17

Economics
1. "'The true national income Is that part of the annu.l net produce which Is directly consumed during
that year'' who said this:
(A) FISHER (8) PIGOU (C) SIMON (0) ROBBINS
2. Who has 1lven the concept of "Wa1e fund theory".
(A) J S MIU (B) Marshall (C) Rlcardion (0) Jevons
3. Both households and societies face many decisions because:
(A) Resources are scar<e (8) Populations my increase or decrease over time
(C) Wases for households and therefore society fluctuate with business cycles
(0) People, by nature, tend to disagree.
c. Which of the following ls NOT lnduded In the decisions that every society must make?
{A) What goods will be produced (8) Who will produce goods
(C) What determines consumer preferences (O) Who will consume the goods
5. Economics deals primarily w ith the concept of.
(A) Scarcity (B) Poverty (C) Change (D) Power
6. Households and economies have each of the following in common EXCEPT bot h.
(A) Must allocate scar~ resources (Bl Face many decisions
(C) Must allocate the goods and services they produce (D) Must have a central decision maker.
7. The word economy comes f rom the Greek word for.
(A) "Environment." (8) "Or'!t who m1n1aa household."
(C) "One who participates in a market (D) "Conservation?"
8. The word that comes from the Greek word for " one who manages a household" Is.
(A) Market (8) Consumer· (C) Producer (0) Economy.
9. A monopsony Is:
(A) The sole supplier of an input (8) The sole supplier of an output.
(C) The sole buyer of some type of Input (O) A unionized Industry
10. Price discrimination is:
(A) Illegal (8) A technique that can Improve the firm's revenue and profit performance.
(C) Immoral In most cases (D) Difficult to administer
11. If a monopoly is unable to cover its short-run variable costs, It should.
(A) Shut down (B) Raise price (C) Lower price (D) Increase output
12. If the monopolist maximizes profits when marginal revenue equals marginal cost equals averc1ge cost,
economic profits must be.
(A) Ne1ative (8) Positive (C) Zero (D) Either A or C
(E) Cannot tell from the information given.
13. If a monopolist has only fixed costs and choses that output at which marginal cost equals price, it will.
(A) Earn posit ive economic profits (B) Earn zero economic profits
(C) Incur a loss equal to its variable costs. (D) Incur a loss equal Its fixed costs.
14. If a monopolls-t had no costs, the best possible price would be where demand Is.
(A) Infinitely ela,..lc (8) Relatively (but not perfectly) elastic
 11
1
(0) Ref1tfvefv (bu t not compietefv
) Inelastic (E) CO m~ fv lneqltic:
(CJ Unit e1attk
15. Per ton 1I Inc om e me ans·. come (0) Old Inc om e
,.. (8) Famlfv Inc om e (C) Go vt In
~J 0M t Income
16. National income per iod Is: (0) Tw oy ur
(C) fou r year
IAJ One ¥U r (8) Th rN year
17. Factors of pro duc tJo n are: (DJ Four
(CJ TWO
(A) On e {8) Thr ee
18. In fflOnOpofy the number of firms Is: (0) Unlimited
(B) Thr ee (C) Tw o
IA) One
m Is:
19. The oth er nam e of law decre1sin1 mu
(IJ l.aW of lncrUIMI cost
(A) law of decreasl111 cos t
(0) uw of lnaUSUII return
(C) law of constant cos t
20. Av era p revenue Is equal to: revenue (D) Ave raa e cos t
(AJ Price (8) Ma,aJnat revenue (C) Total

21. Wh en pric e falls supply: (D) Fix ed

(B) Zero
(C)Minimum
(A) Maximum
22. Wh en pric e falls sup ply : (D) Bec om e fixed
(BJ Remains zero (C) Co n., _..
(A) Exp and s
23. Sk, pe of demand curve Is: (0) Fbced
(BJ Zero (CJ Positive
(AJ Ne pth e
ion?
24. Wh o ls the writer of Wealth of Nat (D) Key nes
(IJ Ad am Sm idt (C) Rob bln s
(AJ Ma rsh all
es:
25. When national Inc om e Is ina eas
(8) Standard of living decreases
(AJ Standard ol hlfll lncri■1111
(0) Bad thine
(C) Remains same
26. Inf lati on on pri ces: (D) Become Zero
(A) Decrease (8) Remains constant (C) lnc raN
27. Phases of trade cyd e are:
(C) Two (DJ Four
(A) One (8) Three
s:'
28. International trade has the ben efit
(8) Three (C)Two (DJ Un llm ltH
(A) One
29. canons of taxation des crib e: (DJ Adam Smith
(BJ Key nes (C) Robbins
(A) Ma rsh all
30. Wh o wro te "The Na tur e and Siln
iflcance of Eco nom a-.
(CJ llobiftl (0) Key nes
(A) Adam Sm ith (8) Ma rsh al
Jon?
31. Wh o crf tid ted Prof. Robbin's deflntt
(CJ Carte (0) Pig eou
(A) Ma rsh all, J.8 (IJ ltw rld p
dinal The ory of Uti lity:
32. Which eco nom ist presented the Car (0) J.B. Say
(8) Canon (CJ Kroose
(AJ Marshal
Th e qua lity of• IOOd wh ktl satJ
sfles • hum an wa nt 1s called as:
33, (0) None
(8) Cost (C) Ut8lty
(A) Servtce
,I uttllty, the ma 'lin al utility:
3,4. Accordlna to law of diminishing ma rsm (0 ) Ne pti ve
(B) Remains constant (CJ Diminis
hes
(A) tna eas es
used by I min:
35. eon sumer 1oods are those aoocts which we
 19

(A) ot,ectly (8) Off and On (C) lndlrectly (D) Never

36. The elastldty of demand of durable 1oods Is:
(A) More than unity (8) Equal to unity (C) Less than unity (D) Zero
37. The unity method of elastlclty of demand w11 presented by:
(A) Adam Smith (I) M■nh■U {C) J.R Hicks (D) Plgeou
38, What remains after deduction of direct taxes form the personal Income:
(A) NNI (I) l>PI (C) NOi (D) GNP
39, Whit Is deducted from GNP find GOP:
(A) Depredation allowance (I) Net Income racelvtd from abroad
(C) Indirect tax (D) Transfer payments
40. What was the dlfflcult In the barter System?
(A) Excess of 1oods (8) Difference language (C) Lick of co-Incidence (0) Difference In profession
41. In Inflation prices:
(A) lncreue (8) Do not change (C) Decrease (D) Become zero
42. Inflation will be useful for:
(A) labourers (8) lndustrlaHst (C) Consumers (D) Pensioners
43. The economy gets prosperity during:
(A) Recessfon (8) Boom (C) Depression (D) Recovery
44. It Is a Federal Tax:
(A) Excise duty (B) local Tax (C) Property tax (D) None
45. The quality of a Sood which satisfies I human want Is called as:
(A) Service (B) Utlltty (C) Marginal (D) None of these
46. Which Economists presented the law of diminishing marginal utility?
(A) Robbins (BJ Malthus (C) Adam Smith (D) Marshall
47. The methods of measuring elasticity of supply are:
(A) Three (8) Two (C) Four (D) Five
48. According to law of lncreasin1 return, marginal product:
(A) Increases (B) Decreases (C) Remains constant (D) None of these
49. Average revenue Is equal to:
(A) Price (B) Total revenue (C) Marginal revenue (0) Average cost
SO. When price falls supply:
(A) Expands (8) Contracts (C) Remains zero (D) Becomes fixed
51. The .o ther name of law of diminishing return Is:
(A) Law of supply (B) Law of diminishing maralnal utility (C) law of demand (D) Law of lncreaslna cost
S2. The elasticity of demand of durable goods Is:
(A) Zero (B) More than unity (C) less than unity (0) Equal of unity
53. Rent of buildin1 Is Included In:
(A) fixed cost (8) Variable cost (C) Maralnal cost (D) Sellln1 cost
S4. Who Is responsible for profit and loss In the business?
(A) Capitalist (B) Entrepreneur (C) labour (D) Middleman
5S. National Income does not Include:
(A) Profit (8) Wages (C) Interest (D) Transfer payments
56. Who presented the quantity theory of money?
(A) Marshall (B) Robbins (C) T1usl1 (0) Keynes
 20

57. lntern1tlonal trade has the benefits:

(A) One (8) Unlimited (C) Two (D) Three
58. The economy 1ets maximum prosperity durln1:
(A) Recession (8) Recovery (C) loom (0) Depression
59. Ushr Implies on:
(A) Aark:ultural product (I) lndultrlal product (Cl Agricultural$ industrial product (D) None of these
60. Who described Economics 1s I science of wealth?
(A) Pl1uo (8) Adam Smith (C) Robbins (0) Marshall
If total expenditure decreases with the rise In price elasticity of demand wlll be:
1 tt ~ 61,
(A) Equal to unity (B) Less than unity (C) Greater than unity (O) Equal to zero
62. Income elastldty shows the relationship between:
(A) Income and demand (8) Income and consumption (C) Income and price (0) Income • nd saving
63. The supply of land Is:
(A) Infinity (I) Fixed (C) Variable (D) zero
64. The shape of AR ind MR under perfect competition is:
(A) Vertical (B) U-Shape (C) HorllOl'ltal to ox uls (D) None of these
65. The supply of perishable goods is:
(A) Fixed (8) Variable (C) Minor change (D) Zero
66. The quallty of a commodity which satisfies the human wants:
(A) Usefulness (8) Loss (C) Utlllty (D) Return
67. Marginal cost curve always Intersects avera1e cost curve at:
(A) The maximum point (B) The Central point (C) The minimum pofnt (0) The vertical point
68. During a year auregate value of produced soods and services of a country Is called:
(A) Per-capita Income (8) Net national Income (C) Personal Income (D) Gross national product
69. How many methods can be used for cultivation?
(A) One (BJ Two (C) Three (D)Four
70. Reward for Labour is:
(A) Interest (I) Waps (C) Profit (D) Rent
71. Due to devaluatlon exports become:
(A) Smaller (B) Larger (C) Cheaper (0) Expensive
72. Reward for capital is called:
(A) Rent (B) Interest (C) Wages (0) Profit
73. Personal Income Includes:
(A) Direct taxes (8) Indirect taxes (C) Undivided profit (0) Both 2nd and 3"'
74. Marco Economics was Introduced by:
(A) Alfred Marshall (B) J.M Keynes (C) N.W Senior (0) J.8 Clark
75. If pen and Ink are complements, then an Increase In the price of pen will cause:
(A) An Increase In the price of Ink. (8) Less Ink to be demanded at each price
(C) A decease In the demand for pen (D) A rightward shift In the demand curve for Ink.
76. A market is said to be In equilibrium when:
(A) Demand equals output.
(B) There Is downward pressure on price.
(C) The amount consumen wish to buy at the current price equals the amount producers wlslt
.... at that price.
 -- - - - - - -
21

(D) All buyers are able to find sellers wtlllna to sell to them at the cu"ent price.
77. As more of I aood Is consumed, then total utility typically.
CA) 1ner•• 111 dlcreallna rate. (8) Dtcreases II lonc as m1,stn1I utility Is neptlve.
(C) oeaeases as lone as m1t•11n1I utility Is positive.
(D) Is negative II Iona 11 ma,aln■I utility Is decreasln1.
78. AmonopOlistlcally competitive firm In short run equlllbrlum.
(A) WIii make ne11tlve profit (lose money). (B) WIii make zero profit (break -.Jen)
(C) WIU make positive profit (D) Any of the stven .,. pouible
79. A monopollstlcllly competitive ftrm In the Iona run equlHbrlum.
(A) WII make neptlve profit. (I) WII make llf'O profit.
(C) Will make positive. (D) Any of the atven are posstble.
80. The market structure In which stnteglc considerations are most Important Is:
(A) Monopolistic competition. (BJ Ollppaty
(C) Pure competition. (0) Pure monopoly
81. The price elasticity of demand for any IOOd must be less than or equal to zero unless:
(A) The aood is• necessity. (8) The aood Is a luxury.
(CJ The aood Is• Giffen aood (O) None of the liven options.
82. In monopoly, which of the followlna Is NOT true?
CA) Products.,. dlfferantlattd
(Bl There Is freedom of entry and exit Into the Industry In the long run.
(C) The firm Is a price maker (D) There Is one main seller.
83. Under the kinked demand curve model, Increase In ma,atnal cost wtll lNd to:
CA) An fnaease In output level and I cllcr11N In price.
(B) A decrease In output level and an Increase In price.
(C) A decrease In output levef and no chanae In price.
(D) Neither a change In output level nor I change In price.
84. For a firm buylna labor competitively, the mif'llnal Input cost Is equal to the:
(A) Waae. (B) Interest rate (C) Price of output (D) Cost of raw materials.
85. The 1area1te supply curve Is the relationship between:
(A) The price level and the real domestic output purchased.
(B) The price level and the real domestic output purchased.
(C) The price level which producers are wtlllna to accept and the price level purchasers are willing to
pay. (D) The real domatic output purchased and the real domestic output p,aducecl.
86. The Iona run 111re1ate supply curve will shift to the right If:
(A) The price level Increases (B) Factors of production (such as labor and capital) Increase.
(C) Expenditures (such as consumption and net exports Increase.
(D) The prices of Inputs UHc:I to produce 1oods and services I such as waa-s and the p,ke of oll)
decrease.
87. A nation's balance of payments an be affected by changes In:
(A) Foreign Income. (8) The differential between domestJc and forefln Interest rates.
(C) TIie rut e,daanp rate (D) All of the given options.
88. Real GOP Is equal to:
(A) Nominal GOP- lnftatlon. (B) Nominal GDP+ Inflation
(C) Nominal GDP/ Inflation. (D) Inflation/ Nominal GDP
 22

19. tf we COfflplft Gross Oonlfttic Product (GOP) wilh Gross National.

{1) Product (GHP} then:
fA) GNP• GOP- Net Income from abrOld (I) GNP• 00, + Net lnc.Offle from ,broad.
(Q GNP - '-I lnaNne from abtoad (D) GNP• NNP + Net Income from abroad.
90. In fflOltc,pofw, whidl of the foloww'I is not true?
(A) llnNluds . . . . . . . . . . ..
(I) There is hedo.,t of en1ry and eat into the Industry in the Iona run.
(Q The firm is I price ma,trer (0) There Is OM main seller.
91. Which of the 1a1a-.. is true about supply CUfW under monopoly?
(A.) It is same • the COfflPltitiw martcet supply am,e.
ca, It ii . . ,....,. of ....... COit curw ..... marpaal costs oceed the minimum value Of
• • I vai1'1•mats.
(Q It is the result of ~ power and production costs.
(0) None of the liven statements is true.
92. Which of the falowins event wtl lead tow•di cost-push inflation and therefore stagflation?
(A) All ll1cn•• In taw Oft lndlwft:◄s (8) A decrease in real interest rates.
(C) A union settlement that increase wap lewls (D) An increase in government purchases.
93. Double COUntint in Ntional income ~ to:
(A) Countins I product more than once (I) CCMlllnl I product at the final staae output process
(Q Countina both as product and as factor payment
(0) Countin1 both as real loods and as money flow
For knowi"I the spendinl capacity of the household sector, we have to use the concept of:
CAI Natiolllll Income (8) Personal Income (C) Private Income (0) Penonal disposable Income
95. for a $tUdy of the '°"I term powth of the economy, we use:
(A) IINI GNP (8) Nominal GNP (C) Personal Income (D) Disposable personal Income
96. In the short run, the equilibrium price level and the equilibrium level of total output are determined
by the Intersection of:
(A) The aarepte demand, the short-run agrepte supply and the long-run 1ure1ate suppfy curves.
(8) The short-run ag,epte supply and the lont-run aaresate supply curves.
(C) Th.. aas...pte demand and the short-run..,..... supply curws.
(0) The agrepte demand and the Ions-run qarepte supply curves.
97. What is the interest rate effect that explains why the aaresate demand curve slopes downward?
(AJ ft refers to the effect of cha,.es in the price level on quantity of Investment demanded which in
tum affects interest rates.
(BJ It refers to the effect to Interest rates on borrowina which In tum affects consumption spending.
(C) It refers to the effect of dlanles In the price level on lnternt rates which In turn affects the
...-,o1 ......,...........
(DJ tt refen to the shifts in agresate demand when interest rates change.
98. Which of the following economists came up with a theory regarding the tradeoff between
unemployment and inflation?
(A) A.W Phllllps (8) John Maynard Keynes (C) Joseph Schumpeter (D) Milton Friedman
99. The real exchange rate is defined as the:
(A) Marbt . . . . . . rate adjustacl fot prices. (B) Market e,cchange adjusted for interest rates.
(C) Martcet exchan,e rate. (D) bchange rate determined by the government
 23

100. The Interest rate parity Is the basis Identity that relates which of the followln1?
(A) interest ratas and exchana• rates. (B) Interest rates and Inflation rate
(C) Exchange rates and lnflatton rate (D) Discount rate and Inflation rate.
lOl. "Government collects zero revenue If the tax rate Is O" and If the tax rate ls 100% which of the
followtn1 best describes this statement?
(A) Consumption curve, (B) Supply curve. (C) Ufer curve. (D) Investment curve.
102. A tax on the accountln1 profits of corporations Is known as:
(A) Is curve must be vertlcal (8) LM curve must be vertical
(C) Central Bank must have lncreuad the money supply at the same tl"'9.
(D) Central Bank must have decreased the money supply at the same time .
.103. If money supply Is fixed by the central bank then In Interest rate money supply space, money supply
curve will be:
(A) Horizontal (B) Vertical (C) Negatively sloped (D) Posltlvely sloped
104. Which of the following Is TRUE for a Giffen good?
(A) Its marginal utlllty Is zero (B) Its demand curve Is pOerfectly elastic
(C) Its substitution effect Is positive (D) Its demand curve Is positively sloped.
105. The total cost (TC) function Is given as: TC- 200 + SQ. What Is the fixed cost?
(A) SQ (8) S {C) S+ (200/Q) (0) 200
106. A good for which Income and quantity demanded are Inversely related Is known as:
(A) lnfarior 1ood (B) Complementary good (C) Normal good (D) None of the given options
107. An Increase In supply Is shown by:
(A) Shifting the supply curve to the left (B) Shifting the supply curve to the right
(C) Upward movement alq the supply curve (D) Downward movement along the supply curve
108. Price floor results In:
(A) All of the given options. (B) Excess supply (C) Equilibrium (O) Excess demand
109. The price elasticity of demand measures the responsiveness of quantity demanded to:
(A) Quantity demanded {B) Quantity supplied (C) Price (D) Output
110. Indifference curves that are convex to the origin reflect:
(A) An Increasing mal'8inal rate of substitution (B) A decreaslna ma,alnal rate of substitution
111. To find the profit maxlmlzii,1 level of output, a flrm finds the output level where:
(A) Price equals marginal cost (B) Marginal revenue and average total cost
(C) Price equals marginal revenue (D) None of the pen options.
112. As compared to exlstln1 firms, a new firm entering In monopolist market has:
(A) Hfch costs, (B) Low costs (C) Equal costs (D) None of the 1lven options.
113. A flrm Is charging a different price for each unit purchased by a consumer. This Is called:
(A) First• degree price discrimination (B) Second -degree price discrimination
(C) Third - dqree price discrimination (D) None.of the given options.
114. Welfare economics Is the branch of economic which deals with:
(A) Positive Issues. ~ (B) Normative lnue. (C) Micro Issue (D) Macro Issue
11S. Under the kinked demar<lcurve model, an Increase In marginal cost will led to:
(A) An increase In output level and a decrease In price
(8) A decrease In output level and Ina-ease In price
(C) Adecrease In output level and no chanp In price.
{0) Neither a change In output level nor a ch1n1e In price

,.-
I
 116. Which of the followinl market sttuatk>n is
,. t gles?
_ monopoly except that its ni...........
much like a pu,..
r
..,,,,.._
\
tend to cheat on qreed upon price and output ::,:et sharln1 monopoly (D) Natural mon<>s>oi.,
(A) Ouopofy (1) Cartel . (C) of h labor supply curve will:
. ht~~~ te
117. In the complete dassicll model, ril w• . wage.
1 1
(A} Decrease the price level and increase the nom na vel
I
(8) Decrease the nominal wqe and Increase the price e ·
(C) Decrease both the price level and nominal wage.
(D) lncrnse both the price level and the nominal WIit• · demand curve to shift to the riBht?
the 111re1• e
118. Which of the foNowlna events CQUId cause se In government expenditures
(8) A decrea ·
(A) An lnaease the rate of Inflation. In lnCOme tax rates.
din• (DI A decrease
(C) A decrease In Investment spen "• ate demand, in the long run, an increi
119. Accordlna to the model of agregate supply and apreg " '-,
money supply should cause. · ch
(A) Both prices and output to rise. (8 ) Prices to fall and output to remainIun anaed
(C) Both prices and output to fall. (D) Prk:eS to rtse and output to rema n unchanaed,
120. Intermediate 1oods are meant for:
(A) Direct use by the consumers. (I) Further processln1.
(D) None of the 1lven options.
(C) The term do not exist.
121. Final 1oods are meant for:
CA) Direct use by the consumers (B) Further processing
(C) The term do not exit (D) None of the given options.
122. All other things remain the same; Gross Domestic Product (GDP) will rise if:
(A) Imports raise II) Durable aoods consumption rises (C) Mllltarv spending falls. (0) Expomfit
123. The traditional Phillips Curve shows the:
(A) Inverse relationship between the rate of Inflation and.
(B) Inverse relationship between the nominal and real wage.
(C) Direct relationship between unemployment and demand-pull inflation.
(D) Tradeoff between the short run and long run.
124. Deflation is:
(A) An increase In the overall level of economic activity.
(8) An Increase In the overall price level
(C) A decrease fn the overall level of economic activity.
(D) A decrease In the overall price level.
12S. Is Gross Domestic Product (GDP) an accurate measure of a country's well-being?
(A) Yes, it Is the best measure of national well Bina.
(BJ Yes, provided we use real GDP and not nominal GDP
(C) Uncertain, dependln1 on wither GOP Is ristna or falllna (0) No It .
126. Real Gross Domestic Product (GDP): ' IS not.
(A) 11 nominal GDP adjusted for chanaes In the price level?
(8) Is also called nominal GDP, (C) Measures GOP min .
(D) Will always change when prtces chanae. us depredation of capital.
127. If a war destroys a l111e portion of country's ca . _....i.. l
exoaenous model predicts that output pita! stock but the saving rate is uncha!V"
w111 &row and the n
(A) A hl1her output level than before ·( ) ew steady state wlll approach:
_ . 8 The same output level as before.

4/
 25

(C) A iower outpu t level than before (D) The Golden Rule out put level.

128. A currency appreciation:

(A) Recluca ...,....te demand Increases...,._..
and supply.
.
(8) Reduces both •ure pte demand and aqregate supply
(C) Increases aare pte demand .and reduces aa,ea ate supply
(D) Increases both aarea ate demand and aareaate supply.
en nominal and real Gross Domestic
129. Which of the followln1 statements describes the difference betwe
Product (GOP)?
and services.
(A) Real GDP lndudes only &oods; nominal GDP lndudes aoods
al GOP Is meuured uslna curnft!
(I) Rnl GDP II measured 1111111 constant base-year prlcn ; nomin
capital stock.
pr',c:e_!. (C) Real GDP Is equal to nominal GOP less the depredation of the
(D) Real GOP ls equal to nomlnal GOP multiplied by the CPI.
130. After a decrease In the wage, the substitution effect lmplles that:
{A) Only the amount demanded of capital decreases.
(8) Only the amount demanded of labor decrease
(C) Only the amount demanded of capital Increase.
(D) The amount demanded of all Inputs Increases.
131. A demand curve Is price elastic when:
(A) Chan p In demand are proportlonatety arute r than chan ps
In price.

(B) Changes In demand are equal to changes In prtce. (C) None of the given options.
es in price.
(D) Chanaes In demanded are propc,rtionately smaller than chan1
.
132. The !'umerlail measurement of a consumer's preference Is called
(B) Pleasure (C) Utlllty (O) Satisfaction
(A) Use
133. Marafnal profit Is equal to:
nal cost
(A) Mlralnal revenue minus m1ratnal COit. (B) Mar1inal revenue plus mar1i
e times ma,alnal cost
(C) Marginal cost minus marginal revenue (O) Marginal revenu
134. The supply curve for a competitive firm Is:
(A) Its entire marginal cost curve. (B) The upward-slowing portion of Its marginal cost curve.
(C) Its marginal cost curve above the minimum point of the averag
e variable cost curve
cost curve.
(D) Its maratnal cost curve above the minimum point of the averap total
13S. Second- de1ree price dlscrlmlnaitlon Is the practice of cha,alng.
(A) The reservation price to each customer.
(8) Different prices for different blocks of the AIM 1ood or service.
products.
(C) Different 1roups of customers different prices for the same
to pay.
(D) Each customer the maximum price that he or she is willing
differentiated products is:
136. A market wtth few entry barriers and with many firms that sell
competitive. (0) Oll1opollstic
(A) Purely competitive. (B) A monopoly (CJ Monopollstlcally
important is:
137. The market structures In which strateslc consideration are most
(A) Monopolistic competition (8) Oll1opoly (C) Pure competition (0) Pure monopoly.
expenditures and net exports are:
138. Consumption spendln&, Investment expenditures, 1ovemment
{A) The components of household Income. (8) The components of agreg ate supply.
(C) 111e components of 1are pt• demand (D) The components of 1ovemment revenue
economic 1n1tysls by:
139. Classical economic was replaced as the dominant theory of macro 1
mics (D) Neoclasslca ~conomlcs
(A) Monetarism (8) Rational expectations (C) Keynesian econo

~
 26
•
140.
Acconlw,c to rlasslcal economics. the economy will always tend toward ful ~mployment due to:
(A) Minimum -.s (8) Amitie.,.._ Md prtms(C) Extended periods of unemployment
(0) lnequatty behwen saw,a and investment.
141. The l'ffl interest rate will incrNse:
CAI If._. an.._.
ts 11iPP1Y of eo.i11111 funds In Ille t1nanc1a1 ....,.._
(I) I f ~ is an etass demand or loanable funds in the fiMncRI mwkeU.
(C) If thete is an excns supply of loaNble funds in t h e ~ exchanp martcets.
(0) If thef-e is an excess demand for loanable funds in the for'eiln exCNn&e martcets.
142.
What would result from a depreciation of the pound an the foreign exchange martet?
(A) Aft Ina ease in the price of Imported computers.
(8) A fall in the s,urchasinc power of US tourists in Landon.
(qA fall In the,.__, 1mpor111c1 .:GlllpUlerS.
(O) An incr"5e in t h e ~ power of UK tourists ~ a s.
143. The news on the ~ reports that the dollar has streu1thened relative to the Japanese yen.
means that:
(A) The dollar can now purchase men yen.
(8) The US trade balance with the Japanese economy has improved.
(q llleyen can now purdme fflOnt dollars. (0) The doll¥ has depreciated relative to the Yon
144. I n ~ «Dltamics. if ._.epte openditures are less than acgrepte output then:
(A) The price level rises. (B) Inventories decrease
(C) Employment decreaes (D) Aaaepte output Increase
145. Demand IS elastic when the elasticity of demand is:
(A) Greater than O but less than 1. (8) Glum than L (C) Less than 0. (0) Equal to 1.
146. Which of the followinc statements is TRUE about cartels?
(A) ~ are considered as part of monopolistic competition.
(B) ~ are orpnizations of independent firms. ~ similar products that work t ~ to

'
raise prices and restrict output.
(C) n.se . . Olp,..._• of lnletdepelldent firms, producing similar products. that wort toteltc
to , . . prices and NS1rict output.
147. After the colus6onJ oliloPofists are able to:
(A) Raise price but no restrict output
(8) Raise price and restrict output but not atbin the monopoly profit
(C) llaiN prtce and restrtd output and therefore attain the monopoly profit.
(D) Restrict output but not raise ~ -
148. tf production remains the same and all prices double, then which of the foflowing will ha~?
(A) Real GOP and nominal GDP will both remain constant.
(8) Real GOP will remain constant and nominal GOP will reduce by half.
(CJ Real GDP wll remain constant and nominal GOP wtl double.
(D) Real GOP wiN double and nominal GOP wil remain constant.
149. The relationship between hours provided by labor and YAge rate is:
(A) l'Olftlw (B) Neptiw (C) Ambil\,ous (D) Very Strong.
1
150. tf the p,vemment wtshes to achieve a fall in unemployment. which of the following policieS shcJUld 1
adopt?
(A) Reduce the real value of income tu free allowances.
 27

(B) Reduce 1ovemment spendln& on capital projects (C) Raise Value Added Ta,c (VA).
(D) Stir pubic Job tralnln1 proarams.
151, In the 1on1 run, sustained Inflation Is due to:
(A) one-time Increase In money 1rowth. (B) A continuous lncn■N In the money powth rate.
(C) A continuous Increase In •areaate demand (D) The rising price of oil.
152. The sltuatlOn when • country Imports more than It exports Is known as:
(A) A trade deficit. (8) A trade surplus. (C) An expansion. (D) A recession.
153. The 1overnment has • balanced budget If:
(A) Its toeal revenues are equals to Its total expenditures.
(8) Its total revenues are less than Its total expenditures.
'(C) Its total revenues are 1reater than Its total expenditures.
(D) The money supply Is less than total expenditures.
154. In a period of boom, credit creation is:
(A) Small (I) Heavy (C) Unchanged (D) Zerc:,
155. What wlll be the Impact of an Increase In taxes?
(A) It will shift the 15 curve to the left and decreases both the interest rate and t he level of Income.
(B) It will shift the IS curve to the right and Increase both the Interest rate and the leYel of income.
(C) It will shift the 15 curve to the right and increase the level of Income but decrease the interest rate
(D) It wlll shift the 1M curve downward (to the rl&ht) and lncreaN th• level of Income but decrease
the lnteNlt rate.
156. Suppose the price ofrall tickets decrease, what will happen to the demand for airline travel?
(A) The demand curve for alrllne travel shifts left.
{B) The demand curve of airline travel shifts rtsht.
(C\ The supply curve of airline travels shifts left. (D) The supply curve of airline travels shifts right.
157. Pr~ductlon posslbllltles curve will shift upward If there Is:
(A) ~ reduction In unemployment (B) An lncrene In the production of capital 1oods.
(C) A reduction In discrimination (D) All of the given options.
158. Which of the following ts NOT induded In the perfect Information assumption of perfect competition?
{A) Consumers know their preferences. (B) Consumers know their Income levels.
(C) Consumers know their 1n·come levels. (D) Consumen can .antldpate price chanaes.
159. Suppose a monopolist set his output at the level where ma11inal revenue, m111lnal cost and averase
total cost are equal. In this case, economic profit will be:
(A) Nqatlve (8) Positive (C) Zero ID) Indeterminate from the given information.
160. • An Enquiry Into the Nature and causes of Wealth of Nations" Is book of economist.
(A) Adam Smith (B) Marshall (C} Robbins (O) None of above
16L "'Economics is the Science of Wealth" who 1ave this definition?
(A) J. K Mehta (B) Marshall (C) Adam Smith (0) Robbins
162. "Economics Is what economists do. "'It has been supported by.
(A) Richard Jones (8) Gunnar Myrdal (C) Comte (D) All of the above
163. "'Human Welfare ts the subject of Economla." The statemen~Is associated with the name of which of
the economists?
(A) Marshall (B) Pig- (C) Penson (D) All of the above.
164. Who has atven scarcity definition of economics?
(A) Adam Smith (B) Marshall (C) Robbins (0) Robertson
 21

16S. ~conomics is a saence• the blsis of this statement Is:

(A) Relation betv.een cause and effect f taws
(8) Use of deduc:ttve ~ and lnductNe method for the formations
0

(Q Cxper'•11enb (D) Al of 1111 abcM

166.
Owacteristics of ecooomk laws are. . . thetical (DI All of the •bovt
(A) Mere statements of economic tendencies (8) Less Certain (C) Hypo
167. Which opinions have rewlutioniled the scope of macroeconomics1 None of the above.
CA) Prtce 11leory (B) Income Theort (C) Emptoyment Theorv (D)
168. Whose opinions have revolutionized the scope of macroeconomics1
(A) Adam Smith (8) J. 8 Say (C) J, M Keynes (D) All of the above
169. Which of t h e ~ is an economic actMty?
CA) TeacNna .4lf a tuctw In the school. (8) To teach son at home
(Q To serw her chld by mother (0) To play football by a student
170. Passive factor of production is:
CA) Only land (8) Only capital (C) loth land and capttal (D) Neither land nor capital
171. Under law of demand.
CA) Price of aJfflfflOdlty Is an Independent variable
(8) Quantity demanded is a dependent variable
(Q Redprocaf rMtionshfp Is found between price and quantity demanded (DJ All of the above.
172. For infe.ior commodities, income effect Is.
(A) Zero (8) N•ttve (C) Infinite (0) Positive
173. When total Utility becomes maximum, then marginal utility will be.
(A) Minimum (8) Averqe (C) Zero (O) Ne11tlve
174. Utility mmns.
CA) Powlrto satisfy a want (8) Usefulness (C) WIUin,ness of a person (D) Harmfulness
175. Ma,liMI utility is equal to average utility at that ttme when average utility Is.
(A) lnaasina (8) Maximum (C) Fallln1 (D) Minimum
176. At point cl satiety, rnqinal utility is.
CA) Zero (B) Positive (C) Maximum (0) Ne1ative
177. Which of the followin1 Is the second law of Gosse1
CA) Law ol ..,.._,alnll utlllty (B) I.Aw of equl-product
(C) Theo,y of indifference curve (D) I.Aw of diminishing ma'llnal utility
178. Total utility of a commodity Is musured by which price of that commodity?
CA) value In use (BJ Value In exchange (C) Both of above (D) None of above
179. In Economics the central problem is:
(A) Money (B) Production (C) Consumption (D) Allocation (E) Scarcity
180. Macroeconomics dells with:
(A) The behavior of firms (B) The 1ctMt1es of Individual units
(C) Economic. ...eptw. (D) The behavior of the electronic industry
111. M"ecroeconomlcs Is not concerned with the behavior of:
(A) F'wrms (8) AarePte demand (C) Consumers (0) Industries
182. The study mInflation ls part of:
CA) Macroeconomics (8) Normative Economia (C) Microeconomics (D) Descriptive economics
183. The total demand for l()0ds and services In an economy is known as:
 29

(A) Ag1epte demand (8) National demand (C) Economy- wide demand (0) Gross National produd
lndlclte below what Is NOT a factor of production.
(A) Labour (8) land (C) tapltal (D) A bank Loan

185, A student chooseS to study because the maralnal benefit ts 1reater than the _ _ cost.
(A) Total (B) Expected (C) Avera1e (D) Marstn•I
' 186, The drcular flow of 1oods and Incomes shows the relationship between.
(A) Wa1es and salartes (B) Income and money (C) Goods and service (D) Finns and houleholdl.
I 111. In a free market system, the amount of aoods and services that any one household gets depends
Upon Its:
(A) Income (B) waae and Interest Income (C) Income and wealth (D) Wealth
are taken by the:
188. In a plaMed or command economy, all the economic dedslons
(A) VoterS (8) Government (C) Consumers (0) Workers
for another 1ood to decrease, the
189. When the decrease In the price of one good causes the demand
1oodsare:
(A) Normal (I) Substitutes (C) Complements (D) Inferior
We can say that aoods
190. Suppose the demand for good Z goes up when the price of good y goes down.
Zand Yare:
(A) Unrelated goods. (8) Perfect substitutes (C) COmplements (D) Substitutes
191. If the demand for coffee decreases as Income decreases, coffee Is:
(A) A Normal aood· (B) A Complementary good (C) A substitute good (0} An Inferior good.
192. The price of apples falls by 5'6 and quantity demanded lnaeased by 6%. This means
that demand Is:
(A) £lastJc (8) Perfectly Elastic (C) Zero Elastic: (D) Inelastic.
falls by 25". This
193. The price of burgers Increase by 22% and the quantity of burgers demanded
Indicates that demand for burgers Is:
(A) Unltartly Elastic (8) Elastic (C) Perfectly Elastic (0) Inelastic
194. If the cross-price elasticity of demand between two goods Is negative, then the two goods are:
(A) Substitutes (B) Unrelated goods. (C) Normal goods (D) Complements.
to
195. When the market operates without Interference, price Increases wlll distribute what Is available
those who are willln1 and able to pay the most. This process Is known as:
(A) Price Ratlonlr11 (8) Quantity Setting (C) Price FlxJng (D) Quantity Adjustment

196. Macroeconomla distinguishes between the real economy and the.

(A) Monetary Economy (B) Virtual Economy (C) Normative Economy (D) Underground Economy
197. The equation for Anna's demand curve for CDs Is Q • 20 - SP . If the price of a CO is £18, consumer
surplus wm be:
(A) An inflation (B) A Hyperinflation (C) A Trend (D) A peak
198. A utillty· maximizing consumer changes their spending for goods X and Y so that:
(A) TUX/PX= TUY/PY (8) MUX•MUY (C) MUX/MUY• PX/PY (D) PX(MUX)=-PY(MUY)
199. The MUX/MUY Is ten and the PX/PV is eight, so the consumer should buy:
(A) Less X and more Y. (8) More X and Lns Y (C) Less X and less Y. (D) More X and More Y.
200. If the Income and substitution effects of a price Increase work In the same directions the good whose
price has changed Is a:
(A) Giffen &ood (8) Inferior good. (C)Superlor good . (D) Normal Good
201. A araph showlna all the combinations of capital and Labour available for a alven total cost Is the:
(A) lsoquant (8) lsocolt lln1 (C) Expenditure set (0) Budget constraint
r
30

202. The formula for averaae fixed costs In:

(A)Oq/DTFC (l)TJC/q (C) q/TFC (O)TFC-q
203. The formula for 1veraae variable cost (AVC) ls:
(A) q/fVC (8) TVC/q (C) Dq/DTVC (D)OlVC/Dq
204. tf the prices of both goods Increase by the same percent, the budaet line wlll.
(A) Shift parallel to the left (8) Shift parallel to the rlsht
(C) Pivot •bout the x uls. (D) Pivot about the y axis (E) None of the above
20S. When the substitution effea of a lowered price Is counteracted by the Income effect, the good
question Is.
(A) An Inferior ION· (8) A substitute aood (C) An Independent 1ood.(O) A normal aood
206. A market demand curve can be derived by addlnt all the lndMdu1I demand curves.
(A) Vertically (I) Horizontally (C) In Parallel (0) Any of the above as long IS It Is consistent
207. Some aoods are not closely related to each other and are nefther substitutes nor complements. F
such aoods, the crc,ss.price elastldty of demand would be.
(A) Positive (8) Nepttve (C) Zero (D) cannot tell without more lnformat
208. For I firm operattna In I perfect market. Its short-run supply is Identical with the rislnl arm of.
(A) Its maralnakost curve (8) Its avera1e-fixed-cost curve
(C) Its aver■ae-totakost curve (D) None of the above.
209. ' For a competitive firm the demand curve.
(A) is honzontal (8) Colnddes with the marginal revenue curve
(C) Coincides with the averaae revenue curve (D) AU of the above.
210. Alona the lone-run supply curve. 1H of the followlns can vary except.
(A) The level of profits (8) The number of firms In the Industry
(C) Input prices (D) The level of Input usaae
I
211. An oli10pollstic industry can be characterized by all of the followin1 except.
l CA) Many sellers
(C) Economies~ scale
(B) Mutual Interdependence
(D) A homo1enous product
2U. In the neWlborhood of the lon1-run equlllbrlum of a monopolistically , ,Jetltlve firm, averap cma
will be.
CA) Decreallnl (8) Constant (C) lnaeastn1 (o· a minimum (E) Either Aore