economics MCQs – Page 270

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 Review each marked answer and report any item that may be outdated or unclear.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

5381. Suppose a wave of investor and consumer optimisms has increased spending so that the current level of input exceeds the long-run natural rate If policy makers choose to engage in activist stabilization policy they should ?
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A. decrease taxes, which shifts the aggregate demand curve to the right

B. decrease taxes, which shifts the aggregate demand curve to the left

C. decrease government spending Which the shifts the aggregate demand curve to the left

D. decrease government spending which shifts the aggregate demand curve to the right

5382. When money demand is expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis an increase in the interest rate ?
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A. decrease the quantity demanded of money

B. increase the quantity demanded of money

C. decreases the demand for money

D. None of these answers

E. increases the demand for money

5383. Which of the following best describes how an increase in the money supply shift the aggregate demand curve ?
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A. The money supply shifts right prices fall spending increases and the aggregate demand curve shifts right

B. The money supply shifts right the interest rate rises investment decreases and the aggregate demand curve shifts left

C. The money supply shifts right, prices rise, demand curve shifts left

D. The money supply shifts right the interest rate falls, investment increases, and the aggregate demand curve shifts right

5384. An increase in the marginal propensity to consumer (MPC) ?
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A. has no impact on the value of the multiplier?

B. rarely occurs because the MPC is set by congressional legislation

C. raises the value of the multiplier

D. lowers the value of the multiplier

5385. Suppose the government increases its purchases by Rs16 billion. If the multiplier effect exceeds the crowding out effect, then ?
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A. The aggregate demand curve shifts to the right by more than Rs 16 billion

B. the aggregate supply curve shifts to the left by more than Rs 16 billion

C. The aggregate demand curve shifts to the left by more than Rs 16 billion

D. The aggregate supply curve shifts to the right by more than Rs 16 billion

5386. For the Eurozone countries, the most important source of the downward slope of the aggregate demand curve is probably ?
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A. The interest-rate effect

B. The fiscal effect

C. None of these answers

D. The wealth effect

E. The exchange-rate effect

5387. Which of the following statements regarding taxes is correct ?
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A. A decrease in taxes shifts the aggregate supply curve to the left

B. A permanent change in taxes has a greater effect on aggregate demand than a temporary change in taxes.

C. An increase in taxes shifts the aggregate demand curve to the right

D. Most economists believe that in the short run the greatest impact of a change in taxes is on aggregate supply, not aggregate demand

5388. Keynes liquidity preference theory of the interest rate suggests that the interest rate is determined by ?
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A. the supply and demand for loanable funds

B. aggregate supply and aggregate demand

C. the supply and demand for labor

D. the supply and demand for money

5389. When an increase in government purchases increases the income of some people, and those people spend some of that increase in income on additional consumer goods, we have seen a demonstration of ?
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A. The multiplier effects

B. The crowding out effect

C. supply side economics

D. None of these answers

5390. If the marginal propensity of consume MPC is 0.75 the value of the multiplier is ?
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A. 7.5

B. 0.75

C. 4

D. 5

5391. The initial impact of an increase in government spending is to shift ?
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A. aggregate supply to the left

B. aggregate demand to the right

C. aggregate demand to the left

D. aggregate supply to the right

5392. In the market for real output, the initial effect of an increase in the money supply is to ?
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A. shift the aggregate demand curve to the right

B. shift the aggregate supply curve to the left

C. shift the aggregate supply curve to the right

D. shift the aggregate demand curve to the left

5393. Suppose a wave of investor and consumer pessimism in the USA causes a reduction in spending If the US federal Reserve (Which has a broader remit than the Bank of England Which is charged only with controlling inflation) chooses to engage in activist stabilization policy it should ?
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A. decrease government spending and increase taxes

B. decrease interest rates

C. decrease the money supply

D. Increase government spending and decrease taxes

5394. When supply and demand for money are expressed in a graph with the interest rate on the vertical axis and the quantity of money on the horizontal axis an increase in the price level ?
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A. None of these answers

B. shifts money demand to the left and decrease the interest rate

C. shifts money demand to the right and increases the interest rate

D. shifts money demand to the right and decreases the interest rate

E. shifts money demand to the left and increases the interest rate

5395. When an increase in government purchases raises incomes shifts money demand to the right raises the interest rate, and lowers investment we have seen a demonstration of ?
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A. supply-side economics

B. None of these answers

C. The crowding-out effect

D. The multiplier effects

5396. Which of the following statements about stabilization policy is not true ?
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A. When policy makers implement activist stabilization policies there is a significant risk that their policies may actually have a destabilizing effect

B. None of these answers are true

C. Many economists prefer automatic stabilizers because they affect the economy with a shorter lag than activist stabilization policy

D. Long lags enhance the ability of policy makers to fine tune the economy

5397. According to the Laffer curve, as tax rates increase tax revenue ?
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A. decrease continuously.

B. initially increase and then decrease

C. rise continuously

D. initially decrease and then increase.

5398. Which of the following statements supports deregulation of industries ?
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A. Many instances of government regulation have succeeded in reducing competition in industries where competition may be beneficial

B. All of the above

C. Because few real natural monopolies exist, there is rarely a reason for government regulation.