PPSC Economics Full Book MCQ Test With Answers

PPSC Economics Full Book MCQ Test

Sr. # Questions Answers Choice
1 Suppose the demand curve for a good shifts rightward, causing the equilibrium price to increase this increase in the price of the good results in. A rightward shift of the supply curve An increase in quantity supplied A leftward shift of the supply curve A leftward movement along the supply curve
2 To determine the total demand for all consumers sum the quantity each consumer demands. At a given price At all prices and then sum this amount across all consumers Both a and b will generate the same total demand None of the above
3 If government regulations prohibit the production of a particular good the demand curve for that good will most likely. Shift leftward Shift rightward Remain unchanged Disappear
4 An increases in the demand curve for orange juice would be illustrated as a. Leftward shift of the demand curve Right ward shift of the demand curve Movement up along the demand curve Movement down along the demand curve
5 If the price of automobiles were to decrease substantially the demand curve for public transpiration would most likely. shift rightward Shift leftward Remain unchanged Remain unchanged while quantity demanded would change
6 If the price of automobile were to decrease substantially the demand curve for automobiles would most likely. shift rightward Shift left eard Remain unchanged Become steeper
7 As the price of a good increases, the change in the quantity demanded can be shown by Shifting the demand curve leftward Shifting the demand curve rightward Moving down along the same demand curve Moving up long the same demand curve
8 Holding all other factors constant consumers demand more of a good the Higher its price Lower its price Steeper the downward slope of the demand curve Steeper the upward slope of the demand curve
9 Which of the following is an example of a normative statement. Since this good is bad for you, you should not consume it. this good is bad for you If you consume this good you will get sick People usually get sick after consuming this good
10 Most Microeconomic models assume that decision makers wish to. Make themselves as well off as possible Act selfishly Not cooperate with others None of the above
11 Economists tend to judge a model based upon the realty of its assumptions The accuracy of its predications Its simplicity Its complexity
12 The purpose of making assumptions in economic model building is to. Force the model to yield the correct answer Minimize the amount of work an economist must do simplify the model while keeping important details. Express the relationship mathematically.
13 If export's are a constant proportion of GNP such that E = 18 GNP, find the level of imports that would represent a zero trade balance when GNP = 10,000 180 555 1,800 5,555
14 Prohibiting a trade between two people Will promote economic efficiency Probably Will inhibit productive efficiency Might be necessary if resources are to be put to their most highly valued uses Will have no effect on other persons.
15 Trade based on comparative advantage assures that. Only the strongest suvrive Some people are rich and others are poor Each item is produced using the least amount of time needed to produce it Each item is produced at as low a cost possible in terms of other things given up
16 according to factor price equalization theorem, if country A is labor abundant then once trade opens. Wages and rents should fall in A Wages and rents should rise in A Wages should rise and rents should fall in A Wages should fall and rents should rise in A
17 Small nations with more than one major trading partner lend to peg the value of their currencies to. gold silver a single currency a basket of currencies
18 Small nations whose trade and financial relationships are mainly with a single partner tend to utilize. Pegged exchange rates Freely floating exchanged rates Managed floating exchange rates Crewing exchange rates.
19 Which exchange rate system does not require monetary reserves for official exchange rate intervention. Floating exchange rates Pegged exchange rates Managed floating exchange rates Dual exchange rates
20 Which exchange rate mechanism calls for frequent redefining of the par value by small amounts to remove payments disequilibrium. Dual exchange rates Adjustable pegged exchange rates Managed floating exchange rates Crawling pegged exchange rates.
21 Which exchange rate mechanism is intended to insulates the balance of payments from short term capital movements while providing exchange rate stability for commercial transactions. Dual exchange rates Managed floating exchange rates Adjustable pegged exchange rates Crawling pegged exchange rates.
22 The exchange rate system that best characterizes the present international monetary arrangement used by industrialized countries is. Freely fluctuating exchange rates Adjustable pegged exchange rates Managed floating exchange rate. Pegged or fixed exchange rates
23 The balance of trade can only worsen if income_______ relative to absorption Increases Decreases Does not change None of the above
24 The balance of trade can only worsen if income________ relative to absorption Increases Decreases Adjustment mechanism Currency contract period
25 the_____________ analysis considers the ability of domestic and foreign prices to adjust to devaluation in the short run. Pass through Absorption Adjustment mechanism currency contract period
26 The asset market approach is most helpful in explaining. Why exchange rate remain quite stable Why government change their money supplies Long term exchange rate movements Short term exchange rate movements
27 Exchange rate overshooting often occur because. Domestic prices adjust slowly to shifts in demand Military spending increases during military's confects Elasticities are smaller in the long run than the short run Elasticities are smaller in the short run than the long run.
28 When the price of foreign currency the exchange is above the equilibrium level. an excess supply of that currency exists in the foreign exchange market. an excess demand for that currency exists in the foreign exchange market The supply of foreign exchange shifts outward to the right the supply of foreign exchange shifts backward to the left
29 When the price of foreign currency exchange is above the equilibrium level. An excess demand for that currency exists in the foreign exchange market. An excess supply of the currency exists in the foreign exchange market The demadn for foreign exchange shifts outward to the right The demand for foreign exchange shifts backward to the left.
30 The relationship between the exchange rate ad the prices of tradable goods is known as the. Purchasing power parity theory Asset markets theory Monetary theory Balance of payments theory
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