Question # 1

The monetary base in composed of.

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Gold and silver

Currency only

Currency and reserves

Currency and checkable deposits

Two commodities are considered to be perfect substitutes for each other if the elasticity of substitution is

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Positive

Negative

Infinite

None of these

A monopolist will maximize profit.

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Where total revenue is maximized

Where the slope of the total revenue function equals the slope of the total cost function

Where average cost is at a minimum

Where all the above are ture

The central bank of a country plays a significant role in her macroeconomics performance by regulating the.

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Money supply

Supply credit

Interest rate

All of these

In which of the following situations will an increase in the money supply have no effect upon equilibrium iincome.

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LM is steeply sloped and IS is relatively that

LM is vertical and IS is stopped

LM is steeply sotped and IS is vertical

LM is relatively flat as is IS

According to the Hackscher - Ohlin model the source of comparative advantage is a country's

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Technology

Advertising

Factor endowments

both a and c

If the price of an apple increased from 50 to 60 the quantity demanded will decrease because of.

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The substitution effect only

The income effect only

A change in income

The substitution and income effects.

The demand for labor slopes down and to the right because of.

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The law of demand

The iron law of wages

The law of diminishing marginal returns

Economies of scale

An increase in costs will

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Shift aggregate demand

Shift aggregate supply

Reduce the natural rate of unemployment

Increases the productivity of employees

Full- employment output is the level of output that firms in the economy supply when

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Taxes are zero

Wages and prices have fully adjusted

The unemployment rate in zero

All capital is fully utilized

The key feature of oligopoly is.

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Excess capacity

High profitability

Product differentiation

Interdependence of firms

The firm under monopolistic competition is likely to produce less and set a higher price than under perfect competition because.

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The firm faces decreasing returns to scale

The firm faces increasing costs

The firm must incur selling expenses including advertising.

The firm faces a downward sloping demand curve

What does ceteris paribus mean.

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"Scientific method"

"Rational thinking"

"Other things remaining the same"

"There is no such thing as a free lunc"

An increase in the wage rate.

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Will usually lead to more people employed

Will decrease total earnings if the demand for labour is wage elastic

Is illegal in a free market

Will cause a shift in the demand for labour

Which of the following index numbers is an important statistical concept in economic theory.

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Per capita income

Cost of living

Gross National product

Maximum Retail price

The near term effect of an unexpected sale of bonds by the central bank is.

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An increase in interest rates, a risen investment and a rise in GDP

An increase in interest rates a drop in investment and a drop in GDP

A decrease in interest rtes a rise in investment and a rise in GDP

A decrease in interesr rates a drop in investment and a drop in GDP

A decrease iin money demand other thing equal shifts the _____ curve to the

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IS ; right

Is ; Left

LM ; Left

LM ; Rfight

The agricultural price support program is an example of.

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A price celling

A price floor

Equilibrium pricing

None of these

A widely used indicator to differentiate developed countries from developing countries.

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International trade per capita

Real income per capita

Unemployment per capita

Calories per capita

Which of the following correct about firms in an oligopoly.

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Each firm has complete control over its own selling price

All firms independently charge monopoly prices

No one firm controls price but each has an influence on the price

There is no competition in oligopoly industries

Profit is measured by

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Revenue - Fixed costs

Fixed cost + revenue

Revenue - sales

Revenues - total costs

If for the output of worth 1 million the stock of capital worth 4 million is required this will be.

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capital profit ratio

Output profit ration

Capital output ratio

Capital input ratio

State Bank of Pakistan was established in

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July 1st 1948

July 1st 1952

July 1st 1953

July 1st 1947

A decline in the money__________ shifts the LM curve to the ____ causing the interest rate to rise and output to fall.

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Demand ; right

demand ; left

supply ; right

supply ; left

The allocation of resources is not efficient it

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The marginal cost of production does not equal society marginal benefit

The distribution is inequitable

Economic growth is low

Unemployment is high

If inflationary expectations increase, the short run Phillip's curve will

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Become vertical

Become up warding sloping

Shift to the right

Shift to the left

"An Enquiry into the Nature and causes of wealth of Nations" is thebook of economist.

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Adam smith

Marshall

Robbins

None of above

The data indicates that country A in billions of rupees is experiencing a

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A deficit of Rs.60

A surplus of Rs. 300

Deficit of Rs.900

A deficit of Rs. 500

The law of diminishing marginal returns to a factor of production is.

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Not applicable

Another explanation of economies of scale

A principle of scales

None of these

Expansionary monetary policy

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Tends to lead to an appreciation of nation's currency

Usually has no effect on a currency's exchange value

Tends to lea dto a depreciation of the currencies of other nations

Tends to lead to a depreciation of a nation's currency.

What happens to the money supply if the deficit is financed by selling bonds to the general public.

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The money supply increaes

The money supply decreases

The money supply is unaffected

We cannot tell what will happen to the money supply

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