economics MCQs – Page 271

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 Review each marked answer and report any item that may be outdated or unclear.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
5401. Which of the following would be considered a supply-side policy ?
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A. An increase in government spending that would lead to increased aggregate demand

B. An increase in the minimum wage that would cause consumer spending to increase

C. investment tax credits for businesses to encourage investment

D. Restrictions placed on the amount that can be imported.

5402. Privatization is the transfer of ?
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A. government businesses to the private sector.

B. corporately owned businesses to individuals

C. privately owned businesses to the government sector

D. publicly held stock to private individuals

5403. Reaganomics was a radical shift in policy aimed at directly tackling ?
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A. the underground economy

B. the supply side of the country

C. the charities economy

D. the demand side of the economy

5404. Interventionist policies to restore regional imbalance focus on ?
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A. tax concessions for firms that move.

B. improved infrastructure

C. all of the above

D. subsidies to encourage firms that moves

5405. A group of economists argue that the real problem with the economy is high rates of taxation and heavy regulation that reduce the incentives to work, save and invest. These economists are?
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A. neo-Keynesian economists

B. Supply-side economics

C. rational-expectations economists.

D. new classical economists.

5406. According to supply-side economists, as tax rates are reduced, labor supply should increase. This implies that ?
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A. the substitution effect of a wage change is greater than the income effect of a wage change

B. the income effect of a wage change is greater than the substitution effect of a wage change.

C. there is no substitution effect when tax rates are changed

D. there is no income effect when tax rates are changed

5407. According to Supply-side economists. if taxes are cut so that people have an increased incentive to work and businesses have an increased incentive to invest ?
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A. aggregate supply will increase will increase aggregate demand will decrease and the price level will decrease

B. aggregate supply will increase will increase aggregate output will increase and the price level will decrease

C. aggregate supply will increase will increase aggregate output will increase and the price level will increase

D. both aggregate supply and demand will increase will increase and the price level will increase

5408. A way helping depressed regions by having wage subsidies lower business taxes and capital subsidies has been suggested as ?
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A. New classical economists.

B. interventionist policies.

C. Left wing theorists

D. monetarists.

5409. The success of regional and urban policies has been limited by ?
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A. bad luck

B. poor communications

C. the low level of government grants and by the fact that some projects would have gone ahead anyway

D. bureaucracy

5410. Complete currency pass through arises when a 10 percent depreciation in the value of the dollar causes U.S?
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A. export prices to rise by 10 percent

B. import prices to fall by 10 percent

C. import prices to rise by 10 percent

D. export prices to fall by 10 percent

5411. The balance of trade can only worsen if income ____ relative to absorption ?
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A. does not change

B. decreases

C. increases

D. None of the above

5412. The extent to which a change in the exchange rate leads to changes in import and export prices is known as the ?
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A. absorption effect

B. J Curve effect

C. pass through effect

D. Marshall Lerner effect

5413. Which approach predicts that is an economy operates a full employment and faces trade deficit currency devaluation will improve the trade balance only if domestic spending is cut thus freeing resources to produce exports ?
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A. the elasticities approach

B. the absorption approaches

C. the Marshall Lerner approach

D. the monetary approach

5414. According to the Marshall-Lerner condition if a countrys currency depreciates its trade balance will worsen if ?
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A. elasticity of demand for exports = 0.7; elasticity of demand for imports = 0.3

B. elasticity of demand for exports = 0.5; elasticity of demand for imports = 0.7

C. elasticity of demand for exports = 0.9; elasticity of demand for imports = 0.4

D. elasticity of demand for exports = 0.3; elasticity of demand for imports = 0.6
5415. If export contracts are written in terms of foreign currency and import contracts are denominated in domestic currency a depreciation of the dollar during the currency contract period ?
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A. should increase the dollar value of exports

B. must increase the balance of trade

C. All of the above

D. should not have any effect on the dollar value of U.S imports

5416. The notion that, following a currency depreciation the balance of trade falls for a while before increasing is called an effect ?
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A. J Curve

B. relative price

C. elasticity

D. Pass through

5417. Suppose that U.S dollar depreciates 70 percent against the yen yet Japanese export prices to Americans did not decrease by the full extent of the dollar depreciation. This is best explained by ?
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A. complete currency pass through

B. partial J curve effect

C. partial currency pass through

D. complete J curve effect

5418. Empirical evidence regarding in the effects of currency depreciation on the balance of trade indicates that?
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A. no strong generalization is possible

B. depreciation generally improves the trade balance

C. depreciation generally hurts the trade balance

D. depreciation has no effect on the trade balance

5419. Economic theory predicts that a currency depreciation will least lead to an improvement in the home countrys trade balance when ?
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A. home demand for imports is elastic and foreign export demand is inelastic

B. home demand for imports is inelastic and foreign export demand is elastic

C. home demand for imports is elastic and foreign export demand is elastic

D. home demand for imports is inelastic and foreign export demand is inelastic
5420. Because of the J curve effect and partial currency pass through, a depreciation of the domestic currency tends to increase the size of a ?
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A. trade deficit in the long run

B. trade deficit in the short run

C. trade surplus in the long run

D. trade surplus in the short run