basic of economics MCQs – Page 2

Practise focused basic of economics questions with marked answers for exam preparation and subject revision.

basic of economics Mcqs
51. The cause of inflation is ?
comments icon0

A. Increase in money supply

B. Fall in production

C. Decrease in money supply and fall in production

D. Increase in money supply and fall in production
52. Depression is a drastic decline in a national of international economy Its characteristic is ?
comments icon0
A. All of these

B. Decreasing business activity

C. Falling prices

D. Unemployment

53. Which function is performed by both commercial banks and central banks ?
comments icon0

A. Acting as bankers to the government

B. Dealing in foreign exchange

C. Fixing the main interest rate

D. Advising the government on monetary policy

54. The bank established for loans to very small enterprises in Pakistan is called_______________?
comments icon0

A. First MINI Bank

B. Micro Finance Bank

C. SME- Bank

D. Moderba Bank

55. Development means economics growth plus ?
comments icon0

A. Deflation

B. Inflation

C. Social change

D. Price stability

56. Which money is called Hot money ?
comments icon0

A. That moves across country borders in response to interest rate differences

B. That moves away when the interest rate differential

C. Both of them

D. None of them

57. What is called the stock that sells at a high price ?
comments icon0

A. Blue Chipper

B. Blue chip

C. All of these

D. An extremely valuable asset or property

58. An organization plans the use of its fund during a 12-month period. What is this period called ?
comments icon0

A. Fiscal period

B. Fiscal year (FY)

C. Calendar year

D. Year unit

59. What is called the market in which forces of demand and supply are not in the control of government ?
comments icon0

A. Market Economy

B. Free Market

C. Both of them

D. None of them

60. What is called that debt obligation backed strictly by the borrowers integrity ?
comments icon0

A. Credit rating

B. Securities

C. Debenture

D. None of them

61. Which of the following must always balance ?
comments icon0

A. The balance of visible trade

B. The balance of invisible trade

C. The balance on the current account

D. The balance of payments
62. Total number of adults currently employed or actively seeking work in all economic sectors is known as ?
comments icon0

A. All of them

B. Work force

C. Labor potential

D. Labor force
63. Which of the following is not a function of a commercial bank?
comments icon0

A. Undertaking agency functions

B. Banker to the government

C. Accepting public deposits

D. Granting loan and advances

64. Mention an international trade policy competitive devaluation and increased protective barriers that one country institute to gain at the expense of its trading partners ?
comments icon0

A. Protectionist policy

B. Beggar-thy-beighbour

C. Domestic policy

D. Nationalist policy

65. Devaluation of currency helps to promote ?
comments icon0

A. Saving

B. Exports

C. Imports at lower cost

D. National income

66. Who is insolvent_______________?
comments icon0

A. A firm that is for sale

B. A firm that has more liabilities than assets

C. A firm that is liquidated

D. A firm that is unable to pay debts
67. How is known the process in which an investment company continually offers new shares and buys existing shares back on demand and uses its capital to invest in diversified securities of other companies ?
comments icon0

A. Stock holding company

B. Liquid fund

C. combine fund

D. Mutual fund
68. Unlike a black market, what is called a system of secretly selling or trading commodities which is not necessarily illegal ?
comments icon0
A. Grey market

B. White market

C. Open market

D. Red market

69. Government of Pakistan issues currency on the basis of__________________?
comments icon0

A. Availability of dollars in the country

B. Demand for money in the country

C. Tax collection

D. Availability of gold in the country

70. In Western Europe in 9th C, originated military and social system in which a nobleman would grant the use of land to servant in return for service which is often military, and duty, Name the system ?
comments icon0

A. Rural system

B. Land based system

C. Feudal system

D. Military system

71. The comparative advantage comes if each trading partners has a product that will bring a better price in another country than it will at home. Which economist proposed the principle of comparative advantage ?
comments icon0

A. Adam Ricardo

B. David Ricardo

C. David Smith

D. Adam Smith

72. The situation with increasing unemployment and inflation is terms as ?
comments icon0

A. Reflection

B. Stagflation

C. Hyperinflation

D. Galloping

73. Which of the following is not an indirect tax ?
comments icon0

A. Custom duty

B. Income tax

C. Tariff

D. Sales tax
74. Economic development is measured on the basis of ?
comments icon0

A. Increase in nominal GNP

B. Increase in government revenue

C. Increase in personal income

D. Increase in real GNP
75. Scale for measuring the average share price and percentage change of 30 major US industrial companies is called ?
comments icon0

A. Nikki Index

B. NASDAQ

C. Major Index

D. Dow Jones Index
76. Name the organization that is managed by those who use its facilities ?
comments icon0

A. Corporation

B. Society

C. Cooperative

D. Limited Company

77. Where Nikkei Stock average applies ?
comments icon0

A. Mainly to Japanese equities

B. Mainly to Korean equities

C. Mainly to international equities

D. Mainly to US equities

78. The branch banking system is in vogue in most countries of the world. In which country was it first developed?
comments icon0

A. South Africa

B. Australia

C. UK

D. Canada

79. What is called a countrys total financial obligations to the rest of the world ?
comments icon0

A. National liabilities

B. Total debt

C. External debt

D. Debt burden

80. Bank loans are usually altered to have longer maturities in order to assist the borrower in making the necessary repayments. What these loans are called____________?
comments icon0

A. Rearranged loans

B. None of these

C. Altered loans

D. Rescheduled loans
81. GNP is_______________?
comments icon0

A. Total monetary transactions in an economy

B. Total sales in the economy

C. The market value of all goods and services produced in an economy

D. Total spending in an economy

82. What is called an additional levy added to some charge ?
comments icon0

A. Fine

B. Extra charges

C. Surcharge

D. Additional Charged

83. Velocity of circulation of money means ?
comments icon0
A. The number of times a unit of money changes hands annually

B. The number of times as unit of money changes hands monthly

C. The number of times a unit of money changes value

D. The number of times a unit of money changes hands daily

84. Which of the following is regarded as a factor of production ?
comments icon0

A. None of these

B. Profit

C. Interest

D. Capital
85. Which branch of accounting provides information to help the management of a firm evaluate production costs and efficiency ?
comments icon0
A. Cost Accounting

B. Outcome risk

C. Efficient Account

D. Ultra-country economic risk

86. Reduction in the circulation of money resulting from fall of prices is known as ?
comments icon0

A. cost

B. inflation

C. cost effective

D. deflation
87. Consumption spending does not include ?
comments icon0

A. Households payment of rent for an apartment

B. Households purchases of food

C. Households purchase of a car

D. Households purchase of stock in any XYZ corporation
88. Theory of comparative advantages was presented by ?
comments icon0

A. Barron

B. Hicks

C. Adam Smith

D. Ricardo
89. An exchange arrangement was formed in 1979 that governs the currencies of European union member countries. What this arrangement called ?
comments icon0
A. Common Monetary System (CMS)

B. European Currency System (ECS)

C. European Monetary Fund (EMF)

D. European Monetary Mechanism (EMM)

90. What is called that market in which supply overwhelms demand ?
comments icon0

A. Deflated market

B. Weak market

C. Bearish market

D. Depressed market
91. Term the average income of the people of a country during a year ?
comments icon0

A. National income

B. Per capita Income

C. Domestic income

D. Protection Income

92. Which of the following is known as foreign exchange ?
comments icon0

A. Transaction of International monetary business

B. Negotiable bills drawn in one country to be paid in another country

C. Both of them

D. None of them

93. Which company holds the world record for having the maximum number of shareholders ?
comments icon0

A. State Bank

B. General Motors

C. Reliance Industries Ltd.

D. British Gas

94. Rules and Particles that govern the management of an organization are called ?
comments icon0

A. Character

B. By laws

C. Internal laws

D. Memorandum of articles

95. What occurs when a firms business is terminated Assets are sold, proceeds are used to pay creditors, and any leftovers are distributed to shareholders ?
comments icon0

A. Bankruptcy

B. Crash

C. Liquidation

D. Solvency

96. When a commercial bank creates credit its immediate effect is that it raises__________________?
comments icon0

A. The interest rates

B. The exchange rates

C. The money supplies

D. The real national income

97. Term the shared of profits of a joint stock company ?
comments icon0

A. Profit-share

B. Dividend

C. Share

D. Margin

98. What is called when a private company first offers shares to the public market and investors ?
comments icon0

A. Coming public

B. going public

C. Public floating

D. Public offering

99. Which of the following is an example of government policy that could reduce inflation ?
comments icon0

A. increasing import duties

B. increasing bank lending

C. None of these

D. reducing government expenditure
100. What term is given to unemployment caused by a downturn in the business cycle ?
comments icon0
A. Cyclical unemployment

B. Disguised unemployment

C. Temporary unemployment

D. Underemployment