PPSC Economics Full Book MCQ Test With Answers

PPSC Economics Full Book MCQ Test

Sr. # Questions Answers Choice
1 Mercantilism. Is the philosophy of free international trade. Was a system of export promotion and barriers to imports practiced by government . Was praised by Adam Smith in the Wealth of Nations Both a and c
2 International trade is based o the notion that. Different currencies are an obstacle to international trade Goods are more mobile internationally than are resources Resources are more mobile internationally that are goods A country's exports should always exceeds its imports
3 If the international terms of trade settle at a level that is between each country's opportunity cost. There is no basis for gainful trade for either country Both countries gain from trade Only one country gains from trade One country gains and the other country loses from trade
4 The earliest statement of the principle of comparative advantage in associated with Adam Smith David Ricardo E . Heckscher Bertil Ohlin
5 A sudden shift from import tariffs to free trade may induce short term unemployment in. Import competing industries Industries that are only exporters Industries that sell domestically as well as export Industries that neither import nor export
6 International trade in goods and services tends to Increase all domestic costs and prices Keep all domestic costs and prices at the same level Lessen the amount of competition facing home manufactures. Increase the amount of competition facing home manufacturers
7 A feasible effect of international trade is that a Monopoly in the home market become an oligopoly in the world market Oligopoly in the home market becomes a monopoly in the world market Purely competitive firm in the home market becomes an oligopolistic Purely competitive firm in the home market becomes a monopolist
8 increase foreign competition tend to. Intensify inflationary pressure at home Induce falling output per worker hour for domestic workers Place constraints on the wages of domestic workers Increase profits of domestic import competing industries.
9 International trade is based on the idea that Exports should exceed imports Imports should exceed exports Resources are more mobile internationally than are goods Resources are less mobile internationally than are goods
10 The movement to free international trade is most likely to generate short term unemployment in which industries'. Industries in which there are neither imports nor exports Import competing industries. Industries that sell to domestic and foreign buyers Industries that sell to only foreign buyers
11 International trade forces domestic firms to become more completive in terms of. The introduction of new products Product design and quality Product price All of the above
12 If a nation has an open economy it means that the nation. Allows private ownership of capital Has flexible exchange rates Has fixed exchange rates Conducts trade with other countries
13 International trade in good sand services is sometimes used as a substitute for all of the following except. Internationals movement of capital International movement of labor International movements of technology Domestic production of different goods and services.
14 A main advantage of specialization results from Economics of large scale production The specializing country behaving as a monoploidy. smaller production runs resulting in lower unit costs High wages paid to foreign workers
15 A primary reason why nations conduct international trade is because. some nations prefer to produce one thing while others produce another. Resources are not equally distributed to all trading nations Trade enhances opportunities to accumulate profits Interest rates are not identical in all trading nations
16 When the reserve requirement on checking deposits is 0.10 and the Federal Reserve purchases government securities values at Rs. 100,000, the MI money supply. Is unchaged Increase by Rs.100,000 Increases by Rs. 1,000,000 None of these
17 How much of the Rs. 5 billion dollar increase in the government expenditures will be financed by bond sales. Rs.3.5 billion Rs.1.5 billion Rs. 4.9 billion Rs.2.8 billion
18 How much of the Rs.5 billion dollar increase in government expenditures will be recouped in taxes. Rs.1 billion Rs.2 billion Rs.0.9 billion Rs.0.5 billion
19 As a result of the increase in government expenditures disposable income increases by. Rs.10 billion Rs.9 billion Rs.20 billion Rs.5 billion
20 Actual equilibrium is Rs. 1,500 billion and full employment is Rs. 2,500 MPC = 0.75 taxes are zero , and prices are adjustable To eliminate the observed deflationary gap , the government should. Increase G by Rs.1,000 Decrease G by Rs.250 Increase G by less than Rs.100 Decrease G by more than Rs.250 but less than Rs.1000
21 The Central Bank controls money and credit with the exception of. Controlling the money base through open market operations Controlling reserve requirements Setting the discount rate of interest controlling the stock market
22 When there is no change in central banking holding of international reserve balances a country's Trae balance always equals 0 Current account balance always equals 0 Capital account balance always equals 0 Balance of payments always equal 0
23 If the original money supply is MSo and the original demand for money is MDo then The equilibrium interest rate and savings are 5% and 50 The money supply is 200 and equilibrium income is 500 The equilibrium interest rate and income are 5% and 600 The speculative demand is 25
24 A monetary action consistent with the central bank selling bonds in the open market would be. An increase in the reserve ratio A reduction in the discount rate of interest An increase in government spending. a reduction in excise taxes
25 The equilibrium level of saving is. Rs.120 Rs.75 Rs.40 Rs.80
26 The equilibrium level of income is. Rs. 360 Rs.600 Rs.440 Rs.500
27 in The Liquidity trap region Fiscal policy is not effective Monetary policy is completely ineffective Monetary policy is completely effective Fiscal policy and monetary policy are equally effective
28 To move from point E to point E1 is consistent with. Expectations of a constant price level Adaptive expectations that have no adjustment for the period immediately following a change in the actual price Rational expectations and NCM A and B
29 If the money supply change was correctly and fully anticipated for a change of M to MI new classical macroeconomics under the assumption of rational expectations would predict a movement from. Pont Eo to point E1 Pont Eo to point E2 Pont Eo to point E3 Pont E3 to point E2
30 An autonomous increase in the value of the domestic exchange rate. Increases output net exports and the interest rate. Decreases output net exports and the interest rate Decreases output and net exports and increases the interest rate. Increase output and decreases net exports and the interest rate.
Download This Set

Is this page helpful?