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
4751. An example of fiat money is ?
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A. gold

B. Paper euros

C. Silver coins

D. cigarettes

4752. In terms of the demand for money the interest rate represents ?
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A. the rate at which current consumption can be exchanged for future consumption

B. the price of borrowing money

C. The opportunity cost of holding money

D. the return on money that is saved for the future

4753. If the central bank buys financial securities in the open market to increase the monetary base, this is and example of ?
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A. Open Market operations

B. financial intermediation

C. Financial regulation

D. lender of less resort

4754. An increase in the money supply aimed at increasing aggregate output is referred to as ?
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A. contractionary fiscal policy

B. expansionary monetary policy

C. expansionary fiscal policy

D. contractionary monetary policy

4755. The demand for money represents the idea that there is ?
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A. a positive relationship between the interest rate and the quantity of money demanded

B. a negative relationship between the price level and the quantity of money demanded

C. a negative relationship between the level of aggregate output and the quantity of money demanded

D. a negative relationship between the interest rate and the quantity of money demanded
4756. The opportunity cost of holding money is determined by ?
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A. the inflation rates

B. the level of aggregate output

C. the interest rates

D. the discount rates

4757. The curve that illustrates the negative relationship between the equilibrium values of aggregate output and the interest rate in the goods market is the ?
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A. aggregate demand curve

B. aggregate supply curve

C. IS curve

D. LM curve
4758. Which of the following events will lead to an increase in the demand for money ?
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A. An increase in the interest rate

B. An increase in the level of aggregate output

C. A decrease in the price level

D. An increase in the supply of money

4759. Which of the following statements about money is not true ?
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A. A debit card is not really money because it is only a means of transferring money between accounts

B. In a complex economy it is not easy to draw a clear dividing line between assets that should be considered as money and those that should not

C. Wealth held in the current account you hold with your bank is almost as convenient for buying things as wealth held in your wallet so the wealth in current accounts should be included in measures of money

D. All the wealth that people hold, in whatever form, should be considered as money
4760. The chain of events that results from an expansionary monetary policy is ?
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A. money demand increases the interest rate decreases planned investment increases aggregate output increases and money demand increases

B. money supply increases the interest rate increase planned investment increases aggregate output increases and money demand increases

C. money supply increases the interest rate decrease planned investment increases aggregate output increases and money demand increase

D. aggregate output increases the demand for money increase the interest rate increase planned investment

4761. Which of the following policy actions by a central bank is likely to increase the money supply ?
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A. All of these will increase the money supply

B. Increasing reserve requirements

C. Increasing the refinancing rate

D. Buying government bonds in open market operations
4762. Suppose the central bank purchases a government bond from a person who deposits the entire amount received from the sale in her bank the money supply will ?
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A. be unchanged

B. rise by less than the amount of the deposit

C. fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio

D. rise by an amount that depends on the banks reserve ratio

E. fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio

4763. If planned investment becomes more sensitive to interest rate changes the crowding out effect will ?
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A. be reduced

B. fall to zero

C. not be affected

D. be increased
4764. The primary function of bank is to ?
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A. Provide notes and coins for trade

B. Make a profit

C. Provide a cheque clearing system

D. Control the money supply

4765. The three main tools of monetary policy are ?
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A. fiat, commodity and deposit money

B. Open-market operations reserve requirements and the refinancing rate

C. The money supply, government purchases and taxation

D. Government expenditures taxation and reserve requirements

E. Coin, currency and demand deposits

4766. One of the transmission mechanisms of monetary policy is through consumer demand when interest rates ________ household wealth ________ and consumption _________?
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A. rise, falls, increase

B. rise, increase, falls

C. rise, falls, falls

D. rise; increase, increase

4767. When economies speak of the demand for money which of the following are they asking ?
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A. What proportion of your financial assets do you want to hold in non-interest-bearing forms

B. How much cash do you wish you could have?

C. How much wealth would you like?

D. How much income would you like to earn?

4768. If the central bank increases the money supply at the same time as the government increasing spending, it is suggested that investment will ?
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A. Suffer even more

B. be replaced by consumer spending

C. not be reduced as much as it would have been

D. be replaced by foreign investment

4769. Which of the following activities is one of the responsibilities of the Bank of England to the banking system ?
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A. Issuing new bonds to finance the PSBR.

B. Loaning money to other countries that are friendly to the UK.

C. Assisting Banks that are in a difficult financial position

D. Auditing the various agencies and department of the government

4770. Banks create money by ?
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A. issuing debit cards

B. printing it

C. accepting cheques

D. lending out part of their deposits
4771. Each point on the LM curve represents the equilibrium point in the ?
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A. money market for the given level of the money supply

B. money market for different combinations of interest rates and output

C. goods market for the given interest rate

D. goods market for the given level of government spending

4772. If there is a general shortage of liquidity in the money market then ?
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A. The short-term interest rate at which the economys commercial banks lend to and borrow from each other will fall and the central bank may be expected to reduce the supply of liquidity to the banks

B. The short-term interest rate at which the economys commercial banks lend to and borrow from each other will rise and the central bank may be expected to increase the supply of liquidity to the banks.

C. The banks will increase their lending

D. the long-term interest rate in the economy will rise and the central bank will raise its interest rate in response

E. The short-term interest rate at which the economys commercial banks lend to and borrow from each other will rise and the long-term interest rate may be expected to rise as a result

4773. Reserve requirements that may be imposed on an economys banks by its central bank specify that banks by its central bank specify that banks reserve must be a minimum percentage of them ?
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A. assets

B. loans

C. deposits

D. government bonds

4774. Which of the following is included in broad money, but not included in narrow money ?
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A. Automatic-transfer savings accounts

B. savings accounts

C. Travelers checks

D. Currency held outside banks

4775. Assume that commercial banks are holding excess reserves because business firms and consumers are not willing to borrow money A decrease in the discount rate is likely to ?
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A. Not change the money supply because banks already have excess reserves they cannot lend

B. Decrease the money supply because it is now cheaper for banks to borrow from the central bank instead instead of buying government securities

C. decrease the money supply because it will now be more expensive for business firms and consumers to borrow money

D. increase the money supply because it is now cheaper for banks to borrow from the central bank

4776. The equilibrium level of aggregate output is determined in ?
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A. the goods and labor markets.

B. the money markets

C. the goods market

D. the money and labor market

4777. M4 is a __________ measure of money and includes deposits at both __________ and _________?
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A. narrow, banks, building societies

B. wide, banks insurance companies

C. Narrow, banks insurance companies

D. Wide, banks building societies
4778. Which of the following events will lead to a decrease in the equilibrium interest rate ?
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A. A decrease in the price level

B. An increase in the level of aggregate output

C. A sale of government securities by the central bank

D. An increase in the discount rate

4779. The curve that illustrates the positive relationship between the equilibrium values of aggregate output and the interest rate in the money market is the ?
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A. money supply curve

B. LM curve

C. money demand curve

D. IS curve

4780. Suppose the State Bank purchases a Rs 1,000 government bond from you. If you deposit the entire Rs 1,000 in you bank what is the total potential change in the money supply as a result of the State Banks action if the your banks reserve ratio is 20 percent ?
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A. Rs 1,000

B. Rs 0

C. Rs 4,000

D. Rs 5,000
4781. The difference between a banks actual reserves and its required reserves is its?
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A. required reserve ratio

B. excess reserves

C. profit margin

D. net worth

4782. A bank has excess reserves to lend but is unable to find anyone to borrow the money This will _________ the size of the money multiplier?
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A. have no effect on

B. increase

C. double

D. reduce
4783. The motive for holding money that encourages investors to hold bonds when interest rates are low, with the hope of selling them when interest rates are high, is the ?
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A. speculation motive

B. profit motive

C. precautionary motive

D. Transactions motive

4784. When the money supply increase ?
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A. The LM curves shifts to the left

B. The LM curve shift to the right

C. The economy moves down the LM curve

D. the economy moves up the LM curve

4785. The interest rate ?
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A. is determined in the money market and has no influence on the goods market

B. is determined in the goods market and influences the level of planned investment and thus the money market

C. is determined in the goods market and has no influences on the money market

D. is determined in the money market and influences the level of planned investment and thus the goods market
4786. According to the simple Keynesian view the aggregate supply curve is ?
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A. vertical until it reaches full capacity and then becomes horizontal

B. downward sloping over all levels of output

C. upward sloping over all levels of output

D. horizontal until it reaches full capacity and then becomes vertical
4787. The idea the government spending causes a reduction in private investment is called ?
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A. fiscal drag

B. investment blight

C. crowding-out

D. the Thatcher effects

4788. Central banks prefer to fix the ____ and accept the resulting _____?
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A. demand for money, interest rate

B. interest rate, demand for money

C. interest rate equilibrium money supply

D. demand for money equilibrium money supply

4789. Money has 3 main function they are __________ and __________?
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A. Medium of exchange unit of account store of value

B. Medium of exchange inflation hedge store of value

C. IOU , inflation hedge store of value

D. Medium of exchange unit of account store of value

E. Medium of exchange unit of account IOU

4790. When interest rate rise, other things equal, we can expect the quantity of real money holding to ?
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A. not change

B. increase

C. fall

D. None of these

4791. The money supply is ?
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A. Money + bank cards + credit cards

B. State Bank of Pakistan Issue Department

C. Cheques + money + bank cards + credit cards

D. Currency in circulation plus bank deposits
4792. Keynesians and monetarists differ over how steep the IS and LM curves actually are Monetarists claim that the IS curve must be __________ and the LM curve must be __________?
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A. steep; steep

B. flat; steep

C. steep; flat

D. flat; flat

4793. A fall in investment demand can result from ?
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A. lower expected future profits

B. higher interest rates

C. All of the above

D. more expensive capital goods

4794. Bance Solida has, in the past, always operated with a reserve ratio of 25 percent. It has now been taken over by Gung-Ho Bank Which operates with a reserve ration of 12 percent, Assuming that Banca Solida adopts the business practices of its new owner, What will be the effect on money supply in the country in which Banca Solida operates ?
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A. Money supply will decrease because the loans will have to be repaid

B. Money supply will increase because Banca Solida will increase its loans

C. Money supply will be unchanged because the central bank has made no policy changes

D. The effect on money supply cannot be determined from the information given

4795. The main reason that people hold money to buy things is referred to as the ?
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A. Transactions motive

B. Profit motive

C. Precautionary motive

D. speculation motive

4796. Which one of the following is not true ?
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A. If the central bank raises its refinancing rate then the commercial banks will try to reduce their lending and so reduce the need to borrow from the central bank

B. In the UK the refinancing rate is known as the repo rate and in the USA it is referred to as the discount rate.

C. The difference between the price at which commercial bank sells an asset to the central bank and the price it agrees to buy it back can be expressed as an annualized percentage of the selling price and this is called the refinancing rate

D. If the central bank has bought some assets from a commercial bank with an agreement that the commercial bank will buy them back at a later date, then this would be called a repo

E. Commercial banks may borrow from and lend to each other and the interest rate at which they do this is called the refinancing rate
4797. Government Securities with terms of more than one year are called ?
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A. bills of exchanges

B. Treasury bills

C. Capital bills

D. government bonds
4798. If the quantity of money demanded exceeds the quantity of money supplied then the interest rate will ?
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A. remain constant

B. rise

C. change in a certain direction

D. fall

4799. As the required reserve ratio is decreased the money multiplier ?
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A. could either increase or decrease

B. decreases

C. remain the same, as long as banks hold no excess reserves

D. increases
4800. Suppose all banks maintain a 100 percent reserve ratio. If an individual deposits Rs 1,000 of currency in a bank ?
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A. the money supply increase by less than Rs 1,000

B. The money supply is unaffected

C. the money supply decrease by less than Rs 1,000

D. the money supply increases by more than Rs 1,000

E. the money supply decrease by more than Rs 1,000