Economics MCQs

Option A: accurately represent the true inequality of living standards

Option B: understate the inequality of living standards

Option C: exaggerate the inequality of living standards

Option D: could exaggerate of understate the inequality of living standards depending on whether the transfers are goods or services.

Correct Answer: exaggerate the inequality of living standards ✔

Option A: 19.8%

Option B: 10.3%

Option C: 9.2%

Option D: 11.5%

Correct Answer: 10.3% ✔

Option A: 16.5%

Option B: 18.2%

Option C: 19.7%

Option D: 20.5%

Correct Answer: 18.2% ✔

Option A: December 29, 2002

Option B: December 25, 2002

Option C: January 25, 2003

Option D: February 15, 2003

Correct Answer: January 25, 2003 ✔

Option A: 1971

Option B: 1970

Option C: 1972

Option D: 1973

Correct Answer: 1972 ✔

Option A: cement

Option B: Sugar

Option C: Textile

Option D: Paper

Correct Answer: Textile ✔

Option A: Ordnance factory

Option B: Mughal Garden

Option C: Both of them

Option D: None of them

Correct Answer: Ordnance factory ✔

Option A: Embroidery work

Option B: irrigation work

Option C: wood work

Option D: agriculture

Correct Answer: irrigation work ✔

Option A: Sialkot

Option B: Chiniot

Option C: Gujranwala

Option D: Lahore

Correct Answer: Sialkot ✔

Option A: Cement

Option B: Sugar

Option C: Handicraft

Option D: Textile

Correct Answer: Handicraft ✔

Option A: Little England

Option B: Little California

Option C: Little Manchester

Option D: Little Oxford

Correct Answer: Little Manchester ✔

Option A: August 3, 2000

Option B: September 15, 2001

Option C: July 13, 2000

Option D: August 15, 2000

Correct Answer: August 3, 2000 ✔

Option A: $ 1095

Option B: $ 905

Option C: $ 945

Option D: $ 975

Correct Answer: $ 1095 ✔

Option A: China

Option B: Japan

Option C: USA

Option D: UK

Correct Answer: China ✔

Option A: August 10, 1991

Option B: July 16, 1990

Option C: September 12, 1992

Option D: October 16, 1989

Correct Answer: July 16, 1990 ✔

Option A: Karachi Shipyard

Option B: Pakistan Steel Mili

Option C: State Cement

Option D: Telephone Industry of Pakistan

Correct Answer: Pakistan Steel Mili ✔

Option A: Haripur

Option B: Lawrencepur

Option C: Faisalabad

Option D: Karachi

Correct Answer: Faisalabad ✔

Option A: musical instruments

Option B: agriculture machinery

Option C: harvesters

Option D: paper manufacturing

Correct Answer: musical instruments ✔

Option A: Wazirabad

Option B: Sialkot

Option C: Lahore

Option D: Gujranwala

Correct Answer: Wazirabad ✔

Option A: Woodwork

Option B: Dairy farms

Option C: Carpets

Option D: Iron work

Correct Answer: Dairy farms ✔

Option A: laquer work

Option B: fire work

Option C: wooden work

Option D: None of them

Correct Answer: wooden work ✔

Option A: 4.3%

Option B: 5.4%

Option C: 6.2%

Option D: 8.6%

Correct Answer: 8.6% ✔

Option A: Nominal wages are equal to expected wages

Option B: Real wages are back at equilibrium level

Option C: Nominal wages are growing faster than inflation

Option D: Inflation is higher than the growth of nominal wages

Correct Answer: Nominal wages are equal to expected wages ✔

Option A: Costs of finding better rates of return

Option B: Costs of altering price lists

Option C: Costs of money increasing its value

Option D: Costs of revaluing the currency

Correct Answer: Costs of altering price lists ✔

Option A: Shift aggregate demand

Option B: Shift aggregate supply

Option C: Reduce the natural rate of unemployment

Option D: Increase the productivity of employees

Correct Answer: Shift aggregate supply ✔

Option A: An outward shift of aggregate demand- and demand-pull inflation

Option B: An outward shift of aggregate demand and cost push inflation

Option C: An outward shift of aggregate supply and demand-pull inflation

Option D: An outward shift of aggregate supply and cost push inflation

Correct Answer: An outward shift of aggregate demand- and demand-pull inflation ✔

Option A: An increase in costs

Option B: A reduction in interest rate

Option C: A reduction in government spending

Option D: An outward shift in aggregate supply

Correct Answer: A reduction in interest rate ✔

Option A: neither borrowers nor lenders will gain because the nominal interest rate has been fixed by contract

Option B: None of these answers

Option C: borrowers will gain at the expense of lenders

Option D: lenders will gain at the expense of borrowers

Correct Answer: lenders will gain at the expense of borrowers ✔

Option A: The nominal rate of interest is 15 percent and the inflation rate is 14 percent

Option B: The nominal rate of interest is 20 percent and the inflation rate is 25 percent

Option C: The nominal rate of interest is 12 percent and the inflation rate is 9 percent

Option D: The nominal rate of interest is 5 percent and the inflation rate are 1 percent

Correct Answer: The nominal rate of interest is 5 percent and the inflation rate are 1 percent ✔

Option A: none of these answers

Option B: The nominal interest rate is the inflation rate minus the real interest rate

Option C: The real interest rate is the nominal interest rate minus the inflation rate

Option D: The nominal interest rate is the real interest rate minus the inflation rate.

Correct Answer: The real interest rate is the nominal interest rate minus the inflation rate ✔

Option A: 4 percent

Option B: 10 percent

Option C: -4 percent

Option D: 3 percent

Correct Answer: 4 percent ✔

Option A: Rs459.25

Option B: Rs418.75

Option C: Rs300

Option D: None of these

Correct Answer: Rs300 ✔

Option A: consumer production

Option B: Products purchased by the typical consumer

Option C: raw materials purchased by firms

Option D: total current production

Correct Answer: Products purchased by the typical consumer ✔

Option A: 5.4 percent

Option B: 30.7 percent

Option C: You can’t tell without knowing the base year

Option D: 5.1 percent

Correct Answer: 5.4 percent ✔

Option A: The balance of trade

Option B: The rate of growth in an economy

Option C: The rate of price increase

Option D: Unemployment

Correct Answer: The rate of price increase ✔

Option A: Nominal wages have risen less than inflation

Option B: Nominal wages have risen at the same rate as inflation

Option C: Nominal wages have risen more than inflation

Option D: Nominal wages have risen less than unemployment

Correct Answer: Nominal wages have risen more than inflation ✔

Option A: An appreciation of the currency

Option B: A revaluation of the currency

Option C: A depreciation of the currency

Option D: Lower inflation abroad

Correct Answer: Lower inflation abroad ✔

Option A: Aggregate supply is perfectly elastic

Option B: Aggregate supply is Perfectly inelastic

Option C: Aggregate supply is unit elastic

Option D: Aggregate supply is relatively elastic

Correct Answer: Aggregate supply is Perfectly inelastic ✔

Option A: Reduce the cost of living

Option B: Reduce the standard of living

Option C: Reduce the price of products

Option D: Reduce the purchasing power of a rupee

Correct Answer: Reduce the price of products ✔

Option A: none of these answers

Option B: Workers will gain at the expense of firms

Option C: neither workers nor firms will gain because the increase in wages in fixed in the labor agreement

Option D: firms will gain at the expense of workers.

Correct Answer: firms will gain at the expense of workers. ✔

Option A: The nominal rate of interest is 12 percent and the inflation rate is 9 percent

Option B: The nominal rate of interest is 20 percent and the inflation rate is 25 percent

Option C: The nominal rate of interest is 5 percent and the inflation rate is 1 percent

Option D: The nominal rate of interest is 15 percent and the inflation rate is 14 percent

Correct Answer: The nominal rate of interest is 20 percent and the inflation rate is 25 percent ✔

Option A: 3/8 percent

Option B: 5 percent

Option C: 11 percent

Option D: 24 percent

Correct Answer: 11 percent ✔

Option A: fallen

Option B: You can’t tell without knowing the base year

Option C: risen

Option D: stayed the same

Correct Answer: risen ✔

Option A: none of these answers

Option B: substitution bias

Option C: base year bias

Option D: bias due to unmeasured quality change

Correct Answer: substitution bias ✔

Option A: An increase in the price of BMWs produced in Germany and sold in the Pakistan

Option B: An increase in the price of Peugeots produced in the Pakistan

Option C: An increase in the price of helicopters purchased by the Pak Navy.

Option D: An increased in the Price of domestically produced armoured vehicles sold exclusively to Iran

Correct Answer: An increase in the price of BMWs produced in Germany and sold in the Pakistan ✔

Option A: All of these answers are used to measure inflation.

Option B: consumer price index

Option C: Producer price index

Option D: GDP deflector

Correct Answer: finished goods price index ✔

Option A: impoverished countries to impoverished countries

Option B: impoverished countries to wealthy countries

Option C: wealthy countries to wealthy countries

Option D: wealthy countries to impoverished countries

Correct Answer: impoverished countries to wealthy countries ✔

Option A: electrician unions in the high-paying nations

Option B: electrician unions in the low paying nations

Option C: electrician employers in the high-paying nations

Option D: electricians who stay in the low paying nations

Correct Answer: electrician unions in the high-paying nations ✔

Option A: decrease wage rates in the low-paying nations

Option B: decrease productivity and real output in the world

Option C: increase business or capitalist incomes in the high-paying nations

Option D: increase business or capitalist incomes in the low-paying nations

Correct Answer: increase business or capitalist incomes in the high-paying nations ✔

Option A: adds to the pre-existing productive capacity

Option B: enters markets neither parent could have entered individually

Option C: yields cost reductions unavailable to parent firms

Option D: gives rise to increased amounts of market power

Correct Answer: gives rise to increased amounts of market power ✔

Option A: enjoy unfair advantage in taxation

Option B: export jobs by shifting technology overseas

Option C: export jobs by shifting investment overseas

Option D: operating at output levels where scale economies occur

Correct Answer: operating at output levels where scale economies occur ✔

Option A: cannot benefit from the advantage of comparative advantage

Option B: may raise political problems in countries where their subsidiaries operate

Option C: can only invest at home but not overseas

Option D: can only invest overseas but not at home

Correct Answer: may raise political problems in countries where their subsidiaries operate ✔

Option A: increase the transfer of technology between nations

Option B: make it harder to nations to foster activities of comparative advantage

Option C: always enjoy political harmony in nations where their subsidiaries operate

Option D: require governmental subsidies in order to conduct worldwide operations

Correct Answer: increase the transfer of technology between nations ✔

Option A: sharing research and development cost among corporations

Option B: forestalling protectionism against imports

Option C: establishing work rules promoting higher labor productivity

Option D: operating at diseconomy-of-scale output levels

Correct Answer: operating at diseconomy-of-scale output levels ✔

1. export led growth
2. import substitution
3. dynamic hedging
4. countervailing duties

Correct Answer: 2. import substitution ✔

Option A: the construction of a new auto assembly plant overseas

Option B: the acquisition of an existing steel mill overseas

Option C: the purchase of bonds or stock issued by a textile company overseas

Option D: the creation of a wholly owned business firm overseas

Correct Answer: the purchase of bonds or stock issued by a textile company overseas ✔

Option A: marginal cost pricing

Option B: full cost pricing

Option C: price discrimination

Option D: transfer pricing

Correct Answer: transfer pricing ✔

Option A: always produce primary goods

Option B: always produce manufactured goods

Option C: produce primary goods or manufactured goods

Option D: None of the above

Correct Answer: produce primary goods or manufactured goods ✔

Option A: multinational corporation

Option B: international joint venture

Option C: horizontal merger

Option D: vertical merger

Correct Answer: international joint venture ✔

Option A: exporting American jobs by investing overseas

Option B: exporting American jobs by keeping investment in the U.S

Option C: importing cheap foreign workers by shifting U.S investment overseas

Option D: importing cheap foreign workers by keeping U.S investment at home

Correct Answer: exporting American jobs by investing overseas ✔

Option A: hire low-income workers

Option B: manufacture in nations they have difficult exporting to

Option C: obtain necessary factor inputs

Option D: All of the above

Correct Answer: All of the above ✔

Option A: total wage income in the world

Option B: wage disparities

Option C: business or capitalist income in the world

Option D: the productivity of labor

Correct Answer: wage disparities ✔

Option A: R&D generating welfare improved technology

Option B: development of more productive machinery

Option C: new work rules promoting workers efficiency

Option D: lower wages extracted from workers

Correct Answer: lower wages extracted from workers ✔

Option A: excludable

Option B: a common resource

Option C: a public goods

Option D: rival

Correct Answer: excludable ✔

Option A: a firework displays

Option B: national defense

Option C: iron one

Option D: a national park

Correct Answer: a national park ✔

Option A: an excludable good.

Option B: a private good

Option C: a common resource

Option D: a public good.

Correct Answer: a common resource ✔

Option A: rival good

Option B: public good

Option C: private good

Option D: common resource

Correct Answer: public good ✔

Option A: receives the benefits of a good but avoids paying for it.

Option B: pays for a good but fails to receive any benefit from the good

Option C: fails to produce goods but is allowed to consume goods.

Option D: produces a good but fails to receive payment for the good

Correct Answer: receives the benefits of a good but avoids paying for it. ✔

Option A: the rivalness problem

Option B: the public goods problem

Option C: the Tragedy of the Commons.

Option D: The free-rider problem.

Correct Answer: The free-rider problem. ✔

Option A: rival but not excludable

Option B: neither rival nor excludable

Option C: not rival but excludable

Option D: both rival and excludable

Correct Answer: not rival but excludable ✔

Option A: neither rival nor excludable

Option B: rival but not excludable.

Option C: both rival but excludable

Option D: not rival but excludable

Correct Answer: neither rival nor excludable ✔

Option A: excess baggage

Option B: a free rider

Option C: a costly rider

Option D: a common resource

Correct Answer: a free rider ✔

Option A: a good produced by a natural monopoly

Option B: a private good

Option C: a public good

Option D: a common resource

Correct Answer: a private good ✔

Option A: government regulation

Option B: that prices are not low enough so firms over produce

Option C: that prices are not high enough, so people overconsume

Option D: that property rights have not been well established

Correct Answer: that property rights have not been well established ✔

Option A: Grant right of the clean air to citizens so that firms must purchase the right to pollute

Option B: Auctions off pollution permits.

Option C: Regulate the amount of pollutants that firms can put in the air

Option D: all of these answers

Correct Answer: all of these answers ✔

Option A: common resources are overconsumed

Option B: public goods are underproduced

Option C: private goods are under consumed

Option D: natural monopolies overproduce goods.

Correct Answer: common resources are overconsumed ✔

Option A: there are no benefits to the public since a public good is not excludable

Option B: the benefits are infinite because a public good is not rival and an infinite amount of people can consume it at the same time

Option C: one can never place a value on human life or the environment

Option D: respondents to naires have little incentive to tell the truth.

Correct Answer: respondents to naires have little incentive to tell the truth. ✔

Option A: Rs 150 or more

Option B: Rs 500,000 or more

Option C: Rs50,000 or more

Option D: Rs500 or more

Correct Answer: Rs 500,000 or more ✔

Option A: hot dogs at a picnic

Option B: Whales in the ocean

Option C: national defense

Option D: apples on a tree in a public park

Correct Answer: national defense ✔

Option A: it is efficient for the government to tax the resident €2,000 each and repair the road

Option B: It is efficient for each neighbour to pay €3,000 to repair the section of street in front of his/her home

Option C: None of these answers are true

Option D: it is not efficient to have the street repaired

Correct Answer: it is efficient for the government to tax the resident €2,000 each and repair the road ✔

Option A: not rival but excludable

Option B: both rival and excludable

Option C: rival but not excludable

Option D: neither rival nor excludable

Correct Answer: rival but not excludable ✔

Option A: rival but not excludable

Option B: not rival but excludable

Option C: both rival excludable

Option D: neither rival nor excludable

Correct Answer: both rival excludable ✔

Option A: rival

Option B: a good produced by a natural monopoly

Option C: a common resource

Option D: excludable

Correct Answer: rival ✔

Option A: increasing the wage in the Unionized sector, Which may create a decrease in the supply of workers in the non-unionized sector

Option B: Increasing the demand for workers in the Unionized sector

Option C: decreasing the demand for workers in the Unionized sector

Option D: Increasing the wage in the Unionized sector which may create an increase in the supply of workers in the non-unionized sector

Correct Answer: Increasing the wage in the Unionized sector which may create an increase in the supply of workers in the non-unionized sector ✔

Option A: Raise the wage for insiders above the competitive equilibrium

Option B: Lower the wage of local outsiders

Option C: Offset the market power of a large firm that is the dominant employer in a region

Option D: Threaten a strike but don’t actually follow through so there are not lost hours of work

Correct Answer: Offset the market power of a large firm that is the dominant employer in a region ✔

Option A: At equilibrium wages workers sleep when the boss is not looking because workers are not deeply concerned about being fired

Option B: At equilibrium wages workers often quit to find better jobs.

Option C: At equilibrium wages only minimally qualified workers apply for the job

Option D: At equilibrium wages, workers cannot afford a healthy diet so they fall asleep at work due to a lack of energy

Correct Answer: All of these answers ✔

Option A: Establishing worker training Programs

Option B: Establishing right-to-work laws

Option C: Reducing unemployment benefits

Option D: Establishing employment agencies

Correct Answer: Raising the minimum wage ✔

Option A: The quantity of labour supplied will exceed the quantity of labour demanded and there will be Unemployment

Option B: Unions will likely Strike and the wage will fall to equilibrium

Option C: The quantity of labour demanded will exceed the quantity of labour supplied and there will be a labour shortage

Option D: The quality of workers in the applicant pool will tend to fall

Correct Answer: The quantity of labour supplied will exceed the quantity of labour demanded and there will be Unemployment ✔

Option A: Help all teenagers because they receive a higher wage than they would otherwise

Option B: have no impact on unemployment as long as it is set above the competitive equilibrium wage

Option C: Create more Unemployment is high-skill job markets than in low-skill job markets

Option D: Create more unemployment in low-skill job markets than in high-skill job markets

Correct Answer: Create more unemployment in low-skill job markets than in high-skill job markets ✔

Option A: 3.2 Percent

Option B: 5.7 Percent

Option C: 5.8 Percent

Option D: Not Enough

Correct Answer: 5.8 Percent ✔

Option A: Employed

Option B: Not in the labour force

Option C: A discouraged worker

Option D: Unemployed

Correct Answer: Not in the labour force ✔

Option A: Increase the budget surplus

Option B: Increase the balance of payment deficit

Option C: Reduce interest rates

Option D: Reduce government expenditure

Correct Answer: Reduce government expenditure ✔

Option A: Helps the economy move on the to Production Possibility Frontier

Option B: Helps shift the economy’s Production Possibility Frontier outwards

Option C: Helps the economy move along its Production Possibility Frontier

Option D: Helps the economy move inside the Production Possibility Frontier

Correct Answer: Helps the economy move on the to Production Possibility Frontier ✔

Option A: People lack information

Option B: People do not want to work

Option C: People do not have the right skills to work

Option D: People cannot afford to move location

Correct Answer: People do not have the right skills to work ✔

Option A: The quantity demanded of labour is higher than the quantity supplied

Option B: The quantity demanded of labour equals the quantity supplied

Option C: The quantity demanded of labour is lower than the quantity supplied

Option D: It will automatically adjust in the short run to bring equilibrium

Correct Answer: The quantity demanded of labour equals the quantity supplied ✔

Option A: Involuntary unemployment

Option B: Cyclical unemployment

Option C: Voluntary unemployment

Option D: A fall in aggregate demand

Correct Answer: A fall in aggregate demand ✔

Option A: There will be equilibrium in the labour market

Option B: There will excess demand in the labour market

Option C: There will be excess supply in the labour market

Option D: More people will be employed

Correct Answer: There will be equilibrium in the labour market ✔

Option A: The average cost of labour

Option B: The marginal product

Option C: The marginal revenue

Option D: The total cost of labour

Correct Answer: The total cost of labour ✔

Option A: Wages are a small proportion of total costs

Option B: Demand for the final product is price elastic

Option C: It is easy to replace labour

Option D: Capital is a good substitute for labour

Correct Answer: Wages are a small proportion of total costs ✔

Option A: A lower equilibrium wage and lower quantity of labour

Option B: A lower equilibrium wage and higher quantity of labour

Option C: A higher equilibrium wage and higher quantity of labour

Option D: A higher equilibrium wage and lower quantity of labour

Correct Answer: A higher equilibrium wage and lower quantity of labour ✔