PPSC Economics Full Book MCQ Test With Answers

PPSC Economics Full Book MCQ Test

Sr. # Questions Answers Choice
1 If goods are exported for less than society's marginal production cost and the marginal benefit to domestic consumers, it is likely that they benefit from. An import subsidy A quota Comparative advantage An export subsidy
2 An optimal tariff is one which reduces imports to the level at which ___ equals imports , exports The balance of trade, zero The demand for currency, the supply of currency Social marginal cost social marginal benefit
3 A tariff causes domestic firms to __________ and consumers to Overproduced, under consume overproduce , overconsume Underproduce, under consume underproduce, overconsume
4 The imposition of a tariff causes consumption to _______ and imports to. rise , rise fall , rise fall , fall rise , fall
5 The level of the equilibrium exchange rate offsets international difference in. Comparative advantage Absolute advantage Opportunity cost Relative costs
6 The main cause of different relative costs between countries are. Relative factors competition Relative factor mobility Relative factor substitution Relative factor endowments
7 International difference in opportunity costs lead to countries acquiring. Comparative advantage High exchange rates Trade exchange rates Trade barriers
8 International specialization takes place because of. Differences in technology Differences in factor endowments Scale economies All of the above
9 Real business cycle theorists argue that ___________ can explain short and long term fluctuations in output. Imperfect labour markets Rational expectations Intertemporal decisions of households firms and government. Sun spot cycles
10 The business cycle is not transmitted from one country to another through. Private sector imports and exports Economic policy The duration of compulsory education Labour supply changes
11 Real business cycle theories suggest that _____ to correct departures from the desired growth path. There is a role of fiscal policy There is a role for monetary policy There is a role for supply side policies There is no case for stabilizing output over the business cycle.
12 Real business cycle are cycles in Potential output Actual output Real output International trade
13 The impossibility of negative gross investment provides a______ to fluctuations in. Celling, stock building Celling, capital prices floor , output floor , the capital output ratio
14 Real business cycle theory suggests that __________ not important in explaining short term fluctuations around actual output. aggregate supply is aggregate demand is Potential output is Real variables are
15 The multiplier accelerator model assumes _______ depends on. Consumption, expected future profits. Investment, interest rates. Investment expected future profits. Stock building, interest rates.
16 The theory that explains business cycles by the dynamic interaction of consumption and investment demand is the. Sun spect theory Multiplier accelerator model Solow theory New classical theory
17 All of the following are parts of the business cycle except. Boom slump Recovery Acceleration
18 The business cycle describes fluctuations in output around the. Trend path of output Boom Recession Short run fluctuations in output
19 The growth rate of economics tend to converge because._________ is easier when capital per worker is low and because of_____ capital widening, technical innovation Capital widening, catch up in technology Capital deepening, technical innovation Capital deepening, catch up technology.
20 Economic growth may depend upon __________ and_________ <div>Population size , x -efficiency</div> Population age distribution, education Population growth, education Population growth, technical progress
21 In the neoclassical theory of growth a higher saving rate leads to. A higher growth rate A fluctuating growth rate A lower growth rate No change in the growth rate
22 The neoclassical theory of growth identities the steady state rate of growth as the _________ just sufficient to keep _______ constant while labour grows. Saving investment Capital per person productivity Labour growth , output Investment capital per person
23 Potential output can be increased by _________ or by_________ Increasing the use of labour, increasing the use of land Increasing the use of capital, increasing the use of labour Increasing the use of land, increasing the use of capital Increasing the use of all inputs technical advances
24 GDP per head may be an imperfect measure of economic welfare because it excludes. The value of leisure Externalities Untraded goods All of the above
25 In the EMU a country's competitiveness can change because of. Interest rate adjustment Central bank intervention i the forex Domestic wage and price adjustment Devaluations
26 the Maastricht criteria for entry to the EMU are that applicants should have Low inflation Low interest rates Stable nominal exchange rate All of the above
27 All of the following are benefits of the single market except. It allows countries to exploit their comparative advantage, more fully Firms could more readily exploit economies of scale It intensified competition It is easier book holidays in member countries.
28 The single European Act committed_ governments to a ___ in 1992 European union, single market Western European, single currency area European union, single currency area Western European, single market
29 In the ERM, each country fixed ___ against each other ERM participant collectively the group._____ against the rest of the world. A nominal exchange rate, floated A real exchange rate, pegged a purchasing power parity, pegged a real exchange rate, floated
30 Fiscal policy is weak under floating exchange rates as fiscal expansion. Crowds out imports Crowds out public consumption Crowds out exports Reduces the budget deficit
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