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
4701. According to the wealth effect aggregate demand slopes downward (negatively) because ?
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A. lower prices increase the value of money holding and consumers spending increase

B. lower prices increase money holding decrease lending, interest rates rise and investment spending falls

C. lower prices reduce money holding increase lending, interest rates fall and investment spending increase

D. lower prices decrease the value of money holding and consumers spending decrease

4702. Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers allow the economy to adjust to the long run natural rate on its own, ?
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A. People will raise their price expectations and the short run aggregate supply will shift left

B. People will reduce their price expectations and aggregate demand will shift right

C. People will reduce their price expectations and the short run aggregate supply will shift right

D. People will raise their price expectations and aggregate demand will shift left

4703. Which of the following events shifts the short run aggregate supply curve to the right ?
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A. a decrease in the money supply

B. an increase in government spending on military equipment

C. a drop-in oil prices

D. an increase in price expectations

E. None of these answers

4704. Refers to Exhibit 4. Suppose the economy is operating in a recession such as point B in Exhibit 4. If policy makers wished to move output to its long run natural rate they should attempt to ?
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A. Shift aggregate demand to the left

B. Shift short run aggregate supply to the left

C. shift short-run aggregate supply to the right

D. shift aggregate demand to the right
4705. Suppose the price level falls but suppliers only notice that the price of their particular product has fallen Thinking there has been a fall in the relative price of their product they cut back on production, This is a demonstration of the ?
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A. classical dichotomy theory of the short run aggregate supply curve

B. sticky price theory of the short run aggregate supply curve

C. misperceptions theory of the short run aggregate supply curve

D. sticky wage theory of the short run aggregate supply curve

4706. Suppose the economy is initially in long run equilibrium Then suppose there is a drought that destroys much of the wheat crop if policymakers allow the economy to adjust to long-run equilibrium on its own, according to the model to aggregate demand and aggregate supply what happens to prices and output in the long run ?
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A. Output and the price level are unchanged from their initial values

B. Output falls; prices are unchanged from the initial value

C. Output rises; prices are unchanged from the initial value

D. Prices fall; output is unchanged from its initial value

4707. Suppose the price level falls but because of fixed nominal wage contracts the real wage rises and firms cut back on production This is a demonstration of the ?
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A. sticky-wage theory of the short-run aggregate supply curve

B. sticky-price theory of the short run aggregate supply curve

C. classical dichotomy theory of the short-run aggregate supply curve

D. misperceptions theory of the short-run aggregate supply curve

4708. Which of the following is not a reason why the aggregate demand curve slopes downward ?
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A. The classical dichotomy/monetary neutrality effect

B. The interest-rate effect

C. The wealth effect

D. The exchange-rate effect

4709. In the model of aggregate demand and aggregate supply, the initial impact of an increase in consumer optimism is to ?
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A. shift the aggregate demand curve to the right

B. shift the short-run aggregate supply curve to the right

C. shift the aggregate demand curve to the left

D. shift the short-run aggregate supply curve to the left

4710. Which of the following statements is true regarding the long-run aggregate supply curve? The long-run aggregate supply cruve ?
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A. shifts right when the government raises the minimum wage

B. Is vertical because an equal change in all prices and wages leaves output unaffected

C. shifts left when the natural rate of unemployment falls

D. is positively sloped because price expectations and wages tend to be fixed is the long run

4711. Which of the following statements about economic fluctuations is true ?
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A. None of these answers

B. A recession is when output rises above the natural rate of output

C. A variety of spending income, and output measures can be used to measure economic fluctuation because most macroeconomic quantitties tend to fluctuate together

D. A depression is a mild recession

4712. According to the interest rate effect aggregate demand slopes downward (negatively) because ?
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A. lower prices increase the value of money holding and consumer spending increases

B. lower prices reduce money holdings increase lending interest rates fall, and investment spending increase

C. lower prices decrease the value of money holdings and consumers spending decreases

D. lower prices increase money holdings decrease lending interest rates rise, and investment spending falls

4713. A buyers willingness to pay is that buyers ?
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A. consumer surplus

B. none of these answers

C. producer surplus.

D. minimum amount they are willing to pay for a good

E. maximum amount they are willing to pay for a good
4714. Jamil has ten pairs of football boots and saleem has none. A pair of football boots cost Rs50. to produce. If jamil values an additional pair of boots at RS100 and saleem values a pair of boots at Rs40, then the maxime ?
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A. efficiency Saleem should receive the glove

B. Efficiency Jamil should receive the glove

C. equity Jamil should receive the glove

D. consumer surplus both should receive a glove

4715. Medical care clearly enhance peoples lives. Therefore, we should consume medical care until ?
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A. everyone has as much as they would like

B. we must cut back on the consumption of other goods.

C. buyers receive no benefit from another unit of medical care.

D. the benefit buyers place on medical care is equal to the cost of producing it
4716. An increase in the price of a good along a stationary supply curve______________?
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A. decrease producer surplus

B. increase producer surplus

C. improves market equity

D. does all the things describe in these answers

4717. If a producer has market power (can influence the price of the product in the market) then free market solutions ?
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A. maximize consumer surplus

B. are inefficient

C. are equitable.

D. are efficient

4718. Total surplus is the area_______________?
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A. below the supply curve and above the price

B. below the demand curve and above the supply curve

C. above the supply curve and below the price

D. above the demand curve and below the price

E. below the demand curve and above the price

4719. The sellers cost of production is ?
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A. the sellers consumer surplus

B. none of these answers.

C. the sellers producer surplus

D. the minimum amount the seller is willing to accept for a good

E. the maximum amount the seller is willing to accept for a good

4720. Adam smiths invisible hand concept suggests that a competitive market outcome ?
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A. maximizes total surplus

B. generates equality among the members of society

C. minimizes total surplus

D. both maximizes total surplus and generates equality among the members of society

4721. If a benevolent social planner chooses to produce more than the equilibrium quantity of a good, then ?
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A. the value placed on the last unit of production by buyers exceeds the cost of production

B. the cost of production on the last unit produced exceeds the value placed on it by buyers.

C. producer surplus is maximized

D. consumer surplus is maximized

E. total surplus is maximized

4722. If buyers are rational and there is no market failure ?
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A. free market solutions are efficient

B. all of these answers

C. free market solutions maximize total surplus

D. free market solutions are efficient and free market solutions maximize total surplus

E. free market solutions are equitable

4723. In general, if a benevolent social planner wanted to maximize the total benefits received by buyers and sellers in a market, the planner should?
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A. Choose any price the planner wants because the losses to the sellers (buyers) from any change in price are exactly offset by the gains to the buyers (sellers).

B. allow the market to seek equilibrium on its own.

C. choose a price below the market equilibrium price

D. choose a price above the market equilibrium price

4724. Suppose that the price of a new bicycle is Rs300 Natalie values a new bicycle at Rs 400 it costs Rs200 for the seller to produce the new bicycle. What is the value of total surplus if Natalie buys a new bike ?
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A. Rs200

B. Rs400

C. Rs300

D. Rs500

4725. If a benevolent social planner chooses to producer less than the equilibrium quantity of a good, then ?
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A. the value placed on the last unit production by buyers exceeds the cost of production.

B. the cost of production on the last unit produced exceeds the value placed on it by buyers.

C. producer surplus is maximized

D. total surplus is maximized

E. consumer surplus is maximized

4726. An increase in the price of a good along a stationary demand curve ?
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A. decrease consumer surplus

B. improves market efficiency.

C. improves the material welfare of the buyers.

D. increase consumer surplus.

4727. Producer surplus is the area ?
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A. below the demand curve and above the supply curve

B. above the supply curve and below the price

C. below the demand curve and above the price

D. above the demand curve and below the price

E. below the supply curve and above the price

4728. If a market is efficient then_______?
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A. the market allocates buyers to the sellers who can produce the good at least cost

B. the market allocates output to the buyers that value it the most

C. the quantity produced in the market maximizes the sum of consumer and producer surplus

D. none of these answers

E. all these answers
4729. If a market generates a side effect or externlity then free market solutions ?
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A. are equitable

B. are inefficient

C. are efficient

D. maximize producer surplus

4730. Consumer surplus is the area ?
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A. above the demand curve and below the price.

B. below the supply curve and above the price.

C. below the demand curve and above the supply curve

D. below the demand curve and above the price.

E. above the supply curve and below the price.

4731. If a buyers willingness to pay for a new Honda is Rs20,000 and she is able to actually buy it for Rs18,000 her consumer surplus is ?
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A. Rs2,000

B. Rs20,000

C. Rs18,000

D. Rs0.

4732. Suppose there are three identical vases available to be purchased. Buyer 1 is willing to pay Rs30 for one, buyer 2 is willing to pay Rs25 for one, and buyer 3 is willing to pay Rs20 for one. If the price is Rs25, how many vases will be sold and what is the value of consumer surplus in this market ?
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A. One vase will be sold, and consumer surplus is Rs30.

B. Three vases will be sold, and consumer surplus is Rs0.

C. Three vases will be sold, and consumer surplus is Rs80

D. Two vases will be sold, and consumer surplus is Rs5.

E. One vase will be sold, and consumer surplus is Rs5.

4733. For the Central bank to keep the interest rat unchanged as the government increase spending, the Central Bank must continue to ?
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A. decrease the money supply

B. decrease the demand for money

C. increase the demand for money

D. increase the money supply
4734. The refinancing rate is ?
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A. The interest rate the European Central Bank pays on reserves

B. He interests rate banks pay on the publics deposits

C. The interest rates the European Central Bank charges on loans to banks

D. The interest rate at Which commercial banks lend to and borrow from each other

E. The interest rates the public pays when borrowing from banks

4735. Money that a government has required has required to be accepted in settlement of debts is ?
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A. legal tender

B. commodity money

C. barter money

D. currency value

4736. The interest rate is determined in ?
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A. the money markets

B. the money and labor markets

C. the goods and labor markets

D. the goods market

4737. Suppose Imtiaz moves his Rs1,000 demand deposit from Bank A to Bank B. If both banks operate with a reserve ratio of 10 percent What is the potential change in money supply as a result of Gerards action ?
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A. Rs 10,00

B. Rs 0

C. Rs 1,000

D. Rs 9,000

4738. Commodity money ?
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A. is used exclusively in the economies of western Europe and north America

B. has intrinsic value

C. has no intrinsic value

D. is used as reserves to back fiat money

4739. The way in which government spending is supposed to reduce investment is by increasing ?
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A. imports

B. interest rates

C. overseas investment

D. incomes

4740. Which of the following is not a function of money ?
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A. unit of account

B. hedge against inflation

C. Store of value

D. Medium of exchange

4741. If the investment demand curve is vertical ?
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A. both monetary and fiscal policy are ineffective

B. monetary policy is effective but fiscal policy is ineffective

C. monetary policy is ineffective but fiscal policy is effective

D. both monetary and fiscal policy are effective

4742. When real income increases other things equal we can expect the demand for real money holdings to ?
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A. fall

B. not change

C. increase

D. None of these

4743. Money is ?
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A. Anything that is generally accepted as a medium of exchange

B. All of the above

C. The value of all coins and currency in circulation at any time

D. The same as income

4744. Each point on the IS curve represents the equilibrium point in the ?
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A. money market for the given value of aggregate output

B. goods market for the given level of government spending

C. goods market for the given interest rate

D. money market for the given level of the money supply

4745. A reduction in interest rates, causes an increases in the monetary base that results in an _________ in the availability of consumer credit and a ________ in the cost of consumer credit?
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A. increase , increase

B. reduction, reduction

C. increase, reduction

D. reduction, increase

4746. Equilibrium in the Money market will change if there is ?
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A. a change in the real money supply

B. any of the above

C. a change in real income

D. a change in competition in the banking industry

4747. If banks and the private sector decide to hold less cash the money multiplier will be ?
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A. Unstable

B. Smaller

C. Unchanged

D. Larger
4748. An item designated as money that is intrinsically worthless is ?
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A. precious metals

B. barter items

C. commodity money

D. fiat money
4749. The monetary base is ________ and _________?
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A. retail deposits, wholesale deposits

B. retail sight deposits building society deposits

C. bank deposits, building society deposits

D. Currency in circulation, banks cash reserves
4750. Three variables affect the demand for money they are _______ and __________?
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A. the price level interest rates real income

B. The time of year bank opening hours the price level

C. The proportion of weekly paid employees the time of year real income

D. bank opening hours, the proportion of weekly paid employees interest rates