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
4851. If a depositor puts Rs100 in a bank amount that earns 4 percent interest compounded annually, how much will be in the account after five years ?
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A. Rs 121.67

B. Rs 123.98

C. Rs400.00

D. Rs 104.00

4852. If two countries start with the same real GDP/person and one country grows at 2 percent while the other grows at 4 percent ?
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A. the standard of living in the two countries will converge

B. the standard of living in the country growing at 4 percent will start to accelerate away from the slower growing country due to compound growth

C. Next year the country growing at 4 percent will have twice the GDP/person as the country growing at 2 percent

D. one country will always have 2 percent more real GDP/person than the other

4853. Which of the following is an example of moral hazard ?
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A. None of these answers demonstrate moral hazard

B. After Gull buys fire insurance, he begins to smoke cigarettes in bed.

C. All of these answers demonstrate moral hazard

D. Mahmood has been feeling poorly lately so he seeks health insurance

4854. If the efficient markets hypothesis is true, then ?
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A. shares tend to be overvalued

B. fundamental analysis is a valuable tool for increasing ones returns from investing in shares

C. All of these answers

D. the stock market is informationally efficient so share prices should follow a random walk
4855. JCB (Which makes agricultural and construction equipment) has the opportunity to purchase a new factory today that will provide them with a Rs50 million return four years from now If prevailing interest rates are 6 percent, what is the maximum that the project can cost for JCB to be willing to undertake the project ?
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A. Rs 34,538,902

B. Rs 53,406,002

C. Rs 39,604,682

D. Rs 43,456,838

4856. Speculative bubbles may occur in the shares market ?
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A. when stocks are fairly valued

B. because rational people may buy an overvalued share if they think they can sell it to someone for even more at a later date

C. during periods of extreme pessimism because so many stocks become undervalued

D. only when people are irrational

4857. Refer to Exhibit 6. Suppose the economy is operating at point (D) As people revise their price expectations ?
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A. The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 9 per cent inflation

B. The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 3 percent inflation

C. The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 6 percent inflation

D. The long-run Phillips curve will shift to the left
4858. If people have rational expectations a monetary policy contraction that is announced and is credible could ?
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A. increase inflation with little or no decrease in unemployment

B. reduce inflation with little or no increase in unemployment

C. reduce inflation but it would increase unemployment by an unusually large amount

D. Increase inflation but would decrease unemployment by an unusually large amount

4859. According to the Phillips curve, in the short run, if policy makers choose an expansionary policy to lower the rate of unemployment ?
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A. Inflation will be unaffected if price expectations are unchanging

B. The economy will experience a decrease in inflation

C. None of these answers

D. The economy will experience an increase in inflation
4860. Refer to Exhibit 6.If People in the economy expect inflation to be 3 percent and inflation is 3 percent the economy is operating at point ?
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A. H

B. b

C. a

D. I

4861. A decrease the Price of foreign oil ?
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A. Shifts the short run Phillips curve upward and makes the Unemployment inflation trade off more favorable

B. Shifts the short-run Phillips curve downward and make the unemployment inflation trade-off less favorable

C. Shifts the short run Phillips curve downward and makes the unemployment inflation trade off more favorable

D. Shifts the short run Phillips curve upward and makes the unemployment inflation trade-off more favorable

4862. Refer to Exhibit 6. Suppose the economy is Operating in long-run equilibrium at point E. An unexpected monetary contraction will move the economy in the direction of point ?
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A. E

B. F

C. c

D. H

4863. The original Phillips curve illustrates ?
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A. The trade-off between output and unemployment

B. The positive relationship between output and unemployment

C. the trade-off between inflation and unemployment

D. The positive relationship between inflation and unemployment

4864. Refer to Exhibit 6.Suppose the economy is in long-run equilibrium at point E. A sudden increase in government spending should move the economy in the direction of point ?
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A. b

B. G

C. d

D. E

4865. If a countrys policy makers were to continuously use expansionary monetary policy in an attempt to hold unemployment below the natural rate the long-run result would be ?
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A. an increase in the level of output

B. an increase in the rate of inflation

C. All of these answers

D. a decrease in the unemployment rate

4866. Which of the following would shift the long-run Phillips curve to the right ?
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A. An increase in the minimum wage

B. An increase in the price of foreign oil

C. An increase in the expected inflation

D. An increase in the aggregate demand

4867. Along a short-run Phillips curve, ?
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A. a higher rate of growth in output is associated with a higher unemployment rate.

B. a higher rate of inflation is associated with a higher unemployment rate

C. a higher rate of growth in output is associated with a lower unemployment rate

D. a higher rate of inflation is associated with a lower unemployment rate
4868. If the sacrifice ratio is five, a reduction in inflation from 7 percent to 3 percent would require ?
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A. a reduction in output of 20 percent

B. a reduction in output of 5percent

C. a reduction in output of 35 percent

D. a reduction in output of 15 percent

4869. Refer to Exhibit 6.If People in the economy expect inflation to be 6 percent but inflation turn out to be 3 percent the economy is operating at point ?
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A. c

B. F

C. H

D. d

4870. The misery index Which some commentators suggest measures the health of the economy, is ?
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A. The sum of the growth rate of output and the inflation rate

B. The sum of the natural rate of unemployment and the actual rate of unemployment

C. The sum of the inflation rate and the central banks refinancing rate

D. The sum of the unemployment rate and the inflation rate
4871. When actual inflation exceeds expected inflation ?
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A. People will reduce their expectations of inflation in the future

B. Unemployment is less than the natural rate of unemployment

C. Unemployment is equal to the natural rate of unemployment

D. Unemployment is greater than the natural rate of unemployment

4872. The Phillips curve is an extension of the model of aggregate supply and aggregate demand because, in the short run, an increase in aggregate demand increase price and ?
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A. decrease growth

B. increases unemployment

C. decreases unemployment

D. decreases inflation

4873. Refer to Exhibit 6. Suppose the economy is Operating in long-run equilibrium at point E. In the long run a monetary contraction will move the economy in the direction of point ?
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A. I

B. F

C. H

D. a

4874. The natural rate hypothesis argues that ?
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A. in the long run the unemployment rate returns to the natural rate, regardless of inflation

B. Unemployment is always below the natural rate

C. Unemployment is always equal to the natural rate

D. Unemployment is always above the natural rate

4875. If, in the long run, people adjust their price expectations so that all prices and incomes move proportionately to an increase in the price level then the long-run Phillips curve ?
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A. has a slope that is determined by how fast people adjust their price expectations

B. is positively sloped

C. is vertical

D. is negatively sloped

4876. An increase in expected inflation ?
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A. Shifts the Short run Phillips curve upward and the unemployment inflation trade-off is less favorable

B. shifts the short run Phillips curve downward and the unemployment inflation trade-off is less favorable.

C. Shift the short-run Phillips curve downward and the unemployment inflation trade-off is more favorable

D. shifts the short-run Phillips curve upward and the unemployment inflation trade-off is more favorable

4877. An increase in income should ?
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A. shift demand for an inferior product inward

B. Shift supply for an inferior product inward

C. Shift demand for an inferior product outward

D. shift supply for an inferior product outward

4878. Adding up the quantities demanded of a good by different people facing the same price gives us the ?
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A. Demand curve

B. Market demand curve

C. Supply curve

D. Market supply curve

4879. A measurement showing how quantity demanded varies with income is the ?
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A. income elasticity of demand

B. budget elasticity of demand

C. Cross-price elasticity of demand

D. Price elasticity of demand

4880. Economics assumes that people consume goods and services to achieve ?
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A. Status

B. Self-esteem

C. Utility

D. Prestige

4881. Which of the following would increase aggregate demand ?
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A. Increased saving

B. Increasing import spending

C. Increased taxation revenue

D. increased investment

4882. The price decrease from Rs 2,000 to Rs 1,800 Quantity demanded per year increases 5000 to 6000 units. Which of the following is correct ?
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A. Income elasticity is + 2

B. The good is inferior

C. The price elasticity of demand is -2

D. Income elasticity is + 0.5

4883. if demand is price inelastic ?
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A. An increase in price must raise profits

B. A decrease in price reduces sales

C. An increase in price decrease revenue

D. An increase in price increase revenue
4884. If the cross-price elasticity of demand between two goods is negative, then the two goods are ?
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A. Substitutes.

B. Complements

C. unrelated goods

D. normal goods

4885. Improved training of employees would ?
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A. Shift aggregate demand to the right

B. Shift aggregate supply to the right

C. shift aggregate demand to the left

D. Shift aggregate supply to the left

4886. The Setrite Corporation produce chairs. An economist working for the firm predicts that if peoples incomes rise next year, then the demand for our chairs will for our chairs will increase ceteris paribus The accuracy of the economists prediction depends on whether the chairs Setrite Produce ?
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A. are normal goods

B. have many complementary goods.

C. have few complementary goods.

D. have few substitutes.

4887. If the cross elasticity of demand is -2 ?
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A. The products are complements and demand is cross price inelastic

B. The products are complements and demand is cross price elastic

C. The products are substitutes and demand is cross price elastic

D. The products are substitutes and demand is cross price inelastic

4888. Firms are assumed to ________ costs and to ________ profits?
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A. charge earns

B. incur, desire

C. minimize, maximize

D. pay, make

4889. If both marginal cost and marginal revenue increase, a firm ?
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A. Should increase output

B. Should reduce output

C. Should not change output

D. will require further information on how to respond
4890. Inferior goods have _________ and luxury goods have _________?
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A. income elasticity greater than 1, negative income elasticities

B. negative income elasticity income elasticity greater than 1

C. Positive income elasticities, negative income elasticities

D. None of the above

4891. Aggregate demand will increase if ?
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A. consumption falls

B. imports fall

C. investment falls

D. Exports fall

4892. Which of the following would decease aggregate demand ?
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A. increasing export revenue

B. increased taxation revenue

C. increase consumption

D. increased investment

4893. If a 4% increase in price leads to a increase in the quantity supplied of 8% ?
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A. Price elasticity of supply is -2

B. Supply is income elastic

C. Price elasticity of demand is -2

D. Supply is price elastic
4894. Increased level consumption ?
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A. shift aggregate demand to the left

B. shift aggregate supply to the right

C. shift aggregate demand to the right

D. shift aggregate supply to the left
4895. Increased levels of spending on imports ?
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A. shift aggregate supply to the right

B. shift aggregate demand to the right

C. shift aggregate supply to the left

D. shift aggregate demand to the left
4896. The opportunity cost of a student is____________?
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A. Course fees and rent

B. What the student could have earned in the best job available by not studying

C. What the student will earn after graduation

D. A loan from the bank

4897. A firm that makes profit in addition to normal profit is making ?
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A. Normal profit

B. Economic profit

C. supernormal profit

D. Accounting profit

4898. When excess demand occurs in an unregulated market, there is a tendency for ?
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A. quantity supplied to decrease.

B. price to rise

C. quantity demanded to increase

D. price to fall

4899. When the decrease in the price of one good causes the demand for another good to decrease, the goods are_________?
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A. substitutes

B. complements

C. nromal

D. inferior

4900. When the market operates without interference, price increases will distribute what is available to those who are willing and able to pay the most. This process is known as ?
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A. price fixing

B. Quantity setting

C. quantity adjustment.

D. price rationing