PPSC Economics Topic 11 MCQS Test Preparation

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MCQ's Test For PPSC Economics Topic 11 Assess Your Basics

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PPSC Economics Topic 11 Assess Your Basics

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Question # 1

Starting from a position of internal and external balance a reduction in aggregate demand will cause a current account.

Question # 2

Monetarists believe that a reduction in _____ can be achieved by reducing.

Question # 3

The opportunity cost of a student is.

Question # 4

The prisoners Dilemma Game demonstrates that.

Question # 5

If banks and the private sector decide to hold less cash the money multiplier will be.

Question # 6

a demand curve can shift because of changing.

Question # 7

Taxes create a wedge between the sales price and purchase price that prevents the price system equaling _________ and

Question # 8

In a competitive industry each buyer and seller.

Question # 9

Adding up the quantities demanded of a good by different people facing the same price gives us the.

Question # 10

Aggregate demand in an economy trading internationally with a government sector can be written s.

Question # 11

One of the transmission mechanism of monetary policy is through consumer house hold wealth.___________ and consumption.

Question # 12

In the ERM, each country fixed ___ against each other ERM participant collectively the group._____ against the rest of the world.

Question # 13

The business cycle is not transmitted from one country to another through.

Question # 14

Output fell sharply in the transition economies because.

Question # 15

At the intersection of AD and AS equilibrium is achieved in.

Question # 16

If one country, with floating exchange states, has higher inflation than its competitors, we would expect its exchange rate to.

Question # 17

If British Residents want more French francs to purchases more fresh wine, other things equal than the equilibrium value of the pound against the French farce will.

Question # 18

Starting from a balanced budget, for a given tax rate an increase in income will cause the government budget to.

Question # 19

The main cause of different relative costs between countries are.

Question # 20

Under floating exchange rates, expectations of higher interest rates are likely to cause an __________ of the exchange rate.

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Economics
11th Chapter

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Sr. # Question Answer
1 Economic transition involves high inflation because ______ and _____

A. High monetary growth, high wages.

B. High budget deficits, devaluation

C.High monetary growth, devaluation

D. Prices surge from an artificially low level to their equilibrium level the inflation tax is required as source of government revenue.

2 The key issues of macroeconomics are

A. Unemployment

B. Inflation

C.Economic growth

D. All of the above

3 International difference in opportunity costs lead to countries acquiring.

A. Comparative advantage

B. High exchange rates

C.Trade exchange rates

D. Trade barriers

4 The quantity theory of money says that changes in ______ lead to equivalent changes in ______ but have no effect on.

A. Prices, wages, output and employment.

B. Output, prices, employment

C.Nominal money, the price level output and employment.

D. Nominal money output prices

5 All of the following are parts of the business cycle except.

A. Boom

B. slump

C.Recovery

D. Acceleration

6 If a country has a burden of debt it cannot sustain it can.

A. Reschedule debt

B. Get a loan from an international organization

C.Default on the loan

D. Any of the above

7 Leakages from the circular flow are____ and _____

A. Investment savings, government expenditure

B. Saving , taxes net of subsidies, imports

C.Consumption, investment , government expenditure.

D. Consumption, taxes, impports

8 In the short run, the supply of capital is _______ and in the long run iwll depend on.

A. Variable technology

B. Fixed, expectations

C.Fixed, rental rate of capital

D. Variable, interest rates.

9 The costs of inflation are

A. Shoe leather costs

B. Menu costs

C.Income redistribution

D. All of the above

10 The primary function of a bank is to.

A. Control the money supply

B. Provide notes and coins for trade

C.Make a profit

D. Provide a chequeen clearing system.

11 All of the following are type of monetary policy except

A. A nominal money stock target

B. A balances budget

C.An inflation target

D. The pursuit of a target real interest rate

12 If banks and the private sector decide to hold less cash the money multiplier will be.

A. Unchanged

B. Larger

C.Smaller

D. unstable

13 The equilibrium inflation rate is determine by the intersection of __________ and ___

A. demand, supply

B. IS , LM

C.AD, AS

D. Labour demand, labour supply

14 The short run marginal cost curve cuts the short run total cost curve and short run average variable cost curve.

A. At their lowest points

B. When they are declining

C.When they are increasing.

D. When marginal revenue is zero

15 When real income increases, other things equal we fan expect the demand for real money holdings to.

A. Fall

B. Not change

C.Increase

D. Decrease

16 In a free market

A. Government intervene

B. Government plan production

C.Government interfere

D. Price adjust to reconcile scarcity and desires.

17 In the event of an increase in the international price of oil that encouraged the central bank to accept lower real interest rates, inflation would most likely.

A. Fall

B. Increases

C.Remain the same

D. Fluctuate

18 A reduction in interest rates, causes an increases in the monetary base that result in an_____ in the availability of consumer credit and a _ in the cost of consumer credit.

A. Reduction, increases

B. reduction,reduction

C.increase, reduction

D. increases, increases

19 M4 is a _________ measures of money and includes deposits at both _____________ and

A. Narrow, banks, building societies

B. Wide, banks, insurance companies

C.narrow, banks, insurance companies

D. Wide, banks, building societies.

20 The impossibility of negative gross investment provides a______ to fluctuations in.

A. Celling, stock building

B. Celling, capital prices

C.floor , output

D. floor , the capital output ratio

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