lecturer economics mcqs[1]

(Lecturer Economics Exam 2011) (Economics General MCQs)1

Ref: David Begg, University of London SET-IQ.1: Economics is the study of

A) production technologyB) consumption decisionsC) how society decides what, how, and for whom to produceD) the best way to run society

Q.2: A resource is scarce if supply exceeds demand at zero price:A) TrueB) False

Q.3: The opportunity cost of a good is A) the time lost in finding itB) the quantity of other goods sacrificed to get another unit of that goodC) the expenditure on the goodD) the loss of interest in using savings

Q.4: A market can accurately be described as:A) a place to buy thingsB) a place to sell thingsC) the process by which prices adjust to reconcile the allocation of resourcesD) a place where buyers and sellers meet

Q.5: A command economy decides resource allocation by government planningA) TrueB) False

Q.6: In a free market ________ __________A) governments interveneB) governments plan productionC) governments interfereD) prices adjust to reconcile scarcity and desires

Q.7: In the mixed economyA) economic problems are solved by the government and marketB) economic decisions are made by the private sector and free marketC) economic allocation is achieved by the invisible handD) economic questions are solved by the government departments

Q.8: Positive economics studies objective explanations of the workings of the economyA) TrueB) False

Q.9: Normative economics forms _________ based on ____________A) positive statements, factsB) opinions, personal valuesC) positive statements, valuesD) opinions, facts

Q.10: Microeconomics is concerned withA) the economy as a wholeB) the electronics industryC) the study of individual economic behaviorD) the interactions within the entire economy

Q.11: Macroeconomics is the study of _______________A) individual building blocks in the economyB) the relationship between different sectors of the economyC) household purchase decisionsD) the economy as a whole

Q.12: An economic model is physical representation of an economyA) TrueB) False

Q.13: Data are important in economics because ___________ and ___________A) they suggest relationships for explanation, allow testing of hypothesisB) they can be used for tables, they can be graphedC) they can be used in computers, governments use them


D) they provide interesting information, can be summarized Q.14: Time Series Data show information

A) about the same point in time over different placesB) about different points in time over the same variableC) about different variables over different placesD) about different points in time over different places

Q.15: Index numbers express base data in relation to some relative valueA) TrueB) False

Q.16: The retail price index is used to _______________A) construct price indexB) compare shop pricesC) measure changes in the cost of livingD) none of the above

Q.17: A real value can be derived from a nominal value byA) adjusting for changes over timeB) adjusting for data collection errorsC) adjusting for population changesD) adjusting for changes in prices

Q.18: To find the percentage change in a number, divide the absolute change by the original number and multiply by 100A) TrueB) False

Q.19: If your income during one year is £10,000 and the following year it is £12,000, then it has grown byA) 20%B) 2%C) 12%D) 16%

Q.20: A straight line diagram can be drawn knowing the ___________ and _____________A) vertical axis and horizontal axisB) intercept and slopeC) scale and slopeD) intercept and scale

Q.21: On a graph, a positive linear relationshipA) moves down to the rightB) moves up to the leftC) moves up to the rightD) moves down to the left

Q.22: If the diagram of a line shows that lower values on the vertical scale are associated with higher values on the horizontal scale, this is an example of ______________A) a nonlinear relationshipB) a positive linear relationshipC) a scatter diagramD) a negative linear relationship

Q.23: When we know the quantity of a product that buyers wish to purchase at each possible price, we knowA) DemandB) SupplyC) Excess DemandD) Excess Supply

Q.24: Supply is the quantity of a good sellers wish to sell each time the market opensA) TrueB) False

Q.25: The equilibrium price clears the market; it is the price at which ______________ _____________A) Everything is soldB) Buyers spend all their money


C) Quantity demanded equals quantity suppliedD) Excess demand is zeroE) c and d

Q.26: When a market is in equilibriumA) Quantity demanded equals quantity suppliedB) Excess demand and excess supply are zeroC) The market is cleared by the equilibrium priceD) All of the above

Q.27: ______________ and ____________ do not directly affect the demand curveA) the price of related goods, consumer incomesB) consumer incomes, tastesC) the costs of production, bank opening hoursD) the price of related goods, preferences

Q.28: A change in price can cause a shift of a demand curveA) TrueB) False

Q.29: A demand curve can shift because of changingA) incomesB) prices of related goodsC) tastesD) all of the above

Q.30: A supply curve is directly affected byA) technologyB) input costsC) government regulationD) all of the above

Q.31: An increase in price will cause a supply curve to shift to the leftA) TrueB) False

Q.32: If a price increase of a good A increases the quantity demanded of good B, the good B is a A) substitute goodB) complementary goodC) bargainD) inferior good

Q.33: An increase in consumer income will increase demand for a ____________ but decrease demand for a ____________A) substitute good, inferior goodB) normal good, inferior goodC) inferior good, normal goodD) normal good, complementary good

Q.34: Price ceilings are imposed increase price above the free market equilibrium priceA) TrueB) False

ANSWERS:-Q.1 C Q.2 B Q.3 B Q.4 CQ.5 A Q.6 D Q.7 A Q.8 AQ.9 B Q.10 C Q.11 D Q.12 BQ.13 A Q.14 B Q.15 B Q.16 CQ.17 D Q.18 A Q.19 A Q.20 CQ.21 C Q.22 D Q.23 A Q.24 BQ.25 E Q.26 D Q.27 C Q.28 BQ.29 D Q.30 D Q.31 B Q.32 AQ.33 B Q.34 B


SET-IIQ.1: The price elasticity of demand measures _____________

A) the responsiveness of quantity demanded to a change in priceB) how far a demand curve shiftsC) a change in priceD) a change in quantity demanded

Q.2: If demand is ____________ the price cuts will __________ spendingA) inelastic, increaseB) elastic, increaseC) elastic, decreaseD) none of the above

Q.3: The cross-price elasticity of demand measures how the quantity demanded of one good is related to consumer income.A) TrueB) False

Q.4: Positive cross-elasticities suggest that goods are _______ and negative cross-elasticities that good are _____________A) substitutes, inferiorB) normal, complementsC) substitutes, complementsD) normal, inferior

Q.5: A measurement showing how quantity demanded varies with income is the A) price elasticity of demandB) cross-price elasticity of demandC) budget elasticity of demandD) income elasticity of demand

Q.6: Inferior goods have _________ and luxury goods have __________A) negative income elasticities, income elasticities greater than 1B) income elasticities greater than 1, negative income elasticitiesC) positive income elasticities, negative income elasticitiesD) none of the above

Q.7: In your income doubles and the prices of the goods your buy double, then your demand for these goods will likely __________A) increaseB) not changeC) decreaseD) shift

Q.8: Any price change can be decomposed into an income effect and a complementary effectA) TrueB) False

Q.9: The income effect of a price increase of a normal good is to ___________ of that and the substitution effect is to __________ of that good.A) increase quantity demanded, reduce quantity demandedB) increase quantity demanded, increase quantity demandedC) reduce quantity demanded, reduce quantity demandedD) reduce quantity demanded, increase quantity demanded

Q.10: The opportunity cost of a student is:A) Course fees and rentB) A loan from the bankC) What the student could have earned in the best job available by not studyingD) What the student will earn after graduation

Q.11: Economics assumes that people consume goods and services to achieve A) StatusB) PrestigeC) UtitlityD) Self-esteem

Q.12: The extra utility from consuming one ore unit of a good is called


A) Marginal UtilityB) Additional UtilityC) Surplus UtilityD) Bonus Utility

Q.13: Adding up the quantities demanded of a good by different people facing the same price gives us the A) Supply curveB) Market Demand CurveC) Demand CurveD) Market supply curve

Q.14: Firms are assumed to ____________ costs and to _________ profitsA) incur, desireB) pay, makeC) charge, earnD) minimize, maximize

Q.15: The increase in total cost when one more unit is produced is known asA) marginal costB) opportunity costC) limited costD) average cost

Q.16: Marginal revenue is the ____________ when output is _____________A) change in average revenue, incrasedB) change in total revenue, increased by one unitC) change in average revenue, increased by one unitD) change in total revenue, increased

Q.17: Profits are maximized when ___________A) Costs are minimizedB) Revenue is maximizedC) average cost is less than average revenueD) marginal cost equals marginal revenue

Q.18: If a firm is producing a level of output where marginal cost is greater than marginal revenue, it should increase output to maximize profitsA) TrueB) False

Q.19: If a firm’s wage costs increase this will cause _________ and __________A) marginal cost to increase, output to fallB) marginal revenue to increase, output to fallC) opportunity cost to increase, the firm will closeD) average cost will rise, output will increase

Q.20: An upward shift in marginal cost _______ output and an upward shift in marginal revenue _________ outputA) reduces, reducesB) reduces, increasesC) increases, increasesD) increases, reduces

Q.21: A firm should close down if profits are zeroA) TrueB) False

Q.22: A firm that breaks even after all economic costs are paid is earningA) Economic ProfitB) Accounting ProfitC) Normal ProfitD) Supernormal Profit

Q.23: A firm that makes profit in addition to normal profit is makingA) Economic ProfitB) Accounting ProfitC) Normal Profit


D) Supernormal ProfitQ.24: If both marginal cost and marginal revenue increase, a firm ________

A) should increase outputB) should reduce outputC) will require further information on how to respondD) shoud not change output

ANSWERS:-

Q.1 A Q.2 B Q.3 B Q.4 CQ.5 D Q.6 A Q.7 B Q.8 BQ.9 C Q.10 C Q.11 C Q.12 AQ.13 B Q.14 D Q.15 A Q.16 BQ.17 D Q.18 B Q.19 A Q.20 BQ.21 B Q.22 C Q.23 D Q.24 C


SET-IIIQ.1: A production technique is technically efficient if

A) output is maximizedB) inputs are minimizedC) there is no way to make a given output using less of one input and no more of the other

InputsD) costs are minimized

Q.2: A period of time long enough for the firm to adjust all production inputs is described as the long runA) TrueB) False

Q.3: Decreasing returns to scale means that ___________ as _____________A) short run marginal costs rises, output risesB) long run marginal cost rises, output risesC) short run average cost rises, output risesD) long run average cost rises, output rises

Q.4: If a long run average cost curve is falling from left to right this is an example of A) increasing returns to scaleB) decreasing returns to scaleC) constant returns to scaleD) the minimum efficient scale

Q.5: If a firm is not operating at the output necessary to achieve all scale economies, it has not achieved itsA) Efficient ScaleB) Average Efficient ScaleC) Maximum Efficient ScaleD) Minimum Efficient Scale

Q.6: When average costs is falling marginal cost is _____________ and when average cost is rising marginal cost is ___________A) greater than average cost, greater than average costB) less than average cost, greater than average costC) less than average cost, less than average costD) greater than average cost, less than average cost

Q.7: The firms long run output decision will be whereA) long run average cost is lowestB) marginal revenue equals outputC) marginal revenue equals long run marginal costD) marginal cost equals output

Q.8: Short run average total costs are equal to the sum of __________ and _________A) short run opportunity costs, profitB) short run variable costs, profitC) short run average variable costs, profitD) short run average variable costs, short run average fixed costs

Q.9: The short run marginal cost curves cuts the short run total cost curve and short run average cost curve __________________A) At their lowest pointsB) when they are decliningC) when they are increasingD) when marginal revenue is zero

Q.10: Given a long run average cost curve, every point represents a tangency with the lowest point of a short run average cost curve for a fixed plant sizeA) TrueB) False

Q.11: Holding all factors constant except one and increasing a variable factor is expected to lead to steadily decreasing marginal product of that factor. This is an example of A) decreasing returns to scaleB) the law of diminishing returns


C) constant returns to scaleD) an inefficient production technique

Q.12: In the short run a firm will produce zero output if___________A) Price is greater than short run average total costB) price is between short run average total cost and short run average variable costC) price is less than short run average variable costD) profit is zero

Q.13: In a competitive industry each buyer and seller _________________A) Is a price takerB) produce different productsC) Believes that can influence priceD) Prevents the entry of competitors

Q.14: For a competitive firm, its short run supply curve is _________ and its long run supply curve is ___________A) SMC, LMCB) SMC above SAVC, LMC above LACC) SMC below SAVC, LMC above LACD) SMC below SAVC, LMC below LAC

Q.15: For perfect competition to work there must be A) many buyers and sellersB) a standard productC) free entry and exitD) perfect informationE) all of the above

Q.16: If there are short run excess profits in a competitive industry, in the long run they will disappear because of new entrants.A) TrueB) False

Q.17: A competitive firm deman curve is A) horizontalB) verticalC) downward slopingD) fairly elastic

Q.18: A competitive firm produces a level of output at which___________A) price is greater than marginal costB) price equals marginal costC) price is less than marginal costD) none of the above

ANSWERS:-

Q.1 C Q.2 A Q.3 D Q.4 AQ.5 D Q.6 B Q.7 C Q.8 DQ.9 A Q.10 B Q.11 B Q.12 CQ.13 A Q.14 B Q.15 E Q.16 AQ.17 A Q.18 B


SET-IVQ.1: The supply rule of the profit maximizing monopolist is different from that of a competitive firm.

A) TrueB) False

Q.2: Comparing a monopoly and a competitive firm, the monopolist will _____________A) produce less at a lower priceB) produce more at a lower priceC) produce less at a higher priceD) produce less at a lower price

Q.3: A discriminating monopolist will charge a higher price to groups with elastic demandA) TrueB) False

Q.4: Perfect price discrimination means that every customer ___________A) buys the same amountB) pays the same priceC) contributes the same revenueD) pays what she thinks the product is worth

Q.5: A monopoly may be self-perpetuating because profits may be used forA) researchB) cost-savingC) technical advanceD) all of the above

Q.6: All of the following are types of imperfect competition exceptA) monopolistic competitionB) oligopolyC) monopolyD) unfair competition

Q.7: A natural monopoly has a declining _________ over a large range of outputA) long run marginal costB) short run marginal costC) long run average costD) long run marginal cost

Q.8: When a market is contestable, incurmbent firms must _________ to avoid the entry of new competitorsA) behave like competitive firmsB) agree to act togetherC) differentiate their productsD) practice price discrimination

Q.9: The long run equilibrium in monopolistic competition involves competitors making excess profitsA) TrueB) False

Q.10: The reason for the kinked demand cureve is thatA) the oligopolist believes that competitors will match output increases but not output

reductionsB) the oligopolist believes that competitors will match price increases but not output

reductionsC) the oligopolist believes that competitors will match price cuts but not price risesD) the oligopolist believes that competitors will match price increases but not output incrases

Q.11: Game theory studies interdependent decision-makingA) TrueB) False

Q.12: The Prisoners’ Dilemma Game demonstrates thatA) players are better off to act independentlyB) monopoly is better than competitionC) people will always cheatD) players are better off if they co-operate

Q.13: In Nash Equilibrium each player chooses the best strategy __________


A) assuming other players move firstB) dominated by the other playersC) given the strategies of other playersD) that is a credible threat

Q.14: A dominant strategy is ____________A) a winning strategyB) a losing strategyC) a players best strategy when moving firstD) a player’s best strategy whatever the strategies adopted by rivals

Q.15: Strategic entry barriers are made by natureA) TrueB) False

ANSWERS:-

Q.1 B Q.2 C Q.3 B Q.4 DQ.5 D Q.6 D Q.7 C Q.8 AQ.9 B Q.10 C Q.11 A Q.12 DQ.13 C Q.14 D Q.15 B


SET-VQ.1: The substitution effect of a rise in the price of labour will _________ the quantity of labour and the

output effect will ______________ it.A) increase, increaseB) increase, reduceC) reduce, reduceD) reduce, increase

Q.2: As more labour is used the marginal physical product of labour increasesA) TrueB) False

Q.3: A profit-maximizing firm will hire labour until _________ equals the __________A) marginal revenue, marginal costB) long run marginal revenue, long run marginal costC) labour output ratio, capital output ratioD) marginal cost of labour, marginal revenue product

Q.4: The downward sloping marginal physical product of labour is the firm’s ___________A) supply of labourB) short-run demand curve for labourC) marginal cost of labourD) marginal revenue product of labour

Q.5: When we say that labour demand is a derived demand, we are referring to government initiatives to increase employmentA) TrueB) False

Q.6: The participation rate in the labour force is affected byA) higher real wagesB) lower fixed costs of workingC) lower non-labour incomeD) changes in tastes between leisure and workE) all of the above

Q.7: Top footballers tend to earn more than lecturers becauseA) footballers give more entertainmentB) lecuterers are lazyC) the labour markets are imperfectD) top footballers are relatively scarce in relation to lecturers

Q.8: Human capital can be described asA) the tools used by workers to enhance productivityB) a persons inherited abilitiesC) the stock of expertise accumulated by a workerD) education

Q.9: The supply of highly educated workers is fixed in long runA) TrueB) False

Q.10: The most important source of wage differentials areA) regional variationB) unionizationC) relative dangerD) skills

Q.11: Skilled labouris relatively scarce becauseA) there are too few teachersB) too few student places in higher educationC) it is costly to acquire human capitalD) teachers’ salaries are too low

Q12: The opportunity cost of acquiring education is __________A) course feesB) course fees and living expensesC) the earnings forgone


D) course fees, living expenses and textbooksQ.13: By restricting labour supply a trade union can ___________ and ___________

A) increase the wage, increase employmentB) maintain the wage, increase employmentC) increase the wage, lower employmentD) maintain the wage, lower empoyent

Q.14: In the UK under a ____________ of the labour force belong to a trade union.A) quarterB) thirdC) halfD) three-quarters

Q.15: Unions achieve a higher wage differential the more _______________ and the more _________A) inelastic the demand for labour, they can restrict the supply of labourB) members they have, aggressive they behaveC) the economy is growing, people prefer leisureD) the productivity is growing, vacancies exist

Q.16: A closed shop is a union that has no room for additional membersA) TrueB) False

Q.17: Women and non-whites on average receive lower incomes than white men becauseA) they tend to work in relatively unskilled jobsB) educational disadvantageC) firms are reluctant to invest in trainingD) all of the above

Q.18: In the UK, in recent years, union membership has ___________ and days of work lost because of strikes has_____________A) grown, declinedB) declined, declinedC) declined, grownD) grown, grown

Q.19: Involuntary unemployment exists if workersA) will not work at the offered wageB) would work at the going wage but cant find jobsC) will not work because the hours are anti-socialD) are not prepared to move house to get the job

Q.20: Efficiency wage are ____________ that rise ____________A) low wages, employmentB) high wages, labour supplyC) high wages, productivityD) high wages, employment

Q.21: The difference between gross investment and net investment isA) depreciation of the existing capital stockB) productive investmentC) dwellingsD) inventories

Q.22: The cost of using capital services is the ___________A) wage rate of capitalB) interest chargesC) marginal capital costD) rental rate for capital

Q.23: The value of an asset depends uponA) its scrap valueB) its depreciationC) the present value of the future stream of income it can earnD) the cost of loans

Q.24: The marginal revenue product of capital is the ______________A) change in company’s balance sheet when it acquires new plant


B) additional value of output from using more capitalC) change in a company’s share priceD) changing value of the capital stock

Q.25: The demand for capital services is derived from a falling MRPK scheduleA) TrueB) False

Q.26: In the short run, the supply of capital is __________ and in the long run will depend on __________A) variable, technologyB) fixed, expectationsC) fixed, rental rate of capitalD) variable, interest rates

Q.27: If workers get a real wage increase this will likely ___________ and ____________A) encourage the use of more capital in the long run, reduce demand for all inputsB) encourage the use of more capital, increase demand for all inputsC) encourage the use of less capital, reduce demand for all inputsD) encourage the use of less capital, reduce demand for all inputs

Q.28: The supply of land is normally greater in the long run than in the short run.A) TrueB) False

Q.29: Land will be allocated between competing uses so that ________________A) hoursing gets priorityB) industry gets priorityC) farming gets priorityD) the equilibrium rental rate equilibrates total demand with supply

Q.30: Different capital intensity in different industries is mainly explained by __________ and ________A) wage differentials, skill levelsB) technology, the ease of factor substitutionC) government grants, international competitionD) patents, skill shortages

Q.31: The functional distribution of income shown how national income is divided betweenA) employeesB) the populationC) the factors of productionD) the working population

Q.32: A major cause of income inequality in European countries is trade union powerA) TrueB) False

Q.33: The transfer earnings of a factor are the payments received in excess of its opportunity cost.A) TrueB) False

ANSWERS:-

Q.1 C Q.2 B Q.3 D Q.4 BQ.5 B Q.6 E Q.7 D Q.8 CQ.9 B Q.10 D Q.11 C Q.12 CQ.13 C Q.14 B Q.15 A Q.16 BQ.17 D Q.18 B Q.19 B Q.20 CQ.21 A Q.22 D Q.23 C Q.24 BQ.25 B Q.26 C Q.27 C Q.28 BQ.29 D Q.30 B Q.31 C Q.32 BQ.33 B


SET-VIQ.1: In the insurance industry, high-risk customers are more likely to take out insurance. This is an

example of A) moral hazardB) risk aversionC) adverse selectionD) a poor gamble

Q.2: Moral hazard means that the act of insuring ________________ that the desired outcome will occurA) reduces the likelihoodB) increases the likelihoodC) guaranteesD) none of the above

Q.3: An allocation ins Pareto-efficient in no reallocation of resources would make some people __________ without making others _____________A) worse off, worse offB) better off, better offC) better off, worse offD) equal, unequal

Q.4: A competitive equilibrium is Pareto-efficientA) TrueB) False

Q.5: We cannot say whether one allocation of resources is better than another allocation becauseA) some people cant countB) some people may not be permanent residentsC) not all economic activity is legalD) we cant make value judgeements to compare different people’s welfare

Q.6: A competitive equilibrium is Pareto-efficient becauseA) producers are price takersB) consumers and producers face the same pricesC) marginal costs and benefits are equalD) prices equal marginal cost and benefitE) all of the above

Q.7: The allocation of resources is not efficient if _____________A) the marginal cost of production does not equal society’s marginal benefitB) the distribution is inequitableC) economic growth is lowD) unemployment is high

Q.8: If my neighbor burns garden waste causing my house to fill with smoke this is an example of ___A) a production externalityB) a second-best solutionC) transaction costsD) a consumption externality

Q.9: Externalities arise because there is a divergence between ____________ and ____________A) private costs, private benefitsB) private costs, social costs or benefitsC) social costs, social benefitD) insiders, outsiders

Q.10: Market failure may arise because of A) imperfect competitionB) taxationC) externalitiesD) missing marketsE) all of the above

Q.11: Markets sometimes fail to exist because of A) externalitiesB) the free-rider problem


C) poor transportD) a and bE) a and c

Q.12: A good example of a public good is _________________A) public transportB) the national health serviceC) national defenceD) rail transport

Q.13: If the consumption of a good by one person does not reduce the quantity available by others and nobody can be easily excluded from consumption, we are referring to a A) private goodB) merit goodC) public goodD) abundant good

Q.14: Satellite television subscription and television detection devices are ways in which broadcasting companies address the _____________ problem.A) externalityB) market imperfectionC) deadweight burdenD) free-rider

Q.15: Taxes to offset externalities are distortionaryA) TrueB) False

Q.16: Except for taxes to offset __________________, taxes are ____________A) imperfect competition, popularB) externalities, distortionaryC) inequality, a first best optionD) poor health, unnecessary

Q.17: Taxes creat a wedge between the sales price and purchase price that prevents the price system equating ________________ and _________________A) marginal costs, marginal benefitsB) demand, supplyC) marginal cost, marginal revenueD) marginal cost, average cost

Q.18: The effect of a tax to offset a negative externality will be to ______________ price and ___________ quantityA) reduce, reduceB) increase, increaseC) increase, reduceD) reduce, increase

Q.19: The social costs of monopoly power arises because _____________A) marginal cost is set equal to marginal revenueB) price is less than marginal costC) marginal consumer benefit is less than marginal revenueD) there is too little output at too high a cost

Q.20: The problem posed by a natural monopoly is that it faces a ________________. This means that _____________A) increasing average cost curve, marginal cost lies above average costB) increasing average cost curve, marginal cost lies below average costC) decreasing average cost curve, marginal cost lies above average costD) decreasing average cost curve, marginal cost lies below average cost

ANSWERS:-Q.1 C Q.2 B Q.3 C Q.4 AQ.5 D Q.6 E Q.7 A Q.8 DQ.9 B Q.10 E Q.11 D Q.12 CQ.13 C Q.14 D Q.15 B Q.16 BQ.17 A Q.18 C Q.19 D Q.20 D


SET-VIIQ.1: The key issues of macroeconomics are

A) unemploymentB) inflationC) economic growthD) all of the above

Q.2: In an company, measuring (1) total value added, (2) total sending on final goods and (3) total factor earnings gives the result that A) 3>2>1B 3=2=1C) 3<2<1D) any measure can be larger or smaller than any other

Q.3: In the circular flow of income, saving is an injection and investment is a leakageA) TrueB) False

Q.4: In the economy when a steel producer sells steel to car producer, it is regarded as ___________A) a final goodB) an intermediate goodC) an injectionD) a leakage

Q.5: Leakages from the circular flow are _____________, _________ and ___________A) investment, saving, government expenditureB) savings, taxes net of subsidies, importsC) consumption, investment, government expenditureD) taxes, exports, transfer payments

Q.6: Injections into the circular flow are ____________, ___________ and __________A) consumption, investment, exportsB) investement, exports, transfer paymentsC) investments, government expenditures, exportsD) taxes, exports, transfer payments

Q.7: In the circular flow we would expect leakages to ______________ injections.A) equalB) be less thanC) be greater thanD) be less or greater than

Q.8: Gross National Product adjusts GDP for net property income from abroadA) TrueB) False

Q.9: Nominal GNP measure income _____________A) At the present timeB) Corrected for tax changesC) Corrected for changes in interest ratesD) At current prices

Q.10: Real GNP measure income __________________A) including non-market activitiesB) adjusted for inflationC) including externalitiesD) including tax evasion

Q.11: Real GNP is a crude measure of national welfare because it excludesA) consumptionB) investmentC) exportsD) work in the home

Q.12: When we refer to the hidden economy we mean unrecorded income owing to ________A) tax evasionB) poor statisticsC) the lags between statistical collection and publication


D) smuggingQ.13: In a macroeconomic model without foreign trade or a government, aggregate demand is the sum

of A) personal savings and private investmentB) personal savings and personal consumptionC) personal consumption and private investmentD) none of the above

Q.14: The sum of the MPS and MPC is 1A) True B) False

Q.15: A linear consumption function with a positive slope less than one means that if income increases, consumption will A) fallB) not changeC) fluctuateD) increase

Q.16: Short-run equilibrium output means that aggregate demand ___________ actual ouptuA) is less thanB) equalsC) is greater thanD) fluctuates around

Q.17: If desired spending in the economy exceeds income we would expect_______________A) households to save moreB) firms to produce lessC) firms to produce moreD) the MPC to change

Q.18: In equilibrium savings exceed investmentA) True B) False

Q.19: When investment is assumed to autonomous the slope of the AD schedule is determined by the ______________A) marginal propensity to investB) disposable incomesC) marginal propensity to consumeD) average propensity to consume

Q.20: The multiplier tells us how much _____________ changes after a shift in ______________A) consumption, incomeB) investment, outputC) savings, investementD) output, aggregate demand

Q.21: The multiplier is calculated asA) 1/(1-MPC)B) 1/MPSC) 1/MPCD) a or b

Q.22: If the MPC is 0.5, the multiplier is ___________A) 2B) ½C) 0.2D) 20

Q.23: If as a result of households’ wish to save more, there is a change in equilibrium income and no change in equilibrium saving, this is an example of ___________A) market imperfectionB) the law of diminishing returnsC) the paradox of thriftD) market failure

Q.24: Aggregate demand without a foreign sector is the sum of ______A) C + IB) C + G


C) I + GD) C + I + G

Q.25: If the government increases spending and raises taxes by just enough to finance this increase it will _____________A) leave output unchangedB) increase outputC) reduce outputD) increase the MPC

Q.26: Startin from a balanced budget, for a given tax rate, an increase in income will cause the government budget toA) move into surplusB) move into deficitC) remain unchangedd) changed

Q.27: For given government spending and taxation, the government budget deficit wil grow in _________ and decline in ___________A) booms, boomsB) recessions, recessionsC) booms, recessionsD) recessions, booms

Q.28: The government budget is a good indicator of fiscal stanceA) TrueB) False

Q.29: Aggregate demand is an economy trading internationally with a government sector can be written as _______________A) AD = C + IB) AD = C + I + GC) AD = C + I + G + X + ZD) AD + C + I + G + X – Z

Q.30: The total multiplier for the economy will reflect _____________A) MPC and MPTB) MPT and MPZC) MPC and MPZD) MPC, MPT and MPZ

Q.31: When the level of income _________ there wil be a tendency for the trade balance to improve as imports ___________A) increases, increasesB) falls, increaseC) falls, fallD) increase, fall

Q.32: When an open economy is in equilibrium it means that the trade deficit is zero.A) True B) False

Q.33: In an open economy leakages to imports ___________ the value of the multiplierA) reduceB) increaseC) do not changeD) change

Q.1 D Q.2 B Q.3 B Q.4 BQ.5 B Q.6 C Q.7 A Q.8 AQ.9 D Q.10 B Q.11 D Q.12 AQ.13 C Q.14 A Q.15 D Q.16 BQ.17 C Q.18 B Q.19 C Q.20 DQ.21 D Q.22 A Q.23 C Q.24 DQ.25 B Q.26 A Q.27 D Q.28 BQ.29 D Q.30 D Q.31 C Q.32 BQ.33 A


SET-VIIIQ.1: Money has 3 main functions, they are, ________, ________ and ________

A) IOU, inflation hedge, store of valueB) Medium of exchange, inflation hedge, store of valueC) Medium of exchange, unit of account, IOUD) Medium of exchange, unit of account, store of value

Q.2: The primary function of a bank is toA) Control the money supplyB) Provide notes and coins for tradeC) make a profitD) Provide a cheque clearing system

Q.3: Banks create money byA) printing itB) issuing debits cardsC) accepting chequesD) lending out part of their deposits

Q.4: The size of money multiplier is determined by the marginal propensity to consumeA) TrueB) False

Q.5: The money supply is ____________A) State Bank of Pakistan’s Issue DepartmentB) money + bank cards + credit cardsC) cheques + money + bank cards + credit cardsD) Currency in circulation plus bank deposits

Q.6: If banks and the private sector decide to hold less cash the money multiplier will be _________A) unchangedB) largerC) smallerD) unstable

Q.7: Three variables affect the demand for money; they are __________, ____________ and ______A) bank opening hours, the proportion of weekly paid employees, interest ratesB) the price level, interest rates, real incomeC) the time of year, bank opening hours, the price levelD) the proportion of weekly paid employees, the time of year, real income

Q.8: If I keep some money available in case I see a bargain, this is an example of ________A) asset demand for moneyB) transactions demand for moneyC) token demand for moneyD) precautionary demand for money

Q.9: An increase in the price level will likely increase the demand for nominal moneyA) TrueB) False

Q.10: When interest rate rise, other things equal, we can expect the quantity of real mone holidings to _______A) fallB) increaseC) not changeD) fluctuate

Q.11: When real income increases, other things equal, we can expect the quantity of real money holdings to ________________A) fallB) not changeC) increaseD) fluctuate

Q.12: M4 is a ____________ measure of money and includes deposits at both ______ and _________A) narrow, banks, building socitiesB) wide, banks, insurance companies


C) narrow, banks, insurance companiesD) wide, banks, building socities

Q.13: The monetary base is ___________ and ___________A) bank deposits, building society depositsB) currency in circulation, banks’ cash reservesC) retail sight deposits, building society depositsD) retail deposits, wholesale deposits

Q.14: If the central bank buys financial securities in the open market to increase the monetary base, this is an example of __________A) lender of last resortB) financial intermediationC) open market operationsD) financial regulation

Q.15: Equilibrium in the money market will change if there is A) a change in the real money supplyB) a change in real incomeC) a change in corruption in the banking industryD) any of the above

Q.16: The money supply is controlled by using open market operations to determine the money multiplier and by using reserve requirements and the discount rate to determined the monetary baseA) TrueB) False

Q.17: Central banks prefer to fix the __________ and accept the resulting __________A) demand for money, interest rateB) interest rate, equilibrium money supplyC) demand for money, equilibrium money supplyD) interest rate, demand for money

Q.18: One of the transmission mechanisms of monetary policy is through consumer demand. When interest rates ____________ household wealth _________ and consumption __________A) rise, increases, increasesB) rise, falls, increasesC) rise, increases, fallsD) rise, falls, falls

Q.19: A reduction in interest rates, causes an increase in the monetary base that results in an _________ in the availability of consumer credit and a ___________ in the cost of consumer credit.A) reduction, increaseB) reduction, reductionC) increase, reductionD) increase, increase

Q.20: A fall in investment demand can result fromA) higher interest rateB) lower expected future profitsC) more expensive capital goodsD) all of the above

ANSWERS:-

Q.1 D Q.2 C Q.3 D Q.4 BQ.5 D Q.6 B Q.7 B Q.8 DQ.9 A Q.10 A Q.11 C Q.12 DQ.13 B Q.14 C Q.15 D Q.16 BQ.17 B Q.18 D Q.19 C Q.20 D


SET-IXQ.1: All of the following are types of monetary policy except

A) a nominal money stock targetB) a balanced budgetC) an inflation targetD) the pursuit of a target real interest rate

Q.2: An increase in government spending will stimulate private spending by causing a reduction in interest ratesA) TrueB) False

Q.3: The classical model of macroeconomics assumesA) wages and prices are stickyB) wages and prices are flexibleC) the economy may operate below full capacityD) the economy is always at full capacityE) a and cF) b and d

Q.4: The AD schedule indicates that __________ inflation is associated with _______ outputA) higher, lowerB) higher, higherC) lower, lowerD) zero, zero

Q.5: In the classical model tha AS schedule is verticalA) TrueB) False

Q.6: If a person thinks they are better of after a 10% wage increase, and all prices have risen 10%, then they are experiencing __________A) inflationB) a supply shockC) crowding outD) inflation illusion

Q.7: In the classical model, potential output can not be increased by A) monetary growthB) better technologyC) more capitalD) higher labour supply

Q.8: The equilibrium inflation rate is determined by the intersection of ___________ and __________A) demand, supplyB) IS, LMC) AD, ASD) Labour demand, Labour supply

Q.9: At the intersection of AD and AS equilbirum is achieved inA) the goods marketB) the money marketC) the labour marketD) all of the above

Q.10: Fiscal expansion in the classical model can increase real outputA) TrueB) False

Q.11: The Keynesian model is a good guide to _________ behavior and the classical model describes behavior in ____________A) long run, short runB) flexible, imperfect marketsC) short-term, long runD) long run, imperfect competition

Q.12: Temporary supply shocks alter potential outputA) True


B) FalseQ.13: Expansionary fiscal policty in the classical model will cause aggregate demand to __________

potential output.A) exceedB) fall belowC) fluctuate aroundD) remain equal to

Q.14: In the event of an increase in the international price of oil that encouraged the central bank to accept lower interest rate, inflation would most likely ____________A) fallB) increaseC) remain the sameD) fluctuate

Q.15: The quantity theory of money says that changes in _________ lead to equivalent changes in _______, but have no effect on __________A) prices, wages, output and employmentB) output, prices, employmentC) nominal money, the price level, output and employmentD) nominal money, output, prices

Q.16: Monetarists believe that a reduction in ___________ can be achieved by reducing _________A) unemployment, pricesB) inflation, wagesC) unemployment, wagesD) inflation, the quantity of nominal money

Q.17: Faster nominal money growth leads to either higher inflation or higher nominal rates, but not bothA) TrueB) False

Q.18: During periods of rising inflation and rising interest rates we expect the demand for real cash to A) riseB) fallC) not changeD) fluctuate

Q.19: Governments may contribute to inflationary pressure on account of building up large ______A) numbers of employeesB) welfare plansC) budget deficitsD) expenditure

Q.20: The Phillips Curve shows the trade-off between _______ and ___________A) the inflation rate, interest ratesB) the inflation rates, the unemployment rateC) interest rates, outputD) output, employment

Q.21: Equilibrium unemployment is determined by the underlying rate of inflationA) TrueB) False

Q.22: The long-run Phillips Curve is __________ at the ____________A) horizontal, natural rate of inflationB) horizontal, natural rate of unemploymentC) vertical, natural rate of inflationD) vertical, equilibrium rate of unemployment

Q.23: The short run Phillips Curve can shift in response to changes in ___________A) Inflationary expectationsB) unemploymentC) the inflation rateD) wage rates

Q.24: The costs of inflation areA) shoe leather costs


B) menue costsC) income redistributionD) uncertainty

Q.25: Only an incomes policy an deliver low inflation in the long runA) TrueB) False

Q.26: A person who is made redundant low inflation in the long runA) frictional unemploymentB) demand-deficient unemploymentC) classical unemploymentD) structural unemployment

Q.27: An advocate of the classical model of the economy would claim that unemployment is created when the _____________ is above its equilibrium level in the ___________A) price level, aggregate economyB) tax rate, government budget C) wage rte, labour marketD) interest rate, market for loanable funds

Q.28: The natural rate of unemployment, (equilibrium unemployment), will always be zeroA) TrueB) False

Q.29: We would normally except the size of the labour force to be ____________ than the number of workers willing to accept job offers at any real wage rateA) smallerB) largerC) the same sizeD) none of the above

Q.30: The equilibrium rate of unemployment, at any real wage, is the difference between _________ and ___________A) those willing to work at the going wage, labour demandB) labour demand, those willing to work at the going wageC) labour demand, labour supplyD) those willing to work at the going wage, labour supply

Q.31: If somebody is prepared to work at the going wage rate but cannot find work then they are victims of A) voluntary unemploymentB) classical unemploymentC) voluntary unemployment D) frictional unemployment

Q.32: Policies to reduce unemployment by reducing union power, tax cuts, reductions in unemployment benefit and investment subsidies are examples of ____________A) Keynesian policiesB) supply-sider policiesC) Monetarist policiesD) Classical policies

Q.33: If the income tax rate changes from 30% to 40% on income over £30,000 and person’s income is £31,000 then her marginal tax rate is __________A) 30%B) 10%C) 70%D) 40%

Q.34: The abolition of income tax would probably _______________ the number of workers in employment and ____________ the equilibrium rate of unemploymentA) increase, reduceB) increase, increaseC) reduce, increaseD) reduce, reduce

Q.35: Possible causes of involuntary unemployment are


A) minimum wage agreementsB) trade unionsC) scale economiesD) insider-outsider distinctionsE) efficiency wagesF) all of the above

Q.36: If a worker chooses not to work at he equilibrium wage rate they are involuntarily unemployedA) TrueB) False

ANSWERS:-

Q.1 B Q.2 B Q.3 F Q.4 AQ.5 A Q.6 D Q.7 A Q.8 CQ.9 D Q.10 B Q.11 C Q.12 BQ.13 D Q.14 B Q.15 C Q.16 DQ.17 B Q.18 A Q.19 C Q.20 BQ.21 B Q.22 D Q.23 A Q.24 EQ.25 B Q.26 D Q.27 C Q.28 BQ.29 B Q.30 D Q.31 C Q.32 BQ.33 D Q.34 A Q.35 F Q.36 B


SET-XQ.1: If British residents want more French francs to purchase more French wine, other things equal,

then the equilibrium value of the pound against the French franc will _______A) riseB) fallC) not changeD) fluctuate

Q.2: When the $/£ exchange rate rises the pound _________, and when $/£ rate falls the pound _________A) depreciates, appreciatesB) revalues, devaluesC) appreciates, depreciatesD) becomes more expensive, becomes cheaper

Q.3: When a government follows a fixed exchange rate regime it allows the exchange rate to be determined by market forcesA) TrueB) False

Q.4: In a fixed exchange rate regime, the central bank will intervene by ______ pounds to _______ the exchange rate A) selling, increaseB) buying, reduceC) selling, reduceD) buying, increaseE) a and bF) c and d

Q.5: A current account deficit means that a country may _________A) reduce its stock of foreign assetsB) increase its stock of foreign assetsC) increase its savingsD) increase its foreign currency reserves

Q.6: Under floating exchange rates, a current account deficit must be exactly matched by a capital account surplusA) TrueB) False

Q.7: Starting from a position of internal and external balance, a reduction in aggregate demand will cause a current account _____________A) deficitB) surplusC) revaluationD) devaluation

Q.8: A rise in the real exchange rate will ___________ the competitiveness of the domestic economyA) increaseB) reduceC) do nothing toD) disturb

Q.9: Within the circular flow of income, an increase in domestic income will tend to increaseA) exportsB) taxesC) inventoriesD) imports

Q.10: Perfect international capital mobility suggests that international funds will be responsive to ________ differentialsA) current accountB) interest rateC) taxD) price

Q.11: When capital mobility is perfect, interest rate differentials will tend to be offset by ________


A) price differencesB) balance of payments differencesC) current account differencesD) expected exchange rate changes

Q.12: The current account will differ from trade balance because of interest flows from foreign assets and debts A) TrueB) False

Q.13: With fixed exchange rate and no private capital flows, to correct a balance of payment deficit, the central bank will _________ and _____________A) buy foreign exchange, sell domestic currencyB) sell foreign exchange, buy domestic currencyC) buy foreign exchange, buy domestic currencyD) sell foreign exchange, sell domestic currency

Q.14: With fixed exchange rates and no private currency flows, when the central bank buys domestic currency the domestic money supply is ____________A) increasedB) unaffectedC) reducedD) affected

Q,15: In the absence of international capital controls, central bank set _________ to provide the correct incentive for speculators.A) Money supply targetsB) Incomes policyC) Interest ratesD) Inflation targets

Q.16: A fixed exchange rate , plus perfect capital mobility ________ the scope for monetary policyA) enhancesB) underminesC) encouragesD) facilitates

Q.17: The competitive advantage from a devaluation is likely to be offset by ________ and _______A) higher import prices, higher wage increasesB) lower export prices, lower import volumesC) higher import prices, lower export pricesD) higher wage increases, lower import volumes

Q.18: Under floating exchange rates, monetary policy is a powerful toolA) TrueB) False

Q.19: Under floating exchange rates, expectation of higher interest rates are likely to cause an _________ of the exchange A) depreciationB) appreciationC) fallD) devaluation

Q.20: In the short run, the level of floating exchange rates is determined mainly by __________A) interest ratesB) competitivenessC) tradeD) speculation

Q.21: If one country, with floating exchange rates, has higher inflation than its competitors, we would expect its exchange rate to ____________A) appreciateB) depreciateC) revalueD) be in short supply

Q.22: Floating exchange rates are __________ in the short run.


A) stableB) predictableC) volatileD) depreciating

Q.23: Fixed exchange rates permit a country to have permanently higher inflationA) TrueB) False

Q.24: Fiscal policy is weak under floating exchange rates as fiscal expansion __________A) crowds out importsB) crowds out public consumptionC) crowds out exportsD) reduces the budget deficit

Q.25: The main factor affecting the long run path of the Pakistan’s nominal exchange rate is the growth of world tradeA) TrueB) False

Q.26: The main features of the European Monetary system are A) the ECUB) currency swap agreement between member countriesC) the exchange rate mechanismD) all of the above

Q.27: In the ERM, each country fixed _________ against each other ERM participant. Collectively the group ____________ against the rest of the world.A) a nominal exchange rate, floatedB) a real exchange rate, peggedC) a purchasing power parity, peggedD) a real exchange rate, floated

Q.28: Internationa policy co-ordination allows policy makers to commit to policies they would otherwise avoidA) TrueB) False

Q.29: The single European Act committed ___________ governments to a ___________ in 1992A) European union, single marketB) Wester European, single currency areaC) European Union, single currency areaD) Western European, single market

Q.30: All of the following are benefits of the Single Market ExceptA) it allows countries to exploit their comparative advantage, more fullyB) firms could more readily exploit economies of scaleC) it intensified competitionD) it is easier to book holidays in member countries

Q.31: The Maastricht criteria for joining EMU is that a country must have a high growth rateA) TrueB) False

Q.32: A monetary union means _________, ___________ and __________A) permanently fixed capital movements, floating exchange rates, a fixed structure of

interest ratesB) permanently fixed exchange rates, free capital movements, a single interest rateC) a common currency, a single central bank, common monetary policyD) a common currency, floating exchange rates, common monetary policy

Q.33: The Maastricht criteria for entry to he EMU are that applicants should haveA) low inflationB) low interest ratesC) stable nominal exchange rateD) budget deficits and government debt under controlE) all of the above

Q.34: The UK is a member of the EMU


A) TrueB) False

Q.35: In the EMU a country’s competitiveness can change because of _________A) interest rate adjustmentB) central bank intervention in the forexC) domestic wage and price adjustementD) devaluation

ANSWERS:-

Q.1 B Q.2 C Q.3 B Q.4 FQ.5 A Q.6 A Q.7 B Q.8 BQ.9 D Q.10 B Q.11 D Q.12 AQ.13 B Q.14 C Q.15 C Q.16 BQ.17 A Q.18 A Q.19 B Q.20 DQ.21 B Q.22 C Q.23 B Q.24 CQ.25 B Q.26 D Q.27 A Q.28 AQ.29 A Q.30 D Q.31 B Q.32 BQ.33 E Q.34 B Q.35 C


SET-XIQ.1: GDP per head may be imperfect measure of economic welfare because it excludes_________

A) the value of leisureB) externalitiesC) untraded goodsD) changes in the distribution of incomeE) all of the above

Q.2: Potential output can be increased by _________ or by _________A) increasing the use of labour, increasing the use of landB) increasing the use of capital, increasing the use of labourC) increasing the use of land, increasing the use of capitalD) increasing the use of all inputs, technical advances

Q.3: If a production input is in fixed supply, growth is impossible in the long runA) True B) False

Q.4: The neoclassical theory of growth identifies the steady state rate of growth as the ________ just sufficient to keep ______ constant while labour growsA) saving, investmentB) capital per person, productivityC) labour growth, outputD) investment, capital per person

Q.5: In the neoclassical theory of growth, a higher saving rate leads to _________A) a higher growth rateB) a fluctuating growth rateC) a lower growth rateD) no change in the growth rate

Q.6: The convergence hypothesis states that poor countries grow more slowly than average, but rich countries grow more quickly than averageA) True B) False

Q.7: Economic growth may depend upon ___________ and _________A) population size, x-efficiencyB) population age distribution, educationC) population growth, technical progressD) population growth, education

Q.8: The zero-growth proposal argues that it is best to aim for zero-growth in measured GNP to avoid environmental costs.A) True B) False

Q.9: The growth rates of economies tend to converge because _____________ is easier when capital per workder is low and because of ____________A) capital-widening, technical innovationB) capital-widening, catch-up in technologyC) capital-deepening, technical innovationD) capital-deepening, catch-up in technology

Q.10: The business cycle describes fluctuations in output around the __________A) trend path of outputB) boomC) recessionD) short-run fluctuations in output

Q.11: All of the following are parts of the business cycle except ______________A) boomB) slumpC) recoveryD) acceleration

Q.12: The political business cycle arises because politicians interfere with the economy for political advantageA) True B) False

Q.13: The theory that explains business cycles by the dynamic interaction of consumption and investment is the ____________


A) sun spot theoryB) multiplier-accelerator modelC) solow theoryD) New classical theory

Q.14: The multiplier-accelerator model assumes ______________ depends on _________A) consumption, expected future profitsB) investment, interest ratesC) investment, expected future profitsD) stock building, interest rates

Q.15: Real business cycle theory suggests that ____________ not important in explaining short-term fluctuations around actual outputA) aggregate supply isB) aggregate demand isC) potential output isD) real variables are

Q.16: The impossibility of negative gross investment provides a __________ to fluctuations in __________A) ceiling, stockbuildingB) ceiling, capital pricesC) floor, outputD) floor, the capital-output ratio

Q.17: Output can exceed demand during the recovery phase as firms restore stocks to their target levelsA) True B) False

Q.18: Real business cycles are cycles in ____________A) potential outputB) actual outputC) real outputD) international trade

Q.19: Real business cycle theories suggest that __________ to correct departures from the desired growth pathA) there is a role for fiscal policyB) there is a role for monetary policyC) there is a role for supply-sider policiesD) there is no case for stabilizing output over the business cycle

Q.20: The business cycle is not transmitted from one country to another through ________-A) private sector impors and exportsB) economic policyC) the duration of compulsory educationD) labour supply changes

Q.21: Real business cycle theorists argue that _________ can explain short and long term fluctuations in outputA) imperfect labour marketsB) rational expectationsC) international decisions of households, firms and governmentD) sun spot cycles

Q.22: Keynesian unemployment causes a fall in the real wageA) TrueB) False

ANSWERS:-Q.1 E Q.2 D Q.3 B Q.4 DQ.5 D Q.6 B Q.7 C Q.8 AQ.9 D Q.10 A Q.11 D Q.12 AQ.13 B Q.14 C Q.15 B Q.16 CQ.17 A Q.18 A Q.19 D Q.20 CQ.21 C Q.22 B


SET-XIIQ.1: International specialization takes place because of _____________

A) differences in technologyB) differences in factor endowmentsC) scale economiesD) all of the above

Q.2: International differences in opportunity costs lead to countries acquiring __________A) comparative advantageB) high exchange ratesC) trade barriersD) trade quotas

Q.3: If a country does not have an absolute cost advantage in the production of any good, there is no incentive to tradeA) TrueB) False

Q.4: The main cause of different relative costs between countries are __________A) relative factor competitionB) relative factor mobilityC) relative factor substitutionD) relative factor endowments

Q.5: The level of the equilibrium exchange rate offsets international differences in ___________A) comparative advantageB) absolute advantageC) opportunity costsD) relative costs

Q.6: International trade can never hurt any peopleA) TrueB) False

Q.7: The imposition of a tariff causes consumption to _____________ and imports to __________A) rise, riseB) fall, riseC) fall, fallD) rise, fall

Q.8: A tariff causes domestic firms to _________and consumers to _________A) overproduce, underconsumeB) overproduce, overconsumeC) underproduce, underconsumeD) underproduce, overconsume

Q.9: Tariffs always distort trade and are never justified.A) TrueB) False

Q.10: An optimal tariff is one which reduces imports to the level at which ________ equals _________A) imports, exportsB) the balance of trade, zeroC) the demand for currency, the supply of currencyD) social marginal cost, social marginal benefit

Q.11: If goods are exported for less than society’s marginal production cost and the marginal benefit to domestic consumers, it is likely that they benefit from __________A) an import subsidyB) a quotaC) comparative advantageD) an export subsidy

Q.12: Export subsidies do not involve wasteA) TrueB) False

Q.13: Economic transaction involves high inflation because __________ and __________A) high monetary growth, high wages


B) high budget deficits, devaluationC) high monetary growth, devaluationD) prices surge from an artificially low level to their equilibrium level, the inflation tax is

required as source of government revenueQ.14: Output fell sharply in the transition economies because

A) banks were unable to functionB) there was little corporate controlC) vital infrastructure was missingD) all of the above

Q.15: Most transition economies are seeking membership of the EUA) TrueB) False

Q.16: All of the following represent obstacles to LDC development exceptA) resource scarcityB) low levels of investmentC) low populationD) poor infrastructureE) poor human capital

Q.17: LDCs often have a comparative advantage in the production of _________A) primary productsB) intermediate goodsC) manufactured productsD) financial services

Q.18: LDCs are reluctant to pursue development through the export of primary products because of ________ and ____________A) the upward trend in commodity prices, the stability of primary products real pricesB) the upward trend in commodity prices, the volatility of primary products real pricesC) the downward trend in commodity prices, the stability of primary products real pricesD) the downward trend in commodity prices, the volatility of primary products real prices

Q.19: Buffer stocks increase price volatility in an unstable marketA) TrueB) False

Q.20: Import substitution is the replacement of ___________ by domestic production under the protection of __________A) exports, subsidiesB) exports, patentsC) imports, high tarrifs or import quotasD) imports, subsidies

Q.21: If a country has a burden of debt it cannot sustain it can ____________A) reschedule debtB) get a loan form an international organizationC) default on the loanD) any of the above

Q.22: If an LDC chooses structural adjustment as a strategy for development, it will nationalize its principle industries.A) TrueB) False

ANSWERS:-Q.1 D Q.2 A Q.3 B Q.4 DQ.5 B Q.6 B Q.7 C Q.8 AQ.9 B Q.10 D Q.11 D Q.12 BQ.13 D Q.14 D Q.15 A Q.16 CQ.17 A Q.18 D Q.19 B Q.20 CQ.21 D Q.22 B

Best of Luck!From: Sami Iqbal, M.A. Economics (P.U) ~ Visiting Lecturer Follow me on Facebook:- [email protected] (My Facebook Account) Contact: +92-322-8458065 / +92-334-9839669 for further guidance.


General Instructions for Answer Sheet:-1. Your paper will be of 2 hours consisting of 100 MCQs relevant to your subject.2. You will be provided an OMR answer sheet (sample given above) 3. Just Use Black or Blue Marker to fill the OMR answer sheet in the paper.

1. Candidate Particulars In this Section candidate will write name, father name, Post Applied for, CNIC and Examination Centre2. Instructions In this Section instructions are given for the candidate for filling the the answer choices box with examples.3. MCQ Answer CHOICES (1 to 100)

There are a Total of 100 questions. Each question has four choices from which candidate have to select the most appropriate answer. In some questions, there may not be an exact answer. In such cases select an answer which is most nearly correct. Against each question one line of options from A - D is given.Mark choice by filling in the appropriate Box of the line (A to D) completely, making it dark with Blue or Black marker as shown below.Question 1. Which is the capital of Pakistan?

A. Lahore B. Karachi C. Islamabad D. Peshawar

Answer: The correct answer is Islamabad i.e.C. Hence the box should be filled in line opposite Q.1 on the answer sheet.

Q.1

Wrong Filling Remarks Examples

The grading computer will mark improperly filled boxes as incorrect answers.Computer will also mark boxes with stray marks orpartially filled or boxes filled more than once , asinvalid answer.

4. Signature of Candidate In this Section candidate will affix signature in the signature box only. Signatures going out of Signature box may reject answer sheet to process through grading machine.5. Office Use This Section is for office Use only. Candidate should not write any thing in this area.


6. Roll Number FILLING SECTION In this section candidate will write Roll Number. The proper way of writing Roll No. is as under.Roll No. Filling Examples

Roll Number 1017 Roll Number 57Wrong Filling of Roll

Number

7. TIME LINE This Section is computer graded area. Writing any thing in this area may reject answer sheet to process through grading machine.8. Signature of Supervisor In this section supervisor will affix signature in the signature box.

Write your allotted roll number in the top right corner of QUESTION PAPER and in the specified place of ANSWER SHEET

Read the QUESTION PAPER carefully and mark your answers on the ANSWER SHEET

Each question has four options. Fill only one box that you think is correct answer. 0.25 marks will be deducted for each incorrect answer

Instructions for filling box have been given on the Answer Sheet. Read them before attempting

Read the instructions for filling your ROLL NO and marking your answer on the ANSWER SHEET before starting answering

Sign the Answer Sheet in the box provided at the left bottom corner Return both Question Paper and Answer Sheet, to the staff, at the end of test

What to Do Use Black Marker only for solving the MCQs answer sheet. Use Answer sheet for answering the questions, No answer will be acceptable if written

on the Question paper. All answers must be written on the Answer Sheet. Avoid any un-necessary mark / line on any area of the sheet except the designated area

for writing / filling of Answers, Roll No, & Name etc. Use separate sheet for rough work, if required


What Not to Do Accepting any damaged sheet. Accepting any sheet that has some writing on it. Damaging the sheet while solving the paper. Folding the sheet or any corner of the sheet. Filling the Box partially. Fillingl multiple options for any question. Writing rough work on any side of the Answer Sheet.

Guidelines Total time for the paper is Two hours. Each question carries equal marks. Think before filling the relevant box completely. Facing difficulty in solving any question, do not waste precious time. Try and solve

another question. Time permitting, attempt the left over questions at the end.

Reference for Guidelines: Punjab Public Service Commission, Lahore.

I wish you best of luck for your Lecturership exam 2011. And I hope that you will be selected Inshallah!

I, being the member of this PPSC helping community took the responsibility of providing you the major (common) MCQs of Economics. So I did it with full devotion.

Thanks and Regards,

SAMI IQBAL<[email protected]>My Facebook ID is : [email protected]: 0322-8458065 / 0334-9839669

Remember:-“Success doesn’t come to you … You go to it!”

lecturer economics mcqs[1]

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