economics MCQs – Page 395

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 Review each marked answer and report any item that may be outdated or unclear.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
7881. If the State Bank of Pakistan wished to pursue a tight monetary policy it would ?
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A. buy government securities on the open market

B. reduce the minimum reserve asset ratio.

C. sell government securities on the open market

D. lower interest rates

7882. Automatic stabilizers act to ______ government expenditures and _______ government revenue during an expansionary period?
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A. increase; decrease

B. decrease; decrease

C. increase; increase

D. decrease; increase
7883. If the state Bank of Pakistan wished to pursue an expansionary monetary policy it would ?
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A. buy government securities on the open market

B. increase the minimum reserve asset ratio.

C. sell government securities on the open market

D. raise interest rates

7884. The multiple by which total deposits can increase for every pound increase in reserves is the ?
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A. liquidity ratio

B. required reserve ratio

C. banks line of credit

D. Money multiplier
7885. A government might use tax to ?
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A. Discourage consumption of merit goods

B. Discourage consumption of negative externalities

C. Discourage consumption of public goods

D. Discourage consumption of positive externalities

7886. The marginal rate of tax paid is ?
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A. The total tax paid / total income

B. Change in income / change in tax paid

C. Total income / total tax paid

D. Change in the tax paid / change in income
7887. In a regressive tax system ?
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A. The amount of tax paid increase with income

B. The average rate of tax is constant as income increases

C. The marginal rate of tax decrease with more income

D. The average rate of tax falls as income increase
7888. Goodharts Law suggests that ?
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A. controlling one part of the money supply will merely result in that item becoming less important

B. monetary policy can only be effective if it is a long-term policy

C. the money supply must only expand at the rate of growth of real national income

D. bad money drives out good

7889. The public Sector Net Cash Requirement (PSNCR) is ?
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A. A measure of the countrys trade position

B. A measure of the countrys total debt

C. A measure of the countrys budget position

D. A measure of the governments monetary stance

7890. The budget deficit tends to decrease then ?
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A. GDP decrease rapidly

B. GDP increase

C. GDP remains unchanged

D. GDP decrease slightly

7891. Over-funding is when the State Bank of Pakistan ?
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A. sells more government bonds than are required to finance the PSBR

B. sells government securities on the open market

C. buys government securities on the open market

D. sells less government bonds than are required to finance the PSBR

7892. As an economy grows ?
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A. This will have no effect on the governments budget position

B. The governments budget position should automatically improve

C. The governments budget position should automatically worsen

D. This will reduce the governments tax revenue

7893. The parable of Riding a Switchback suggest that stabilizing policy ?
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A. is not sufficiently stimulating or contracting the economy at any time

B. is stimulating or contracting the economy at the wrong times

C. is desirable

D. is effective

7894. Imagine there is no tax on income up to Rs 1000 after that there is a tax of 505 what is the average tax rate on an income of Rs 20,000 ?
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A. 20%

B. 25%

C. Rs 50000

D. Rs 10000

7895. Which side of the market is more likely to lobby government for a price floor ?
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A. the buyers

B. Neither buyers nor sellers desire a price floor.

C. the sellers

D. Both buyers and sellers desire a price floor.

7896. Which of the following statements about a binding price ceiling is true ?
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A. The surplus created by the price ceiling is greater in the short run than in the long run

B. The shortage created by the price ceiling is greater in the short ran than in the long run.

C. The shortage created by the price ceiling is greater in the long run than in the short run

D. The surplus created by the price ceiling is greater in the long run than in the short run

7897. A tax placed on a good that is a necessity for consumers will likely generate a tax burden that ?
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A. falls more heavily on buyers.

B. falls entirely on sellers

C. is evenly distributed between buyers and sellers.

D. falls more heavily on sellers

7898. Which of the following statements is true if the government places a price ceiling on petrol at Rs150 per litre and the equilibrium price is Rs100 per litre ?
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A. There will be surplus of petrol

B. A significant increase in the demand for petrol could cause the price ceiling to become a binding constraint.

C. There will be a shortage of petrol

D. A significant increase in the supply for petrol could cause the price ceiling to become a binding constraint.

7899. A price floor ?
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A. sets a legal minimum on the price at which a good can be sold

B. always determines the price at which a good must be sold

C. is not a binding constraint if it is set above the equilibrium price

D. sets a legal maximum on the price at which a good can be sold

7900. Which of the following statements about the burden of a tax is correct ?
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A. The tax burden falls most heavily on the side of the market (buyers and sellers) that is most willing to leave the market when price movements are unfavorable to them.

B. The burden of a tax falls on the side of the market (buyers or sellers) from which it is collected

C. The distribution of the burden of a tax is determined by the relative elasticities of determined by legislation.

D. The tax burden generated from a tax placed on a good consumer perceive to be a necessity will fall most heavily on the sellers of the good