Economics MCQs

Option A: Transitional Monetary Fund

Option B: World Bank

Option C: European Bank for Reconstruction and Development

Option D: OECD

Correct Answer: European Bank for Reconstruction and Development ✔

Option A: SOEs perform better with competition

Option B: Successful performing SOEs in Japan, Singapore and Sweden have greater managerial autonomy and accountability than other SOEs

Option C: SOEs in South Korea and Sweden generally achieve inferior economic results to those in Ghana

Option D: Financial autonomy is a major factor contributing to SOEs managerial effectiveness

Correct Answer: SOEs in South Korea and Sweden generally achieve inferior economic results to those in Ghana ✔

Option A: national defense

Option B: an automobile

Option C: libraries

Option D: fire protection

Correct Answer: an automobile ✔

Option A: agricultural bank only

Option B: urban credit cooperatives

Option C: mono bank system

Option D: housing savings banks

Correct Answer: mono bank system ✔

Option A: Japan and Korea

Option B: Brazil and Argentina

Option C: Algeria and Yugoslavia

Option D: Singapore and Malaysia

Correct Answer: Algeria and Yugoslavia ✔

Option A: switching spending from domestic to foreign sources

Option B: devaluing local currencies

Option C: increase trade restrictions by imposing quota

Option D: increase government spending

Correct Answer: devaluing local currencies ✔

Option A: full employment and price stability

Option B: exports minus imports

Option C: monetary policy offsetting fiscal policy

Option D: exports equal to imports

Correct Answer: full employment and price stability ✔

Option A: I only

Option B: II only

Option C: I and II only

Option D: I, III and IV only

Correct Answer: I, III and IV only ✔

Option A: I and II only

Option B: III and IV only

Option C: I, II , III and IV

Option D: None of these

Correct Answer: I, II , III and IV ✔

Option A: Shifts the supply of loanable funds to the left and increase the real interest rate

Option B: Shift the supply of loanable funds to the right and reduces the real interest rate.

Option C: Shifts the demand for loanable funds to the right and increases the real interest rate.

Option D: Shifts the demand for loanable funds to the left and reduces the real interest rate

Correct Answer: Shift the supply of loanable funds to the right and reduces the real interest rate. ✔

Option A: Real interest rates rise and investment falls

Option B: Real interest rates rise and investment rises

Option C: Real interest rates fall and investment rises

Option D: Real interest rates fall and investment falls

Correct Answer: Real interest rates rise and investment falls ✔

Option A: an increase in public saving

Option B: a decrease in private saving

Option C: None of these answers

Option D: a decrease in public savings

Correct Answer: a decrease in public savings ✔

Option A: raise the real interest rate and decrease the quantity of loanable funds demanded for investment

Option B: lower the real interest rate and increase the quantity of loaable funds demanded for investment

Option C: raise the real interest rate and increase the quantity of loandable funds demanded for investment

Option D: lower the real interest rate and decrease the quantity of loanable funds demanded for investment

Correct Answer: raise the real interest rate and decrease the quantity of loanable funds demanded for investment ✔

Option A: Lower taxes on the returns to saving, provide investment tax credits and lower the deficit

Option B: Increase tax on the returns to saving Provide investment tax credits and increase the deficit

Option C: Increase tax on the returns to saving Provide investment tax credits and lower the deficit

Option D: Lower taxes on the returns to saving Provide investment tax credits and increase the deficit

Correct Answer: Lower taxes on the returns to saving, provide investment tax credits and lower the deficit ✔

Option A: The purchase of goods and services

Option B: The purchase of capital equipment and structures

Option C: When we place our saving in the bank

Option D: The purchase of stocks and bonds

Correct Answer: The purchase of capital equipment and structures ✔

Option A: Saving is unchanged

Option B: There is an increased in saving and the economy should grow more quickly

Option C: There is a decrease in saving and the economy should grow more slowly

Option D: There is not enough information to determine what will happen to saving

Correct Answer: Saving is unchanged ✔

Option A: there is a budget deficit

Option B: None of these answers

Option C: There is a budget surplus

Option D: private saving is positive

Correct Answer: there is a budget deficit ✔

Option A: none of these answers

Option B: investment + consumption expenditures

Option C: private saving + public saving

Option D: GDP government purchases

Correct Answer: private saving + public saving ✔

Option A: Probability of default

Option B: Price-earnings ratio

Option C: dividend

Option D: tax treatment

Correct Answer: Probability of default ✔

Option A: the real interest rate should fall

Option B: the real interest rate should rise

Option C: the impact on the real interest rate is indeterminate

Option D: the real interest rate should not change

Correct Answer: the impact on the real interest rate is indeterminate ✔

Option A: intermediation

Option B: equity finance

Option C: crowding out

Option D: the investment fund effect

Correct Answer: crowding out ✔

Option A: a reduction in the budget deficit

Option B: an increase in the budget deficit

Option C: an investment tax credit

Option D: None of the above

Correct Answer: a reduction in the budget deficit ✔

Option A: Shifts the supply of loanable funds to the right

Option B: Shift the demand for loandbale funds to the left

Option C: Shift the demand for loanable funds to the right

Option D: Shift the supply of loanable funds to the left

Correct Answer: Shift the supply of loanable funds to the left ✔

Option A: The supply of loanable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to fall.

Option B: The demand for loanable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to rise

Option C: The demand for loandable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to fall

Option D: The supply of loandable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to rise

Correct Answer: The supply of loanable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to fall. ✔

Option A: A bond issued by a startup company

Option B: A government bond issued by the government of France.

Option C: A bond issued by a blue-chip company

Option D: An investment funds with portfolio of corporate bonds issued by blue chip companies

Correct Answer: A bond issued by a startup company ✔

Option A: Saving = Rs 300 investment = Rs 300

Option B: Saving = Rs 200 investment = Rs 100

Option C: Saving = Rs 100 investment = Rs 200

Option D: Saving = Rs 0 investment = Rs 0

Correct Answer: Saving = Rs 0 investment = Rs 0 ✔

Option A: Long-term bonds tend to pay less interest than short-term bonds

Option B: Government bonds pay less interest than comparable corporate bounds

Option C: Investment funds are riskier than single stock purchases because the performances of so many different firms can affect the return of a mutual fund

Option D: A stock index is a directory used to locate information about selected stocks.

Correct Answer: Government bonds pay less interest than comparable corporate bounds ✔

Option A: buyers and sellers

Option B: husbands and wives.

Option C: borrowers and lenders.

Option D: labor unions and firms

Correct Answer: borrowers and lenders. ✔

Option A: Corporate bonds

Option B: Company shares

Option C: All of these answers are equity finance

Option D: Government bonds

Correct Answer: Company shares ✔

Option A: Economic profit

Option B: Accounting profit

Option C: Normal profit

Option D: supernormal profit

Correct Answer: supernormal profit ✔

Option A: reduces; reduces

Option B: reduces; increases

Option C: increases; increases

Option D: increases; reduces

Correct Answer: reduces; increases ✔

Option A: Change in average revenue, increased

Option B: Change in total revenue, increase by one unit

Option C: change in average revenue, increased by one unit

Option D: change in total revenue increased

Correct Answer: Change in total revenue, increase by one unit ✔

Option A: incur, desire

Option B: pay, make

Option C: charge earns

Option D: minimize, maximize

Correct Answer: minimize, maximize ✔

Option A: Marginal utility

Option B: Additional utility

Option C: Surplus utility

Option D: Bonus utility

Correct Answer: Marginal utility ✔

Option A: Course fees and rent

Option B: A loan from the bank

Option C: What the student could have earned in the best job available by not studying

Option D: What the student will earn after graduation

Correct Answer: What the student could have earned in the best job available by not studying ✔

Option A: increase

Option B: not change

Option C: decrease

Option D: shift

Correct Answer: not change ✔

Option A: Price elasticity of demand

Option B: Cross-price elasticity of demand

Option C: budget elasticity of demand

Option D: income elasticity of demand

Correct Answer: income elasticity of demand ✔

Option A: The responsiveness of quantity demanded to a change in price

Option B: How far a demand curve shifts

Option C: a change in price

Option D: a change in quantity demanded

Correct Answer: The responsiveness of quantity demanded to a change in price ✔

Option A: shift aggregate supply to the right

Option B: shift aggregate supply to the left

Option C: shift aggregate demand to the right

Option D: shift aggregate demand to the left

Correct Answer: shift aggregate supply to the left ✔

Option A: Shift aggregate supply to the right

Option B: Shift aggregate supply to the left

Option C: Shift aggregate demand to the right

Option D: shift aggregate demand to the left

Correct Answer: Shift aggregate supply to the right ✔

Option A: Increased saving

Option B: Increasing import spending

Option C: Increased taxation revenue

Option D: increased investment

Correct Answer: Increased taxation revenue ✔

Option A: consumption falls

Option B: investment falls

Option C: Exports fall

Option D: imports fall

Correct Answer: imports fall ✔

Option A: 80 units

Option B: 320 units

Option C: 60 units

Option D: 120 units

Correct Answer: 320 units ✔

Option A: Lead to a contraction of supply

Option B: Lead to an expansion of supply

Option C: Lead to a shift in supply outwards (i.e more supplied at each and every price)

Option D: Lead to a higher equilibrium and lower equilibrium quantity

Correct Answer: Lead to a shift in supply outwards (i.e more supplied at each and every price) ✔

Option A: Shift demand outwards

Option B: Shift demand inwards

Option C: Shift supply outwards so more is supplied at each and every price, all other things unchanged

Option D: Shift supply inwards

Correct Answer: Shift supply inwards ✔

Option A: A price elasticity of supply greater than one

Option B: A price elasticity of supply equal to one

Option C: A price elasticity of supply less than one

Option D: A positive price elasticity of supply

Correct Answer: A price elasticity of supply equal to one ✔

Option A: Supply is price elastic

Option B: Supply is income elastic

Option C: Price elasticity of demand is -2

Option D: Price elasticity of supply is -2

Correct Answer: Supply is price elastic ✔

Option A: The price elasticity of demand is negative the income elasticity of demand is negative

Option B: The price elasticity of demand is positive the income elasticity of demand is negative

Option C: The price elasticity of demand is negative the income elasticity of demand is positive

Option D: The price elasticity of demand is positive; the income elasticity of demand is positive

Correct Answer: The price elasticity of demand is negative the income elasticity of demand is positive ✔

Option A: An increase in price must raise profits

Option B: An increase in price decrease revenue

Option C: An increase in price increase revenue

Option D: A decrease in price reduces sales

Correct Answer: An increase in price increase revenue ✔

Option A: Demand is price elastic

Option B: Demand is price inelastic

Option C: The demand curve is downward sloping

Option D: An increase in income will reduce the quantity demanded

Correct Answer: The demand curve is downward sloping ✔

Option A: The products are substitutes and demand is cross price elastic

Option B: The products are substitutes and demand is cross price inelastic

Option C: The products are complements and demand is cross price elastic

Option D: The products are complements and demand is cross price inelastic

Correct Answer: The products are complements and demand is cross price elastic ✔

Option A: The price elasticity of demand is -2

Option B: The good is inferior

Option C: Income elasticity is + 0.5

Option D: Income elasticity is + 2

Correct Answer: The price elasticity of demand is -2 ✔

Option A: Demand is inversely related to income

Option B: Demand in inversely related to price

Option C: Demand is directly related to price

Option D: Demand is inversely related to the price of substitutes

Correct Answer: Demand is inversely related to income ✔

Option A: Shift demand outwards

Option B: Shift demand inwards

Option C: A contractions of demand

Option D: An extension of demand

Correct Answer: A contractions of demand ✔

Option A: Shift demand for an inferior product outward

Option B: shift demand for an inferior product inward

Option C: shift supply for an inferior product outward

Option D: Shift supply for an inferior product inward

Correct Answer: shift demand for an inferior product inward ✔

Option A: Utility is at a maximum with the first unit

Option B: Increasing units of consumption increase the marginal utility

Option C: Marginal product will fall as more units are consumed

Option D: Total utility will rise at a falling rate as more units are consumed

Correct Answer: Total utility will rise at a falling rate as more units are consumed ✔

Option A: Will cause an inward shift of demand

Option B: Will cause an outward shift of supply

Option C: May be caused by a fall in demand

Option D: Leads to a higher level of production

Correct Answer: May be caused by a fall in demand ✔

Option A: Quantity setting

Option B: price fixing

Option C: price rationing

Option D: quantity adjustment.

Correct Answer: price rationing ✔

Option A: normal goods

Option B: unrelated goods

Option C: Substitutes.

Option D: Complements

Correct Answer: Complements ✔

Option A: elastic

Option B: perfectly elastic

Option C: unitarily elastic

Option D: inelastic.

Correct Answer: elastic ✔

Option A: zero elastic

Option B: elastic

Option C: perfectly elastic

Option D: inelastic

Correct Answer: elastic ✔

Option A: a decrease in supply.

Option B: a rise in income

Option C: a fall in the number of substitute goods

Option D: a rise in the price of inputs

Correct Answer: a decrease in supply. ✔

Option A: increase price but not output

Option B: increase output but not price

Option C: increase output and price

Option D: decrease output and price

Correct Answer: increase price but not output ✔

Option A: price to fall

Option B: quantity supplied to decrease.

Option C: price to rise

Option D: quantity demanded to increase

Correct Answer: price to rise ✔

Option A: As the price of calculators rise, the quantity supplied of calculators decreases, ceteris paribus.

Option B: As the price of calculators calls the supply of calculators increases, ceteris paribus.

Option C: As the price of calculators rise, the quantity supplied of calculators increases, ceteris paribus.

Option D: As the price of calculators rise, the supply of calculators increases ceteris paribus.

Correct Answer: As the price of calculators rise, the quantity supplied of calculators increases, ceteris paribus. ✔

Option A: an inferior good

Option B: a normal good

Option C: a complementary good

Option D: a substitute good

Correct Answer: a normal good ✔

Option A: complements

Option B: substitutes

Option C: inferior

Option D: nromal

Correct Answer: substitutes ✔

Option A: Pepsi’s advertising is not as effective as in the past .

Option B: The price of Coca Cola has increased,

Option C: Pepsi consumers had an increase in income.

Option D: The price of Pepsi increased

Correct Answer: The price of Pepsi increased ✔

Option A: have few substitutes.

Option B: are normal goods

Option C: have few complementary goods.

Option D: have many complementary goods.

Correct Answer: are normal goods ✔

Option A: Should increase output

Option B: Should reduce output

Option C: will require further information on how to respond

Option D: Should not change output

Correct Answer: will require further information on how to respond ✔

Option A: Economic profit

Option B: Accounting profit

Option C: Normal profit

Option D: Supernormal profit

Correct Answer: Normal profit ✔

Option A: marginal cost to increase, output to fall

Option B: marginal revenue to increase output to fall

Option C: opportunity cost to increase the firm will close

Option D: average cost will rise output will increase ____ output and an upward shift in marginal revenue ____ output

Correct Answer: marginal cost to increase, output to fall ✔

Option A: costs are minimized

Option B: revenue is maximized

Option C: average cost is less than average revenue

Option D: marginal cost equals marginal revenue

Correct Answer: marginal cost equals marginal revenue ✔

Option A: marginal cost

Option B: opportunity cost

Option C: limited cost

Option D: average cost

Correct Answer: average cost ✔

Option A: Supply curve

Option B: Market demand curve

Option C: Demand curve

Option D: Market supply curve

Correct Answer: Market demand curve ✔

Option A: Status

Option B: Prestige

Option C: Utility

Option D: Self-esteem

Correct Answer: Utility ✔

Option A: increase quantity demanded, reduce quantity demanded

Option B: increase quantity demanded, increases quantity demanded

Option C: reduce quantity demanded, reduce quantity demanded

Option D: reduce quantity demanded, increase quantity demanded

Correct Answer: reduce quantity demanded, reduce quantity demanded ✔

Option A: negative income elasticity income elasticity greater than 1

Option B: income elasticity greater than 1, negative income elasticities

Option C: Positive income elasticities, negative income elasticities

Option D: None of the above

Correct Answer: negative income elasticity income elasticity greater than 1 ✔

Option A: substitutes inferior

Option B: normal, complements

Option C: substitutes complements

Option D: normal, inferior

Correct Answer: substitutes complements ✔

Option A: inelastic; increase

Option B: elastic; increase

Option C: elastic, decrease

Option D: none of the above

Correct Answer: elastic; increase ✔

Option A: shift aggregate supply to the right

Option B: shift aggregate supply to the left

Option C: shift aggregate demand to the right

Option D: shift aggregate demand to the left

Correct Answer: shift aggregate demand to the left ✔

Option A: shift aggregate supply to the right

Option B: shift aggregate supply to the left

Option C: shift aggregate demand to the right

Option D: shift aggregate demand to the left

Correct Answer: shift aggregate supply to the right ✔

Option A: increase consumption

Option B: increasing export revenue

Option C: increased taxation revenue

Option D: increased investment

Correct Answer: increasing export revenue ✔

Option A: Aggregate supply is price inelastic

Option B: Aggregate supply is price elastic

Option C: Aggregate supply has a unitary price elasticity

Option D: Aggregate demand is price inelastic

Correct Answer: Aggregate supply is price elastic ✔

Option A: Reduce the general price level and reduce national income

Option B: Reduce the general price level and increase national income

Option C: Increase the general price level and reduce national income

Option D: Increase the general price level and increase national income

Correct Answer: Reduce the general price level and reduce national income ✔

Option A: +2

Option B: +0.5

Option C: -2

Option D: -0.5

Correct Answer: +0.5 ✔

Option A: A shift in supply outwards

Option B: A shift in supply inwards

Option C: A contraction of supply

Option D: An extension of supply

Correct Answer: An extension of supply ✔

Option A: Demand shifts outwards

Option B: The supply curve shifts inwards

Option C: The quantity supplied falls when the price falls

Option D: The supply curve shifts outwards

Correct Answer: The quantity supplied falls when the price falls ✔

Option A: In the short run rather than the long run

Option B: If factors of production are relatively immobile between industries

Option C: If there are very few producers

Option D: If it is easy to expand output

Correct Answer: If it is easy to expand output ✔

Option A: The quantity consumers would like to buy in an ideal world

Option B: The quantity producers are willing and able to sell at each and every price all other things unchanged

Option C: The quantity producers are willing and able to sell at each and every income all other things unchanged

Option D: The quantity producers are willing and able to sell at each and every point in time all other things unchanged

Correct Answer: The quantity producers are willing and able to sell at each and every price all other things unchanged ✔

Option A: The price elasticity of demand is negative: the income elasticity of demand is negative

Option B: The price elasticity of demand is positive the income elasticity of demand is negative

Option C: The price elasticity of demand is negative the income elasticity of demand is positive

Option D: The price elasticity of demand is positive the income elasticity of demand is positive

Correct Answer: The price elasticity of demand is negative: the income elasticity of demand is negative ✔

Option A: 550 units

Option B: 500 units

Option C: 450 units

Option D: 490 units

Correct Answer: 450 units ✔

Option A: 3000

Option B: 7000

Option C: 5500

Option D: 4500

Correct Answer: 7000 ✔

Option A: Reduces revenue

Option B: Leaves revenue unchanged

Option C: Increase revenue

Option D: Reduces costs

Correct Answer: Leaves revenue unchanged ✔

Option A: Demand is price inelastic

Option B: The good is inferior

Option C: Income elasticity is -2

Option D: The product is normal

Correct Answer: The product is normal ✔

Option A: Demand is inversely related to income

Option B: Demand is inversely related to price

Option C: Demand is directly related to price

Option D: Demand is inversely related to the price of substitutes

Correct Answer: Demand is directly related to price ✔

Option A: Shift demand for Product A outwards

Option B: Shift demand for product A inwards

Option C: Shift supply for product A outwards

Option D: Shift supply for product A inwards

Correct Answer: Shift demand for product A inwards ✔

Option A: Total utility is zero

Option B: An additional unit of consumption will decrease total utility

Option C: An additional unit of consumption will increase total utility

Option D: Total utility is maximized

Correct Answer: Total utility is maximized ✔

Option A: Price decreases

Option B: The price of a substitute falls

Option C: The price of a complement rises

Option D: income falls

Correct Answer: The price of a substitute falls ✔

Option A: the quantity consumers would like to buy in an ideal world

Option B: The quantity consumers are willing to sell

Option C: The quantity consumers are willing and able to buy at each and every income all other things unchanged

Option D: The quantity consumers are willing and able to buy each and every price all other things changed

Correct Answer: The quantity consumers are willing and able to buy each and every price all other things changed ✔