Question # 1

What is the average money balance according to the square root rute if income is Rs.1500, each transaction cost is Rs.4, and the opportunity cost of holding money is.2%

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387

50

175

203

Expansion in money supply stems from.

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Increasing the cost of bank credit

Reducing availability of bank credit

Reducing the financial cost of bank credit

None of above

Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.

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Left ward ; LM

Right ; LM

Left ward ; IS

Left ward ; AD

When a market is contestable , incumbent firms must.________ to avoid the entry of new competitors.

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Behave like competitive firms

Agree to act together

Differentiate their products

Practice price discrimination

The term of trade in Pakistan remained unfavorable regarding.

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Industrial sector

Services sector

Agricultural sector

All of these

If the price of factor A is Rs.8.00 per hour, and its marginal product is 10 units, and the price of factor B is Rs. 5.00 and its marginal product is 9, is the producer is likely to.

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Hire more of A and less of B

Hire more of B and less of A

Start paying factor A more

Try to use factor B more productively

The world narrative derived from Latin verb

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Quantitative research

Qualitative research

Descriptive research

Experimental

If B is a subset of A ,then A is a

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Super set of B

Sub set of B

Empty set of B

Universal set of B

Duopoly is a market situation when there is

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Single seller

Many seller

Two seller

Few seller

A activates which do not promote human welfare cannot be encouraged.

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Western estate

Police state

Islamic estate

None Islamic estate

If the State bank of Pakistan wished to pursue a light monetary policy it would.

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Lower the required reserve ratio and the statutory liquidity ratio.

Lower interest rates

Buy government securities on the open market

Sell government securities on the open market

A linear homogenous production function would reveal.

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Constant returns to scale

Increasing returns to scale

Decreasing return to scale

Doubling all inputs would more than double output

Which of the following groups is most hurt by unexpected inflation.

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Workers with cost of living adjustments in their labor contracts

Home owners

People with large debts to pay for their homes and cars

People with large retirement savings held in savings accounts.

Of the following which one is a characteristic of monopolistic competition.

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Standardized product

Comparatively easy only

Little non price competition

None of these

The income elasticity of inferior goods is

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Zero

Positive

Negative

Unitary

First Islamic banking branch of NBP started its operations in Karachi onDecember 15

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2004

2005

2006

2007

Relation with other aspect of research creates.

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Values related problem

Ethical problem

Personal prejudice and bias

Moral dilemmas

Which of the following will cause a monetary induced change versus a fiscal induced change in equilibrium income as determined.by IS - LM analysis.

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A shift in the consumption function

A shift in government expenditures

A change in liquidity preference

A change in a government expenditures

If there is a financial panic and increased uncertainty about the return in the stock market and bond market what is the likely effect on money demand.

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Money demand declines first then rises when inflation increases

Money demand rises

The overall effect its ambiguous

Money demand declines

Which of the following is a NOT component of M-2.

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Small time deposited

Money market mutual funds

Stocks

Checkable deposits

A decrease in lump sum taxes is an examples of.

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Contractionary fiscal policy

Expansionary fiscal policy

A change in induced taxes

A and c

Economists tend to disagree primarily about.

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The implications of scarcity for our economy

Which resources are free

Topics in positive economics

Issues of normative economics

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 expected profit from the profit distribution above is.

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40 units

60 units

100 units

20 units

Open market operations occur when the government.

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Reduces the interest rate

Buys and sells bonds and securities

Increases taxation

Increases the exchange rate

Marginal cost is the change is cost the result from a one unit increase in.

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Price

Cost

Output

Revenue

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

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Deficit

Surplus

Revaluation

Devaluation

Consider the five panels of the figure on the previous page in which panel would the simultaneous imposition of restrictive monetary policy and expansionary fiscal policy cause the largest increase in interest rates.

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Panel a

Panel b

Panel c

Panel d

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.

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Total Physical product begins to fall

The marginal physical product rises

The marginal physical product falls

The average physical product falls.

If I keep some money available in case I see a bargain this is an example of.

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Asset demand for money

Transactions demand for money

Token demand for money

Precautionary demand for money

A decrease in the quantity of money supplied shifts the money supply curve to the________ and the equilibrium interest rate

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right ; fall

right ; rises

left ; falls

left ; rises

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