economics MCQs – Page 243

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 Review each marked answer and report any item that may be outdated or unclear.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

4841. The study of a companys accounting statements and future prospects to determine its value is known as ?
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A. diversification

B. information analysis

C. risk management

D. fundamental analysis

4842. Diversification of portfolio can ?
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A. reduce aggregate risk

B. eliminate all risk

C. increase the standard deviation of the portfolios return

D. reduce idiosyncratic risk

4843. Compared to a portfolio composed entirely of shares a portfolio that is 50 percent government bonds and 50 percent shares will have a ?
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A. lower return and a higher level of risk

B. lower return and a lower level or risk

C. higher return and a higher level of risk

D. higher return and a lower level or risk

4844. If people are risk averse, then ?
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A. All of these answers are true

B. None of these answers are true

C. ir utility function exhibit the property of diminishing marginal utility of wealth

D. They dislike bad things more than the like comparable good things

E. The utility they would lose from losing a Rs50 bet would exceed the utility they would gain from winning a Rs 50 bet

4845. Which of the following should cause the price of a share of stock to rise ?
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A. An increase in expected dividends

B. All of these answers

C. A reduction in the interest rate

D. A reduction in aggregate risk

E. None of these answers

4846. Idiosyncratic risk is the ?
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A. uncertainty associated with the entire economy

B. risk associated with adverse selection

C. uncertainty associated with specific companies

D. risk associated with moral hazard

4847. An increase in the prevailing interest rate ?
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A. decreases the present value of future return from investment and decreases investment

B. increases the present value of future returns from investment and increases investment

C. increases the present value of future returns from investment and decreases investment

D. decreases the present value of future returns from investment and increase investment

4848. Which of the following does not help reduce the risk that people face ?
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A. diversifying their portfolio

B. All of these answers help reduce risk

C. buying insurance

D. increasing the rate of return within their portfolio

4849. The amount today that would be needed, at prevailing interest rates, to produce a particular sum in the future is known as ?
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A. compound value

B. present value

C. fair value

D. future value

E. beginning value

4850. It is difficult for an actively managed investment fund to outperform an index fund because ?
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A. all of these answers

B. index funds are able to buy undervalued stocks

C. stock markets tend to be inefficient

D. actively managed funds trade more often and charge fees for their alleged expertise

4851. If a depositor puts Rs100 in a bank amount that earns 4 percent interest compounded annually, how much will be in the account after five years ?
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A. Rs 121.67

B. Rs 123.98

C. Rs400.00

D. Rs 104.00

4852. If two countries start with the same real GDP/person and one country grows at 2 percent while the other grows at 4 percent ?
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A. the standard of living in the two countries will converge

B. the standard of living in the country growing at 4 percent will start to accelerate away from the slower growing country due to compound growth

C. Next year the country growing at 4 percent will have twice the GDP/person as the country growing at 2 percent

D. one country will always have 2 percent more real GDP/person than the other

4853. Which of the following is an example of moral hazard ?
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A. None of these answers demonstrate moral hazard

B. After Gull buys fire insurance, he begins to smoke cigarettes in bed.

C. All of these answers demonstrate moral hazard

D. Mahmood has been feeling poorly lately so he seeks health insurance

4854. If the efficient markets hypothesis is true, then ?
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A. shares tend to be overvalued

B. fundamental analysis is a valuable tool for increasing ones returns from investing in shares

C. All of these answers

D. the stock market is informationally efficient so share prices should follow a random walk

4855. JCB (Which makes agricultural and construction equipment) has the opportunity to purchase a new factory today that will provide them with a Rs50 million return four years from now If prevailing interest rates are 6 percent, what is the maximum that the project can cost for JCB to be willing to undertake the project ?
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A. Rs 34,538,902

B. Rs 53,406,002

C. Rs 39,604,682

D. Rs 43,456,838

4856. Speculative bubbles may occur in the shares market ?
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A. when stocks are fairly valued

B. because rational people may buy an overvalued share if they think they can sell it to someone for even more at a later date

C. during periods of extreme pessimism because so many stocks become undervalued

D. only when people are irrational

4857. Refer to Exhibit 6. Suppose the economy is operating at point (D) As people revise their price expectations ?
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A. The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 9 per cent inflation

B. The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 3 percent inflation

C. The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 6 percent inflation

D. The long-run Phillips curve will shift to the left

4858. If people have rational expectations a monetary policy contraction that is announced and is credible could ?
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A. increase inflation with little or no decrease in unemployment

B. reduce inflation with little or no increase in unemployment

C. reduce inflation but it would increase unemployment by an unusually large amount

D. Increase inflation but would decrease unemployment by an unusually large amount

4859. According to the Phillips curve, in the short run, if policy makers choose an expansionary policy to lower the rate of unemployment ?
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A. Inflation will be unaffected if price expectations are unchanging

B. The economy will experience a decrease in inflation

C. None of these answers

D. The economy will experience an increase in inflation

4860. Refer to Exhibit 6.If People in the economy expect inflation to be 3 percent and inflation is 3 percent the economy is operating at point ?
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A. H

B. b

C. a

D. I

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