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
2401. Comparative advantage is determined by ?
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A. actual differences in labor productivity between countries

B. relative differences in labor productivity between countries

C. Both (a) and (b)

D. Neither (a) nor (b)

2402. Which of the following explanations of wage differentials is not likely to be true ?
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A. Men have more job experience than women

B. None of the above

C. Employers in competitive markets are bigots

D. Men have more human capital than women

2403. 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. relative price

B. elasticity

C. Pass through

D. J Curve
2404. In the early eighties, the Federal Reserve pursed a tight monetary policy. All else being equal. the impact of that policy was to interest rates in the United States relative to those in Europe and cause the dollar to _______ against European currencies?
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A. decrease; appreciate

B. decrease; depreciate

C. increase; appreciate

D. increase; depreciate

2405. An important feature of a _______ is that the holder has the right but not the obligation to buy or sell currency ?
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A. foreign exchange option

B. futures market contract

C. Swap

D. foreign exchange arbitrage

2406. 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. anticipate the dollar to appreciate against the euro

B. anticipate the dollar to depreciate against the euro

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

D. have no anticipation concerning future movements in the dollar/euro exchange rate

2407. Roberto and Thomas live in a university hall of residence. Reberto values playing loud music at a value of 100. Thomas values peace and quiet at a value of 150. Which of the following statements is true about an efficient solution to this externality problem if Roberto has the right to play loud music and if there are no transaction costs ?
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A. Thomas will pay Roberto between 100 and 150 and Roberto will continue to play loud music

B. Roberto will pay Thomas 100 and Roberto will stop playing loud music

C. Thomas will pay Roberto between 100 and 150 and Roberto will stop playing loud music

D. Roberto will pay Thomas 150 and Roberto will continue to play loud music

2408. As an economy grows ?
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A. The governments budget position should automatically improve

B. This will have no effect on the governments budget position

C. This will reduce the governments tax revenue

D. The governments budget position should automatically worsen
2409. 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 a decrease 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 an increase in the demand for foreign currency

2410. 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. lower inflation rates than Japan

B. more rapid money supply growth than Japan

C. higher future interest rates than Japan

D. faster growth than Japan
2411. The budget deficit tends to decrease then ?
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A. GDP decrease slightly

B. GDP decrease rapidly

C. GDP remains unchanged

D. GDP increase
2412. The exchange rate system that best characterizes the present international monetary arrangement used by industrialized countries is ?
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A. managed floating exchange rates

B. pegged or fixed exchange rates

C. adjustable pegged exchange rates

D. freely fluctuating exchange rates

2413. The poorest region of the World is ?
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A. Asia

B. Sub Saharan Africa

C. the Middle East

D. Latin America

2414. If the relative Price (MRT) of T were to increase, then the price line would ?
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A. Become flatter

B. Shift out in a parallel fashion

C. shift in a parallel fashion

D. become steeper

2415. Joseph Schumpeter is the exceptional economist who links the entrepreneur to ?
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A. oligopolistic capitalism

B. land and labor

C. innovation

D. resource management

2416. The J-curve effect refers to the observation that ?
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A. the trade balance usually gets better before it gets worse after a currency appreciation

B. GDP usually decreases before it increases after a currency appreciation

C. GDP usually decreases before it increases after a currency depreciation

D. the trade balance usually gets worse before it improves after a currency depreciation
2417. With International trade, what would be the maximum amount of steel that South Korea would be willing to export to Japan in exchange for each DVD ?
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A. One-half ton of steel

B. One ton of steel

C. Two tons of steel

D. Two and one-half tons of steel

2418. All currencies other than the domestic currency of a given country are referred to as ?
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A. near monies

B. hard currency

C. foreign exchange

D. reserve currencies

2419. If a nations interest rates are relatively low compared to those of other countries then the exchange value of its currency will tend to ?
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A. depreciate under a system of fixed exchange rates

B. depreciate under a system of floating exchange rates

C. appreciate under a system of floating exchange rates

D. appreciate under a system of floating fixed rates

2420. If the autarky price of S were lower in country A than in country B then if trade were allowed ?
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A. None of the above

B. A would likely import S from B

C. A would likely export S to B

D. neither country would want to trade

2421. A depreciation of the dollar will have its most pronounced impact on imports if the demand for imports is ?
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A. Unitary elastic

B. inelastic

C. constant

D. elastic
2422. Relatively low real interest rates in the United States tend to ?
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A. increase the foreign demand for dollars causing the dollar to depreciate

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

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

D. decrease the foreign demand for dollars causing the dollar to depreciate
2423. 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. the demand for foreign exchange shifts backward to the left

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

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

2424. By financial crowding out economist mean ?
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A. credit rationing

B. government borrowing drives up interest rates

C. what the government borrows cannot be used for private investment

D. Bank of England controls on commercial bank lending

2425. If foreign manufacturing costs and profit margins in response to a depreciation in the U.S dollar the effect of these actions is to ?
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A. lengthen the amount of time in which the depreciation leads to smaller trade deficit

B. shorten the amount of time in which the depreciation leads to smaller trade deficit

C. shorten the amount of time in which the depreciation leads to smaller trade surplus

D. lengthen the amount of time in which the depreciation leads to smaller trade surplus

2426. 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 inelastic

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 elastic

2427. When wealthy alumni provide charitable contributions to their universities to reduce the tuition payments of current students it is an example of ?
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A. a command-and-control policy

B. an attempt to internalize a positive externality

C. a Pigouvian tax

D. an attempt to internalize a negative externality

2428. If the countries were to trade along the lines of absolute advantage ?
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A. A would export X to B

B. B would import Y from A

C. Neither country would want to trade

D. None of the above

2429. In autarky, the relative price of wine, in terms of beer, in country A is ?
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A. 1W = 2B

B. 1W = 1/3B

C. 1W = 3B

D. 1W = 1B

2430. The multiple by which total deposits can increase for every pound increase in reserves is the ?
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A. Money multiplier

B. required reserve ratio

C. banks line of credit

D. liquidity ratio

2431. 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. export prices to fall by 10 percent

C. import prices to rise by 10 percent

D. import prices to fall by 10 percent

2432. Technical advance involves ?
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A. introducing new products modifying production functions creating credit and making profits

B. the development of pure science, invention innovation financing the innovation and the innovations acceptance

C. innovation investment credit creation and economies growth

D. patent management resource gains mature innovation and speculative gains

2433. During the Great Depression workers in DCs who took inferior jobs as a result of being laid off were known as ?
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A. seasonally unemployed

B. disguised unemployed

C. voluntarily unemployed

D. cyclical unemployed

2434. Dynamic gains from trade could result from ?
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A. The stimulus of additional investment spending as market open

B. All of the above

C. Additional competition made possible by the opening of markets

D. Economies of large scale production as markets open

2435. 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 desirable

C. is effective

D. is stimulating or contracting the economy at the wrong times
2436. The gains from international trade are closely related to ?
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A. The labor theory of value

B. All of the above

C. The fact that a country must lose from trade

D. How much the autarky price differs from international terms of trade change
2437. Labor skills are a major component of ?
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A. fertility

B. morbidity

C. mortality

D. population quality
2438. Which of the following is TRUE about gender and business world ?
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A. There are more women than men in U.S business because of the aspirations of U.S girls

B. Businesswomen in India are viewed as naturally stronger, less emotional more socially adept and more rational than businessmen

C. There are relatively few women in U.S business partly because of female socialization

D. LDC businesswomen have a better chance than men of getting credit from bankers and suppliers

2439. 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. the United States being considered a safe haven by foreign investors

D. relatively high inflation rates in the United States
2440. In the classical model of Ricardo, the direction of trade is determined by ?
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A. Which way the wind blows

B. Physical advantage

C. Absolute advantage

D. Comparative advantage
2441. 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. flow from the United States to foreign countries

B. flow from foreign countries to the United States

C. remain totally in foreign countries

D. remain totally in the United States

2442. Currency speculation is _____ if speculators bet against market forces that cause exchange fluctuations, thus moderating such fluctuations ?
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A. destabilizing

B. stabilizing

C. deflationary

D. inflationary

2443. A pigovian tax on pollution ?
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A. Sets the price of pollution

B. determines the demand for pollution rights.

C. reduces the incentive for technological innovations to further reduce pollution

D. Sets the quantity of pollution

2444. Which exchange rate system does not require monetary reserves for official exchange rate intervention ?
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A. pegged exchanged rates

B. dual exchange rates

C. managed floating exchange rates

D. floating exchange rates
2445. 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 = 0.9; elasticity of demand for imports = 0.4

B. elasticity of demand for exports = 0.7; elasticity of demand for imports = 0.3

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

D. elasticity of demand for exports = 0.3; elasticity of demand for imports = 0.6
2446. By restricting labor supply a trade union can _____ and _______?
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A. increase the wage, lower employment

B. maintain the wage, increase employment

C. increase the wage, increase employment

D. maintain the wage, lower employment

2447. If the state Bank of Pakistan wished to pursue an expansionary monetary policy it would ?
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A. sell government securities on the open market

B. increase the minimum reserve asset ratio.

C. raise interest rates

D. buy government securities on the open market
2448. 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 a decrease in the demand for foreign currency

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

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

D. increase in the demand for imports and an increase in the demand for foreign currency

2449. A government might use tax to ?
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A. Discourage consumption of public goods

B. Discourage consumption of positive externalities

C. Discourage consumption of merit goods

D. Discourage consumption of negative externalities

2450. Under managed floating exchange rates if the rate of inflation in the United States is less than the rate of inflation of its trading partners the dollar will likely ?
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A. be officially revalued by the government

B. be officially devalued by the government

C. depreciates against foreign currencies

D. appreciates against foreign currencies