economics MCQs – Page 240

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 Review each marked answer and report any item that may be outdated or unclear.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

4781. The difference between a banks actual reserves and its required reserves is its?
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A. required reserve ratio

B. excess reserves

C. profit margin

D. net worth

4782. A bank has excess reserves to lend but is unable to find anyone to borrow the money This will _________ the size of the money multiplier?
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A. have no effect on

B. increase

C. double

D. reduce

4783. The motive for holding money that encourages investors to hold bonds when interest rates are low, with the hope of selling them when interest rates are high, is the ?
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A. speculation motive

B. profit motive

C. precautionary motive

D. Transactions motive

4784. When the money supply increase ?
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A. The LM curves shifts to the left

B. The LM curve shift to the right

C. The economy moves down the LM curve

D. the economy moves up the LM curve

4785. The interest rate ?
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A. is determined in the money market and has no influence on the goods market

B. is determined in the goods market and influences the level of planned investment and thus the money market

C. is determined in the goods market and has no influences on the money market

D. is determined in the money market and influences the level of planned investment and thus the goods market

4786. According to the simple Keynesian view the aggregate supply curve is ?
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A. vertical until it reaches full capacity and then becomes horizontal

B. downward sloping over all levels of output

C. upward sloping over all levels of output

D. horizontal until it reaches full capacity and then becomes vertical

4787. The idea the government spending causes a reduction in private investment is called ?
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A. fiscal drag

B. investment blight

C. crowding-out

D. the Thatcher effects

4788. Central banks prefer to fix the ____ and accept the resulting _____?
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A. demand for money, interest rate

B. interest rate, demand for money

C. interest rate equilibrium money supply

D. demand for money equilibrium money supply

4789. Money has 3 main function they are __________ and __________?
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A. Medium of exchange unit of account store of value

B. Medium of exchange inflation hedge store of value

C. IOU , inflation hedge store of value

D. Medium of exchange unit of account store of value

E. Medium of exchange unit of account IOU

4790. When interest rate rise, other things equal, we can expect the quantity of real money holding to ?
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A. not change

B. increase

C. fall

D. None of these

4791. The money supply is ?
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A. Money + bank cards + credit cards

B. State Bank of Pakistan Issue Department

C. Cheques + money + bank cards + credit cards

D. Currency in circulation plus bank deposits

4792. Keynesians and monetarists differ over how steep the IS and LM curves actually are Monetarists claim that the IS curve must be __________ and the LM curve must be __________?
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A. steep; steep

B. flat; steep

C. steep; flat

D. flat; flat

4793. A fall in investment demand can result from ?
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A. lower expected future profits

B. higher interest rates

C. All of the above

D. more expensive capital goods

4794. Bance Solida has, in the past, always operated with a reserve ratio of 25 percent. It has now been taken over by Gung-Ho Bank Which operates with a reserve ration of 12 percent, Assuming that Banca Solida adopts the business practices of its new owner, What will be the effect on money supply in the country in which Banca Solida operates ?
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A. Money supply will decrease because the loans will have to be repaid

B. Money supply will increase because Banca Solida will increase its loans

C. Money supply will be unchanged because the central bank has made no policy changes

D. The effect on money supply cannot be determined from the information given

4795. The main reason that people hold money to buy things is referred to as the ?
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A. Transactions motive

B. Profit motive

C. Precautionary motive

D. speculation motive

4796. Which one of the following is not true ?
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A. If the central bank raises its refinancing rate then the commercial banks will try to reduce their lending and so reduce the need to borrow from the central bank

B. In the UK the refinancing rate is known as the repo rate and in the USA it is referred to as the discount rate.

C. The difference between the price at which commercial bank sells an asset to the central bank and the price it agrees to buy it back can be expressed as an annualized percentage of the selling price and this is called the refinancing rate

D. If the central bank has bought some assets from a commercial bank with an agreement that the commercial bank will buy them back at a later date, then this would be called a repo

E. Commercial banks may borrow from and lend to each other and the interest rate at which they do this is called the refinancing rate

4797. Government Securities with terms of more than one year are called ?
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A. bills of exchanges

B. Treasury bills

C. Capital bills

D. government bonds

4798. If the quantity of money demanded exceeds the quantity of money supplied then the interest rate will ?
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A. remain constant

B. rise

C. change in a certain direction

D. fall

4799. As the required reserve ratio is decreased the money multiplier ?
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