PPSC Economics Full Book MCQ Test With Answers

PPSC Economics Full Book MCQ Test

Sr. # Questions Answers Choice
1 In which of the following situations will an increase in the money supply have no effect upon equilibrium iincome. 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
2 Ahmed uses dummy variables in order to determine the monthly seasonal effect in her regression model. The number of dummy variables used will be. 5 11 12 1
3 Ahmed regression model yields a Durbin Watson d statistic whose value is 0.002. The results indicate. Positive serial correlation the presence of multicollinearity No serial correlation Negative serial correlation
4 If the reserve deposit ratio is 0.25 and the ratio of currency in circulation to deposits is 0.3, the potential money multiplier will have a value of. 2.36 0.42 1.20 0.96
5 If government spending of Rs. 10 and a lump sum tax of Rs.10 is added, the empirical equation for the new IS curve becomes. Y = 285 + 20 I Y = 270 - 10 i Y = 285 - 50 i Y = 210 - o.5 i
6 Given the data above, the empirical equation for the IS curve is. Y = 275 + 10 i Y = 225 + 50 i Y = 250 - 10 i Y = 275 - 501
7 The multiplier that applies to changes in autonomous investment is identical to changes in. Autonomous government expenditures Autonomous consumption expenditures Autocoups exports All of the responses above
8 Given the saving equation S = - 50 + 0, 20 Y, where s is saving and Y is income. The break even level of income is 240 Dissaving takes place if income is 300 Consumption expenditures and saving are equal at an income level of 500 The MPS is constant for all levels of income
9 An increase in investment leads to an increase in income and consumer spending, which in turn leads to a further increase in investment spending This is example of. The expenditure multiplier Explosive gowth Hyperinflation Interaction of multiplier and accelerator
10 In closed economic model aggregate demand is not sensitive to. Interest rates Exchange rates Price level Tax policy
11 A Rs.10 increase in autonomous investment spending shifts IS Rightward by Rs.10 Leftward Rs.10 Rightward by Ke (Rs.10) Leftward by Ke (Rs.10)
12 When investment spending is negatively related to the rate of interest, equilibrium income in the goods market. Is unrelated to the rate of interest Is positively related to the rate or interest Inversely related to the rate of interest Falls as the rate of interest decreases
13 When total utility becomes maximum then marginal utility will be. Minimum Average Zero Negative
14 For interior commodities income effect is. Zero Negative Infinite Positive
15 An expansionary supply side shock results in. An increased real national income The aggregate supply curve shifting to the left The aggregate demand curve shifting to the right The aggregate demand curve shifting to the left
16 If government tax function is T = 80 + .6 Y and the marginal propensity to consume is a constant 8 and increase in GNP of Rs.50 would cause consumption to. Increase by Rs.16 Decrease by Rs.16 Increase by Rs.40 Decrease by Rs.30
17 A decrease in the marginal propensity to import will lead to. An increase in GNP Lower the multiplier An increase in imports A decrease in imports
18 The econometric problem of errors in variables leads to Ballasted estimates of regression coefficients. Autocorrelation Unbiased estimates of regression coefficients but non minimum variance of estimated coefficients. None of the above
19 If the price level for an economy was 100 in 1984 , 115 in 1985 and 125 in 1986 the rate of inflation between 1985 and 1986 was. 105 8% 8.7% 17.5%
20 The Laffer curve depicts A trade off between tax rates and government receipts Price levels and real income government deficits and unemployment Tax rates and infixation
21 When GNP is Rs.500 billion and consumption expenditures are Rs.300 billion. the MPC is 6 The MPS is 4 The Multiplier is 2.5 None of the above
22 If nominal GNP were Rs.1000 ballooning 1976 and Rs.2200 billion in 1986, and the implicit GNP deflator was. 1.2 in 1976 and 1.6 in 1986 concluded that . Real GNP increased by approximately Rs. 542 billion from 1976 to 1986 The price level fell from 1976 to 1986 Real GNP increased by 35% Nominal GNP increased by 80%
23 If investors expectations concerning the future are positive and thus increase investment at every interest rate the. IS curve would shift up IS curve would shift down LM curve would shift down IS and LM curves will not shift
24 When the supply of money increases. The LM curve will shift in The LM curve will shit out The demand for money will decrease The demand for money will increase
25 A commercial bank has a required reserve ratio of 20% and desires to hold 5% in excess reserves. the bank receives a Rs. 10,000 deposit. It it abides by the required reserve ration and its desire to hold excess reserves the bank can make a loan of a most. Rs.7500 Rs.2500 Rs.5000 Rs.30,000
26 If the sampi is accepted as coming from a universe with a mean of Rs.500 or greater when if doesn't. A Type II error is made A type I error is mad The alternative hypothesis is correct. A and C are correct
27 The hypothesis would the tested with A two tailed test A one tailed test with the rejection region in the left tail a one tailed test with the rejection region on the right tail The normal distiribution
28 A firm's total labor cost when six workers are employed is Rs.580 When seven workers are employed the total labor cost is Rs.700 the Rs. 120 change in total labor cost represents. Marginal physical product Marginal resources cost Marginal cost Marginal revenue
29 Which of the following factors will cause the demand curve for labor to shift to the right. The demand for the product produced by labor declines. The prices of substitute imputes falls The productivity of labor increases None of the above
30 When the Central Bank initiates actions which will lead to an increase in the supply of money IS -LM models tell us to expect that. The interest rate will rise The interest rate will decline The price level will not change Investment will decline
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