commercial banks are holding excess reserves because business firms and consumers are not willing to borrow money A decrease in the discount rate is likely to ?
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A. Not change the money supply because banks already have excess reserves they cannot lend