PPSC Economics Chapter 1 Basic Economics With Answers

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PPSC Economics Chapter 1 Basic Economics

Sr. # Questions Answers Choice
1 Why is the law of diminishing marginal returns true. specialization and division of labor Spreading the average fixed cost Limited capital All factors being variable in the long run
2 Exchange rates that are determined by the unregulated forces of supply and demand are. Floating exchange rates Pegged exchange rates Fixed exchange rate Managed exchange rates
3 All currencies other than the domestic currency of a given country are referred to as. Reserve currencies Neal monies Foreign exchange Hard currency
4 If inflationary expectations increase, the short run Phillip's curve will Become vertical Become up warding sloping Shift to the right Shift to the left
5 If input price adjusted very slowly to output prices, the Phillip's curve would be. Downward sloping Vertical or nearly vertical Upward sloping Horizontal or nearly horizontal
6 The index used most often to measure inflation is the Consumer price index Wholesale price index Student price index Producer price index
7 The accelerator theory of investment says that induced investments determined by. The rate of change of national income Expectations The level of national income The level of aggregate demand
8 If injection are less than with drawls at the full employment level of national income there is. an inflationary gap Equilibrium A deflationary gap Hyperinflation
9 The law of diminishing returns states that as more of a variable factor is added to a certain amount of a fixed factor beyond some point. Total Physical product begins to fall The marginal physical product rises The marginal physical product falls The average physical product falls.
10 As the MPS increases, the multiplier will Increase Either increase or decrease depending on the size of the change in investment Remain constant Decrease
11 Which of the following is not an obvious or direct determinant of a country's imports. Real exchange rate Income Tariff rates Interest rate
12 Which is the most volatile component of aggregate demand. Net exports Consumption Investment Government spending
13 Which of the following is a determinant of consumption. Expectations about future prices Level of indebtedness of consumers The price level All of the above
14 Say's law states that Supply creates its own demand Demand creates its own supply There is no such things as a free lunch Macro economics policy activism is essential to ensure full employment.
15 The hypothesis that people know the true model of the economy and that they use this model and al available information to form their expectations of the future is the Relational expectations hypothesis. Active expectations hypothesis Static expectations hypothesis Adeptive expectations hypothesis
16 Rapid increases in the price level during periods of recession or high unemployment are known as. Slump Stagnation Stagflation Inflation
17 In a market system sellers act in ___ interest, but this leads to behaviors in ___ interest. Self : self Self ; society's Society's ; society's society's, self
18 The economists who emphasized wage flexibility as a solution for unemployment were. Monetarists New keynesians Classical economists Keynesians
19 Prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded are. Market prices Sticky prices Fixed prices Regulatory prices
20 Government policies that focus on increasing production rather than demand are called. Fiscal policies Monetary policies Incomes policies Supply side policies
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