PPSC Economics Full Book MCQ Test With Answers

PPSC Economics Full Book MCQ Test

Sr. # Questions Answers Choice
1 The asset market approach a more helpful in explaning. why excahnge rates remain quite stable Why governments change their money supplies. Long term exchange rate movement. Short term exchange rate movement.
2 Starting from a position where the nation's money demand equals the money supply and its balance of payments is it equilibrium, economic theory suggest that the nation's balance of payments would more into a surplus position if there occurred in the nation a. Decrease in the money supply Increase in the money supply Decrease in the money demand any of the above
3 The relation ship between the exchange rate and the prices of tradable goods is known as the. Purchasing power parity theory Asset markets theory Monetary theory Balance of payments theory
4 Currency speculations is_________ if speculators bet against market forces that cause exchange functions, thus moderating such fluclutions. Destabilizing Stabilizing Inflationary Deflationary
5 Riskless transactions to take advantage of profit opportunities due to a price differential or a yield differential in excess of transaction costa are called deferential actions Cash transactions, Arbitrage Forward transactions
6 Comparative advantage is determined by Actual difference in labor productivity between countries. Relative difference in labor productivity between countries. both a and b Neither a and b
7 Absolute advantage is determined by., Actual difference in labor productivity between countries. Relative difference in labor productivity between countries. Both a and b neither a and b
8 In the classical model of Ricardo the direction of trade is delemined by. Absolute advantage Comparative advantage Physical advantage Which way the wind blows
9 The earliest statement of the principle of comparative advantage is associated with. Adam Smith David Ricardo Eli Heckshcer Berti Ohlin
10 a nation with a current account deficit will be Lending more money to other nations Experiencing a surplus in exports of goods and services. Reducing its indebtedness to other nations Going further into debt with other nations
11 International trade is based on the idea that. Exports should exceed imports Imports a should exceed exports Resources are more mobile internationally than are goods Resources are less mobile internationally than are goods.
12 International trade forces domestic firms to become more competitive in terms of. The introduction of new products Product design and quantity Product price All of the above
13 International trade in goods and services is sometimes used as a substitute for all of the following except. International movements of capital International movement of labor International movement of technology Domestics production of different goods and services
14 The central economic problem in an economy refers to. The prevalence of unemployment To allocate scarce resources between competing uses. Consumers having less money than they would like ensure that production costs are converted by sales revenue.
15 If an economy experience an increase in productivity it means that. the level of output has risen Employees are working harder than before Output per unit of input has risen Technical change has taken place
16 The multiplier for a change in social security benefits is equl to the multiplier for a change in the same direction in salaries of Evanston police officers tiems. the marginal propensity to save Minus the marginal propensity to save The marginal propensity to consume Minus the marginal propensity to consume
17 Which provides the best explanation of the failure of many poor countries to experience economic growth as rapid as the rich countries.. Classical growth theory Neoclassical growth theory New growth theory Market failure
18 Depreciation is. A decrease in the stock of capital Gross investment Net investment An increases in the stock of capital
19 Which of the following NOT a source of economic growth. Investment in new capitals Labor productivity Investment in human capital Technology advances
20 Productivity can grow. If capital per hour of labor increases. If there are no technological advances. If capital per hour of labor decreases If real GDP per hour labor decrease and capital per hour of labor increases.
21 The productivity curve Is given by the labor productively Shows the change in real GDP per hour of labor as the amount of capital per hour labor changes Shows the change in technology Is given by the equation Y = F ( L,K, T)
22 A decrease in lump sum taxes is an examples of. Contractionary fiscal policy Expansionary fiscal policy A change in induced taxes A and c
23 the difference between actual and planned expenditure is equal to. X -M M- X Unplanned inventory change Excess reserves of depository institutions.
24 In Balance of payments accounting tourism and travel are classified in the Merchandise trade account Services account Unilateral transfers account Capital account
25 In the short run an increase in the quantity of money ______ real GDP and _ the price level. increases ; raises does not change ; lowers decreases ; raises decrease ; lowers
26 The larger the required reserve ratio the. Smaller is the deposit multiplier Larger is the deposit multitier Larger is the amount of total deposits that can created from a new deposit Larger is the amount of total money that can be created from a withdrawal
27 Your checking account is An asset for you and a liability for your bank A liability for you and an asset for your bank An asset for both you and your bank A liability for both you and your bank
28 According to the crowding out effect, a there is a government deficit, the real interest rate will.__________ and investment will_________ rise ; rise fall ; rise rise ; fall fall ; fall
29 The investment demand curve shifts right ward if The real interest rate falls Savers increase their thriftiness The expected profit rate increases. The economy moves into a recession
30 Accordant the wealth effect , an increase i the price level _______ real wealth and ____ consumption expenditure. Increase, Increases. Increases ; decreases decreases ; increases decreases ; decreases
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