economics MCQs – Page 260

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 Review each marked answer and report any item that may be outdated or unclear.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 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
5181. The purchasing power parity theory has limitations in forecasting exchange rate fluctuations for all of the following reasons except ?
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A. inflation effects exchange rates

B. governments sometimes impose trade restrictions such as tariffs and quotas

C. international capital flows affect exchange rates

D. not all products are internationally tradeable

5182. When the price of foreign currency (i.e the exchange rate) is below the equilibrium level ?
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A. an excess demand for that currency exists in the foreign exchange market

B. an excess supply of the currency exists in the foreign exchange market

C. the demand for foreign exchange shifts outward to the right

D. the demand for foreign exchange shifts backward to the left

5183. For the United States suppose the annual interest rate on government securities equals 12 percent while the annual inflation rate equals 8 percent For Japan the annual interest rate on government securities equals 10 percent while the annual inflation rate equals 5 percent the above variables would cause investment funds to flow from ?
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A. The Japan to United States, causing the dollar to depreciate

B. The United States to Japan causing the dollar to appreciate

C. The Japan to United States, causing the dollar to appreciate

D. The United States to Japan causing the dollar to depreciate
5184. When the price of foreign currency (the exchange rate) is above the equilibrium level ?
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A. the supply of foreign exchange shifts outward to the right

B. an excess demand for that currency exists in the foreign exchange market

C. the supply of foreign exchange shifts backward to the left

D. an excess supply of that currency exists in the foreign exchange market
5185. IF when cost $4 per bushel in the United States and 2 pounds per bushel in Great Britain then in the presence of purchasing power parity the exchange rate should be ?
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A. $1.00 per pound

B. $8.00 per pound

C. $2.00 per pound

D. $50 per pound

5186. Which example of market expectations causes the dollar to appreciate against the yen expectations that the U.S economy will have ?
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A. more rapid money supply growth than japan

B. faster economic growth than Japan

C. higher future interest rates than Japan

D. higher inflation rates than japan

5187. The appreciation in the value of the dollar in the early 1980s is explained by all of the following except ?
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A. relatively high real interest rates in the United States

B. confidence of foreign investors in the U.S economy

C. relatively high inflation rates in the United States

D. the United States being considered a safe haven by foreign investors

5188. Suppose Canada and Switzerland were the only two countries in the world There exists an excess supply of Swiss francs on the foreign exchange market This suggests that ?
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A. the Swiss current account balance is in deficit

B. the Canadian current account balance is in surplus

C. the Swiss current account balance is in equilibrium

D. the Canadian current account balance is in equilibrium

5189. Consulting firms that use large-scale econometric models to forecast exchange rate movements are engaging in ?
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A. fundamental analysis

B. judgmental analysis

C. technical analysis

D. nontechnical analysis

5190. The assets market approach is most helpful in explaining ?
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A. short term exchange rate movements

B. why exchange rates remain quite stable

C. long term exchange rate movements

D. why governments change their money supplies

5191. Suppose that the purchasing power parity estimate of the dollar/euro exchange rate is $1.30 per euro, and the current spot rate is $1.3 8 per euro. Comparing these two exchange rates from a long-run viewpoint you would ?
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A. have no anticipation concerning future movements in the dollar/euro exchange rate

B. anticipate the dollar to depreciate against the euro

C. anticipate the dollars exchange rate against the euro to remain constant

D. anticipate the dollar to appreciate against the euro
5192. Suppose that rising U.S income leads to higher sales and profits in the United States This would likely result in ?
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A. decreasing portfolio investment into the United States

B. increasing portfolio investment into the United States

C. increasing direct investment into the United States

D. decreasing direct investment into the United States

5193. Assume that a Big Mac hamburger cost $3 in the United States 2 pesos in Mexico The implied purchasing power parity exchange rate between the peso and the dollar is ?
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A. 0.67 pesos = $1

B. 0.8 pesos = $1

C. 1.25 pesos = $1

D. 1.67 pesos = $1

5194. The exchange value of the U.S dollar is primarily determined by ?
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A. the monetary value of gold held at Fort Knox, Kentucky

B. the rate of inflation in the United States

C. the number of dollars printed by the U.S government

D. the international demand and supply for dollars
5195. If a Big Mac hamburger sells for the same dollar value in New York as in London then ?
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A. the exchange rates are said to be fixed pegged to each other

B. the inflation rate in each country will necessarily equal zero

C. the inflation rate in each country will necessarily equal 1 percent

D. purchasing power parity holds
5196. Assume identical interest rates on comparable securities in the United States and foreign countries. Suppose investors anticipate that in the future the U.S dollar will depreciate against foreign currencies. investment funds would tend to ?
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A. remain totally in foreign countries

B. flow from foreign countries to the United States

C. remain totally in the United States

D. flow from the United States to foreign countries
5197. The asset market approach views exchange rates as being determined mainly by ?
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A. the use of import tariffs and quotas by governments

B. the relative growth rate of national output between countries

C. the current account balance of each country

D. efforts of investors to balance their portfolios among financial assets denominated in different currencies
5198. The high foreign exchange value of the U.S dollar in the early 1980s can best be explained by ?
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A. American tourists overseas finding costs increasing

B. additional investment funds made available from overseas

C. lack of investor confidence in U.S fiscal policy

D. market expectations of rising inflation in the United States

5199. Given a system of floating exchange rates rising income in the United States would trigger a (an) ?
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A. decrease in the demand for imports and an increase in the demand for foreign currency

B. increasing in the demand for imports and an increasing in the demand for foreign currency

C. increase in the demand for imports and decrease in the demand for foreign currency

D. decrease in the demand for imports and a decrease in the demand for foreign currency

5200. Which example of market expectations causes the dollar to depreciate against the yen expectation that the U.S economy will have ?
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A. faster growth than Japan

B. more rapid money supply growth than Japan

C. lower inflation rates than Japan

D. higher future interest rates than Japan