economics MCQs – Page 261

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 Review each marked answer and report any item that may be outdated or unclear.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
5201. In the presences of purchasing power parity, if one-dollar exchanges for 2 British pounds and if a DVD player costs $400 in the United States then in Britain the DVD player should cost ?
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A. 600 pounds

B. 800 pounds

C. 400 pounds

D. 200 pounds

5202. Exchange rate overshooting often occurs because ?
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A. elasticities are smaller in the long run than the short run

B. elasticities are smaller in the short run than the long run

C. military spending during military conflicts

D. domestic prices adjust slowly to shifts in demand

5203. If Japan runs current account deficit and exchange rates are floating?
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A. Japanese exports become more expensive to foreign buyers

B. Japanese imports become less expensive for German buyers

C. Japanese imports become more prestigious to German buyers

D. Japanese exports become less expensive for foreign buyers
5204. According to the asset market approach increased investor confidence in the Mexican economy would cause the peso to ?
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A. depreciate because of an increased supply of peso denominated assets

B. depreciated because of an increased demand for peso denominated assets

C. appreciated because of an increased demand for peso denominated assets

D. appreciate because of an increase supply of peso denominated assets

5205. Relatively low real interest rates in the United States tend to ?
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A. decrease the foreign demand for dollars causing the dollar to appreciate

B. decrease the foreign demand for dollars causing the dollar to appreciate

C. decrease the foreign demand for dollars causing the dollar to depreciate

D. increase the foreign demand for dollars causing the dollar to depreciate

5206. If Canada runs a balance of payments surplus and exchange rates are floating ?
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A. the dollar will depreciate relative to other currencies

B. the price of foreign goods will rise for Canadians

C. the price of foreign goods will become cheaper to Canadians

D. the value of other currencies will rise relative to the dollar

5207. Given a system of floating exchange rates falling income in the United States would trigger a (an) ?
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A. increase in the demand for imports and an increase in the demand for foreign currency

B. decrease in the demand for imports and an increase in the demand for foreign currency

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

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

5208. Under a system of floating exchange rates relatively low productivity and high inflation rates in the United States results in a (an) ?
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A. increase in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar

B. decrease in the demand for foreign currency a decrease in the supply of foreign currency and a depreciation in the dollar

C. decrease in the demand for foreign currency and increase in the supply of foreign currency and a appreciation in the dollar

D. increase in the demand for foreign currency an increase in the supply of foreign currency and a appreciation in the dollar

5209. Starting from a position where the nations money demand equals the money supply and its balance of payments is in equilibrium its balance of payments would move into a surplus position if there occurred in the nation a (an) ?
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A. decrease in the money demand

B. decrease in the money supply

C. None of the above

D. increase in the money supply

5210. Which of the following products is least likely to be sold in a monopolistically competitive market ?
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A. breakfast

B. beer

C. cotton

D. video games

5211. Which of the following firms has the least incentive to advertise ?
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A. a manual fracture of breakfast cereal

B. a wholesaler of crude oil

C. a manufacturer of home heating and air conditioning

D. a restaurant

5212. One source of inefficiency in monopolistic competition is that since price is above marginal cost, some units are not produced that buyers value in ?
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A. monopolistically competitive firms earn economic profits in the long run

B. excess of the cost of production and this causes a deadweight loss.

C. Since price is above marginal cost surplus is redistributed from buyers to sellers

D. monopolistically competitive firms produce beyond their efficient scale

5213. In the short run, if the price is above average total cost in a monopolistically competitive market, the firm makes ?
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A. losses and firms enter the market

B. profits and firms enter the market

C. profits and firms exit the market

D. losses and firms exit the market

5214. The use of word competition in the name of the market structure called monopolistic competition refers to the fact that ?
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A. there are many sellers in a monopolistically competitive market and there is free entry and exit in the market just like a competitive market

B. The products are differentiated in a monopolistically competitive market just like in a competitive market.

C. Monopolistically competitive firms face a downward-sloping demand curve just like competitive firms.

D. Monopolistically competitive firms charge prices equal to the minimum of their average total cost just like competitive firms.

5215. Which of the following firms is most likely to spend a large percentage of their revenue on advertising ?
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A. The manufacturer of an industrial product

B. the manufacturer of an undifferentiated consumer commodity

C. a perfect competitor

D. The producer of a low-quality product that costs the same to produce as a similar high-quality product

E. the producer of a highly differentiated consumer product
5216. Which of the following is not put forth as a criticism of advertising and brand names ?
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A. of these answers are criticisms of advertising and brand names

B. Advertising manipulates peoples tastes to create a desire that otherwise would not exist

C. Advertising increase competition Which causes unnecessary bankruptcies and layoffs.

D. Advertising increases brand loyalty causes demand to be more inelastic and thus, increase mark-up over marginal cost.

5217. When firms enter a monopolistically competitive market and the business-stealing externality is larger than the product-variety externality then ?
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A. The only way to improve efficiency in this market is for the government to regulate it like a natural monopoly.

B. There are too few firms in the market and market efficiency could be be increased with additional entry

C. the number of firms in the market is optimal and the market is efficient

D. there are too many firms in the market and market efficiency could be increased if firms exited the market
5218. Which of the following is true regarding the similarities and differences in monopolistic competition and monopoly ?
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A. the monopolist faces a downward-sloping demand curve while the monopolistic competitor faces an elastic demand curve

B. the monopolist charges a price above marginal cost while the monopolistic competitor charges a price equal to marginal cost

C. The monopolist makes economic profits in the long run while the monopolistic competitor makes zero economic profits in the long run

D. Both the monopolist and the monopolistic competitor operate at the efficient scale

5219. Which of the following is true with regard to monopolistically competitive firms scale of production and pricing decisions Monopolistically competitive firms produce ?
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A. With excess capacity and charge a price above marginal cost

B. at the efficient scale and charge a price equal to marginal cost

C. at the efficient scale and charge a price above marginal cost

D. With excess capacity and charge a price equal to marginal cost

5220. Which of the following is not an argument put forth by economists in support of the use of advertising ?
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A. Advertising increases competition

B. Advertising provides a creative outlet for artists and writers

C. Advertising provides new firms with the means to attract customers from existing firms.

D. Advertising provides information to customers about prices, new products and location of retail outlets.