VIRTUAL ACADMEY OF PAKISTAN

A Project by: FAQEER MUHAMMAD BHUTTO #03003435675

Economics
1. “The true national income is that part of the annual net produce which is directly consumed during that
year’’ who said this:
(A) FISHER (B) PIGOU (C) SIMON (D) ROBBINS
2. Who has given the concept of “Wage fund theory”.
(A) J S Mill (B) Marshall (C) Ricardion (D) Jevons
3. Both households and societies face many decisions because:
(A) Resources are scarce (B) Populations my increase or decrease over time
(C) Wages for households and therefore society fluctuate with business cycles
(D) People, by nature, tend to disagree.
4. Which of the following is NOT included in the decisions that every society must make?
(A) What goods will be produced (B) Who will produce goods
(C) What determines consumer preferences (D) Who will consume the goods
5. Economics deals primarily with the concept of.
(A) Scarcity (B) Poverty (C) Change (D) Power
6. Households and economies have each of the following in common EXCEPT both.
(A) Must allocate scarce resources (B) Face many decisions
(C) Must allocate the goods and services they produce (D) Must have a central decision maker.
7. The word economy comes from the Greek word for.
(A) “Environment.” (B) “One who manages household.”
(C) “One who participates in a market (D) “Conservation?”
8. The word that comes from the Greek word for “one who manages a household” is.
(A) Market (B) Consumer (C) Producer (D) Economy.
9. A monopsony is:
(A) The sole supplier of an input (B) The sole supplier of an output.
(C) The sole buyer of some type of input (D) A unionized industry
10. Price discrimination is:
(A) Illegal (B) A technique that can improve the firm’s revenue and profit performance.
(C) Immoral in most cases (D) Difficult to administer
11. If a monopoly is unable to cover its short-run variable costs, it should.
(A) Shut down (B) Raise price (C) Lower price (D) Increase output
12. If the monopolist maximizes profits when marginal revenue equals marginal cost equals average cost,
economic profits must be.
(A) Negative (B) Positive (C) Zero (D) Either A or C
(E) Cannot tell from the information given.
13. If a monopolist has only fixed costs and choses that output at which marginal cost equals price, it will.
(A) Earn positive economic profits (B) Earn zero economic profits
(C) Incur a loss equal to its variable costs. (D) Incur a loss equal its fixed costs.
14. If a monopolist had no costs, the best possible price would be where demand is.
(A) Infinitely elastic (B) Relatively (but not perfectly) elastic
(C) Unit elastic (D) Relatively (but not completely) inelastic (E) Completely inelastic
15. Personal income means:
(A) Own income (B) Family income (C) Govt. income (D) Old income
16. National income period is:
(A) One year (B) Three year (C) Four year (D) Two year
17. Factors of production are:
(A) One (B) Three (C) Two (D) Four
18. In monopoly the number of firms is:
(A) One (B) Three (C) Two (D) Unlimited
19. The other name of law decreasing return is:
(A) Law of decreasing cost (B) Law of increasing cost
(C) Law of constant cost (D) Law of increasing return
20. Average revenue is equal to:
(A) Price (B) Marginal revenue (C) Total revenue (D) Average cost
21. When price falls supply:
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 (A) Maximum (B) Zero (C) Minimum (D) Fixed
22. When price falls supply:
(A) Expands (B) Remains zero (C) Contrasts (D) Become fixed
23. Slope of demand curve is:
(A) Negative (B) Zero (C) Positive (D) Fixed
24. Who is the writer of Wealth of Nation?
(A) Marshall (B) Adam Smith (C) Robbins (D) Keynes
25. When national income is increases:
(A) Standard of living increases (B) Standard of living decreases
(C) Remains same (D) Bad thing
26. Inflation on prices:
(A) Decrease (B) Remains constant (C) Increase (D) Become Zero
27. Phases of trade cycle are:
(A) One (B) Three (C) Two (D) Four
28. International trade has the benefits:’
(A) One (B) Three (C) Two (D) Unlimited
29. Canons of taxation describe:
(A) Marshall (B) Keynes (C) Robbins (D) Adam Smith
30. Who wrote “The Nature and Significance of Economics”.
(A) Adam Smith (B) Marshall (C) Robins (D) Keynes
31. Who criticized Prof. Robbin’s definition?
(A) Marshall, J.B (B) Beveridge (C) Clark (D) Pigeou
32. Which economist presented the Cardinal Theory of Utility:
(A) Marshall (B) Canon (C) Kroose (D) J.B. Say
33. The quality of a good which satisfies a human want is called as:
(A) Service (B) Cost (C) Utility (D) None
34. According to law of diminishing marginal utility, the marginal utility:
(A) Increases (B) Remains constant (C) Diminishes (D) Negative
35. Consumer goods are those goods which are used by a man:
(A) Directly (B) Off and On (C) Indirectly (D) Never
36. The elasticity of demand of durable goods is:
(A) More than unity (B) Equal to unity (C) Less than unity (D) Zero
37. The unity method of elasticity of demand was presented by:
(A) Adam Smith (B) Marshall (C) J.R Hicks (D) Pigeou
38. What remains after deduction of direct taxes form the personal income:
(A) NNI (B) DPI (C) NDI (D) GNP
39. What is deducted from GNP find GDP:
(A) Depreciation allowance (B) Net income received from abroad
(C) Indirect tax (D) Transfer payments
40. What was the difficult in the barter System?
(A) Excess of goods (B) Difference language (C) Lack of co-incidence (D) Difference in profession
41. In inflation prices:
(A) Increase (B) Do not change (C) Decrease (D) Become zero
42. Inflation will be useful for:
(A) Labourers (B) Industrialist (C) Consumers (D) Pensioners
43. The economy gets prosperity during:
(A) Recession (B) Boom (C) Depression (D) Recovery
44. It is a Federal Tax:
(A) Excise duty (B) Local Tax (C) Property tax (D) None
45. The quality of a good which satisfies a human want is called as:
(A) Service (B) Utility (C) Marginal (D) None of these
46. Which Economists presented the law of diminishing marginal utility?
(A) Robbins (B) Malthus (C) Adam Smith (D) Marshall
47. The methods of measuring elasticity of supply are:
(A) Three (B) Two (C) Four (D) Five
48. According to law of increasing return, marginal product:
(A) Increases (B) Decreases (C) Remains constant (D) None of these
49. Average revenue is equal to:
(A) Price (B) Total revenue (C) Marginal revenue (D) Average cost
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50. When price falls supply:
(A) Expands (B) Contracts (C) Remains zero (D) Becomes fixed
51. The other name of law of diminishing return is:
(A) Law of supply (B) Law of diminishing marginal utility (C) Law of demand (D) Law of increasing cost
52. The elasticity of demand of durable goods is:
(A) Zero (B) More than unity (C) Less than unity (D) Equal of unity
53. Rent of building is included in:
(A) Fixed cost (B) Variable cost (C) Marginal cost (D) Selling cost
54. Who is responsible for profit and loss in the business?
(A) Capitalist (B) Entrepreneur (C) Labour (D) Middleman
55. National income does not include:
(A) Profit (B) Wages (C) Interest (D) Transfer payments
56. Who presented the quantity theory of money?
(A) Marshall (B) Robbins (C) Tausig (D) Keynes
57. International trade has the benefits:
(A) One (B) Unlimited (C) Two (D) Three
58. The economy gets maximum prosperity during:
(A) Recession (B) Recovery (C) Boom (D) Depression
59. Ushr implies on:
(A) Agricultural product (B) Industrial product (C) Agricultural $ industrial product (D) None of these
60. Who described Economics as a science of wealth?
(A) Piguo (B) Adam Smith (C) Robbins (D) Marshall
61. If total expenditure decreases with the rise in price elasticity of demand will be:
(A) Equal to unity (B) Less than unity (C) Greater than unity (D) Equal to zero
62. Income elasticity shows the relationship between:
(A) Income and demand (B) Income and consumption (C) Income and price (D) Income and saving
63. The supply of land is:
(A) Infinity (B) Fixed (C) Variable (D) Zero
64. The shape of AR and MR under perfect competition is:
(A) Vertical (B) U-Shape (C) Horizontal to ox axis (D) None of these
65. The supply of perishable goods is:
(A) Fixed (B) Variable (C) Minor change (D) Zero
66. The quality of a commodity which satisfies the human wants:
(A) Usefulness (B) Loss (C) Utility (D) Return
67. Marginal cost curve always intersects average cost curve at:
(A) The maximum point (B) The Central point (C) The minimum point (D) The vertical point
68. During a year aggregate value of produced goods and services of a country is called:
(A) Per-capita income (B) Net national income (C) Personal income (D) Gross national product
69. How many methods can be used for cultivation?
(A) One (B) Two (C) Three (D) Four
70. Reward for Labour is:
(A) Interest (B) Wages (C) Profit (D) Rent
71. Due to devaluation exports become:
(A) Smaller (B) Larger (C) Cheaper (D) Expensive
72. Reward for capital is called:
(A) Rent (B) Interest (C) Wages (D) Profit
73. Personal income includes:
(A) Direct taxes (B) Indirect taxes (C) Undivided profit (D) Both 2nd and 3rd
74. Marco Economics was introduced by:
(A) Alfred Marshall (B) J.M Keynes (C) N.W Senior (D) J.B Clark
75. If pen and ink are complements, then an increase in the price of pen will cause:
(A) An increase in the price of ink. (B) Less ink to be demanded at each price
(C) A decease in the demand for pen (D) A rightward shift in the demand curve for ink.
76. A market is said to be in equilibrium when:
(A) Demand equals output.
(B) There is downward pressure on price.
(C) The amount consumers wish to buy at the current price equals the amount producers wish to
sell at that price.
(D) All buyers are able to find sellers willing to sell to them at the current price.
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77. As more of a good is consumed, then total utility typically.
(A) Increase at a decreasing rate. (B) Decreases as long as marginal utility is negative.
(C) Decreases as long as marginal utility is positive.
(D) Is negative as long as marginal utility is decreasing.
78. A monopolistically competitive firm in short run equilibrium.
(A) Will make negative profit (lose money). (B) Will make zero profit (break –even)
(C) Will make positive profit (D) Any of the given are possible
79. A monopolistically competitive firm in the long run equilibrium.
(A) Will make negative profit. (B) Will make zero profit.
(C) Will make positive. (D) Any of the given are possible.
80. The market structure in which strategic considerations are most important is:
(A) Monopolistic competition. (B) Oligopoly
(C) Pure competition. (D) Pure monopoly
81. The price elasticity of demand for any good must be less than or equal to zero unless:
(A) The good is a necessity. (B) The good is a luxury.
(C) The good is a Giffen good (D) None of the given options.
82. In monopoly, which of the following is NOT true?
(A) Products are differentiated
(B) There is freedom of entry and exit into the industry in the long run.
(C) The firm is a price maker (D) There is one main seller.
83. Under the kinked demand curve model, increase in marginal cost will lead to:
(A) An increase in output level and a decrease in price.
(B) A decrease in output level and an increase in price.
(C) A decrease in output level and no change in price.
(D) Neither a change in output level nor a change in price.
84. For a firm buying labor competitively, the marginal input cost is equal to the:
(A) Wage. (B) Interest rate (C) Price of output (D) Cost of raw materials.
85. The aggregate supply curve is the relationship between:
(A) The price level and the real domestic output purchased.
(B) The price level and the real domestic output purchased.
(C) The price level which producers are willing to accept and the price level purchasers are willing to pay.
(D) The real domestic output purchased and the real domestic output produced.
86. The long run aggregate supply curve will shift to the right if:
(A) The price level increases (B) Factors of production (such as labor and capital) increase.
(C) Expenditures (such as consumption and net exports increase.
(D) The prices of inputs used to produce goods and services ( such as wages and the price of oil)
decrease.
87. A nation’s balance of payments can be affected by changes in:
(A) Foreign income. (B) The differential between domestic and foreign interest rates.
(C) The real exchange rate (D) All of the given options.
88. Real GDP is equal to:
(A) Nominal GDP – Inflation. (B) Nominal GDP + Inflation
(C) Nominal GDP / Inflation. (D) Inflation/ Nominal GDP.
89. If we compare Gross Domestic Product (GDP) with Gross National.
(1) Product (GNP) then:
(A) GNP = GDP- Net income from abroad (B) GNP = GDP + Net Income from abroad.
(C) GNP – Net Income from abroad (D) GNP = NNP + Net Income from abroad.
90. In monopoly, which of the following is not true?
(A) Products are differentiated`
(B) There is freedom of entry and exit into the industry in the long run.
(C) The firm is a price marker (D) There is one main seller.
91. Which of the following is true about supply curve under monopoly?
(A) It is same as the competitive market supply curve.
(B) It is the portion of marginal cost curve where marginal costs exceed the minimum value of
average variable costs.
(C) It is the result of market power and production costs.
(D) None of the given statements is true.
92. Which of the following event will lead towards cost-push inflation and therefore stagflation?
(A) An increase in taxes on individuals (B) A decrease in real interest rates.
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 (C) A union settlement that increase wage levels (D) An increase in government purchases.
93. Double counting in national income refers to:
(A) Counting a product more than once (B) Counting a product at the final stage output process
(C) Counting both as product and as factor payment
(D) Counting both as real goods and as money flow
94. For knowing the spending capacity of the household sector, we have to use the concept of:
(A) National Income (B) Personal Income (C) Private Income (D) Personal disposable Income
95. for a study of the long term growth of the economy, we use:
(A) Real GNP (B) Nominal GNP (C) Personal Income (D) Disposable personal Income
96. In the short run, the equilibrium price level and the equilibrium level of total output are determined by the
intersection of:
(A) The aggregate demand, the short-run aggregate supply and the long-run aggregate supply curves.
(B) The short-run aggregate supply and the long-run aggregate supply curves.
(C) The aggregate demand and the short-run aggregate supply curves.
(D) The aggregate demand and the long-run aggregate supply curves.
97. What is the interest rate effect that explains why the aggregate demand curve slopes downward?
(A) It refers to the effect of changes in the price level on quantity of investment demanded which in turn
affects interest rates.
(B) It refers to the effect to interest rates on borrowing which in turn affects consumption spending.
(C) It refers to the effect of changes in the price level on interest rates which in turn affects the
quantity of investment demanded.
(D) It refers to the shifts in aggregate demand when interest rates change.
98. Which of the following economists came up with a theory regarding the tradeoff between unemployment
and inflation?
(A) A.W Phillips (B) John Maynard Keynes (C) Joseph Schumpeter (D) Milton Friedman
99. The real exchange rate is defined as the:
(A) Market exchange rate adjusted for prices. (B) Market exchange adjusted for interest rates.
(C) Market exchange rate. (D) Exchange rate determined by the government
100. The interest rate parity is the basis identity that relates which of the following?
` (A) Interest rates and exchange rates. (B) Interest rates and inflation rate
(C) Exchange rates and inflation rate (D) Discount rate and inflation rate.
101. “Government collects zero revenue if the tax rate is 0% and if the tax rate is 100% which of the following
best describes this statement?
(A) Consumption curve. (B) Supply curve. (C) Lifer curve. (D) Investment curve.
102. A tax on the accounting profits of corporations is known as:
(A) Is curve must be vertical (B) LM curve must be vertical
(C) Central Bank must have increased the money supply at the same time.
(D) Central Bank must have decreased the money supply at the same time.
103. If money supply is fixed by the central bank then in interest rate money supply space, money supply curve
will be:
(A) Horizontal (B) Vertical (C) Negatively sloped (D) Positively sloped
104. Which of the following is TRUE for a Giffen good?
(A) Its marginal utility is zero (B) Its demand curve is p0erfectly elastic
(C) Its substitution effect is positive (D) Its demand curve is positively sloped.
105. The total cost (TC) function is given as: TC= 200 + 5Q. What is the fixed cost?
(A) 5Q (B) 5 (C) 5+ (200/Q) (D) 200
106. A good for which income and quantity demanded are inversely related is known as:
(A) Inferior good (B) Complementary good (C) Normal good (D) None of the given options
107. An increase in supply is shown by:
(A) Shifting the supply curve to the left (B) Shifting the supply curve to the right
(C) Upward movement along the supply curve (D) Downward movement along the supply curve
108. Price floor results in:
(A) All of the given options. (B) Excess supply (C) Equilibrium (D) Excess demand
109. The price elasticity of demand measures the responsiveness of quantity demanded to:
(A) Quantity demanded (B) Quantity supplied (C) Price (D) Output
110. Indifference curves that are convex to the origin reflect:
(A) An increasing marginal rate of substitution (B) A decreasing marginal rate of substitution
111. To find the profit maximizing level of output, a firm finds the output level where:
(A) Price equals marginal cost (B) Marginal revenue and average total cost
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 (C) Price equals marginal revenue (D) None of the given options.
112. As compared to existing firms, a new firm entering in monopolist market has:
(A) High costs, (B) Low costs (C) Equal costs (D) None of the given
options.
113. A firm is charging a different price for each unit purchased by a consumer. This is called:
(A) First- degree price discrimination (B) Second – degree price discrimination
(C) Third – degree price discrimination (D) None of the given options.
114. Welfare economics is the branch of economic which deals with:
(A) Positive issues. (B) Normative issue. (C) Micro issue (D) Macro issue
115. Under the kinked demand curve model, an increase in marginal cost will led to:
(A) An increase in output level and a decrease in price
(B) A decrease in output level and increase in price
(C) A decrease in output level and no change in price.
(D) Neither a change in output level nor a change in price
116. Which of the following market situation is much like a pure monopoly except that its member firms tend
to cheat on agreed upon price and output strategies?
(A) Duopoly. (B) Cartel (C) Market sharing monopoly (D) Natural monopoly
117. In the complete classical model, rightward shift of the labor supply curve will:
(A) Decrease the price level and increase the nominal wage.
(B) Decrease the nominal wage and increase the price level.
(C) Decrease both the price level and nominal wage.
(D) Increase both the price level and the nominal wage.
118. Which of the following events could cause the aggregate demand curve to shift to the right?
(A) An increase the rate of inflation. (B) A decrease in government expenditures.
(C) A decrease in investment spending (D) A decrease in income tax rates.
119. According to the model of aggregate supply and aggregate demand, in the long run, an increase in the
money supply should cause.
(A) Both prices and output to rise. (B) Prices to fall and output to remain unchanged
(C) Both prices and output to fall. (D) Prices to rise and output to remain unchanged.
120. Intermediate goods are meant for:
(A) Direct use by the consumers. (B) Further processing.
(C) The term do not exist. (D) None of the given options.
121. Final goods are meant for:
(A) Direct use by the consumers (B) Further processing
(C) The term do not exit (D) None of the given options.
122. All other things remain the same; Gross Domestic Product (GDP) will rise if:
(A) Imports raise (B) Durable goods consumption rises (C) Military spending falls. (D) Exports fall.
123. The traditional Phillips Curve shows the:
(A) Inverse relationship between the rate of inflation and.
(B) Inverse relationship between the nominal and real wage.
(C) Direct relationship between unemployment and demand-pull inflation.
(D) Tradeoff between the short run and long run.
124. Deflation is:
(A) An increase in the overall level of economic activity.
(B) An increase in the overall price level
(C) A decrease in the overall level of economic activity.
(D) A decrease in the overall price level.
125. Is Gross Domestic Product (GDP) an accurate measure of a country’s well-being?
(A) Yes, it is the best measure of national well Bing.
(B) Yes, provided we use real GDP and not nominal GDP
(C) Uncertain, depending on wither GDP is rising or falling (D) No, it is not.
126. Real Gross Domestic Product (GDP):
(A) Is nominal GDP adjusted for changes in the price level?
(B) Is also called nominal GDP. (C) Measures GDP minus depreciation of capital.
(D) Will always change when prices change.
127. If a war destroys a large portion of country’s capital stock but the saving rate is unchanged, the exogenous
model predicts that output will grow and the new steady state will approach:
(A) A higher output level than before (B) The same output level as before.
(C) A lower output level than before (D) The Golden Rule out put level.
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128. A currency appreciation:
(A) Reduces aggregate demand and increases aggregate supply.
(B) Reduces both aggregate demand and aggregate supply.
(C) Increases aggregate demand and reduces aggregate supply
(D) Increases both aggregate demand and aggregate supply.
129. Which of the following statements describes the difference between nominal and real Gross Domestic
Product (GDP)?
(A) Real GDP includes only goods; nominal GDP includes goods and services.
(B) Real GDP is measured using constant base-year prices; nominal GDP is measured using current
prices. (C) Real GDP is equal to nominal GDP less the depreciation of the capital stock.
(D) Real GDP is equal to nominal GDP multiplied by the CPI.
130. After a decrease in the wage, the substitution effect implies that:
(A) Only the amount demanded of capital decreases.
(B) Only the amount demanded of labor decrease
(C) Only the amount demanded of capital increase.
(D) The amount demanded of all inputs increases.
131. A demand curve is price elastic when:
(A) Change in demand are proportionately greater than changes in price.
(B) Changes in demand are equal to changes in price. (C) None of the given options.
(D) Changes in demanded are proportionately smaller than changes in price.
132. The numerical measurement of a consumer’s preference is called.
(A) Use (B) Pleasure (C) Utility (D) Satisfaction
133. Marginal profit is equal to:
(A) Marginal revenue minus marginal cost.(B) Marginal revenue plus marginal cost
(C) Marginal cost minus marginal revenue (D) Marginal revenue times marginal cost
134. The supply curve for a competitive firm is:
(A) Its entire marginal cost curve. (B) The upward-slowing portion of its marginal cost curve.
(C) Its marginal cost curve above the minimum point of the average variable cost curve
(D) Its marginal cost curve above the minimum point of the average total cost curve.
135. Second- degree price discrimination is the practice of charging.
(A) The reservation price to each customer.
(B) Different prices for different blocks of the same good or service.
(C) Different groups of customers different prices for the same products.
(D) Each customer the maximum price that he or she is willing to pay.
136. A market with few entry barriers and with many firms that sell differentiated products is:
(A) Purely competitive. (B) A monopoly (C) Monopolistically competitive. (D) Oligopolistic
137. The market structures in which strategic consideration are most important is:
(A) Monopolistic competition (B) Oligopoly (C) Pure competition (D) Pure monopoly.
138. Consumption spending, investment expenditures, government expenditures and net exports are:
(A) The components of household income. (B) The components of aggregate supply.
(C) The components of aggregate demand (D) The components of government revenue
139. Classical economic was replaced as the dominant theory of macroeconomic analysis by:
(A) Monetarism (B) Rational expectations (C) Keynesian economics (D) Neoclassical economics
140. According to classical economics, the economy will always tend toward full employment due to:
(A) Minimum wages (B) Flexible wages and prices (C) Extended periods of unemployment
(D) Inequality between saving and investment.
141. The real interest rate will increase:
(A) If there is an excess supply of loanable funds in the financial markets.
(B) If there is an excess demand or loanable funds in the financial markets.
(C) If there is an excess supply of loanable funds in the foreign exchange markets.
(D) If there is an excess demand for loanable funds in the foreign exchange markets.
142. What would result from a depreciation of the pound on the foreign exchange market?
(A) An increase in the price of imported computers.
(B) A fall in the purchasing power of US tourists in London.
(C) A fall in the price of imported computers.
(D) An increase in the purchasing power of UK tourists overseas.
143. The news on the television reports that the dollar has strengthened relative to the Japanese yen. This
means that:
(A) The dollar can now purchase more yen.
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 (B) The US trade balance with the Japanese economy has improved.
(C) The yen can now purchase more dollars. (D) The dollar has depreciated relative to the yean
144. In Keynesian economics, if aggregate expenditures are less than aggregate output then:
(A) The price level rises. (B) Inventories decrease
(C) Employment decreases (D) Aggregate output increase
145. Demand is elastic when the elasticity of demand is:
(A) Greater than 0 but less than 1. (B) Greater than 1. (C) Less than 0. (D) Equal to 1.
146. Which of the following statements is TRUE about cartels?
(A) These are considered as part of monopolistic competition.
(B) These are organizations of independent firms, producing similar products that work together to raise
prices and restrict output.
(C) These are organizations of interdependent firms, producing similar products, that work
together to raise prices and restrict output.
147. After the collusion, oligopolists are able to:
(A) Raise price but no restrict output
(B) Raise price and restrict output but not attain the monopoly profit
(C) Raise price and restrict output and therefore attain the monopoly profit.
(D) Restrict output but not raise price.
148. If production remains the same and all prices double, then which of the following will happen?
(A) Real GDP and nominal GDP will both remain constant.
(B) Real GDP will remain constant and nominal GDP will reduce by half.
(C) Real GDP will remain constant and nominal GDP will double.
(D) Real GDP will double and nominal GDP will remain constant.
149. The relationship between hours provided by labor and wage rate is:
(A) Positive (B) Negative (C) Ambiguous (D) Very Strong.
150. If the government wishes to achieve a fall in unemployment, which of the following policies should it adopt?
(A) Reduce the real value of income tax free allowances.
(B) Reduce government spending on capital projects (C) Raise Value Added Tax (VA).
(D) Star public job training programs.
151. In the long run, sustained inflation is due to:
(A) One-time increase in money growth. (B) A continuous increase in the money growth rate.
(C) A continuous increase in aggregate demand (D) The rising price of oil.
152. The situation when a country imports more than it exports is known as:
(A) A trade deficit. (B) A trade surplus. (C) An expansion. (D) A recession.
153. The government has a balanced budget if:
(A) Its total revenues are equals to its total expenditures.
(B) Its total revenues are less than its total expenditures.
(C) Its total revenues are greater than its total expenditures.
(D) The money supply is less than total expenditures.
154. In a period of boom, credit creation is:
(A) Small (B) Heavy (C) Unchanged (D) Zero
155. What will be the impact of an increase in taxes?
(A) It will shift the IS curve to the left and decreases both the interest rate and the level of income.
(B) It will shift the IS curve to the right and increase both the interest rate and the level of income.
(C) It will shift the IS curve to the right and increase the level of income but decrease the interest rate (D)
It will shift the LM curve downward (to the right) and increase the level of income but decrease the
interest rate.
156. Suppose the price of rail tickets decrease, what will happen to the demand for airline travel?
(A) The demand curve for airline travel shifts left.
(B) The demand curve of airline travel shifts right.
(C) The supply curve of airline travels shifts left. (D) The supply curve of airline travels shifts right.
157. Production possibilities curve will shift upward if there is:
(A) A reduction in unemployment (B) An increase in the production of capital goods.
(C) A reduction in discrimination (D) All of the given options.
158. Which of the following is NOT included in the perfect information assumption of perfect competition?
(A) Consumers know their preferences. (B) Consumers know their income levels.
(C) Consumers know their income levels. (D) Consumers can anticipate price changes.
159. Suppose a monopolist set his output at the level where marginal revenue, marginal cost and average total
cost are equal. In this case, economic profit will be:
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 (A) Negative (B) Positive (C) Zero (D) Indeterminate from the given information.
160. “An Enquiry into the Nature and Causes of Wealth of Nations” is book of economist.
(A) Adam Smith (B) Marshall (C) Robbins (D) None of above
161. “Economics is the Science of Wealth” who gave this definition?
(A) J. K Mehta (B) Marshall (C) Adam Smith (D) Robbins
162. “Economics is what economists do. “it has been supported by.
(A) Richard Jones (B) Gunnar Myrdal (C) Comte (D) All of the above
163. “Human Welfare is the subject of Economics.” The statement is associated with the name of which of the
economists?
(A) Marshall (B) Pig- (C) Penson (D) All of the above.
164. Who has given scarcity definition of economics?
(A) Adam Smith (B) Marshall (C) Robbins (D) Robertson
165. “Economics is a science” the basis of this statement is:
(A) Relation between cause and effect
(B) Use of deductive method and inductive method for the formations of laws
(C) Experiments (D) All of the above
166. Characteristics of economic laws are.
(A) Mere statements of economic tendencies (B) Less Certain (C) Hypothetical (D) All of the above
167. Which opinions have revolutionized the scope of macroeconomics?
(A) Price Theory (B) Income Theory (C) Employment Theory (D) None of the above.
168. Whose opinions have revolutionized the scope of macroeconomics?
(A) Adam Smith (B) J. B Say (C) J. M Keynes (D) All of the above
169. Which of the following is an economic activity?
(A) Teaching of a teacher in the school. (B) To teach son at home
(C) To serve her child by mother (D) To play football by a student
170. Passive factor of production is:
(A) Only land (B) Only capital (C) Both land and capital (D) Neither land nor capital
171. Under law of demand.
(A) Price of commodity is an independent variable
(B) Quantity demanded is a dependent variable
(C) Reciprocal relationship is found between price and quantity demanded (D) All of the above.
172. For inferior commodities, income effect is.
(A) Zero (B) Negative (C) Infinite (D) Positive
173. When total utility becomes maximum, then marginal utility will be.
(A) Minimum (B) Average (C) Zero (D) Negative
174. Utility means.
(A) Power to satisfy a want (B) Usefulness (C) Willingness of a person (D) Harmfulness
175. Marginal utility is equal to average utility at that time when average utility is.
(A) Increasing (B) Maximum (C) Falling (D) Minimum
176. At point of satiety, marginal utility is.
(A) Zero (B) Positive (C) Maximum (D) Negative
177. Which of the following is the second law of Gosse?
(A) Law of equi-marginal utility (B) Law of equi-product
(C) Theory of indifference curve (D) Law of diminishing marginal utility
178. Total utility of a commodity is measured by which price of that commodity?
(A) Value in use (B) Value in exchange (C) Both of above (D) None of above
179. In Economics the central problem is:
(A) Money (B) Production (C) Consumption (D) Allocation (E) Scarcity
180. Macroeconomics deals with:
(A) The behavior of firms (B) The activities of individual units
(C) Economic aggregates. (D) The behavior of the electronic industry
181. Microeconomics is not concerned with the behavior of:
(A) Firms (B) Aggregate demand (C) Consumers (D) Industries
182. The study of inflation is part of:
(A) Macroeconomics (B) Normative Economics (C) Microeconomics (D) Descriptive economics
183. The total demand for goods and services in an economy is known as:
(A) Aggregate demand (B) National demand (C) Economy- wide demand (D) Gross National product
184. Indicate below what is NOT a factor of production.
(A) Labour (B) Land (C) Capital (D) A bank Loan
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185. A student chooses to study because the marginal benefit is greater than the ______ cost.
(A) Total (B) Expected (C) Average (D) Marginal
186. The circular flow of goods and incomes shows the relationship between.
(A) Wages and salaries (B) Income and money (C) Goods and service (D) Firms and households.
187. In a free market system, the amount of goods and services that any one household gets depends
Upon its:
(A) Income (B) Wage and interest income (C) Income and wealth (D) Wealth
188. In a planned or command economy, all the economic decisions are taken by the:
(A) Voters (B) Government (C) Consumers (D) Workers
189. When the decrease in the price of one good causes the demand for another good to decrease, the goods are:
(A) Normal (B) Substitutes (C) Complements (D) Inferior
190. Suppose the demand for good Z goes up when the price of good Y goes down. We can say that goods Z and
Y are:
(A) Unrelated goods. (B) Perfect substitutes (C) Complements (D) Substitutes
191. If the demand for coffee decreases as income decreases, coffee is:
(A) A Normal good. (B) A Complementary good (C) A substitute good (D) An inferior good.
192. The price of apples falls by 5% and quantity demanded increased by 6%. This means that demand is:
(A) Elastic (B) Perfectly Elastic (C) Zero Elastic (D) Inelastic.
193. The price of burgers increase by 22% and the quantity of burgers demanded falls by 25%. This indicates
that demand for burgers is:
(A) Unitarily Elastic (B) Elastic (C) Perfectly Elastic (D) Inelastic
194. If the cross-price elasticity of demand between two goods is negative, then the two goods are:
(A) Substitutes (B) Unrelated goods. (C) Normal goods (D) Complements.
195. When the market operates without interference, price increases will distribute what is available to those
who are willing and able to pay the most. This process is known as:
(A) Price Rationing (B) Quantity Setting (C) Price Fixing (D) Quantity Adjustment
196. Macroeconomics distinguishes between the real economy and the.
(A) Monetary Economy (B) Virtual Economy (C) Normative Economy (D) Underground Economy
197. The equation for Anna’s demand curve for CDs is Q = 20 – 5P . If the price of a CD is E18, consumer surplus
will be:
(A) An inflation (B) A Hyperinflation (C) A Trend (D) A peak
198. A utility- maximizing consumer changes their spending for goods X and Y so that:
(A) TUX/PX= TUY/PY (B) MUX=MUY (C) MUX/MUY= PX/PY (D) PX(MUX)=PY(MUY)
199. The MUX/MUY is ten and the PX/PV is eight, so the consumer should buy:
(A) Less X and more Y. (B) More X and Less Y (C) Less X and less Y. (D) More X and More Y.
200. If the income and substitution effects of a price increase work in the same directions the good whose price
has changed is a:
(A) Giffen good (B) Inferior good. (C)Superior good . (D) Normal Good
201. A graph showing all the combinations of capital and Labour available for a given total cost is the:
(A) Isoquant (B) isocost line (C) Expenditure set (D) Budget constraint
202. The formula for average fixed costs in:
(A) Dq/DTFC (B) TFC/q (C) q/TFC (D) TFC-q
203. The formula for average variable cost (AVC) is:
(A) q/TVC (B) TVC/q (C) Dq/DTVC (D) DTVC/Dq
204. If the prices of both goods increase by the same percent, the budget line will.
(A) Shift parallel to the left (B) Shift parallel to the right
(C) Pivot about the x axis. (D) Pivot about the y axis (E) None of the above
205. When the substitution effect of a lowered price is counteracted by the income effect, the good in question
is.
(A) An inferior good. (B) A substitute good (C) An independent good.(D) A normal good
206. A market demand curve can be derived by adding all the individual demand curves.
(A) Vertically (B) Horizontally (C) In Parallel (D) Any of the above as long as it is consistent
207. Some goods are not closely related to each other and are neither substitutes nor complements. For such
goods, the cross-price elasticity of demand would be.
(A) Positive (B) Negative (C) Zero (D) cannot tell without more information
208. For a firm operating in a perfect market, its short-run supply is identical with the rising arm of.
(A) Its marginal-cost curve (B) Its average-fixed-cost curve
(C) Its average-total-cost curve (D) None of the above.
209. `For a competitive firm the demand curve.
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 (A) is horizontal (B) Coincides with the marginal revenue curve
(C) Coincides with the average revenue curve (D) All of the above.
210. Along the long-run supply curve, all of the following can vary except.
(A) The level of profits (B) The number of firms in the industry
(C) Input prices (D) The level of input usage
211. An oligopolistic industry can be characterized by all of the following except.
(A) Many sellers (B) Mutual interdependence
(C) Economies of scale (D) A homogenous product
212. In the neighborhood of the long-run equilibrium of a monopolistically competitive firm, average cost will
be.
(A) Decreasing (B) Constant
(C) Increasing D) At a minimum (E) Either A or C

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