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MULTIPLE CHOICE QUESTIONS OF ECONOMICS
1. Which of these is a secondary sector?
a. Manufacturing sector
b. Transport
c. Forestry
d. Animal husbandry

2. Which of the following is not an economic activity

a. Painting for self use
b. Maintenance of Public Park by Local administration
c. Painting for commercial use
d. Running an Academic school

3. ……………. States that rapid growth of per capita income will be associated with a
reduction in poverty.
a. The trickledown theory
b. Multiplier theory
c. Malthus population theory
d. None

4. Rotten eggs are:

a. Free good
b. Economic good
c. Service
d. Wealth
5. Human wants are:
a. One thousand
b. Few
c. Innumerable
d. Countable

6. A consumer is in equilibrium when marginal utilities are:

a. Minimum
b. Highest
c. Equal
d. Increasing

7. In economics, one or more persons sharing common consumer budget is called:

a. Business firm
b. Gathering
c. Organization

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d. Household

8. When marginal is negative, it must be true that:

a. The average is negative
b. The average is decreasing
c. The total is negative
d. The total is decreasing

9. The term 'marginal' in economics means:

a. Unimportant
b. Additional
c. The minimum unit
d. Just barely passing

10. Utility is most closely related to the term:

a. Useful
b. Useless
c. Necessary
d. Satisfaction

11. Demand curve slopes downward because of the law of:

a. Consumer equilibrium
b. Utility maximization
c. Utility minimisation
d. Diminishing marginal utility

12. A consumer's spending is restricted because of:

a. Marginal utility
b. Budget constraint
c. Demand curve
d. Utility maximization

13. Law of substitution is another name for law of:

a. Law of Diminishing MU
b. Law of Equi-MU
c. Law of Demand
d. Satisfaction

14. Law of Equi-marginal Utility is a law of:

a. Production of wealth
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b. Consumption of wealth
c. Distribution of wealth
d. Exchange of wealth

15. Utility and usefulness are:

a. Equal
b. Different
c. Similar
d. Unrelated

16. When MU is positive, TU:

a. Increases
b. Decreases
c. Remains constant
d. Is highest

17. Diminishing marginal utility is the basis of:

a. Law of supply
b. Law of demand
c. Law of returns
d. None of the above

18. When MU = 0, TU is:

a. Minimum
b. Maximum
c. Laws of return
d. None of the above

19. Quality of a commodity that satisfies some human want or need is called:
a. Service
b. Demand
c. Utility
d. Efficiency

20. Indifference curves are convex to the origin because:

a. Two goods are perfect substitutes

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b. Two goods are imperfect substitutes
c. Two goods are perfect complementary goods
d. None of the above

WAGES RENT INTEREST AND PROFIT

101. Union leaders are in a better position to bargain for higher wages if demand for
labour is:
a. Elastic
b. Inelastic
c. Very large
d. Permanent

102. Sometimes the supply curve of labor ends:

a. Downward
b. Upward
c. Backward
d. Firstly upward and then downward

103. In which form the largest percentage of national income is earned:

a. Interest income
b. Proprietor's income
c. Employees' wages
d. Rental income

104. The minimum wage is an example of:

a. Price floor
b. Price ceiling
c. Equilibrium wage
d. Efficiency of labour

105. A firm maximizes profit if:

a. MRP = Wage rate
b. MRP = ARP
c. MRP is rising
d. None of these

106. Who is unemployed:

a. Housewife

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b. College student
c. A peer who lives on gifts from mureeds
d. A freshly graduated engineer who is searching for a job

107. Standard of living of workers depends upon their:

a. Nominal wages
b. Real wages
c. Average product
d. Govt. Policy

108. Doctors get higher wages than clerks because:

a. Doctors are in short supply
b. Doctors have more respect in society
c. Doctors are organised in trade unions
d. People fear doctor's displeasure

109. Under Marginal productivity Theory, reward for labour is determined by:
a. Owner
b. Government
c. Labour
d. Marginal product

110. The economist Ricardo argued that prices were _____ because land rents were
_______
a. High, High
b. Low, High
c. High, Low
d. Low, Low

111. As for the cost of production of an individual farmer, the rent paid by him:
a. Enters into the price of his product
b. Does not enter into price of his product
c. Is unjustified
d. None of these

112. He presented a theory of rent:

a. Malthus
b. Allama Iqbal
c. Ricardo
d. Marshall
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113. The following affect rent EXCEPT:
a. Better location
b. Fertility of land
c. Cleverness of landlords
d. Scarcity of land

114. These are kinds of rent EXCEPT:

a. Differential rent
b. Scarcity rent
c. Mobility rent
d. Location rent

115. This is capital:

a. Money
b. Forests
c. Machinery
d. Trademarks

116. According to Keynes interest is a payment for:

a. Consumer's preference
b. Producer's preference
c. Liquidity preference
d. State Bank's preference

117. Interest is paid because:

a. Capital is scarce
b. Capital is productive
c. Capital is attractive
d. Capital is surplus

118. With decrease in price of bonds, rate of interest:

a. Decreases
b. Increases
c. Does not change
d. None of the above

119. Every factor of production gets reward equal to its:

a. Cost
b. Marginal product
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c. Price
d. Increasing return

120. According to Keynes, interest is a payment for:

a. Use of durable goods
b. Use of capital
c. Use of money
d. Use of land

121. In economics capital refers to:

a. Money
b. High quality goods
c. Trade mark
d. Machinery and factories

122. If rate of interest is 10% the PV (present value) of Rs. 100 received in 1 years
time is:
a. 90
b. 90.9
c. 95
d. 110

123. Professor Knight is famous for his theory of:

a. Rent
b. Profit
c. Population
d. Wages

124. Profits:
a. Are residual payment
b. Are pre-determined
c. Are fixed contract
d. Are always higher than wages

125. Profits:
a. Are lower in the long run than in the short run
b. Can be negative
c. Is less in perfect competition than in monopoly?
d. All of the above

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126. Profits:
a. Are necessary
b. Are unnecessary
c. Can never be negative
d. Are illegal

127. Profits arise because an entrepreneur:

a. Prepares plan
b. Innovates
c. Lends money
d. Both (a) and (b)

128. Profits:
a. Are less in the long run than in short run
b. Interest on capital owned by firm
c. Are less in perfect competition than in monopoly
d. All of the above are true

129. Gross profit does NOT include:

a. Rent of land owned by the firm
b. Interest on capital owned by firm
c. Pure profit
d. Taxes

130. Some economists say that profit earner is a kind of:

a. Rent receiver
b. Interest receiver
c. Wage earner
d. Govt. Officer

131. Risks in the business arise because of:

a. Introduction of the new products
b. Uncertain policy of rival firms
c. Changes in tastes
d. All the above

132. According to Professor Knight risks are of _____ kinds:

a. 2
b. 3
c. 4

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d. Many

133. This is not a function of the entrepreneur:

a. Supervise
b. Innovate
c. Lend money
d. Prepare plan

TRANSPORT COMMUNICATION AND HUMAN RESOURCES

134. According to Malthus, population increases by progression of kind:
a. Systematic
b. Arithmetic
c. Geometric
d. Automatic

135. Productivity of labor can be increased by:

a. Raising minimum wages
b. Raising average wages
c. Increasing skills of workers
d. All of the above

136. All labor is:

a. Homogeneous
b. Heterogeneous
c. Lazy
d. Intelligent

137. Mobility of labor:

a. Increases efficiency of labor
b. Spoils labor
c. Increases division of labor
d. and (c) of above

138. Unemployment due to mechanization of agriculture is:

a. Seasonal
b. Structural
c. Industrial
d. Personal

139. Labor includes:

a. The inventor
b. The innovator
c. The unskilled worker
d. All of the above

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140. A skilled worker is an example of:
a. Scarcity
b. An entrepreneur
c. The labor input
141. and (c) above

142. The labor force participation rate is:

a. Proportion of working population
b. Proportion of population working or seeking work
c. Proportion of skilled workers in the population
d. Female working population

143. Union leaders are in a better position to bargain for higher wages if demand for
labor is:
a. Elastic
b. Inelastic
c. Very large
d. Permanent

144. In which form the largest percentage of national income is earned:

a. Interest income
b. Proprietor's income
c. Employees' wages
d. Rental income

145. Who is unemployed:

a. Housewife
b. College student
c. A peer who lives on gifts from mureeds
d. A freshly graduated engineer who is searching for a job

146. Standard of living of workers depends upon their:

a. Nominal wages
b. Real wages
c. Average product
d. Govt. Policy

147. Unemployment takes place because of:

a. High demand for labor
b. More exports
c. High population growth rate
d. Higher education

148. Unemployment rate in Pakistan is:

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a. Less than 5%
b. Between 5% and 20%
c. Between 20% and 30%
d. More than 30%

149. Working population in Pakistan is in the ratio of total population:

a. 1/2
b. 1/3
c. 1/4
d. 1/5

150. This is a cause of unemployment:

a. Foreign loans
b. Fast population growth
c. Huge expenditure of government
d. High Literacy rate

151. Productivity of Labor is measured by:

a. Measuring GDP
b. Production per hour
c. Production per day
d. Total working hours

152. Various kinds of unemployment are:

a. Seasonal and Circular
b. Seasonal and Structural
c. Structural and Social
d. Private and Public

153. These steps will raise productivity of Labor:

a. High wages, longer hours of work
b. High wages, shorter hours of work
c. High wages, specialization
154. and (c) above

155. The nature of unemployment due to mechanization of agriculture is:

a. Seasonal
b. Structural
c. Industrial
d. Permanent

156. Mobility of Labor:

a. Increases efficiency of Labor
b. Decreases efficiency of Labor
c. Does not affect efficiency of Labor

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d. None of the above

157. Rate of growth of population in Pakistan is:

a. Increasing
b. Decreasing
c. Constant
d. Unpredictable

158. Mobility of Labor depends upon:

a. Age of the worker
b. Attitude of the worker
c. Education of the worker
d. All of the above
159. SCALE OF PRODUCTION AND LAWS OF RETURNS

160. Negative returns in the short run imply that:

a. Average product is negative
b. Total product is negative
c. Marginal is negative
d. Total cost is falling

161. Economies of scale:

a. Occur when an increase in input causes a less than proportionate increase in
output
b. Suggest that firm's marginal cost curve lies above its average cost curve
c. Suggest that the firm's marginal cost curve lies above its average cost curve
d. None of these

162. In law of diminishing returns at least one factor:

a. Must be constant
b. Must be owned by the firm
c. Must be purchasable
d. Must be efficient

163. Economies of scale are of two kinds:

a. Temporary and permanent
b. Internal and external
c. Managerial and industrial
d. Natural and artificial

164. Laws of return apply to firms working in:

a. Perfect competition
b. Monopoly
c. Small firm

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d. All kinds of market situations

165. During short period, diminishing returns may follow because:

a. Quantity of labor is fixed
b. Quantity is fixed
c. Quantity of capital is fixed
d. Quantity of any one factor is fixed

166. When a firm using a fixed amount of land and capital takes on more workers, it
finds that marginal product (MP) of labor falls but the average product (AP) of labor
rises. This can be explained by the factors that:
a. The MP of labor is greater than AP of labor
b. The additional workers are more efficient
c. MP and AP always moves in opposite directions
d. None of these

167. Which of the following is example of external economies of scale?

a. Discount on purchases of raw materials
b. Technical progress leads to development of machines at low price
c. Hiring of specialized staff due to increase in scale of production
d. A firm starts producing by products

168. The maximum point on TP curve is at quantity of labor where:

a. Average physical product of labor is equal to 1
b. MPP of labor is at its maximum
c. Curves of APP and MPP of labor intersect
d. MPP of labor is zero

169. When a firm using a fixed amount of land and capital takes on more workers, it
finds that marginal product (MP) of labor falls but the average product (AP) of labor
rises. This can be explained by the factors that:
a. The MP of labor is greater than AP of labor
b. The additional workers are more efficient
c. MP and AP always moves in opposite directions
170. and (c)

171. In an economy government constructed a new water reservoir for the purpose of
irrigation; this might be taken as:
a. Increase in supply of capital
b. Increase in supply of land
c. Increase in supply of land and supply of capital
d. None of these
BUSINESS AND FINANCE

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172. Business can be defined as:
a. Selling of goods
b. Buying of good
c. A market place
d. Trade, commerce and industry

173. What can be the maximum number of partners in a partnership firm?

a. 10
b. 15
c. 20
d. 25

174. Which form of business organization would be most suitable for a capital
intensive business?
a. Sole proprietorship
b. Partnership
c. Co-operative society
d. Joint-stock company

175. According to the systems approach, a system is the:

a. Sum total of all its components
b. Orderly arrangement of its components in a coordinated manner
c. A combination of some of the component
d. A systemic view of the organization

176. A business organization has constant and invisible interaction with its:
a. Employees
b. Suppliers and customers
c. External environment
d. Government

177. The asset limit above which a company or group would be covered under the
MRTP in India for concentration of economic power is:
a. Rs 50 lakh
b. Rs 1 crore
c. Rs 20 crore
d. Rs 100 crore
178. Which one of the following refers to 'factoring services'?
a. Guaranteeing realisation from debtor
b. Financing working capital
c. Providing project consultancy
d. None of the above

179. An indirect tax is one where:

a. Tax is levied on wealth

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b. Tax is levied always on products
c. Points of impact and incidence are the same
d. Points of impact and incidence are different
180. Which one of the following is an example of indirect tax?
a. Corporation tax
b. Wealth tax
c. Income tax
d. Sales tax
181. The incidence of tax refers to:
a. The effect produced by the tax
b. The rate of taxation
c. One who bears the ultimate money burden of the tax?
d. One who is immediately responsible to pay the tax?

182. Who is generally regarded as the father of modern management?

a. F.W.Taylor
b. Henry Fayol
c. James D.Mooney
d. Alan C. Reiley

183. The term Managerical Rovolution refers to the prediction that with the expansion
in size of business units, world affairs will eventually be in the hands of a few powerful
managers. Who made use of this term?
a. J.Burnham
b. F.W.Taylor
c. Alfred Marshall
d. J.K.Galbraith

184. The principle of scientific management implies:

a. Replacement of rules of thumb by scientific principles of management
b. Managing business in a scientific way
c. Use of science in business
d. Human approach to management

185. Objectives in the context of management may be defined as:

a. Laying down targets to be achieved over a period of time
b. The end result, which an organisation tries to attain
c. The purpose for the organization's survival
d. Parameters for unified planning

186. The two key factors in 'management by objectives' are:

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a. Performance evaluation and objectives
b. Democratic goal-setting and verifiable objectives
c. Systems approach and long-range planning
d. Short-run goods and flexibility

187. An informal organisation is one where:

a. There is no division of work
b. Jobs of individuals are not precisely defined
c. The structure is not prescribed by formal authority
d. There are no fixed hours of work

188. The first level of needs in Maslow's 'need hierarchy is:

a. Social needs
b. Security needs
c. Physiological needs
d. Esteem needs

189. Planning and control are related in such a way that:

a. Planning precedes control
b. Control precedes planning
c. Both are concurrent
d. Both go hand-in-hand with each other in a cyclical manner

190. Communication is complete when the:

a. Message is sent by the sender
b. Message is received by the receiver
c. Message is received and understood by the receiver
d. Message is further transmitted by the receiver

191. A private company must have at least:

a. 2 members
b. 5 members
c. 7 members
d. 10 member

192. Unless the Articles of Association otherwise provide, the quorum for a general
meeting of a public company is:
a. One-third of the total members
b. Five members personally present
c. Seven members personally present
d. Twenty members personally present

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193. A Special resolution is one, which is passed in a general meeting by:
a. A simple majority of votes
b. Two-third majority of votes
c. Three-fourth majority of votes
d. Three-fifth majority of votes

194. A share warrant can be issued by:

a. Private companies only
b. Public companies only
c. Both public and private companies
d. Government companies only

195. What is the minimum number of shareholders necessary for a public company?
a. 5
b. 7
c. 11
d. 20

196. The share capital of a company refers to:

a. Equity share capital
b. Preference share capital
c. Equity and preference share capital
d. Equity and preference share capital and debentures

197. In which year was the Indian Contract Act passed?

a. 1850
b. 1872
c. 1926
d. 1939

198. Any agreement by a minor which is beneficial to him is a:

a. Void agreement
b. Illegal agreement
c. Valid contract
d. Void contract

199. The liability of partners in a partnership firm is:

a. Joint and several
b. Joint and alternative
c. Alternative
d. Joint

200. What is the maximum number of partners necessary in a partnership firm carrying
on banking business?

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a. 5
b. 10
c. 15
d. 20

201. The suit for specific performance in case of breach of contract may be filed only
where the subject matter relates to:
a. Movable goods
b. Immovable property
c. Perishable goods
d. Personal skill and qualifications

202. Which one of the following is a void agreement?

a. Agreement in restraint of trade
b. Agreement whose object is illegal
c. Agreement in respect of sale of goodwill
d. Service agreements containing negative stipulations during the tenure of service

203. Crossing a cheque 'Not Negotiable' affords security against:

a. Negotiation of cheque
b. The ft of cheque
c. Payment to wrong banker or account
d. None of the above

204. Non-registration of a partnership does not affect the:

a. Suit by a partner against the firm or other co-partners
b. Suit by the firm against third parties
c. Suit by third parties against the firm
d. Claim of set-off or other proceedings on a contract by the firm

205. Organisation Theory is concerned with the:

a. Development of an organisation as an economic unit
b. Study to explain the nature and composition of organisations as a social or
human group
c. Rules governing an organisation
d. Human behaviour at work

206. With which of following is Behavioural Science in management related?

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a. Organizational response to its environment
b. Scientific study of human behaviour
c. Superior-subordinate behaviour within an organisation
d. None of the above

207. Job-enrichment means:

a. More tasks of the same general nature
b. More tasks providing greater challenge
c. Change or variation of job after a time perior
d. one of the above

208. An organisation structure refers to the:

a. Nature of superior-subordinate relationship
b. Relationships and dependencies within an organisation
c. Extent of delegation of authority in the organisation
d. Flow of authority and responsibility

209. Finance is concerned with:

a. Arrangement of funds
b. Identification of sources of funds
c. Recording utilisation of funds
d. All of the above

210. Current Ratio is the ratio of:

a. Current assets to current liabilities
b. Current liabilities to current assets
c. Fixed assets to total liabilities
d. Current assets to total liabilities

211. Debt Equity Ratio refers to the ratio of:

a. Debtors to equity share capital
b. Long term debt to shareholders' equity
c. Total debt to equity share capital
d. Long term debt to equity share capital

212. Trading on eqrity' means:

a. Use of equity share capital for trade financing

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b. Use of fixed-interest borrowed funds for getting a higher return on equity
c. Having no borrowed funds
d. Trading in equity share capital

213. Cost of goods sold refers to:

a. Sales minus gross profits
b. Sales minus profits
c. Cost of materials, labour and overheads
d. None of the above

214. In the pay back period method of capital budgeting, investment is divided by:
a. Annual profits
b. Return on investment
c. Constant annual cash flow
d. Cumulative cash flow

215. The relationship between EBIT and EPS gives:

a. Operating leverage
b. Financial leverage
c. Nornal leverage
d. Composite leverage

216. Break-even-point is a situation where

a. Profits are negative
b. There is no profit no loss
c. Profits-Costs
d. Business is at the point of dissolution

217. Under-capitalisation refers to a situation where:

a. The capital base is larger for the earnings made
b. The capital base does not justify the amount of earnings made and needs to
be enhanced
c. The capital base justifies the earnings made
d. The earnings ratio of the company equals the industry's earnings ratio

218. A schedule of balances drawn from the ledger is called:

a. A trial balance

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b. A balance sheet
c. A profit and loss account
d. A statement of account

219. Goodwill of a firm represents

a. Fixed assets
b. Tangible assets
c. Intangible assets
d. Fictitious assets

220. A bank account is a:

a. Personal account
b. Real account
c. Liability account
d. Nominal account

221. Prepaid expenses appearing in a trial balance will figure in the:

a. Balance sheet
b. Profit and loss account
c. Profit and loss account and balance sheet
d. Prepaid expenses account

222. Sale of old furniture on credit will appear in the:

a. Sales day book
b. Cash book
c. Journal
d. Debtors ledger

223. The excess of current assets over current liabilities is called:

a. Net worth
b. Working capital
c. Net tangible worth
d. Turnover

224. Depreciation is the process of:

a. Allocation of costs
b. Valuation of assets
c. Use of assets

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d. None of the above

225. What is the objective of cost accounting?

a. Cost determination
b. Cost analysis
c. Cost control
d. All of the above

226. What is Conersion Cost?

a. Cost of materials and labour
b. Cost of transforming direct materials into finished products
c. Cost of labour
d. Total cost of running business

227. In an integrated costing system, most of the data relevant to cost accounting
comes from the:
a. Cost accounting system
b. Financial accounting system
c. Stores accounting system
d. Sales and distribution system V H-

228. Which method of costing is used by sugar mills?

a. Unit or output costing
b. Job costing
c. Process costing
d. Batch costing

229. Premium on redemption of debentures is accounted for in the:

a. Personal account
b. Real account
c. Nominal account
d. Assets account

230. After debentures are redeemed, the balance in the sinking fund account is
transferred to:
a. Capital reserve
b. General reserve
c. Profit and loss account
d. Secret reserve

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231. To the extent redemption of preferece shares takes place out of profits, an equal
amount has to be transferred to:
a. Development rebate reserve
b. Capital redemption reserve
c. General reserve
d. Share premium account

232. When shares are forfeited, the share capital account is debited by:
a. Calls-in-arrears
b. Called-up-amount
c. Paid-up amount
d. Face value of shares

233. The profit on re-issuing forfeited shares is transferred to:

a. Capital reserve
b. Capital redumption reserve
c. General reserve
d. Revaluation reserve

234. The share application account is a:

a. Real account
b. Personal account
c. Nominal account
d. Asset account

235. The excess of purchase price over net assets is:

a. Goodwill
b. Capital reserve
c. Preliminary expense
d. Revenue reserve

236. In the balance sheet of a company, the items goodwill, patents and trade marks are
shown under the heading:
a. Current assets
b. Loans and advances
c. Fixed assets

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d. Investments

237. A preliminary expense is a:

a. Current asset
b. Fictitious asset
c. Current liability
d. Non-current liability

238. Divisible profits do not include:

a. Reserve fund
b. Profit on revaluation of assets
c. Post-incorporation profits
d. None of the above

239. Advance payment of tax should be shown on the:

a. Assets side of a balance sheet
b. Liabilities side of a balance sheet
c. Debit side of a profit and loss account
d. Credit side of a profit and loss account

240. Dividends are usually paid on the:

a. Called-up capital
b. Paid-up capital
c. Subscribed capital
d. Nominal capital

241. Which of the following is not concerned with the valuation of goodwill?
a. Earning capacity method
b. Super profits method
c. Average profits method
d. Net as sets method

242. When two or more companies dissolve to form a new company, the process is
known as:
a. Amalgamation
b. Absorption
c. Reconstruction

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d. Combination

243. Absorption is said to take place when:

a. A company is formed to take over another company
b. Two or more companies are dissolved to form a few company
c. Two or more companies dissolve to be taken over by a existing company
d. Two companies decide for virtual integration of their operations

244. For calculating market value using P/E ratios, it is necessary to know:
a. The rate of dividend
b. Average profits
c. Market price of the share
d. Earnings per share and market price of the share

245. The relationship between normal rate of return and P/E ratio is:
a. Inverse
b. Direct
c. Irregular
d. None of the above

246. For a company to carry out capital reduction, permission is required from the:
a. Controller of Capital Issues
b. Competent Court
c. Company Law Board
d. Board of Directors

247. Any balance in the capital reduction account after writing off lost capital is
tansferred to:
a. Capital reserve
b. General reserve
c. Debenture redemption reserve
d. Capital redemption reserve

248. In a scheme of reorganization, the amount of shares surrendered by shareholders

is transferred to the:
a. Shares surrendered account
b. Capital reduction account

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c. Capital reorganization account
d. Capital sacrificed account

249. Amounts sacrificed by shareholders are credited to the:

a. Capital reserve account
b. General reserve account
c. Capital reduction account
d. Capital redemption reserve account

250. At the commencement of winding up, a contributory is a:

a. Creditor
b. Debtor
c. Shareholder
d. Debenture holder

251. The shareholding of the government in a government company must be at least:

a. 33%
b. 50%
c. 51%
d. 100%
ECONOMICS AND COMMERCIAL GEOGRAPHY

252. Which is the smallest continent?

Europe
Antarctica
South America
Australia

253. Asia is the largest continent in the world. Roughly what percentage of the earth's
area is covered by it?
33.4
29.5
27.6
25.8

254. Which country in Europe has the largest area?

Spain
France

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Sweden
Finland

255. Identify the world's largest island:

Greenland
New Guinea
Borneo
Great Britain

256. Which is the highest waterfall in the world?

Tugela
Utigord
Angel
Yosemite

257. Which is the world's largest river?

Nile
Amazon
Hudson
Mississippi-Missouri

258. Which is the biggest ocean in the world?

Arctic Ocean
Indian Ocean
Pacific Ocean
Atlantic Ocean

259. Which two continents are complementary to each other?

Africa and South America
Asia and Australia
North America and South America
Asia and Europe

260. Which of the following is a block mountain?

Andes
Rockies
Alps
Vosges

261. Which is the world's smallest independent country?

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Manaco
Vatican city
Naura
Tauralu

262. Which place is known as the Land of Thousand Lakes?

Norway
Sweden
Finland
Srinagar

263. Which country is the leading producer of wood pulp in the world?
Canada B. USSR
USA D. Japan

264. Which of the following resources is inexhaustible?

Natural gas
Iron ore
Coal
Solar energy

265. Identify the country, which is the largest among coal producing countries in the
world:
USA
China
UK
France

266. Brazil leads in the production of:

Tea
Coffee
Cotton
Tobacco

267. Identify the country, which is known as the sugar bowl of the world:
Cuba
Colombia
India
Peru

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268. Which country has the highest dam?
Canada
Egypt
China
USSR

269. Two countries produce about 40% of the world's wine. France is one of them.
Which is the other?
Spain
USSR
Italy
Turkey

270. Which is the largest producer and exporter of palm oil in the world?
Indonesia
Mexico
Zaire
Malaysia

271. What is New Zealand's extent of dependence on waterpower as a source of

electricity?
45%
55%
65%
75%

272. Two countries lead the world in bauxite production. Guinea is one. Which is the
other?
Brazil
Australia
Jamaica
USSR

273. Which country is the leading producer of silver in the world?

USSR
USA
South Africa
China

274. Which of the following minerals does not contain any metal?
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Silver ore
Lead ore
Aluminium ore
Mica ore

275. Identify the country, which is the leading iron ore producer in the world?
USA
USSR
France
Australia

276. Which of the following prevents deserts from spreading further?

Afforestation
Constructing canals
Deforestation
Desalination

277. Where are Savana grasslands found?

Africa
North America
Canada
Australia

278. Identify the country, which leads in world fish production:

China
USA
USSR
Japan

279. Which country is the largest producer of nuclear power in the world?
USA
France
USSR
Japan

280. Which country has the largest share in cotton production?

USA
China
USSR
Pakistan
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281. Which one of the following cities is known as the 'city of skyscrapers'?
New York
Ottawa
Tokyo
Washington

282. Which of the following fertilisers is used after sowing seeds?

Potash
Phosphorus
Nitrate
Green manure

283. Which is the world's largest producer and consumer of synthetic rubber?
Malaysia
USA
Indonesia
Thailand

284. Which is the leading country in pipeline transportation of crude petroleum?

USSR
Iraq
Iran
USA

285. The Richter scale is used for measuring:

Earthquake's magnitude
Intensity of wind
Depth of ocean
Height of mountain

286. Identify the first metal used by man:

Gold
Iron
Copper
Aluminium

287. The Duncan Passage is between:

Sri Lanka and India
Andaman Islands and Nicobar Islands
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Pakistan and Afghanistan
China and India

288. Which is the world's largest city?

Tokyo
Seoul
Shanghai
Moscow

289. What was the earlier name of Zimbabwe?

Zanzibar
Rhodesia
South West
Bechuanaland

290. Which of the following is one of the assumptions of perfect competition:

Few buyers and few sellers
Many buyers and few sellers
Many buyers and many sellers
All sellers and buyers are honest

291. A firm under perfect competition is:

Price maker
Price breaker
Price taker
Price shaker

292. Which of the following markets comes closest to perfect market?

Wheat market
Cigarette market
Cold drinks market
Stock market

293. This kind of market is undesirable:

General markets
Specialized
Local market

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National market

294. Which is a condition for existence of monopoly:

Big size
Identical product
Absence of government taxes
No close substitute

295. In case of monopoly:

Marginal revenue curve always slopes upward
Total revenue curve always slopes upward
Marginal revenue is always equal to average revenue
Marginal revenue is always less than average revenue

296. In case of perfect competition in the market:

Marginal revenue curve always slopes upward
Marginal revenue curve always slopes downward
Marginal revenue is always equal to average revenue
Marginal revenue is always less than average revenue

297. In the business world:

A firm working under perfect competition wants to become a monopoly
A firm working under monopoly wants to become a competitive firm
Monopoly price is always higher than competitive price
Competitive price is always higher than monopoly price

298. Which is not true:

Perfect monopoly does not exist in real world
Perfect competition does not exist in real world
Every monopoly is evil
Every firm wants to reduce competition

299. The major difference between perfect competition and monopolistic competition
is:
Number of firms
Differentiated product
Rate of profit
Free exist and entry

300. Marginal revenue is always less than price at all levels of output in:
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Perfect competition
Monopoly
Both (a) & (b)
None of the above

301. Which of the following is not a characteristic of perfect competition?

Free entry and exit of the firms
the demand curve of firm is horizontal
The marginal revenue curve is horizontal
An individual firm can influence the price

302. When marginal revenue is zero, total revenue:

Maximum
Minimum
Zero
Decreasing

303. Marginal revenue is always less than price at all levels of output in:
Perfect competition
Monopoly
Both (a) & (b)
None of the above

304. Which of the following is not a characteristic of perfect competition?

Free entry and exit of the firms
Demand curve of a firm is horizontal
The marginal revenue curve is horizontal
An individual firm can influence the price

305. Who is called as father of Economics?

Adam smith
Robinson
Marshall
George Bernard

306. Economics is the science of wealth who gave this definition?

J.K.Mehta
Marshall
Adam Smith
Robbins

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307. Which of the following is related with controlling economic problems ?
What to produce
How to produce
For whom to produce
All of the above

308. The existence of both public and private sector enterprises constitutes
Capitalist economy
Mixed economy
Socialist economy
None of the Above

309. 12. Peoples wants are ----------------

More
Limited
Unlimited
Few

310. Who has given scarcity definition of economics?

Adam smith
Marshall
Robbins
Robertson

311. Micro economic theory is also known as -----------------.

Business Theory
Price Theory
Individual Theory
Cost theory

312. Profit Maximisation goal is suitable for ------------ and ------------ markets .
Monopolistic and Oligopoly
Monopolistic and Duopoly
Monopsony and Duopsony
Perfect competition and monopoly

313. In economics the central problem is ----------------

Money
Production
Consumption
scarcity

314. Utility is measured by ______________.

Wealth
Price

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Value or worth
Income

315. The extra utility from consuming one more unit of a commodity is called
----------------
Marginal utility
Additional utility
Surplus utility
Bonus utility

316. If marginal utility is zero ----------------

Total utility is zero
An additional unit of consumption will decrease total utility
An additional unit of consumption will increase total utility
Total utility is maximum

317. When the total utility curve reaches its maximum level, marginal utility
is-----------------------
Zero
Positive
Rising
Negative

318. In case of Utility theory as income increases, marginal utility of money ---------
Decreases
Increases
Constant
none of these

319. Who has given the concept of consumer surplus?

Marshall
Robbins
Pigou
None of these

320. Utility means _______________.

Power to satisfy a want
Usefulness
Willingness of a person
Harmfulness

321. At point of satiety, marginal utility is _________________.

Zero.
Positive.
Maximum.
Negative

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322. Which of the following is the second law of Gossen?
Law of equi-marginal utility
Law of equi-product.
Theory of indifference curve.
Law of diminishing marginal utility

323. Total utility of a commodity is measured by which price of that commodity?

Value in use.
Value in exchange
Both of above.
Value of money

324. According to Marshall, the basis of consumer surplus is ______________.

Law of diminishing marginal utility
Law of equi-marginal utility
Law of proportions
All of the above

325. Which of the following is an economic activity?

Teaching of a teacher in the school.
To teach son at home.
To serve her child by mother.
To play football by a student.

326. Sales Maximization is suitable for ------------ market

Oligopoly
Duopoly
Monopoly
Monopsony

327. Demand is a function of -----------

Income.
Advertisement
Consumers
Price.

328. Which will cause a change in the demand for commodity X?

A Change in Tastes.
A Change in Income.
A Change in the Price of X
A Change in Price of Complementary Product

329. A market demand can be derived by adding all the individual demand curves
_________.
Vertically
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Horizontally
in parallel
by any of the above, as long as it is consistent.

330. A market demand Schedule for a product indicates that ______________.

as the product's price falls; consumers buy less of the good
there is a direct relationship between price and quantity demanded
as a product's price rises; consumers buy less of other goods.
‘there is an inverse relationship between price and quantity demanded.

331. When one speaks of "demand" in a particular market, this refers to __________.
the quantity demanded at a given price
only one price-quantity combination on the demand schedule
only one point on the entire demand curve
the whole demand curve

332. Other things being equal, the law of demand implies that as ______________.
the demand for increases, the price will decrease
income increases, the quantity demanded will increase
the price increases, the quantity demanded will decrease
the price increases, the quantity demanded will increase

333. For inferior commodities, income effect is ______________.

Zero.
Negative
Infinite.
Positive.

334. Which is not a determinant of demand?

Income.
The Cost of Inputs In Production
The Prices of Related Goods
Future Price Expectations

335. The price elasticity of demand is the ___________________.

percentage change in quantity demanded divided by the percentage change in price.
percentage change in price divided by the percentage change in quantity demanded
dollar change in quantity demanded divided by the dollar change in price.
percentage change in quantity demanded divided by the percentage change in quantity
supplied

336. If two goods are close substitutes, ___________________.

an increase in the price of one will decrease the demand for the other.
an increase in the price of one will increase the demand for the other.
a decrease in the price of one will increase the demand for the other.
a decrease in the price of one will have no effect on the demand for the other.
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337. People demand more of product X when the price of product Y decreases. This
means X and Y are__________.
complements.
Substitutes
not related.
both inexpensive

338. Derived demand is directly determined by ____________.

Utility
the profitability of using inputs to produce output
the ability to satisfy consumer desires
personal consumption

339. When demand is elastic ________________.

a fall in price is more than offset by an increase in quantity demanded, so that total
revenue rises.
the good is probably a necessity, so price has little effect on quantity demanded.
a rise in price will increase total revenue, even though less is sold
buyers are not much influenced by prices of competing proceeds

340. The demand for a good is highly inelastic if __________________.

the price elasticity of the good is close to zero.
the income elasticity of the good is close to one
if it is a necessity
both a & c

341. A perfectly inelastic demand curve __________________.

is a vertical line parallel to Y-axis.
is a vertical line parallel to X-axis
indicates a good with no close substitutes.
a and c

342. Demand curve is a _____________.

falling curve
rising curve
downward sloping curve
upward sloping curve

343. Which of the following is not a step in the forecasting process?

Determine The Use Of The Forecast.
Eliminate Any Assumptions.
Determine The Time Horizon.
Select A Forecasting Model(S).

344. Gradual, long-term movement in time-series data is called _____________.

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seasonal variation
cycles
trends
exponential variation

345. Which of the following is not present in a time series?

Seasonality
Operational Variations.
Trend.
Random Variations.

346. In Sample survey method -------- Technique is adopted.

Deliberate
Convenience
Quota
Random

347. In time series, which of the following cannot be predicted?

Large Increases In Demand.
Technological Trends.
Seasonal Fluctuations
Random Fluctuations.

348. Which of the following is not a characteristic of simple moving averages?

It Smoothes Random Variations In The Data.
It Has Minimal Data Storage Requirements.
It Weights Each Historical Value Equally.
It Smoothes Real Variations In The Data.

349. Car and petrol are ---------------goods.

Substitutes
Complementary
Producers
None of the above.

350. Tea and coffee are --------------Goods

Substitutes
Complementary
Producers
None of the above.

351. In cross elasticity of demand, for unrelated goods the demand curve will be
---------------
Rectangular hyperbola
Vertical line
Horizontal line
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None of the above.

352. The total outlay method explains the relationship between Price and---------------
Demand
Supply
Expenditure
Income

353. Which of the following is included in exceptions to the law of demand

Giffen Goods
Prestigious goods
Both of the above
None of the above

354. When a commodity with many uses is demanded then it is called

Direct demand
Joint demand
Composite demand
None of these

355. A fall in the price of a commodity leads to _______________.

a shift in demand
a fall in demand
a rise in the consumer’s real income
a fall in the consumer’s real income

356. An increase in demand can result from ____________.

a decline in market price
an increase in income
a reduction in the price of a substitute
an increase in the price of complements

357. Giffen goods are goods ___________.

for which demand increases as price increases
which have a high income elasticity of demand
which has a low crosses elasticity of demand.
which are in very short supply

358. Decrease in demand means ________________.

movement upward on a demand curve
movement downward on the demand curve
shift downward of a demand curve
shift upward of a demand curve

359. Elasticity of demand is _______________.

slope of the demand curve

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usually unity
usually zero
degree of responsiveness of quantity demanded to a change in price.

360. How would you indicate relatively inelastic demand by using one of the following
measures________?
E = Zero.
E is less than 1.
E is greater than 1
E = 1.

361. A demand curve which is a horizontal straight line has an elasticity that is
------------
Zero
greater than zero but less than one
one.
infinite

362. Demand forecasting means _________________.

simply guessing about future demand
establishing relations between demand and its determinants
predicting level of demand at a future date
all the above

363. The demand for labor slopes down and to the right because of _______________.
the law of demand
the iron law of wages
the law of diminishing marginal returns
economies of scale

364. Normal goods experience an increase in consumption when _______________.

real income increase
real income falls
price rises.
tastes change.

365. The demand for a good is price inelastic if ___________________.

the price elasticity is one.
the price elasticity is less than one.
the price elasticity is greater than one.
zero

366. A demand curve with unitary elasticity at all points is __________________.

a straight line
a parabola
a hyperbola
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convex to the origin

367. Supply is a function of -----------

Income.
Advertisement
Consumers
Price.

368. The supply of a product does not depend on _____________.

labor costs
the number of sellers in the market
consumer’s tastes
existing technology

369. -------- Economies views on reducing the Production costs

Internal
Inventory
Pecuniary
External

370. Which factor of production is considered as fixed input?

Labor
Technology
Capital
Land

371. ----------- is the remuneration for organization

Rent
Wages
Interest
Profit

372. ------------- input factor is divided as skilled, semi skilled, unskilled

Land
Capital
Technology
Labor

373. ---------- is the remuneration for labor

Rent
Wages
Interest
Profit.

374. When the output increases in the same proportion as the increase in input it is
--------------Returns.
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Constant
Average
Decreasing
Increasing

375. Cobb- douglas production function mainly studies --------------

Capital and labor
Labor and Entrepreneur
Land and Labor
Land and capital

376. Marginal cost is defined as

Change in total cost due change in output
Total cost divided by output
change in output due to a one unit change in an input
Total product divided by the quantity of input

377. The cost with which the concept of marginal cost is closely related -------------
Variable cost
Fixed cost
Opportunity cost
Economic Cost

378. Opportunity Cost is also Known as ---------------

Outlay cost
Sunk Cost
Alternative Cost
‘Total Cost

379. The costs that depend on output in the short run are _____________.
total variable costs only
both total variable costs and total costs.
total costs only
total fixed cost only.

380. In the short run, as economists use the phrase, is characterized by

________________.
all inputs being variable
a period where the law of diminishing returns does not hold
at least one fixed factor of production and firms neither leaving nor entering the
industry
no variable inputs - that is, all of the factors of production are fixed.

381. The formula for average fixed costs is __________________.

TFC/Q.
Dq/DFC.
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Q/TFC.
TVC/Q.

382. The formula for average variable cost (AVC) is __________________.

DQ/DTVC.
DTVC/DQ
TVC/Q
Q/TVC

383. Implicit costs are ________________.

equal to total fixed costs
comprised entirely of variable costs
payments for self-employed resource
always greater in the short run than in the long run

384. Which would be an implicit cost for a firm? The cost _________________
of worker wages and salaries for the firm
paid for leasing a building for the firm
paid for production supplies for the firm
of wages foregone by the owner of the firm

385. If a firms revenues just cover all its opportunity costs, then ________________.
normal profit is zero
economic profit is zero
total revenues equal its explicit costs.
total revenues equal its implicit costs

386. When the total product curve is falling, the ______________________.

marginal product of labor is zero
marginal product of labor is negative
average product of labor is increasing
average product of labor must be negative.

387. Variable costs are __________________.

sunk costs
multiplied by fixed costs
costs that change with the level of production.
defined as the change in total cost resulting from the production of an additional unit of
output.

388. Opportunity cost of a factor of production with specific use is ____________.

very high
infinite
zero
constant

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389. Money paid to unskilled labor is called ---------------
Wages
Salary
Royalty
None

390. Which of the following curve is not U-shaped?

AVC
AFC
AC
MC

391. Labor is a _________________.

Gift
immovable factor
bargaining factor
passive factor

392. Off all the factors of production given below, which one is perishable in nature
_______.
Labor
Land
Capital’
entrepreneurship

393. External economies of scale arise when ______________.

expansion of output of one firm improves the efficiency of others
a large firm acquires monopoly advantage
the staff of the firm makes a discovery which patentable.
prices are reduced for bulk buying of raw materials

394. Internal economies of scale may not arise due to _______________.

division of labor
vertical integration
bulk purchases
high cost.

395. Opportunity cost is a term which describes ________________.

a bargain price for a factor of production
costs related to an optimum level of production.
variable costs
cost of one product in terms of production of others forgone.

396. Total cost is ____________.

the overall cost associated with a given level of output.
equal to marginal cost times the quantity of output.
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determined by adding marginal cost and average cost.
fixed cost plus marginal cost.

397. Marginal cost curve cuts the average cost curve _____________.
at the left of its lowest point
at its lowest point
at the right of its lowest point
at its highest point

398. Marginal cost means ______________.

subtraction to the total cost.
addition to the total cost.
multiplication to the total cost.
variable cost

399. An LAC curve is not known as _________________.

envelope curve
planning curve
operating curve
plant curve

400. In case of oligopoly, number of firms is -------------

Large
Infinite
One
Few

401. What are homogenous products?

Undifferentiated products
Differentiated products
Both (a) and (b)
None of the above

402. A distinguishing characteristic of monopolistic competition is ----------------

Large number of firms
Low entry barriers
Product standardization
Product differentiation

403. in perfect competition, the marginal revenue curve ----------------------

And the demand curves facing the firm are identical
Is always above the demand curve facing the firm
Is always below the demand curve facing the firm
Intersects the demand curve when marginal revenue is minimized.

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404. If firms can neither enter nor leave an industry, the relevant time period is the
-------------
Short run
Intermediate run
Long run
Immediate run

405. Which of the following is a characteristic of a perfectly competitive market

Firms are price setters.
There are few sellers in the market.
Firms can exit and enter the market freely.
All of the above are correct.

406. In the long run, a profit-maximizing firm will choose to exit a market when
_________.
fixed costs exceed sunk costs
average fixed cost is rising
revenue from production is less than total costs
marginal cost exceeds marginal revenue at the current level of production

407. When firms have an incentive to exit a competitive market, their exit will
________.
drive down market prices
drive down profits of existing firms in the market
decrease the quantity of goods supplied in the market.
All of the above are correct.

408. In a perfectly competitive market, the process of entry or exit ends when
____________.
firms are operating with excess capacity.
firms are making zero economic profit.
firms experience decreasing marginal revenue.
price is equal to marginal cost.

409. Imperfect competition was introduced by -------------

Marshall
Chamberlin
Keynes
None of these

410. In case of Monopoly, a firm in long run can have ----------------

Loss
Profit
Super normal profit
All of above

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411. In Perfect Competition equilibrium is attained when ---------
AR = AC
TR = TC
MR = MC
Q=P

412. Price leadership may not arise due to _________________.

cost advantage.
substantial market share
initiative in developing a product
makes poor quality of the product.

413. Concentration of monopoly is implemented under ----------------

FERA
MRTP
FEMA
None

414. Which method is better in measuring the national income?

Expenditure census method
Social accounting method
Opportunity method
Incremental method

415. in perfectly inelastic, demand curve will be -----------------

Horizontal Straight line
Vertical line
Rectangular hyperbola
None

416. in relatively inelastic, demand curve will be ----------------

Horizontal Straight line
Vertical line
Steeper
Flatter

417. Deductive method explains things from------------------

General to particular
Particular to General
Both
None

418. The primary objective for discriminating monopolist is --------------

Loss minimization
Profit maximization
To cover production cost
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All the above

419. A monopolistic competitive firm sells ----------------- products

Differentiated
Homogenous
All of the above
None

420. Under perfect competition firms do not engage in price-war because

______________.
firms work in co-operation with one another under the same
number of firms under the same is very large.
the demand for the product of a firm under the same is perfectly elastic
all the above-mentioned conditions are responsible.

421. The equilibrium of a firm occurs when _______________.

P = MC.
MC = MR.
P = MR.
AC = MC.

422. In a perfectly competitive market, the firm will be ________________.

a price maker
attempting to maximize profits
producing a product which will be different from its competitors
a price taker

423. In an Oligopolistic market, there are ________________.

a large number of sellers and few buyers
few sellers and few buyers
few sellers and a large number of buyers
only one seller

424. Which one is not collusive oligopoly ___________________.

price leadership
market-sharing cartel
price discrimination
price fixing cartel

425. Equilibrium implies a state of ________________.

Rest
inactivity
absence of motion
movement

426. Uncertainty refers to ______________.

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insurable risks
uninsurable risks
risks due to fires and accidents
no risks

427. Willingness to pay, _______________.

is the minimum valuation of each buyer of a good.
is the price that each buyer can afford given his current income.
is the maximum valuation of each buyer of a good.
must be greater than the price of a good.

428. A marginal buyer is the one _______________________.

who, if the price is increased a little is the first to go out of the market
who, if the price is decreased a little is the first to enter the market
who is indifferent about buying and not buying
both a and c

429. A market is said to be efficient ___________________.

if quantity demanded and the quantity supplied are the same.
if both consumer surplus and the producer surplus are maximized.
if the sum of the producer surplus and the consumer surplus is maximized
both a and c

430. Under perfect competition, rivalry is _____________________.

Impersonal
very personal and direct, advertising being important
nonexistent since the firms cooperate
control output

431. Monopolies arise as a consequence of ______________.

patents
control over the supply of a basic input
franchise
captures the market.

432. A monopolist will never produce at a point where ____________________.

demand is price-inelastic.
demand is price-elastic.
marginal cost is positive.
marginal cost is increasing.

433. Which of the following best defines price discrimination?

Charging Different Prices On The Basis Of Race
Charging Different Prices For Goods With Different Costs Of Production
Charging Different Prices Based On Cost-Of-Service Differences.

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Selling a Certain Product Of Given Quality And Cost Per Unit At Different Prices
To Different Buyers.

434. Dynamic Theory of profit given by ----------------

J.B.Clark
Hawley
Schumpeter
J.S.Mill

435. A recession is-----------------

A period during which aggregate output declines
A period of decling unemployment
A period of very rapidly declining prices
A period of declining prices

436. -------- phase takes twice in a trade cycle

Depression
Recession
Recovery
Prosperity

437. Business cycle also known as ________________.

trade cycle
contraction
expansion
upper turning point

438. The main aim of monetary policy is _________________________.

to regulate cost and credit
to control inflation
to control foreign exchange
all the above

439. The phases of business cycle are --------------

Boom and Recession
Depression and Recovery
Both
None

440. In the ------------ phase, demand, output, employment and income are at a high
level.
Depression
Recession
Boom
Recovery

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441. The taxation and Public expenditure policy is Known as ------------
Monetary Policy
Fiscal Policy
Trade Policy
Pricing policies

442. When national income of a country is calculated in terms of constant prices, it is

called as------------
Nominal GNP
GNP at current prices
GNP at constant prices
GDP at constant prices

443. Inflation means -------------------

More money less value
Less money high value
More money more value
Less money less value

444. ------------------ refers to the credit control measures adopted by the central bank of
a country.
Monetary policy
Fiscal policy
Direct controls
All of the above

445. The instruments of monetary policy are --------------------

Qualitative
Quantitative
Qualitative and Quantitative
None

446. A-------------- is a quantitative expression of a plan for a defined period of time.

Budget
Open market operation
Both
None

447. --------------- is a budget where receipts are equal to expenditure.

Revenue Budget
Receipts Budget
Balanced Budget
Performance Budget

448. ---------- is a variable budget

Flexible budget
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Fixed budget
Both
None

449. ----------- Income is the total income received by individuals of a country from all
sources before payment of direct taxes in one year.
Domestic Income
Private Income
Personal Income
Real Income
450. The average income of the people of a country in a particular year is called ----
Private Income
Real Income
Disposable Income
Per capita Income

451. ---------- control is used to regulate the commercial banks

Qualitative
Quantitative
Public Debt
Fiscal Measures

452. Which is not a tool of fiscal policy?

Public Deb
Public Taxation
Bill market
Public Expenditure

453. A decrease in demand causes the equilibrium price to:

Rise
Fall
Remain constant
Indeterminate

454. When price is below equilibrium level, there will be:

Surplus commodity in the market
Shortage of commodity in the market
Supply curve will shift
Demand curve will shift

455. If equilibrium price rises but equilibrium quantity remains unchanged, the cause
is:
Supply and demand both increase equally

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Supply and demand both decrease equally
Supply decreases and demand increases
Supply increases and demand decreases

456. Price of a product is determined in a free market:

By demand for the product
By supply of the product
By both demand and supply
By the government

457. In market equilibrium, supply is vertical line. The downward sloping demand
curve shifts to the rights. Then:
Price will fall
Price remains same
Price will rise
Quantity rises

458. Equilibrium:
Is a state that can never be achieved in economics?
Is an important idea for predicting economic changes?
Is a stable condition
Is an unstable condition

459. Ten rupees is the equilibrium price for good X. If government fixes price at Rs. 5,
there is:
A shortage
A surplus
Excess supply
Loss

460. A rise in supply and demand in equal proportion will result in:
Increase in equilibrium price and decrease in equilibrium quantity
Decrease in equilibrium price and increase in equilibrium quantity
No change in equilibrium price and increase in equilibrium quantity
Increase in equilibrium price and no change in equilibrium quantity

461. The price and sales of sugar both increase. What could be the cause of this?
A decrease in the incomes of the consumers
A decrease in the tax on sugar
An increase in the wages of workers in the sugar industry
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An increase in the price of sugar substitutes

462. A firm decides to exit the industry when:

AC strts rising
MC starts rising
Price is less than LAC
TC starts rising

463. Profit is maximum when:

TC and TR curves are parallel
MC and MR curves are parallel
TC and TR curves cross each other
AC and AR curves cross each other

464. In monopoly and perfect competition the cost curves are:

Same
Different
Opposite
None of these

465. Normal profit is called normal because:

It is neither very high nor very low
It is minimum acceptable to the producer
It is minimum which buyer wants to pay
It is the maximum allowed by govt.

466. If a firm shuts down temporarily, it will incur loss equal to:
AFC
AVC
TFC
TVC

467. Under perfect competition:

AC = AVC
AR = AC
AR = MC
AR = MR

468. The necessary condition for equilibrium position of a firm is:

MR = MC
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MC > Price
MC = MR
MC = AC

469. When a competitive firm achieves long run equilibrium then:

P = MC
MR = MC
P = ATC
All of the above

470. The most efficient scale of production of a firm is where:

LAC is minimum
SAC is minimum
LMC is minimum
SMC is minimum

471. A firm should shut down in the short run if it is not covering its:
Variable cost
Fixed cost
Total cost
Explicit cost (money outlays)

PROFIT MAXIMIZATION

472. The necessary condition for equilibrium position of a firm is:

MC > MR
MC > Price
MC = MR
MC is falling
MC = AC

473. Profit is maximum when:

Distance between TR and TC is maximum
Distance between AR and AC is maximum
Distance between MR and MC is maximum
None of these

474. Profit is maximum when:

Slope of MC and MR is the same
Slope of TC and TR is the same

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Slope of AC and AR is the same
None of these

475. Profit is m4aximum when:

TC and TR curves are parallel
MC and MR curves are parallel
AC and AR curves are parallel
None of these

476. At the point of equilibrium of firm (under perfect competition):

MC curve must be rising
MC curve must be falling
MR curve must be rising
None of these

477. Normal profit is:

Part of total cost
Part of economic profit
Total revenue minus total cost
Total revenue minus implicit cost

478. Economic profit is:

Part of total cost
Total revenue minus total cost
Total revenue minus explicit cost
Total variable cost minus total fixed cost

479. A firm earns economic profit when total profit exceeds:

Normal profit
Implicit costs
Explicit costs
Variable costs

480. The basic goal of a firm is to:

Maximize revenues
Maximize welfare of its employees
Maximize profit
Maximize output

481. A firm's MR exceeds its MC, maximum profit rule requires that firm to:
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Increase in output in both perfect and imperfect competition
Increase in perfect competition but not necessarily in imperfect competition
Increase in output in imperfect but not necessarily in perfect competition
Decrease in output in both perfect and imperfect competition

482. The basic goal of a firm is to:

Maximize revenues
Maximize welfare of its employees
Maximize profit
Maximize output

PUBLIC FINANCE:

483. Taxes are levied to:

Penalise people
Provide direct benefits to tax payers
Provide general benefits for the people
To accumulate funds

484. Whom of the following propounded principles of taxation:

Keynes
Marshall
Adam Smith
Al Ghazali

485. Taxes on commodities are:

Direct taxes
Indirect taxes
Progressive taxes
Proportional taxes

486. Govt. prepares its budget:

Weekly
Monthly
Quarterly
Annually

487. One of the following is NOT a feature of private finance:

Balancing of income and expenditure
Secrecy

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Saving some part of income
Publicity

488. One of the following is NOT a feature of private finance:

Publicity
Secrecy
Efforts to balance income and expenditure
Taking steps to increase income

489. It is direct tax:

Excise tax
Sales tax
Income tax
Custom duty

490. These are heads of expenditure of the government EXCEPT?

Provide social services
Defence
Improve transport and communication
Provide cosmetics

491. The most important source of income of a government is:

Foreign loans
Taxes
Printing of new money
Sale of government property

492. Progressive taxes:

Increase government revenue
Bring equality in distribution of incomes
Act as penalty for rich people
Both (a) & (b)

493. These are principles of taxation:

Principle of equality
Principle of certainty
Principle of secrecy
Both (a) & (b)

494. In Pakistan, taxes are levied by:

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Prime minister of Pakistan
President of Pakistan
Federal cabinet of ministers
National assembly

495. Which of the following tax is best example of ability to pay principle of taxes:
Excise tax on cigarettes
Highway toll tax
Proportional sales tax
Personal income tax

496. Govt. taxing and spending policies are called:

Monetary policy
Fiscal policy
Commercial policy
Finance policy

497. Govt. budget is balanced when:

Govt. expenditure outstrips tax receipts
Govt. tax receipts outstrips expenditure
Government expenditure equals tax revenue
None of the above

498. Government finance is called:

National finance
Public finance
Private finance
(a) and (b) of above

499. How the government can meet its expenditure:

By taxing people
By borrowing from banks and other governments
By printing new money
By all the three methods

500. The government can collect funds from:

Taxes
Fees
Prices of public goods
All the three
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501. A direct tax is that which:
Is heavy burden on the tax payers
Can be directly deposited in the banks
Cannot be evaded
Is paid by the person on whom it is levied

502. In Pakistan government budget is prepared by:

National Assembly
President of Pakistan
Ministry of Finance
State Bank of Pakistan

503. In Pakistan Income tax is:

Progressive tax
Proportional
Direct
(a) and (b) of above

504. Which tax better conforms to the principle of equality in taxation?

Progressive tax
Regressive tax
Proportional tax
Fixed tax

505. Which one is not a principle of taxation:

Principle of equality
Principle of certainty
Principle of morality
Principle of diversity

506. A country has proportional system of taxation. A person pays Rs 500 tax when his
income is 5000, how much tax he will pay if his earning rises to 8000:
200
400
600
800

507. Which source a private company cannot use?

A bank loan
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A bank overdraft
Selling new shares in stock exchange
Deficit finance (new money)

508. Net taxes are:

Domestic taxes minus foreign taxes
Business taxes minus personal taxes
Total taxes minus govt. transfer payments
Total taxes minus govt. Purchases

509. Which is not counted as public expenditure?

Subsidy given to local city bus service
Defence expenditure
Investment spending by public companies
Interest payment on national debt

510. If Income tax is assessed as Rs. 100 on an income of Rs. 1000. Compared to this,
which one of the following indictes that the income tax rate is progressive?
Rs. 150 tax on Rs. 2000 income
Rs. 350 tax on Rs. 3000 income
Rs. 400 tax on Rs. 4000 income
Rs. 450 tax on Rs. 5000 income

511. The most important source of income of a government is:

Foreign loans
Sprinting of new money
Sale of government property
Taxes

512. Progressive taxes:

Increase government revenue
Bring equality in distribution of incomes
Compel rich people to be honest
(a) & (b) of above

513. This is NOT a principle of taxation:

Principle of equality
Principle of certainty
Principle of secrecy
Principle of economy
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514. This is principle of taxation
Principle of honesty
Principle of morality
Principle of secrecy
Principle of economy

515. In Pakistan, the authority to levy taxes lies with:

Prime minister of Pakistan
President of Pakistan
Federal cabinet of ministers
National assembly

516. This tax is a good example of ability to pay principle of taxes:

Excise tax on cigarettes
Highway toll tax
Proportional sales tax
Personal income tax

517. Govt. taxing and spending policies are called:

Monetary policy
Fiscal policy
Commercial policy
Finance policy

518. Govt. budget is balanced when:

Govt. expenditure is kept to the minimum
Govt. income consists of both tax and non-tax income
Government expenditure equals tax revenue
None of the above

519. Government finance is called:

National finance
Public finance
Official finance
(a) & (b) of above

520. The government can meet its expenditure:

By taxing people
By printing new money
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By borrowing from banks and foreign countries
By all the three methods

521. It is direct tax:

Property tax
Income tax
Import tax
All are indirect taxes

522. Mansoor Software Co imported computers and paid import tax. Burden of tax will
be on:
Importer
Wholesaler
Last buyer
Retailer

523. If a person who is tax-payer can shift the burden of tax to someone else, the tax is
called:
Movable tax
Indirect tax
Transfer tax
Undesirable tax

524. The federal budget of Pakistan includes:

Direct taxes and indirect taxes
Proportional and progressive taxes
Simple and difficult taxes
(a) & (b) of above

525. To bring equitable distribution of income in the country taxes should be

Direct
Indirect
Proportional
Progressive

526. These are principles of taxation:

Equality and certainty
Certainty and morality
Flexibility and durability
Durability and rigidity
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527. It is better way to finance the govt. budget:
By taxing people
By printing new money
By borrowing from banks
By fining people doing illegal activities

528. Income tax in Pakistan is:

Direct and progressive
Direct and proportional
Indirect and progressive
Indirect and proportional

529. In Pakistan, income tax is collected by:

Local govt
Provincial govt
Federal govt
All governments

530. Sales tax in Pakistan is:

Direct and progressive
Direct and proportional
Indirect and progressive
Indirect and proportional

531. It is easy and convenient to pay:

Direct tax
Indirect tax
Proportional tax
Progressive tax

532. It is difficult to evade:

Direct tax
Indirect
Proportional
Progressive tax

533. Zakat is not due on the gold owned by a person who has less than:
60 tolas
30 tolas
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15 tolas
7.5 tolas

534. Zakat can be spent for this purpose:

Payment of fee of a poor child
Performing Hajj
Help poor parents
All of the above

535. It is a source of revenue for the Local government bodies:

Corporation tax
Value added tax
Excise tax
Property tax

536. Federal government transfers to provinces as their share in tax collection:

Less than 40%
More than 40% but less than 60%
More than 60%
More than 90%

537. Which tax is not shared between central and provincial governments?
Excise tax
Sales tax
Custom duty
Property tax

538. Which is provincial tax in Pakistan:

Excise tax
Sales tax
Import duty
Motors token tax

539. Tax is a payment:

Compulsory
Voluntary
Unnecessary
Temporary

540. The main source of revenue of federal government is:

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Property taxes
Token tax
Custom duties
Sales tax

541. In Pakistan government budget is prepared by:

National assembly
President of Pakistan
Ministry of Finance
State Bank of Pakistan

542. In Pakistan Income tax is:

Progressive tax
Proportional
Direct
(a) and (c) of above

543. The budget estimate prepared by ministry of finance is finally approved by:
State Bank
President
Senate
National Assembly

544. Federal govt. budget estimate for 2010-11 is:

2800 million
2800 billion
2800 trillion
Bigger than 2800 trillion

545. Government of Pakistan can increase its resources by:

Taxing people
Printing new notes
Borrowing
All the three

546. The non-Muslims pay Zakat:

At a higher rate than Muslims
At a lower rate than Muslims
At the same rate
Do not pay Zakat
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547. To control inflation the government should increase:
Budget deficit
Consumer spending
Income tax
Pensions

548. In past decades Pakistan increased its GDP, yet living standard of majority has not
risen. The most important cause of this situation is:
Increased govt. expenditure
Increased imports
Increased education
Increased population

549. Which of the following should NOT be the aim of a government:

Economic growth
Full employment
Inequality of incomes
Price stability

550. Which of the following would cause incomes to become more unequal:
Increased employment
Increased unemployment allowance
More progressive taxes
More regressive taxes

551. What is the benefit of tariffs:

Increased choice
Increased government revenue
More competition
More trade

552. Pakistan's public debt is:

Larger than GNP
Approximately equal to GNP
Smaller than GNP
Smaller than our exports

553. Pakistan's fiscal year starts from:

1st September
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1st January
1st April
1st July

554. The Federal budget is presented in the parliament by:

Prime minister
President
Finance minister
Commerce minister

555. Pakistan's Budget has parts:

Current and development
Revenue and expenditure
Development and non-development
Both (a) and (b)

556. Federal government tax revenue collection includes:

Divisible taxes with provinces
Divisible taxes with district govt.
Non-tax revenue ‘
All of the above

557. Which is true:

Federal govt. collects taxes and shares with provinces
Provincial govt. collects taxes and shares with federal govt.
Federal govt. collects taxes and shares with local govt
Local govt Collects, taxes and shares with federal govt

558. Which is true?

Federal govt. has the right to collect taxes
Provincial govt. has the right to collect taxes
Local govt. has the right to collect taxes
All of the above is true

559. The most important body to collect taxes in Pakistan is:

District govt
State Bank
Ministry of finance
FBR

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560. According to total amount collected the taxes fall in this order:
Custom, excise, sales
Sales, custom, excise
Custom, sales, excise
Excise, sales, custom

561. According to total amount collected the taxes fall in this order:
Custom, sales tax, income tax
Custom, income tax, sales tax
Income tax, custom, sales tax
Sales tax, custom, excise

562. Which is true about amount of taxes collected in Pakistan:

Direct taxes are more than indirect taxes
Indirect taxes are more than direct taxes
Provincial taxes are more than federal
Provincial govt Share taxes with federal govt.

563. Exemption limit for income tax in Pakistan is:

10 lakh
5 lakh
3 lakh
1 lakh

564. Rate of General Sales Tax (GST) is:

Less than 10%
More than 10% but less than 20%
More than 20% but less than 30%
More than 30% but less than 40%

565. 40% of income of federal government is obtained from:

Income tax
Excise tax
Import tax
Property tax

566. Pakistan's expenditure on defence is:

10% of federal budget
More than 10% but less than 25%
More than 25% but less than 35%
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More than 35% but less than 45%

567. Balance of payments of a country includes:

Current account
Monetary account
Capital account
All of above

568. Balance of payments of a country includes:

Balance of trade
Capital receipts and payments
Saving and investment account
Both (a) and (b)

569. Final balance of payments of a country is:

Always balanced
Always deficit
Always surplus
Fluctuates

570. Balance of payments of a country has parts:

2
3
4
5

571. Exchange rate for currencies is determined by supply and demand in system of:
Fixed exchange rate
Flexible
Constant
Govt. Regulated

572. If GNP of Pakistan rises, it will encourage:

Exports
Imports
Both
None of these

573. A country that does not trade with other countries is called an economy:
Open
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Closed
Independent
None of these

574. If Japanese import more goods from Pakistan (other things remain same)
Our balance of payments will improve
Japan's BOP will deteriorate
Our BOP will deteriorate
(a) and (b) of above

575. Invisible items in balance of payments include:

Foreign remittances
Income from tourists
Internet charges
All the three

576. Pakistan follows the policy of:

Fixed exchange rate
Flexible exchange rate
Controlled exchange rate
Increasing exchange rate

577. It helps countries to meet deficit in balance of payments:

IMF
WTO
World Bank
UNO

578. The balance of payments of country means

Balance in income and expenditure of govt.
Balance in demand and supply of money
Balance in export and import earnings
The annual account of foreign trade

579. Pakistan's exports are part of our GDP:

5%
15%
25%
35%

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580. What would cause a country's exchange rate to fall:
An increased demand for its exports
An increased demand for its imports
An increased in flow of capital
None of the above

581. Which of the following must always balance:

Balance of visible trade
Balance of invisible trade
Balance on the current account
Balance of payments

582. What will be expected result if the value of rupee falls against dollar?
The price of Pakistani goods in USA will rise
The price of American goods in USA will fall
The price of American goods in USA with fall
The price of American goods in Pakistan will rise

583. If Toyota Company, establishes a factory in Pakistan, this will be recroded in

balance of payments in the section:
Capital account
Visible balance
Invisible balance
Official financing

584. If CDA (Capital Development Authority, Islamabad) gets a loan from World
Bank for roads, it will be recorded in the balance of payments in section:
Capital account
Visible balance
Invisible balance
Official financing

585. Which of the following must always balance?

Balance of visible trade
Balance of invisible trade
Balance on the current balance
Balance of payments

586. Which of the following compares the average price of exports to average price of
imports?
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The balance of payments
The balance of trade
The exchange rate
The terms of trade

587. IMF represents

International Monetary Fund
International Money Flow
International Money Forum
International Monetary Finance

588. Flexible exchange rate system has the advantage:

Automatic adjustment of balance of payments
Easy to borrow from World Bank
Encourages exports
None of the above

589. Fixed exchange rate system has the advantage:

Automatic adjustment of balance of payments
Increases govt. control over foreign trade
Discourages unnecessary speculation about future trade deals
(b) and (c) of above

590. Export of goods is called trade in:

Visible goods
Invisible goods
Basic goods
Real goods

591. Export of goods is called trade in:

Visible goods
Invisible goods
Basic goods
Non-real goods

592. Visible goods are recorded in this part of balance of payments account:
Current account
Capital account
Govt. account
Official account
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593. Visible exports include:
Remittance
Computer hardware
Computer software
Transport cost

594. Visible imports include:

Remittance
Machinery
Computer software
Transport cost

595. If balance of payments of country is in deficit, then:

Current account will be in deficit
Country can increase money supply to meet deficit
The country can borrow from abroad
(a) and (c) of above

596. The balance of payments account of a country includes:

Official transfer of foreign exchange
Smuggling transactions
Loans and aid
Both a and c of the above

597. Foreign exchange reserves increase if:

Govt. increases taxes
Exports increase imports remain the same
Imports increase exports remain the same
(a) and (b) of above

598. The receipts and payments for goods exported and imported are counted in:
Trade account
Capital account
Current account
Monetary account

599. IMF has given loan to Pakistan. It will improve Pakistan's:

Current account
Capital account
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Overall balance of payments
(b) and (c) of above

600. IMF gives loans:

To fill gap in balance of payments
To fill gap in government budget
To decrease inflation
To increse employment opportunities

601. In capitalism there is sovereignty of:

Producer
Consumer
Government
Businessmen

602. Basic principle of Islamic economic system is:

Equality
Justice
High profit
Less consumption

603. In capitalistic system, prices of goods are determined by:

Sellers
Buyers
Government
Forces of demand and supply

604. In socialistic system, prices of goods are determined by:

Sellers
Buyers
Government
Forces of demand and supply

605. In working of markets, the Islamic system is nearer to:

Capitalism
Socialism
Mixed economy
None of the above

606. Which is the basic economic problem, which is common in all economic systems:
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Allocation of scarce resources
Elimination of inflation
To increase exports
To reduce taxation

607. In a country like Pakistan:

All economic decisions are made through markets
There is no planning
Govt. owns most of the means of production
There is reliance on market

608. In Islamic economic system:

All economic decisions are made through markets
There is no planning
Govt. owns most of the means of production
There is reliance on market

609. Capitalism is defined as an economic system where there is:

A lack of planning
Reliance over free market
Private ownership of property
All of the above

610. Pakistan having a:

Mixed economy
Capitalistic economy
Socialistic economy
Islamic economy

ECONOMICS - BASICS ECONOMICS STUDIES

611. The subject matter of economics is concerned with

Production
Distribution and exchange
Consumption
All of the above

612. The economic problem arises since

Wants are unlimited
Resources are limited
Resources are capable of alternative uses
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All of the above

613. The wants of the people are

Limited
Unlimited
Satiable
All of the above

614. Economic problem arises in

Planned economies
Free market economies
Mixed economies
All of the above

615. The resources are:

Limited
Unlimited
Not only limited but are capable of alternative uses
None of the above

616. Which one of the following is an example of an economic good

Sunlight
Air
Petrol
None of the above

617. ----- is not an example of free good

Sunlight
Car
Petrol
Computer

618. The term production refers to:

Producing things which are capable of satisfying human wants
Creation or addition of utilities
Transformation of inputs into output
All of the above

619. The problem of allocation of resources is concerned with:

What to produce
How to produce
For whom to produce
All of the above

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620. The distribution of national product among the members of the society is the
problem of:
What to produce
How to produce
For whom to produce
All of the above

621. Production is said to be efficient when:

The re-allocation of resources cannot increase the production of the article even by
one unit
More output is produced with the given input
Resources are fully employed
All of the above

622. Which one of the following comes under macro economics?

Per capita income
Study of a firm
Individual income
Theory of factor pricing

623. Which one of the following is not come under macro economics?
National income
Per capita income
Disposable income
Individual income

624. Partial equilibrium analysis comes under:

Micro economics
Macro economics
Welfare economics
International economics

625. “The starting point of all economic activity is the existence of human wants” Who
said this?
Adam Smith
Selligman
Ricardo
Alfred Marshall

626. Production and consumption takes place simultaneously in the case of

Goods
Services
Both in the case of goods and services
Neither in the case of goods and services

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627. Economics is a social science because
The central point in economics is man and his problems
Economics uses scientific approach to derive its laws
Like History, Politics and Psychology economics deals with the problems of human
being
All of the above

628. Economic growth can be achieved through

Advanced technology
Expansion of resources
Both A & B
Neither A & B

629. Micro economics doesn’t deal with:

The study of individual economic units
Determination of factor prices
Price determination of commodities
General equilibrium analysis

630. Name the economist who analyses the subject matter of economics into two
branches: micro economic analysis and macro economic analysis.
Adam Smith
Alfred Marshall
Ragner Frisc
P A Samuelson

631. Transformation of inputs into outputs is known as

Production
Consumption
Distribution
Exchange

632. ----- is an example of secondary input

Land
Labour
‘Capital
Raw material

633. Odd-man out from the following

Steel
Medicine
Education
Train

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634. The choice of techniques of production is related to the problem of
What to produce
How to produce
For whom to produce
None of the above

635. The functional relationship between inputs and outputs is called

Production function
Consumption function
Investment function
Saving function

636. Firms owned by one individual is known as

Proprietorship
Partnership
Corporations
None of the above

637. Firms owned by two or more individuals is known as

Proprietorship
Partnership
Corporations
None of the above

638. Firms owned by stock holders are known as

Proprietorship
Partnership
Corporations
None of the above

639. The major objective of a firm is

Profit maximization
Revenue maximization
Sales maximization
None of the above

640. Which one of the following is an example of fixed input

Raw materials
Casual workers
Plant and equipments
All of the above

641. In short-run
All inputs are fixed
All inputs are variable

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Some inputs are fixed and some are variable
None of the above

642. In long-run
All inputs are fixed
All inputs are variable
Some inputs are fixed and some are variable
None of the above

643. Marginal product of a factor is

The additional product received by the firm due to the employment of an additional unit
of a variable factor
Addition to the total product when one more unit of a factor is employed
The rate of change in the total product per unit change in the variable factor
All of the above

644. Production function expresses

The relationship between input and output
How maximum output is produced with the given input
What is the least-cost combination of input to produce the given output?
All of the above

645. The variable cost of a firm vary in direct proportion to the

Volume of its output
Extent of its profits
Volume of its sale
All of the above

646. Law of variable proportions is concerned with

Long-run production function
Laws of returns to scale
Short-run production function
None of the above

647. The ‘point of inflection’ comes in which stage of the law of variable proportions
Stage I
Stage II
Stage III
None of the above

648. A rational producer will select his level of production in which stage of the law of
variable proportions
Stage I
Stage II
Stage III

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Either Stage I or Stage II

649. Total product reaches at maximum when

MP is increasing
MP is maximum
MP = 0
MP is negative

650. At the ‘point of inflection’

MP is maximum
AP is maximum
TP is maximum
All of the above

651. Returns to scale refers to the production function where

All factors are fixed
Some factors are fixed and others are variable
All factors are variable
None of the above

652. In the case of diminishing returns to scale, a given proportionate increase in all
factors causes
A more than proportionate increase in output
An equal proportionate increase in output
A less than proportionate increase in output
None of the above

653. Increasing returns to scale occurs due to

Division of labour
Specialization
Economies of scale
All of the above

654. The cause for diminishing returns to scale is:

Improper proportion of factors of production
Difficulty in the combination of certain factors
Excess combination of certain factors
All of the above

655. The solution to diminishing returns to scale is :

Technical progress
Expansion of resources
Proper combination or resources
All of the above

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656. Economies of scale refer to:
Advantages resulting from large scale production
Disadvantages resulting from large scale production
Advantages resulting from the increase in the number of consumers
All of the above

657. Which one of the following is not related to economies of scale:

Scope for division of labour and specialization
Scope for getting inputs at cheaper rates
Difficulty faces by the managers to coordinate the business
Scope for better storage facilities

658. The law of Diminishing returns is applicable to:

Agriculture only
Industry only
In short-run only
Universally

659. Let a firm employs 5 labourers and produces 120 units of output. When 6
labourers are employed the firm produces 136 units of output. Then the marginal product
is ---
120
136
6
16
660. A firm produces 200 units of commodity X by employing 10 workers and 240
units of the same commodity by employing 12 workers. Then the Average Product of the
worker is -----
200
240
20
40

661. Other things remaining the same, the quantity of a product demanded increases
with ------------ in price.
Increase
Decrease
Variation
None of the above

662. When total utility is maximum, marginal utility is:

Maximum
One
Zero
Infinite

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663. For complementary goods, the cross elasticity of demand:
Positive
Negative
Zero
None

664. Relation between price of a commodity and demand for another commodity is
measured by:
Price elasticity
Income elasticity
Cross elasticity
Elasticity of substitution

665. When TU falls, MU is:

Rises
Zero
Positive
Negative

666. Demand varies ------------- with price.

Directly
Positively
Inversely
None of the above

667. When Q = f (P), the elasticity coefficient is measured by:

_Q/_P / P/Q
_P/_Q * Q/P
_Q/_P * P/Q
_P/_Q / Q/P

668. Income elasticity of demand for inferior good is:

Negative
Positive
Zero
Unity

669. In the case of luxury goods, the income elasticity of demand will be:
Less than unity
Unity
More than unity
All the above

670. Income elasticity is positive, but less than unity in the case of:

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Necessity
Luxury
Inferior
Substitutes

671. In drawing an individual demand curve for a commodity, all but which of the
following are kept constant:
Individual’s money income
The prices of the related commodity
Price of the commodity under consideration
Tastes of the consumer

672. When an individual’s income rises, when everything else remains the same, his
demand for normal goods:
Rises
Falls
Remains the same
Any of the above is possible

673. When an individual’s income falls, when everything else remains the same, his
demand for inferior goods:
Increases
Decreases
Remains unchanged
Cannot say

674. When the price of the substitute commodity of X falls, the demand for X:
Rises
Falls
Remains unchanged
All of the above is possible

675. If the quantity demanded remains unchanged as the price of the commodity falls,
the coefficient of price elasticity of demand is:
Greater than
One Equal to one
Smaller than one
Zero

676. If the income elasticity of demand is greater than one, then the commodity is:
Necessity
Luxury
Inferior
Non-related commodity

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677. If the amount of the commodity purchased remains unchanged when the price of
another commodity changes, the cross elasticity of demand between them will be:
Positive
Negative
Zero
One

678. Which of the following is an exception to the law of demand?

Giffen good
Normal good
Superior good
All of the above

679. The law of diminishing marginal utility was popularized by:

Keynes
Marshall
Smith
Samuelson

680. If the income elasticity of demand for a commodity is found to be 0.4, then the
commodity concerned is:
Luxury
Necessary
Giffen’s goods
Independent good

681. Cross elasticity of demand in the case of substitutes:

Zero
Negative
Positive
Infinity

682. If a small change in price leads to infinitely large change in quantity demanded,
then the demand is:
Perfectly elastic
Perfectly inelastic
Elastic
Inelastic

683. Net addition to total utility when one more unit is consumed is:
AU
MU
MC
TU

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684. Most important determinant of demand is :
Income
Wealth
Price
Advertisement

685. Which of the following is the reason for law of demand:

Price effect
Backlash effect
Income effect
Real balance effect

686. A market:
Necessarily refers to a meeting place between buyer and sellers
Does not necessarily refers to a meeting place between buyer and sellers
Extends over the entire country
Extends over a city

687. Net addition to total cost is called:

Marginal cost
Average cost
Fixed cost
Variable cost

688. The market equilibrium for a commodity is determined by :

Market demand
Market supply
Balancing of the forces of demand and supply
Any of the above

689. When there are only few sellers of the commodity, the market is called:
Monopoly
Duopoly
Oligopoly
Monopsony

690. If the supply curve of the commodity is having a positive slope, a rise in the price
of the commodity, results in:
Increase in supply
Increase in quantity supplied
Decrease in supply
Decrease in quantity supplied

691. From the position of stable equilibrium, the market supply of a commodity
decreases, while the market demand remains unchanged, then:

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Equilibrium price falls
Equilibrium quantity rises
Both equilibrium price and equilibrium quantity decreases
Equilibrium price rises, but equilibrium quantity falls

692. Elasticity of supply for a positively sloped straight line supply curve that
intersects the price axis is:
Equal to zero
Equal to one
Greater than one
Constant

693. In which of the following market, advertisement is absent:

Monopolistic competition
Perfect competition
Oligopoly
None of the above

694. -------------- Cost can never become zero.

Variable cost
Fixed cost
Marginal cost
Average cost

695. If a positively sloped linear supply curve crosses the quantity axis, the elasticity of
supply is:
Inelastic
Elastic
Unitary elastic
Perfectly elastic

696. If a positively sloped linear supply curve passes through the origin, the elasticity
of supply is
Inelastic
Elastic
Unitary elastic
Perfectly elastic

697. Average cost is the sum of AVC and

MC
TC
AFC
ATC

698. The horizontal supply curve parallel to quantity axis represents

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Elastic supply
Inelastic supply
Perfectly elastic supply
Perfectly inelastic supply

699. When output is zero, variable cost is --------

Maximum
Minimum
Infinity
Zero

700. Change in quantity supplied of a product can result from

Changes in own price
Changes in cost of production
Change in technology
Change in price of related products

701. At prices above the equilibrium price

Quantity supplied exceeds quantity demanded
Quantity demanded exceeds quantity supplied
There is shortage
All of the above is possible

702. When MC cuts AC, AC is at its ------------

Maximum
Minimum
Zero
Negative

703. An increase in market supply, demand remaining the same causes

Increase in equilibrium price
Decrease in equilibrium quantity
Decrease in equilibrium price and increase in equilibrium quantity
Both equilibrium price and quantity rises

704. Cost function relates cost to

Input
Output
Raw material
Machines

705. An increase in market demand, supply remaining the same results in

Decrease in equilibrium price
Decrease in equilibrium quantity
Decrease in equilibrium price and increase in equilibrium quantity

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Both equilibrium price and quantity rises

706. There is no distinction between firm and industry in

Perfect competition
Monopoly
Monopolistic competition
Oligopoly

707. A fall in the market demand, supply remaining the same results in
Increase in equilibrium price
Increase in equilibrium quantity
Increase in equilibrium price and decrease in equilibrium quantity
Both equilibrium price and quantity falls

708. The cost of next best alternative is called

Marginal cost
Average cost
Opportunity cost
Direct cost

709. When MC is greater than AC, AC

Rises
Falls
Maximum
Minimum
NATIONAL INCOME ACCOUNTING

710. Which of the following is an economic activity?

a. Medical facilities rendered by a charitable dispensary
b. Teaching one's own child at home
c. A housewife doing household duties
d. Listening to music on the radio

711. Which of the following is closest to the concept of economic production?

a. Sale of goods and services for profit
b. Manufacture of goods
c. Addition to the value of commodities
d. Addition to the stock of goods and services for future use

712. Which of the following is a characteristic feature of a modern economy?

a. Predominance of agriculture
b. Self-sufficient village economy
c. Diversity in production of commodities
d. Static technology

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713. Identify economic stock from among the following:
a. Depreciation of machinery
b. Production of food grains during the Kharif season
c. Purchase of food grains by a household
d. Bank deposit of a household

714. Which of the following is an economic flow?

a. National capital
b. Demand for machinery
c. Current account of a household in a bank
d. Population of a country

715. A closed economy is one which:

a. Does not trade with other countries
b. Does not possess any means of international transport
c. Does not have a coastal line
d. Is not a member of the United Nations Organisation

716. The traditional economy is characterised by:

a. Division of labour and specialisation
b. Organisation of production for self-consumption
c. Capital-intensive process of production
d. Increasing state intervention

717. Who among the following is a non-resident of India?

a. A person of Indian origin working at the World Bank, Washington, DC
b. A person of Indian origin employed in the UNO office at New Delhi
c. The Indian manager of the Punjab National Bank branch office in London
d. An Indian tourist in Europe

718. Purchase of a ceiling fan by a household is treted in national income accounting

as a part of:
a. Capital formation
b. Consumption over a long period of time
c. Consumption at the time of its purchase
d. Intermediate consumption

719. Corporate enterprises refer to:

a. Business houses maintaining a separate profit and loss account
b. Business houses that obtain loans from a bank
c. Business houses that obtain loans from the public
d. Business houses that is independent of their owners

720. Which of the following is not a corporate enterprise?

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a. Food Corporation of India
b. Municipal Corporation of Delhi
c. Tata Iron and Steel Company
d. Life Insurance Corporation of India

721. Departmental enterprises are a part of the:

a. General government
b. Corporate sector
c. Non-profit public institutions
d. Non-profit institutions serving households

722. Which of the following is a departmental enterprise of the Government of India?

a. Reserve Bank of India
b. Indian Oil Corporation
c. Indian Railways
d. Food Corporation of India

723. In which of the following sectors does production for self-consumption generally
take place?
a. Government administrative enterprises
b. Private corporate sector
c. Non-departmental public enterprises
d. House-holds

724. Subsistence production refers to:

a. Production for self-consumption only
b. Production of necessities of life
c. Exports equaling imports
d. Low levels of production

725. Collective wants include:

a. Sum total of all goods and services wanted by individuals
b. Goods like refrigerators shared by members of a family
c. Newspapers
d. Defence of a country

726. Which of the following are durable use producer-goods?

a. Fertilisers
b. Tractors
c. Diesel oil
d. Fodder for cattle

727. Demand for intermediate consumption arises in:

a. Consumer households
b. Government enterprises only

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c. Corporate enterprises only
d. All producing sectors of the economy

728. Expenditure on the purchase of new replacement parts of machinery installed by a

firm is part of:
a. Fixed capital formation
b. Consumption of capital
c. Intermediate consumption
d. Final consumption

729. Which of the following is an expenditure on intermediate consumption?

a. Purchase of coal by a steel factory
b. Purchase of coal by a dealer in coal
c. Purchase of coal by a household
d. All of the above

730. Demand for final consumption arises in:

a. Household sector only
b. Government sector only
c. Both (a) & (b)
d. All sectors

731. Which of the following activities of a farmer is an example of intermediate

consumption?
a. Purchase of tractor
b. Payment of interest to a co-operative bank
c. Electricity charges for operating a pump
d. Wages paid to workers at harvesting time

732. Imputed rental value of owner occupied dwellings is a part of:

a. Intermediate consumption
b. Capital formation
c. Final consumption
Expenditure on consumer durably

733. Sale of old newspapers by a household is a part of:

a. Net final consumption expenditure of the household
b. Value added by the household sector
c. Capital formation
d. Transfer payments

734. Which of the following constitutes a part of domestic fixed capital formation?
a. Net purchase of second-hand assets by corporate enterprises
b. Net purchase of second-hand physical assets from abroad
c. Expenditure on new parts of physical assets

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d. Accumulation of stocks of fertilizers

735. Purchases made by the US Embassy in India are part of:

a. Net factor earnings from abroad
b. Transfer payments
c. Domestic consumption expenditure
d. Exports from India to the USA

736. Direct purchases abroad made by the government on current account are a part of:
a. Final consumption B. Investments
b. Net factor payments abroad D. Current transfers from the rest of the world
737. Which of the following is not a part of net investment in an economy?
a. Purchase of old shares
b. Purchase of a wall-clock by a factory
c. Purchase of wall-clock by a household
d. Increasing the storage of raw materials

738. Which of the following is included in the consumption of fixed capital?

a. Fall in the price of machinery and other stocks
b. Expenditure on repairs and maintenance
c. Destruction of buildings in an earthquake
d. Normal wear and tear machinery while in use

739. Gross domestic fixed-capital formation does not include:

a. Net purchase of second hand machinery by private corporate sector from
Government
b. Net imports of second-hand machinery from abroad
c. Own account production of news assets
d. Construction of new roads and bridges

740. Value of output differs from the value added by the amount of:
a. Indirect taxes
b. Wages and Salaries
c. Intermediate consumption
d. Gifts received from abroad

741. The gross fixed investment in an economy during a year is Rs. 200 Crore. The
economy possessed Rs 1200 Crore worth of fixed capital at the beginning of the year and
the rate of depreciation is 10% per annum. What is the net value of fixed capital stock
held at the end of the year?
a. Rs 1600 crore
b. Rs 920 crore
c. Rs 1280 crore
d. Rs 1200 crore

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742. In consumption of capital is equal to gross fixed investment, then:
a. Net investment is zero
b. Net investment is negative
c. Net investment is positive
d. ‘National income is constant

743. Which of the following constitutes an investment by a household?

a. Purchasing a washing machine
b. Painting a house
c. Purchasing a new house
d. Purchasing a new car

744. Net value added is equal to:

a. Payments accruing to factors of production
b. Compensation of employees
c. Wages plus rent plus interest
d. Value of output minus depreciation

745. Addition to the stocks of food grains by the Food Corporation of India is a part of:
a. Net fixed investment
b. Net revenue of the Government sector
c. Gross capital formation
d. Final consumption

746. Mixed income of the self-employed means:

a. Gross profits received by a proprietorship
b. Rent interest and profit of an enterprise
c. Combined factor payments which are not distinguishable
d. Wages due to family workers

747. Operating surplus implies:

a. Gross value added minus profits
b. Net income from property and entrepreneurship
c. Net profits of public enterprises
d. Part of profits which are reinvested
748. Operating surplus arises in:
a. Government sector only
b. Household sector only
c. Public enterprises only
d. All producing enterprises in the corporate sector

749. Operating surplus differs from net value added by the amount of:
a. Compensation of employees
b. Net indirect taxes
c. Consumption of fixed capital

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d. Dividends

750. Which of the following is not a part of the compensation of employees?

a. Employer's contribution to provident fund
b. Leave travel allowance
c. Payments made to visiting foreign consultant
d. Pensions to retired employees

751. Identify the item, which is not a factor payment:

a. Free uniforms to defence personnel
b. Salaries and allowance to the members of Parliament
c. Imputed rent of an owner-occupied building
d. Scholarships given to scheduled caste students

752. Which of the following is an example of factor-income from abroad?

a. Interest earned by a non-resident Indian on his bank account in India
b. Export of handicrafts from India to the UK
c. Money sent by an engineer employed in London to his family in Delhi
d. Profits earned by a branch of the State Bank of India in London

753. Transfer payments refer to payments which are made:

a. Without any exchange of goods and services
b. To workers on transfer from one job to another
c. As compensation of employees
d. None of the above

754. Personal disposable income is:

a. Always equal to personal income
b. Always more than personal income
c. Equal to personal income minus direct taxes paid by household
d. Equal to personal income minus indirect taxes

755. If during a year the national income at constant prices goes up by 5%, while
prices also rise by 5% and population registers a growth of 2%; then the real per capita
income will:
a. Remain constant
b. Rise by 2%
c. Decrease by 3%
d. Increase by 3%

756. National income estimates of India are published both at current and constant
prices. What is the base year for constant price estimates published at present?
a. 1960-61
b. 1970-71
c. 1980-81

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d. 1985-86
757. The national income accojnts, direct personal taxes are recorded as:
a. Receipts of the government sector and payments of the corporate sector
b. Receipts of the government sector and payments of the household sector
c. Transfer from the household sector to the government sector
d. Disbursements of the government sector

758. For which of the following sectors is the income method used for estimation of
national income of Pakistan?
a. Agriculture and allied activities
b. Pushing
c. Forestry
d. Banking and insurance

759. Identify the sector in respect of which the expenditure method is used for
estimating national income in India:
a. Registered manufacturing
b. Construction
c. Public administration and defence
d. Real estate, ownership of dwellings and business services

760. If GNP at market prices is Rs 1200 crore, and fixed capital stock is worth Rs 2000
crore which depreciates at the rate of 10% per annum and the net indirect taxes amount
is Rs 150 crore. What is the national income?
a. Rs 3050 crore
b. Rs 2850 crore
c. Rs 1000 crore
d. Rs 850 crore

761. National income differs from the net national product at market prices by the
amount of:
a. Current transfers from rest of the world
b. Net indirect taxes
c. National debt interest
d. It does not differ
762. If net factor income from abroad is zero, then:
a. Domestic product is zero
b. National product is zero
c. National product is equal to domestic product
d. National product is constant

763. For the estimation of private income which of the following items has to be added
to national income?
a. Income from property accruing to government
b. Savings of the non-departmental enterprises

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c. Subsidies
d. Interest on national debt

764. While estimating personal income from national income, which of the following
items need to be deducted?
a. Net indirect taxes
b. Direct Taxes paid by households
c. Dividends
d. Corporate profitstax

765. Which of the following has to be added to national income to obtain the net
national disposable income?
a. Income from property and entrepreneurship accruing to Government
b. Net current transfers from the rest of the world
c. Profits of public enterprises
d. Loans from public

766. Net national product at factor cost is :

a. Equal to national income
b. More than national income
c. Less than national income
d. Always more than the gross national product

767. Which of the following is deducted while estimating national income by the
value-added method?
a. Value of goods and services produced for self-consumption
b. Imputed rental value of owner-occupied building
c. Net factor income from abroad
d. Consumption of capital

768. While estimating national income by the income method one of the following is
not included. Identify it:
a. Mixed income of the self employed
b. Inheritance tax or death duty
c. Interest on bonds of a foreign company
d. Income of employees of voluntary organizations

769. Which of the following is not included while estimating national income by the
expenditure methods?
a. Investment in shares of a new company
b. Defence expenditure
c. Net indirect tax
d. Net exports

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770. The difference between net national product at market prices and net domestic
product at market prices is equal to:
a. Value of exports
b. Net current transfers from abroad
c. Value of exports minus value of imports
d. Net factor income from abroad

771. Which of the following accounts for the difference between net domestic product
at market prices and national income?
a. Net factor income from abroad
b. National debt interest
c. Net factor income from abroad minus current transfers
d. Net factor income from abroad minus indirect taxes

772. Which of the following has to be deducted from the value of output to arrive at
the net value added by a producing enterprise?
a. Value of intermediate consumption
b. Consumption of fixed capital
c. Net indirect taxes
d. All of the above

773. The value added method of measuring national income is also known as:
a. Net output method
b. Production method
c. Industry of origin method
d. All of the above

774. Net borrowings from abroad are a part of:

a. Gross domestic product
b. Net national product
c. Gross investment
d. Capital transfers

775. Aggregate gross receipts means:

a. Turnover value of output
b. Receipts of the Government
c. Receipts of the corporate sector
d. Receipts from the rest of the world

776. The term national income commonly refers to:

a. GNP at factor cost
b. GNP at market prices
c. NNP at factor cost
d. NNP at market prices

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777. Which of the following is an example of transfer payment by the Government?
a. Free housing accommodation to the government employees
b. Free housing accommodation to the President of India
c. National debt interest
d. Bonus paid to railway employees

778. Transfer receipts of the Government include:

a. Sale of second hand cars by government departments
b. Direct and indirect taxes
c. Imputed rent of government buildings
d. ‘Dividends received from public enterprises

779. Which one is an example of capital transfer within a country?

a. Compensation to residents whose houses have been damaged by flood
b. Old age pensions
c. Interest paid by consumer households on consumer loans
d. Gifts to sick and poor on festivals

780. Net retained earnings abroad means:

a. Income retained by a resident working abroad
b. Profits of resident companies abroad
c. Net undistributed profits of resident and non-resident companies
d. Foreign exchange reserves

781. Which of the following is not an example of capital transfers between countries?
a. War damages
b. Gifts for cyclone victims
c. Economic aid
d. Grants from other governments

782. Interest on public debt is a part of:

a. Transfer payments by the government
b. Transfer payments by enterprises
c. Domestic income
d. Interest payments by households

783. Which of the following is not a government transfer payment to households?

a. Scholarship
b. Subsidy
c. Family pension
d. Unemployment allowance

784. Income from property is a part of:

a. Mixed income of the self-employed
b. Operating surplus

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c. Compensation of employees
d. None of these

785. Unilateral payments are known as:

a. Factor income
b. Factor payments
c. Transfer payments
d. Payments for productive services rendered by others

786. Identify the correct statement:

a. Personal disposable income excludes direct taxes paid by households
b. Capital transfers are paid from current income
c. Lottery income received by a household is factor income
d. Royalties are a part of compensation to employees

787. Which of the following includes interest on national debt?

a. National income
b. Personal income
c. Gross national product
d. Net national product

788. Which of the following is incorrect?

a. GDP at market prices = NNP at factor cost plus net indirect taxes
b. NNP at factor cost = NNP at market prices minus net indirect H taxes
c. GNP at market prices = GDP at market prices plus net factor income from abroad

d. None of the above

789. The first estimate of national income in India was made by Dadabhai Naoroji for
the year:
a. 1857-58
b. 1867-68
c. 1881-82
d. 1890-91

790. Domestic incomes refer to incomes which are generated

a. By all the producers within the geographical territory of the country
b. By resident producers only
c. In the household sector
d. In cottage industries

791. If the general price level goes up by 12% and national income at constant prices
increases by 3%, then the national income at current prices:
a. Increase by 9%
b. Increase by 15%

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c. Increase by 12%
d. Increase by 9%

792. Gross domestic product differs from net domestic product by the amount of:
a. Government income from property
b. Net indirect taxes
c. Consumption of fixed capita
d. Net capital formation

793. There is ------- relationship between price and quantity supplied

Positive
Negative
Constant
Inverse

794. Supply curve represents -------- relationship between quantity and price
Direct
Inverse
Either direct or inverse
None of the above

795. National Income means:

GNP at Factor Cost
GNP at Market Price
NNP at Factor Cost
NNP at market Price

796. The difference between GDP and NDP equals:

Transfer payments
Net indirect taxes
Net factor income from abroad
Depreciation

797. Which of the following is true?

GNP + Depreciation = NNP
GNP = GDP + Net factor income from abroad
NDP = GNP minus net indirect taxes
‘NNP = DGP minus depreciation

798. NNP is equal to:

GNP plus Depreciation
GNP minus depreciation
GNP minus exports
GNP plus exports

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799. Which of the following is not a method of national income estimation?
Matrix method
Income method
Expenditure method
Product method

800. An accounting year in India is:

Calendar year
Academic year
Fiscal year
None of these

801. Increase in real National Income (NI) means increase in:

NI at current prices
NI at constant prices
Both
None of these

802. Net indirect taxes means:

Indirect taxes plus subsidies
Income minus taxes
Indirect taxes minus subsidies
Exports minus imports

803. Net factor income from abroad shows the difference between:
GDP and NDP
NNP and NDP
GNP and GDP
GNP and NNP

804. Per capita income is equal to:

Population/National income
National income/population
National income/GDP
NNP/GNP

805. GDP deflator is given by:

Nominal NI/Real NI
Nominal DGP/Real GDP
Nominal GDP/ Nominal GNP
Real GDP/Real GNP

806. Wear and tear of capital due to constant use means:

Intermediate consumption
Final consumption

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Depreciation
Devaluation

807. Value of output minus intermediate consumption is:

Depreciation
Value added
Net value added
Net exports

808. Personal income minus personal taxes is:

National Income
Private income
Disposable income
Per capita income

809. Primary sector includes:

Agriculture
Industry
Services
Banking

810. National income is a --------variable.

Flow
Stock
Static
Dynamic

811. Which of the following is true:

GDP is a geographical concept
GDP is not a geographical concept
GDP and GNP are same
None of them

812. GNP measured in terms of current market prices is called:

Nominal GNP
Real GNP
Both
None

813. In India, the current base year is:

1980-81
1993-94
1999-2000
2004-05

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814. Which of the following does not include in the group?
GDP
GNP
GVA
NDP

815. The term “Classical Economics” was first used by:

J.M. Keynes
Adam Smith
Karl Marx
David Ricardo

816. Who is the leader of the Classical school?

Thomas Robert Malthus
J.S. Mill
David Ricardo
Adam Smith.

817. The core of classical economists is:

Effective Demand
Employment
Say’s Law of Market
Socialism

818. ‘Law of Market’ is attributed to:

J.S. Mill
J.B. Say
Alfred Marshall
A.C. Pigou

819. The Classicals adopted ---------policy:

Governmental policy
Laissez-faire
Policy of restriction
None of these

820. According to Classicals, full employment is a:

Rare phenomenon
Normal phenomenon
Abnormal phenomenon
None of these

821. According to the Classical economists, general over production is:

Possible

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Impossible
Both
None

822. According to the Classical economists, savings and investments are:

Always unequal
Always equal
Never equal
Sometimes equal

823. Wages and prices are ----------, according to the Classicals.

Rigid
Flexible
Both
All of these

824. Classical aggregate supply curve is:

Perfectly elastic
Perfectly inelastic
More elastic
Unitary elastic

825. Pick the odd one from the following:

Law of Market
J.B. Say
Full employment
J.M. Keynes

826. According to the Classicals, investment is a function of:

Saving
Income
Employment
Rate of Interest

827. “Supply creates its own demand” is called:

Law of supply
Law of market
Law of demand
Law of elasticity

828. Under the classical system, the equilibrium will be at:

Under employment
Full employment
Voluntary employment
Disguised unemployment

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829. When savings exceeds the demand for savings, the rate of interest will:
Rise
Fall
Remain constant
None of these

830. Rate of interest will increase when the demand for saving is:
Less than its supply
Equal to its supply
More than its supply
Less than or equal to its supply

831. In the Classical system, the role of the government is:

The highest
Not at all needed
Limited
Important

832. Equilibrium in the economy is settled by ---------, according to the Classicals.

Centralized planning
Price mechanism
Both the planning and price mechanism
None of these

833. Say’s Law of market was proved wrong by:

Industrial revolution
Great Depression
Green revolution
Gulf war

834. Self interest, competition, profit motive are the features of:
Socialism
Capitalism
Marxism
Mixed economy

835. The Great Depression was during:

1930s
1920s
1940s
1830s

836. The equilibrium price is determined by the forces of:

Supply only

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Demand only
Both Demand and Supply
None of these

837. Temporary unemployment is -------------, according to the Classical economists:

Impossible
Permanent
Possible
None of these

838. J.B. Say was a ---------------Economist.

Swedish
German
French
American

839. Pick the odd one out:

J.B. Say
David Ricardo
Adam Smith
J.M. Keynes

840. Author of the book ‘The General Theory of Employment, Interest and Money’:
Karl Marx
J.B. Say
J.M. Keynes
Adam Smith

841. ‘The General Theory’, was published in :

1776
1890
1936
1950

842. The branch of Economics that deals with economic aggregate is called:
Micro Economics
Development economics
Macro Economics
Welfare economics

843. The central theme of Keynesian Theory is:

Laissez-faire
Free Trade
Effective demand
Self interest

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844. Who repudiated Say’s law of market?
J.B. Say
David Ricardo
J.S. Mill
J.M. Keynes

845. Effective demand is that demand when:

Aggregate demand is greater than aggregate supply
Aggregate demand is less than aggregate supply
Aggregate demand is equal to aggregate supply
All of these

846. The concept of effective demand is associated with the name of:
Marshall
Keynes
Krugman
Adam Smith

847. The proportion between total income and total consumption is called:
Average propensity to consume
Average propensity to save
Marginal propensity to consume
Marginal propensity to save

848. The proportion between incremental income and incremental consumption is

called:
APC
APS
MPC
MPS

849. The proportion between total income and total saving is called:
APC
APS
MPC
MPS

850. 1- MPC is called:

APC
APS
MPC
MPS

851. APC + APS is equal to:

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0
>0
1
<0

852. Multiplier is obtained by:

1 – MPC
1/1- MPS
1/1- APC
1/1-MPC

853. Exports minus imports is termed as:

Net income
Net imports
Net exports
National Income

854. As income increases consumption also increases, but:

Proportionately
More than proportionately
Less than proportionately
Equally

855. The expected return on investment is called:

Marginal propensity to save
Marginal propensity to consume
Marginal revenue
Marginal efficiency of investment

856. Marginal efficiency of investment curve is:

Slopping downwards
Slopping upwards
Parallel to X axis
Parallel to Y axis

857. According to Keynes, unemployment is due to:

Deficiency of capital
Deficiency of labour
Deficiency of education
Deficiency in effective demand

858. “In the long run, we are all dead”. Who said this?
Keynes
Adam Smith
Karl Marx

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David Ricardo

859. According to Keynes, investment is a function of:

Rate of interest
Rate of profit
Rate of MEI
MEI and rate of interest

860. Keynes believed in :

Full employment equilibrium
Under employment equilibrium
Both
None

861. According to Keynes, wages and prices are:

Rigid
Flexible
Variable
Automatic

862. In Economics, 1930s is popularly known as the period of:

Great Battle
Great Depression
Industrial Revolution
Great Devide

863. Keynesian aggregate supply curve is:

Perfectly elastic
Perfectly inelastic
Unitary elastic
Parabola

864. Keynes strongly argued for:

Free Trade
Non-intervention of Government
Laissez-faire
Governmental intervention

865. Consumption expenditure directly varies with:

Savings
Investment
Disposable income
Rate of interest

866. An important issue of macro economics is the determination of:

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Consumption
Production
Utility
Income and employment

867. Pick the odd one:

Aggregate demand
Effective demand
J.M. Keynes
Law of market

868. Which of the following items does not include in the group?
Consumption
Investment
Rate of Interest
Net exports

869. If marginal propensity to consume is 0.8, the value of multiplier will be:
1
2.5
5
2

870. Who is known as the father of Modern Economics?

Adam Smith
J. M. Keynes
Robinson
Ricardo

871. Goods without which people cannot live are called:

Comforts
Luxuries
Necessaries
None

872. The problem of what to produce is a problem of:

Distribution
Technological choice
Consumption
Allocation of resources

873. Those things that possess both utility and scarcity are called:
Economic Goods
Free goods
Intermediate goods

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Luxuries

874. If a worker specializes in the production of a single good, it is called:

Product based division of labour
Process based division of labour
Worker based division of labour
None of these

875. Goods produced for use in future productive process are called:
Intermediate goods
Final goods
Consumer goods
Capital goods

876. In a horizontal straight line demand curve, the price elasticity of demand is:
Unity
Infinity
Zero
Less than one

877. Who wrote the article Laws of Returns under Competitive Conditions?
Joan Robinson
E.H. Chamberlin
A.C. Pigou
P. Sraffa

878. Increase in output less than proportional to increase in inputs is called:

Increasing returns
Constant returns
Diminishing returns
Marginal returns

879. A simplified representation of a real situation is called:

Theory
Hypotheses
Evidence
Economic Model

880. When marginal product reaches its maximum, what can be said of total product?
Total product must be at its maximum
Total product starts to decline even if marginal product is positive
Total product is increasing if marginal product is still positive
Total product levels off

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881. When a firm doubles its inputs and finds that its output has more than doubled,
this is known as:
Economies of scale
Constant returns to scale.
Diseconomies of scale
A violation of the law of diminishing returns

882. When average product is at a maximum, marginal product is:

Zero
Increasing
Equal to average product
Greater than average product

883. The want satisfying power of a commodity:

Satisfaction
Utility
Value
Marginal Utility

884. Supply curve represents -------- relationship between quantity and price.
Direct’
Inverse
Either direct or inverse
None of the above

885. Laws of return shows ---------production function.

Short-term
Medium term
Long term
Annual

886. In classical theory the level of employment is a function of:

Price level
Money wage rate
Quantity of money
Real wage rate

887. Consumption of capital good in the process of production is called as:

Capital Consumption
Depreciation
Decay of Capital
None of the above

888. Economic Laws are:

Statement of tendencies

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Exact and predictable
Definite
None

889. Returns to scale examines the production function in the:

Short-term
Medium term
Long term
Quinquinial

890. “An Enquiry into the Nature and Causes of Wealth of Nations” is the book of
economist:
a. Adam Smith
b. Marshall
c. Robbins
d. None of above

891. “Economics is the Science of Wealth” who gave this definition?

a. J. K. Mehta
b. Marshall
c. Adam Smith
d. Robbins

892. “Economics is what economists do.” It has been supported by—

a. Richard Jones
b. Comte
c. Gunnar Myrdal
d. All of the above

893. “Human Welfare is the subject of Economics.” This statement is associated with
the name of which of the economists?
a. Marshall
b. Pigou
c. Penson
d. All of the above

894. Who has given scarcity definition of economics?

a. Adam Smith
b. Marshall
c. Robbins
d. Robertson

895. “Economics is a science” the basis of this statement is—

a. Relation between cause and effect
b. Use of deductive method and inductive method for the formations of law

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c. Experiments
d. All of the above

896. Characteristics of economic laws are—

a. Mere statements of economic tendencies
b. Less certain
c. Hypothetical
d. All of the above

897. Which theory is generally included under micro economics?

a. Price Theory
b. Income Theory
c. Employment Theory
d. None of the above

898. Whose opinions have revolutionized the scope of macro economics?

a. Adam Smith
b. J.B. Say
c. J.M. Keynes
d. All of the above

899. Which of the following is an economic activity ?

a. Teaching of a teacher in the school
b. To teach son at home
c. To serve her child by mother
d. To play football by a student

900. Passive factor of production is—

a. Only land
b. Only capital
c. Both land and capital
d. Neither land nor capital

901. Under law of demand—

a. Price of commodity is an independent variable
b. Quantity demanded is a dependent variable
c. Reciprocal relationship is found between price and quantity demanded
d. All of the above

902. For inferior commodities, income effect is—

a. Zero
b. Negative
c. Infinite
d. Positive

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903. When total utility becomes maximum, then marginal utility will be—
a. Minimum
b. Average
c. Zero
d. Negative

904. Utility means—

a. Power to satisfy a want
b. Usefulness
c. Willingness of a person
d. Harmfulness

905. Marginal utility is equal to average utility at that time when average utility is—
a. Increasing
b. Maximum
c. Falling
d. Minimum

906. At point of satiety, marginal utility is—

a. Zero
b. Positive
c. Maximum
d. Negative

907. Which of the following is the second law of Gossen?

a. Law of equi-marginal utility
b. Law of equi-product
c. Theory of indifference curve
d. Law of diminishing marginal utility

908. Total utility of a commodity is measured by which price of that commodity?

a. Value in use
b. Value in exchange
c. Both of above
d. None of above

909. According to Marshall, the basis of consumer surplus is—

a. Law of diminishing marginal utility
b. Law of equi-marginal utility
c. Law of proportions
d. All of the above

910. In the case of agriculture,

a. the demand has shifted to the right more than the supply has shifted to the right

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b. the demand has shifted to the right less than the supply has shifted to the
right
c. the demand has shifted to the left more than the supply has shifted to the left
d. the demand has shifted to the left less than the supply has shifted to the left

911. The agricultural price support program is an example of

a. a price ceiling
b. a price floor
c. equilibrium pricing

912. If there is a price floor, there will be

a. shortages
b. surpluses
c. equilibrium

913. If there is a price ceiling, there will be

a. Shortages
b. surpluses
c. equilibrium

914. If there is a price ceiling, which of the following is NOT likely to occur?
a. rationing by first-come, first-served
b. black markets
c. gray markets
d. sellers providing goods for free that were formerly not free

915. The goal of a pure market economy is to best meet the desires of
a. consumers
b. companies
c. workers
d. the government

916. In a pure market economy, which of the following is a function of the price?
1. provide information to sellers and buyers
2. provide incentives to sellers and buyers
i. I only
b. II only
c. both I and II
d. neither I nor II

917. In a market system, sellers act in _____ interest, but this leads to behaviors in
_____ interest.
a. self; self
b. self; society’s
c. society’s; society’s

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d. society’s; self

918. The law of diminishing (marginal) returns states that as more of a variable factor
is added to a certain amount of a fixed factor, beyond some point:
a. Total physical product begins to fall
b. The marginal physical product rises
c. The marginal physical product falls
d. The average physical product falls

919. Why is the law of diminishing marginal returns true?

a. specialization and division of labor
b. spreading the average fixed cost
c. limited capital
d. all factors being variable in the long-run

920. The fundamental economic problem faced by all societies is:

a. unemployment
b. inequality
c. poverty
d. scarcity

921. “Capitalism” refers to:

a. the use of markets
b. government ownership of capital goods
c. private ownership of capital goods
d. private ownership of homes & cars
922. There are three fundamental questions every society must answer. Which of the
following is/are one of these questions?
a. What goods and services are to be produced?
b. How are the goods and services to be produced?
c. Who will get the goods and services that are produced?
d. All of the above

923. If you were working full-time now, you could earn $20,000 per year. Instead, you
are working part-time while going to school. In your current part-time job, you earn
$5,000 per year. At your school, the annual cost of tuition, books, and other fees is
$2,000. The opportunity cost of completing your education is:
a. $2,000
b. $5,000
c. $17,000
d. $20,000
e. $22,000

924. The bowed shape of the production possibilities curve illustrates:

a. the law of increasing marginal cost

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b. that production is inefficient
c. that production is unattainable
d. the demand is relatively inelastic

925. You have taken this quiz and received a grade of 3 out of a possible 10 points (F).
You are allowed to take a second version of this quiz. If you score 7 or more, you can
raise your score to a 7 (C) You will need to study for the second version. In making a
rational decision as to whether or not to retake the test, you should
a. always retake the quiz
b. consider only the marginal benefits from of retaking the quiz (four extra points)
c. consider only the marginal opportunity costs from taking the quiz (the time spent
studying and taking the quiz)
d. consider both the marginal benefits and the marginal opportunity costs of
retaking the quiz

926. The law of demand states that:

a. as the quantity demanded rises, the price rises
b. as the price rises, the quantity demanded rises
c. as the price rises, the quantity demanded falls
d. as supply rises, the demand rises

927. The price elasticity of demand is the:

a. percentage change in quantity demanded divided by the percentage change
in price
b. percentage change in price divided by the percentage change in quantity
demanded
c. dollar change in quantity demanded divided by the dollar change in price
d. percentage change in quantity demanded divided by the percentage change in
quantity supplied

928. Community Colleges desired to increase revenues. They decided to raise fees paid
by students with Bachelors degrees to $50 per unit because they believed this would
result in greater revenues. But in reality, total revenues fell. Therefore, the demand for
Community College courses by people with Bachelors degrees must have actually been:
a. relatively inelastic
b. unit elastic
c. relatively elastic
d. perfectly elastic

929. The demand for a product would be more inelastic:

a. the greater is the time under consideration
b. the greater is the number of substitutes available to buyer
c. the less expensive is the product in relation to incomes
d. all of the above
930. Which of the following is a characteristic of pure monopoly?

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a. one seller of the product
b. low barriers to entry
c. close substitute products
d. perfect information

931. In pure monopoly, what is the relation between the price and the marginal
revenue?
a. the price is greater than the marginal revenue
b. the price is less than the marginal revenue
c. there is no relation
d. they are equal

932. In order to maximize profits, a monopoly company will produce that quantity at
which the:
a. marginal revenue equals average total cost
b. price equals marginal revenue
c. marginal revenue equals marginal cost
d. total revenue equals total cost

933. Compared to the case of perfect competition, a monopolist is more likely to:
a. charge a higher price
b. produce a lower quantity of the product
c. make a greater amount of economic profit
d. all of the above

934. Which of the following is necessary for a natural monopoly?

a. economies of scale
b. a high proportion of the total cost is the cost of capital goods
c. the market is very small
d. all of the above

935. Which of the following is true about the way by which SDG&E has been
regulated by the PUC?
a. SDG&E has been allowed to earn very high economic profits
b. The profits of SDG&E are calculated as a percent of the value of the capital
goods
c. When the demand for electricity would fall, the price of electricity would also fall
d. All of the above

936. Which of the following best defines price discrimination?

a. charging different prices on the basis of race
b. charging different prices for goods with different costs of production
c. charging different prices based on cost-of-service differences
d. selling a certain product of given quality and cost per unit at different prices
to different buyers

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937. In order to practice price discrimination, which of the following is needed?
a. some degree of monopoly power
b. an ability to separate the market
c. an ability to prevent reselling
d. all of the above

938. In price discrimination, which section of the market is charged the higher price?
a. the section with the richest people
b. the section with the oldest people
c. the section with the most inelastic demand
d. the section with the most elastic demand

939. Which of the following concepts represents the extra revenue a firm receives from
the services of an additional unit of a factor of production?
a. total revenue
b. marginal physical product
c. marginal revenus product
d. marginal revenue

940. The demand for labor is the same as the

a. marginal revenue product
b. marginal physical product
c. marginal cost
d. wage

941. The demand for labor slopes down and to the right because of
a. the law of demand
b. the iron law of wages
c. the law of diminishing marginal returns
d. economies of scale

942. The demand for labor will be more elastic if:

a. there are few substitutes for labor
b. there is a short time under consideration
c. labor is a large percent of the total cost of production
d. the demand for the product is relatively inelastic
e. all of the above
943. Skills that can be transferred to other employers are called:
a. general skills
b. specific skills
c. non-pecuniary skills
d. all of the above

944. Which skills are most likely to be paid for by the employer?

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a. General skills
b. Specific skills
c. Educational skills

945. If worker A earns more in wages than worker B, it could be because:

a. The product made by worker A sells for a higher price than that made by worker
B
b. Worker A uses more capital per worker than worker B
c. Worker A has more natural ability than worker B
d. All of the above

946. Skills that embodied in a person are called

a. Human capital
b. Embodied skills
c. Physical capital
d. Experience skills

947. “Treating an individual as typical of a group” is the definition of

a. pure discrimination
b. statistical discrimination
c. human capital
d. specific skills

948. The largest source of tax revenue for the federal government is:
a. the personal income tax
b. the social security tax
c. the property tax
d. the sales tax

949. When my income was $100,000, I paid $10,000 in taxes. When my income
became $200,000, I paid $40,000 in taxes. My marginal tax rate is:
a. 10%
b. 20%
c. 30%
d. 40%
950. The tax is question #2 is:
a. progressive
b. regressive
c. proportional

951. Which of the following taxes is regressive?

a. the federal income tax
b. the state income tax
c. the sales tax
d. the Medicare tax

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952. Assume that there are two goods, A and B. In 1996, Americans produced 10 units
of A at a price of $10 and 20 units of B at a price of $20. In 2002, Americans produced
20 units of A at a price of $20 and 30 units of B at a price of $30. The Nominal GDP for
2002 is:
a. $100
b. $400
c. $500
d. $900
e. $1300

953. Using the numbers in question 5, the Real GDP for 2002 is:
a. $400
b. $500
c. $800
d. $900
e. $1,300

954. Which of the following statements is/are true?

a. Business Investment Spending occurs when individuals buy stock in the stock
market
b. Productivity is the United States grew very slowly between 1973 and 1996
c. Because of discouraged workers, the official unemployment rate is too high
d. “Full employment” occurs when there is no frictional unemployment

955. Immediately after a trough, we would expect to have a/an

a. peak
b. recession
c. recovery
d. another trough

956. Last week, Martha spent one day cleaning a house. For this, she was paid $50.
The rest of the week, she spent looking for a job. Martha would be classified as
a. employed
b. unemployed
c. not in the labor force

957. John lost his accounting job when Montgomery Ward’s closed its stores in San
Diego. He looked for a similar job for ten months before finding an accounting job at
Sears. During the month John was unemployed, he was
a. frictionally unemployed
b. seasonally unemployed
c. cyclically unemployed
d. structurally unemployed

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958. Which of the following groups is most hurt by unexpected inflation?
a. workers with cost of living adjustments in their labor contracts
b. homeowners
c. people with large debts to pay for their homes and cars
d. people with large retirement savings held in savings accounts

959. If the nominal interest rate is 5% and the inflation rate is 2%, the real interest rate
is:
a. 2%
b. 3%
c. 5%
d. 7%
e. 2 ½%

960. For which of the following reasons might inflation cause Real GDP to grow
slower than it otherwise would?
a. Inflation makes everyone poorer
b. Inflation reduces the value of consumer debt
c. Inflation increases business investment spending
d. Inflation decreases savings in financial form

961. Disposable Income is equal to:

a. National Income c. National Income Minus Taxes
b. Real GDP
c. National Income Minus Taxes
d. National Income Minus Taxes Plus Transfers

962. Assume that Potential Real GDP equals $10,000. National Income is therefore
$10,000. Of this, consumers will pay $2,000 in taxes, save $1,000, and spend $7,000 on
consumer goods. Business Investment spending is $2000. In order to avoid recessions
and inflation (to have equilibrium), the government should have a:
a. balanced budget
b. budget deficit of $1000
c. budget surplus of $1000
d. budget deficit of $2000

963. According to Keynes, when the Great Depression started, the government should
have:
a. done nothing
b. decreased the money supply
c. had a large increase in government spending
d. enacted high tariffs, such as the Smoot-Hawley Tariff
964. If the government lowers taxes by $10 billion, the Real GDP will rise by
a. more than $10 billion
b. less than $10 billion

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c. exactly $10 billion

965. Which of the following is an automatic stabilizer?

a. unemployment benefits
b. spending on education
c. defense spending
d. net interest

966. “Crowding out” means that

a. a government budget deficit lowers interest rates and causes investment spending
to rise
b. an increase in marginal tax rates lowers production
c. a government budget deficit raises interest rates and causes investment
spending to fall
d. a government budget deficit raises American exports and lowers American
imports
967. Which of the following IS a function of money?
a. medium of exchange
b. store of value
c. unit of accounting
d. ]all of the above

968. Which of the following is a component of M-1?

a. savings deposits
b. credit card
c. checkable deposits
d. gold

969. Which of the following is a NOT component of M-2?

a. small time deposits
b. money market mutual funds
c. stocks
d. checkable deposits

970. Which of the following is true about the Federal Reserve System (Fed)?
a. it is a system of 12 central banks
b. its Board of Governors is elected by a vote of the people
c. its main policy-making body is the FDIC
d. it accepts deposits from the public and makes loans to businesses
e. all of the above

971. An IOU of the Federal Reserve Bank of San Francisco to Bank of America is
called:
a. discounts
b. federal funds

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c. reserves
d. collateral

972. Which of the following is the most liquid?

a. a savings account
b. a 6 month CD
c. a home
d. water

973. The monetary base is composed of:

a. gold and silver
b. currency only
c. currency and reserves
d. currency and checkable deposits

974. If the monetary base is increased by $1,000 and the reserve requirement is 10%
(1/10), by how much wills the money supply be increased?
a. $100
b. $1,000
c. $5,000
d. $10,000

975. If the Federal Reserve wishes to increase the money supply, it should:
a. raise the reserve requirement
b. raise the discount rate
c. buy Treasury securities in the open market
d. all of the above

976. An increase in the money supply will cause interest rates to

a. rise
b. fall
c. remain unchanged

977. Marginal utility always

a. Increases
b. Decreases
c. Remains constant
d. Sometimes increases and sometimes decreases
978. Total utitliy curve (TU) is
a. Concave to x-axis
b. Convex to x-axis
c. Concave or convex depending on situations
d. Concave to y-axis
979. Total utility curve

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a. Always rises
b. Always falls
c. First and then rises
d. First rises and then falls
980. Total utility is maximum at a point then marginal utility is
a. Positive
b. Zero
c. Negative
d. Positive and decreasing
981. The falling part of a TU curve shows
a. Increasing marginal utility
b. Decreasing marginal utility
c. Zero marginal utility
d. Negative marginal utility
982. Utility is
a. A subjective concept
b. A moral concept
c. An objective concept
d. A neutral concept

MONEY AND VALUE OF MONEY

983. Rupee is a coin:

Full value
Token money
Credit money
Convertible

984. Cash cannot be directly drawn from a bank against:

Cross cheque
Order cheque
Bearer cheque
Traveller cheque

985. Money material should be:

Abundant
Scarce
Beautiful
Heavy

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986. In Pakistan money of account is:
Paisa
Rupee
Gold
Dollar

987. If no money is used to exchange goods, it is called:

Barter
Currency
Black market
Free trade

988. Which is not the function of money:

Make demand and supply equal
Store of value
Medium of exchange
Measure of value

989. Which is money:

Check
Credit card
Currency
Prize bond

990. Convertible money means:

It can buy goods
Govt. can give gold against it
Illegal money
Low value money

991. Barter has the defect:

Goods exchanged are of inferior quality
Goods cannot be exchanged for services
Lack of common measure of value

None of the above

992. Legal money is called so because:

The buyer must pay in that money
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Can be converted into gold
Sellers do not accept any other money
It is official medium of exchange

993. It is the medium of exchange:

Black money
Near money
Currency
Foreign exchange

994. The govt. can control inflation by:

Increasing demand for goods
Increasing supply of goods
Increasing money supply
Decreasing taxes

995. Government of Pakistan issues currency on the basis of:

Availability of gold in the country
Availability of dollars in the country
Demand for money in the country
Tax collection

996. Quantity of money has relation with value of money:

Direct
Indirect
Inverse
No relation

997. Commercial banks create:

Credit money
Token money
Legal money
Do not create money

998. Cheque is:

Legal money
Credit money
Paper money
Not money

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999. The most important feature of money:
General acceptability
Convertibility into gold
Store of value
Medium of exchange

1000. It can change money supply:

National Assembly
Supreme Court
Government
State Bank

1001. Which of the following increases money supply in the country?

Purchase of bonds by State Bank
Sale of bonds by State Bank
Increase in discount rate
Decrease in taxes

1002. Paper money came into use:

100 years ago
200 years ago
1000 years ago
2000 years ago

1003. Which property the paper money does not possess:

Acceptability
Divisibility
Duability
Portability

1004. A saving account in a bank represents the function of money

A measure of value
A medium of exchange
A standard for deferred payments
Store of value

1005. A student records her income and spending for past month, she uses the funtion of
money
Medium of exchange
Standard of deferred payments
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Store of value
Unit of account

1006. It implements monetary policy of the country:

Central bank
Commercial banks
Specialised bank
Finance department

1007. Which property paper money does NOT Possess

Acceptability
Divisibility
Durability
Portability

1008. Anything used as money must be:

Fixed in value
Fixed in supply
Legal tender
Readily acceptable

1009. What will promote savings?

Increase in credit facilities
Increase in taxation
Increase in personal incomes
Rising prices

1010. Treasury Bill is a document used for:

A short-term loan to the exporter
A long-term loan to the government
A short-term loan to the government
A short-term loan to a govt. employee

1011. Which does NOT represent a method of payment?

Cheque
Saving certificate
Currency note
Bill of exchange

1012. Which is NOT a desirable characteristic of money?

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Portable
Uniform
Easily recognised
Easily duplicated

1013. Speculative demand for money depends upon:

Income
Investment
Rate of interest
Central bank

1014. If money supply in a country decreases:

Prices will rise
Prices will fall
Rate of interest falls
(b) and (c) of above

1015. In the equation MV = PY, V represents:

Value of money
Velocity of circulation of money
Variation of nation income
All of the above

1016. In the equation MV = PY, M represents:

Money supply
Money demand
Maximum output
Minimum output

1017. Accourding to Keynes, motives for holding money are:

Two
Three
Four
Five

1018. Quantity Theory of Money explains that:

Value of money depends upon quantity of money
Rate of interest depends upon quantity of money
Quantity of investment depends upon quantity of money
Supply of money depends upon quantity of money
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1019. Cross cheque has a cross sign (X) in the:
Right side upper corner
Right side lower corner
Left side upper corner
It does not have cross sign (X)

1020. Cross cheque means:

It has been cancelled
Cash cannot be directly drawn from the bank
It has two lines drawn in left upper corner
(b) and (c) of above

1021. It is true to say about kinds of inflation:

Demand pull and cost push inflation
Demand pull and cost push industry
Demand pull and income pull inflation
None of the above

1022. Liquidity of a monetary asset means:

Velocity of circulation of money
Easy availability of money
Ready acceptability of monetary asset
The monetary asset has lost it value

1023. Barter means:

Trade through metallic money only
Trade of goods only excluding services
Trade of very low value goods
Trade without use of money

1024. With reference to currency system of a country token money means:

Token tax
The money which has no purchasing power
The money which has higher face value
Advance payment to purchase something

1025. Ten-rupee note is:

Token money
Credit money
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Legal money
(a) and (c) of above

1026. Paper money in Pakistan is:

Convertible
Inconvertible
Linked to gold
None of the above

1027. Government securities:

Mean currency
Are near money
Are bought and sold on stock exchange market
(b) and (c) of above

1028. Which is the characteristic of a good money:

Has good design
Has high value
Has a fixed value in gold
Is readily accepted by people

1029. This is NOT money

Currency
Prize bond
Demand deposit in a bank
Coins

1030. Cross cheque:

Is issued only by a business firm
Is not accepted by banks
Ensures immediate payment of cash to the holder
None of the above

1031. This is a characteristic of good money:

High intrinsic value
Liquidity
Attractive design
Easy to duplicate

1032. This is a characteristic of good money:

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High intrinsic value
General Acceptability
Attractive design
High purchasing power

1033. It is a kind of money:

Credit money
Discredit money
Trust money
False money

1034. It is included in kinds of money:

Legal money
Credit money
Token money
All of the above

1035. In payment of debt, people can use this kind of money:

Legal money
Credit money
Real money
(a) and (b) of the above

1036. Purchasing power of money during deflation is:

Reduced
Increased
Constant
Fluctuating

1037. Velocity of circulation of money means the number of times a unit of money
Changes hands daily
Changes hands monthly
Changes hands annually
Changes purchasing power

1038. The equation of exchange PT = MV was given by:

Fisher
Crowther
Kuznet
Keynes
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1039. Value of money in Pakistan is determined by:
Govt. of Pakistan
State Bank
General Price level
Value of doller

1040. When value of money falls, they benefit more:

Farmers
Industrialist
Lenders
Debtors

1041. When the nation's money supply is Rs. 1200 billion and GDP is Rs. 4800 billion,
velocity of circulation money is:
0.25
4
0.4
4 billion rupees

1042. Which one is equation of exchange?

PT = MV
PV = MT
PM = TV
None of these

1043. Inflation can be controlled by applying:

Monetary and fiscal policies
Monetary and labour policy
Fiscal and commercial policies
All of the above

1044. Inflation is a situation when :

Prices of some goods rise
General price level rises continuously
Prices double every year
Prices rise and fall

1045. Under normal circumstances, the velocity of circulation of money in a country is:
100%
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Negative
Less than 10
Zero

1046. In Pakistan, in the year 2007-08, money supply was about

Rs. 3400 million
Rs. 3400 billion
Rs. 3400 trillion
Uncountable

1047. Banks discount it and advance loans:

Draft
Bill of exchange
Pay order
Gold

1048. Paper money is called fiat money because

It is issued with authority of government
It is convertible into gold
It can be easily printed
It is light weight

1049. According to Keynes, demand for money is affected by:

Income
Rate of interest
Literacy rate
Both (a) & (b)

1050. During inflation:

Lenders lose, borrowers gain
Borrowers lose, lenders gain
Borrowers and lenders both lose
All sections of the society gain

1051. The quantity demanded of money rises:

As the interest rises
As the interest rate falls
As the supply of money falls
As the number of banks rises

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1052. Which people are most likely to gain during inflation?
Those living on pension
Those living on their savings
Those who are repaying borrowed money
Those who have lent money

1053. If quantity of money increases 100%, other things remaining constant, value of
money changes by:
Increases by 100%
Decreases by 100%
Decreases by 200%
Does not change

1054. For the economy, prices are beneficial:

Falling slowly
Rising slowly
Rising fast
Falling fast

1055. According to Keynes people demand money for purposes (motives):

1
2
3
4

1056. Value of money means:

Gold purchased by money
General purchasing power of money
Importance of money
Demand for money

1057. Value of money and supply of money are related:

Inversely
Directly
Govt. law
Are not related

1058. They are not affected badly by rising prices:

Salaried persons
Businessmen
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Debtors
Importers

1059. Inflation:
Makes distribution of income equal
Makes distribution of income unequal
Has no effect on distribution of income
Affects only industrial sector

1060. It is assumption of quantity theory of money:

Quantity of traded goods increases
Velocity of circulation of money constant
Govt. imposes new taxes
(a) and (b) of the above

1061. If we put this letter in the blank space, we get quantity theory of money PY = M
S
T
V
A

1062. In the equation PY = MV showing quantity theory of money. Y represents:

Year of measurement of national income
National income
Tax revenue of the govt
(a) and (c) of above

MONEY BANKING AND INTERNATIONAL TRADE

1063. Which one of the following approaches to the definition of money gives the
widest possible view of money?
Central bank approach
Conventional approach
Chicago approach
Gurley Shaw approach

1064. The best example of representative full-bodied money is found in the 'gold
certificates' which circulated in the U.S.A. before being withdrawn from circulation in:
1925

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1927
1929
1933

1065. Which of the following is not a function of money?

Medium of exchange
Unit of account
Standard of deferred payments
Stabilization of price level

1066. Money has been defined as 'that by delivery of which debt contracts and price
contracts are discharged, and in the the shape of which general purchasing power is
held'. Whole definition is this?
G. Crowther
D.H.Robertson
J.M.Keynes
George N.Halm

1067. Fiat money refers to:

Credit money
Legal money
Full bodied money
International money

1068. Which one of the following is an example of quasi-money or near-money?

Bills of exchange
Cheque
Bank notes
Coins

1069. When the commodity value of money and its value as money are equal, it is
called:
Token money
Full-bodied money
Quasi-money
Fiat money

1070. The limited legal-tender money stands for the component of money which:
Is issued in a limited amount
Is legal tender for payment upto a certain maximum amount
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Is legal tender in specified areas
Is to be used in specific transaction

1071. As compared to the classical theory, which function of money was stressed more
in the Keynesian theory?
Unit of account
Medium of exchange
Standard of deferred payments
Store of value

1072. Bad money drives good money out of circulation. With whole name is this law
associated?
J.M.Keynes
Thomas Gresham
L.E.Mises
R.G.Hawtrey

1073. Identify the country which was the first to adopt the gold standard:
UK
France
Germany
USA

1074. During which decade of the nineteenth century did most European countries adopt
the gold standard?
Sixties
Seventies
Eighties
Nineties

1075. When did the UK finally abandon the gold standard?

1925
1929
1931
1936

1076. Who is generally regarded as the founder of the Modern Quantity Theory of
Money?
J.M.Keynes
Milton Friedman
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M.L.Bursten
Don Patinkin

1077. The Quantity Theory of Money establishes the relationship between quantity of
money in an economy and the level of:
Employment
National income
Prices
Savings

1078. Identify Pigou's cash balances equation:

M = Ky + K'A
M = KPO
M = KR/P
M = PKT

1079. In the Fisher's equation of exchange MV = PT, what does T denote?

Period of time
Volume of trade
Total money wealth
Trend value of general price level

1080. Cost-push inflation is caused by:

Increase in the quantity of money
In-crease in investment
Creation of credit money
Increase in the prices of inputs

1081. Who introduced the concept of the real balance effect?

A.C.Pigou
Alfred Marshall
J.M.Keynes
Milton Friedman

1082. Which of the following according to Milton Friedman is not a key determinant of
the demand for money?
Aggregate wealth
Precautionary motive
Relative rates of return obtainable on different forms of assets
Physical non-human capital goods and human capital or wealth
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1083. The cash transactions approach to the quantity theory of money is usually
associated with the name of:
Alfred Marshall
Irving Fisher
J.M.Keynes
D.H.Robertson

1084. The relationship between the market rate of interest and the market price of a
bond is:
Inverse
Direct
Positive and proportionate
Uncertain

1085. The degree of elasticity in respect of speculative demand for money, under the
liquidity trap conditions, is:
Zero
One
Greater than one
Infinite

1086. A retail price index is a good measure of changes in:

Consumers' cost of living
General purchasing power of money
Average standard of living
Patterns of consumer expenditure

1087. Which of the following is not an instrument of monetary policy?

Taxation
Bank rate
Open-market operations
Credit rationing

1088. At a very low rate of interest, the interest-elasticity of the speculative demand for
money becomes:
Low
High
Very high
Infinite
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1089. The liquidity trap condition occurs at a:
Low rate of interest
Very low rate of interest
High rate of interest
Very high rate of interest

1090. In which capacity does a person stand to gain from deflation?

As a pensioner
As a debtor
As an entrepreneur
As an equity-holder

1091. According to the classical approach, the demand for money primarily depends
upon:
Rate of interest
Economic transactions
Speculative activity
Precautionary motive

1092. Which of the following measures is helpful in controlling inflation?

Raising the bank rate
Price control and rationing of essential goods
Reduction of government expenditure
All of the above

1093. During the period of hyper-inflation, there takes place astronomical rise in prices
and, as a result, money becomes almost worthless. Such a situation was witnessed in
Germany in 1923 and in China in:
1947
1949
1951
1953

1094. Stagflation refers to a situation which is characterised by:

Deflation and rising unemployment
Inflation and deflation
Sustained price-rise and rising unemployment
Stagnant employment and deflation

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1095. The first explanation of stagflation was offered originally in 1931 by:
Friedrich A.von Hayek
J-M. Keynes
Bent Hansen
Milton Friedman

1096. The reduction or elimination of inflation is known as:

Disinflation
Deflation
Creeping inflation
Stagflation

1097. Which of the following is not a function of a commercial bank?

Accepting public deposits
Granting loans and advances
Undertaking agency functions
Banker to the Government

1098. Which of the following is not a liability of commercial banks?

Demand deposits
Time deposits
Advances from the central bank
Security holdings

1099. Which is not a function of the central bank of a country?

Lender of the last resort
Controller of credit
Custodian of nation's foreign exchange reserves
Supervisor of nation's fiscal policy

1100. Under the unit banking system, each individual bank is a separate entity having its
own independent management and board of directors. Which country is generally
regarded as the home of the unit banking system?
USA
Germany
France
Japan

1101. The branch banking system is currently in vogue in most countries of the world.
Identify the country where it first developed:
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South Africa
UK
Canada
Australia

1102. The china banking system a variant of the group banking system, developed
around the mid-nineteenth century and reaching the apex of popularity in the present
century. In which country did it develop?
USA
UK
Germany
Italy

1103. In which country was the instrument of minimum legal cash reserves ratio for
banks first introduced?
USA
UK
Germany
Japan

1104. Which of the following is not a part of the un-organised Indian money market?
Indigenous bankers
Co-operative credit societies
Chit funds
Money lenders

1105. Which one of the following will reduce the capacity of commercial banks to lend?
Sales of securities in the open market by the central bank
Reduction in the discount rate
Reduction of the required cash reserves ratio
Purchase of securities by the Central bank in the open market

1106. If there is a significant decrease in the demand for loans, banks will be forced to:
Sell securities to the public
Adjust their protfolios
Resort to creating credit
Increase liquidity

1107. Open market operations refer to the buying and selling of:
Commercial bills
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Foreign exchange
Gold
Government securities

1108. Bank rate refer to the interest rate at which:

Commercial banks receive deposits from the public
Central bank gives loans to commercial banks
Government loans are floated
Commercial banks grant loans to their customers

1109. The immediate effect of credit-creation by banks is:

Rise in prices
Increase in money supply
Increase in real national income
Reduction of poverty

1110. Selective credit control devices are used by the central bank of a country to:
Regulate the volume of aggregate bank credit in the economy
Regulate credit-creation on the part of some selected banks
Control the flow of aggregate bank credit to different productive activities in the
economy
Selectively allocate credit among banks

1111. In a bimetallic standard:

Two metals (usually gold and silver) are simultaneously monetized and their monetary
values are fixed as legal tender
Both gold and silver coins circulate as unlimited legal tender
Coinage as well as exports and imports of both the metals are free
All of the above

1112. One of the following is an instrument of qualitative credit control. Identify it:
Credit rationing
Bank rate
Open-market operations
Minimum statutory cash reserves ratio

1113. Which of the following is an instrument of quantitative credit control?

Credit rationing
Prescribing margin requirements
Variable reserve ratio
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Consumer credit regulation

1114. Arrange the following assets of a bank in the ascending order of income (i.e. in
the descending order of liquidity): I-Bills; II-Loans; III-In-vestments in Government and
other approved securities
I,II,III
I,III,II
II,I,III
III,II,I

1115. Which of the following is not an item on the assets side of the balance sheet of a
commercial bank?
Investments
Money at call and short notice
Reserves
Advances

1116. Commercial banks have always to face a conflict between:

Sharcholders and depositors
Central bank and themselves
Liquidity and profitability
Demand deposits and time deposits

1117. The main function of legal cash reserve requirements is to:

Ensure safely of deposits
Influence the demand deposit-creating power of commercial banks
Regulate the inter-sect oral flow of money supply
Keep a portion of deposits liquid

1118. Since when has the Reserve Bank of India been successfully operating the
instrument of selective credit control in this country?
1939
1951
1956
1961

1119. Identify the country, which first employed credit rationing as an instrument of
credit control:
Germany
UK
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USA
France

1120. The 'terms of trade' refer to:

Comparative advantage of one country over another in the production of a particular
commodity
Bilateral trade agreements
Rates of exchange between two currencies
Ratio of the index of export prices to the index of import prices

1121. By which year had the gold standard virtually disappeared from the world as an
international monetary system?
1933
1936
1939
1945

1122. The market for very short term loans is known as:
Capital market
Money market
Stock market
Discount market

1123. If the increase in exports exceeds the increase in imports, and other things remain
the same, then the level of income will:
Rise
Remain the same
Fall
Move in an uncertain manner

1124. Which of the following was not favoured by the mercantilists?

Accomulation of gold by the country
Free trade
Export promotion
Import restriction

1125. Of the following concepts of term of trade, which one was introduced by F.W.
Taussig?
Income terms of trade
Commodity terms of trade
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Real cost terms of trade
Double fact oral terms of trade

1126. Dynamic factors in the realm of international trade theory relate to changes in:
Income
Factor endowments
Technical knowledge and methods of production
All of the above

1127. The devaluation of currency by a country is designed to lead to:

Expansion of the export trade
Contraction of import trade
Promotion of import substitution
All of these

1128. What would be the impact on the country's balance of payments position, when in
the context of inflationary pressures recourse is taken to expenditure reducing policies?
Highly unfavourable
Unfavourable
Favourable
Neutral

1129. Which of the following items in the balance of payments is invisible?

Government expenditure abroad
Foreign investment
Foreign travel
Goods exported

1130. If the elasticity of foreign demand for the country's exports is unity, the supply
curve of foreign exchange will be:
Backward bending
Vertical
Positively sloping from left to rigt
Horizontal

1131. A deficit disequilibrium in the balance of payments can be corrected through:

Devaluation
Monetary squeeze
Exchange controls and import quotas
All of the above
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1132. The spot and forward markets in foreign exchange are linked to each other
through:
Interest arbitrage
Hedging
Speculation
All of the above

1133. What does the modern theory of international trade predict regarding difference in
factor prices between nations on account of trade? The difference:
Increases
Diminishes
Remains the same
Either diminishes or increases

1134. The multiple exchange rates were first employed by:

Brazil
Ecuador
Germany
Peru

1135. Which of the following statements is not correct?

Devaluation can have only temporary effects and it may provoke other countries to
retaliate
Many countries of Europe resorted to exchange clearing agreements during the 1930s
The balance of payments of a country is a balance sheet showing the country's foreign
assets and liabilities at any given period of time
The concept of single factoral terms of trade was developed by Jacob Viner.

1136. Under the flexible exchange rate system, the exchange rate is determined by:
The central bank of the country
The forces of demand and supply in the foreign exchange market
The price of gold
The purchasing power of currencies

1137. The elasticity of demand for foreign exchange for financing capital outflow is:
Zero
Greater than zero
One
Less than infinity
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1138. The foreign exchange market performs the function of:
Transfer of purchasing power
Provisions of credit for financing foreign trade
Furnishing facilities for hedging foreign exchange risks
All of the above

1139. According to the Heckscher-Ohlin theory of international trade the most

important cause of differences in relative commodity pries and trade between nations is
the differences in:
Consumer tastes and preferences
Factor endowments
Knowledge and technology
Demand conditions

1140. On which of the following is the law of comparative costs based?

Labour theory of value
Opportunity cost theory
Law of diminishing returns
Both (a) and (b)

1141. Which among the following, is not an assumption of the classical - territory of
comparative cost advantage?
Labour is the only factor of production
Production takes place under diminishing returns
There are no tariffs
Prices are determined by their real labour costs of production

1142. Developing countries usually complain of:

Detoriation in their terms of trade
Serious hurdles in the way of export promotion
Uncertainty and inadequacy of reign aid
All of the above

1143. Adam Smith's views on world trade can be best understood if one considers them
as a reaction to:
The mercantilist approach to trade
Ricardo's views on trade
The labour theory of value
None of the above
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1144. What proportion of international trade is based on absolute differences in costs of
production?
All
Substantial
Very little
Nil
1145. Profit and loss-sharing is an element of this system:
Islamic
Capitalistic
Socialistic
None of these

1146. Cash cannot be obtained from bank against:

Cross cheque
Order cheque
Bearer cheque
Traveller cheque

1147. Commercial banks accept deposits and provide:

Money
Cheque
Loans
Bill of exchange

1148. The banks can give loans:

Unlimited
Equal to deposits
Less than deposits
More than deposits

1149. Banks discount it and advance loans:

Draft
Bill of exchange
Pay order
Good

1150. Banks prepare their balance sheet:

Weekly
Monthly
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Quarterly
Annually

1151. Balance sheet of a bank has two parts:

Supply and demand for deposits
Supply and demand of advances
Assets and liabilities
Cash reserves and loans

1152. When banks prepare their balance sheets, they show the money lent in:
Liabilities
Assets
Both assets and liabilities
None of these

1153. The power of a bank to create credit is affected by:

The cash reserve requirement
The amount of cash available
The number of branches of a bank
Both (a) & (b)

1154. Demand deposits are:

Bank notes
Money (they can be used to make payments)
Considered as near money
Legal money

1155. An asset is liquid when it is:

Being traded frequently
Earning a good rate of return
Is money or easily converted into money
All of the above

1156. A bank has Rs. 5 million in cash. The minimum reserve ratio is 20%. What is
maximum potential increase in total deposits:
0
5m
10 m
25 m

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1157. The following is not a bank liability:
Demand deposit
Time deposit
Saving deposit
Loans

1158. When a commercial bank creates credit, it immediately raises:

Its assets
Its liabilities
Money supply
(a) and (b) of above

1159. Which is the source of interest for a bank:

Advances
Bills discounted
Investments
All of the above

1160. Commercial banks are able to create money by:

Printing money
Making loans
Moral suasion
Selling government bonds

1161. Which is a function of a commercial bank:

Acting as a govt. banker
Fixing the exchange rate
Issuing bank notes
Making loans

1162. When a commercial bank creates credit, its immediate effect is that it raises:
The exchange rate
The interest rate
The money supply
The real national income

1163. Total number of bank branches in Pakistan is:

More than 5000 but less than 10,000
More than 10,000 but less than 15,000
More than 15,000 but less than 20,000
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More than 20,000 but less than 25,000

1164. Demand deposits mean:

Saving account
Profit loss account
Chequeable deposits
Time deposits

1165. Which is considered liability by a bank:

Loans
Bank's building and equipment
Time deposit
Securities

1166. Demand deposits are money because:

They are backed by gold
They are assets of banks
They can be used to make payments
All of the above

1167. Credit money is created by:

Central bank
Commercial bank
Government
All of the above

1168. Credit money is created by:

Exchange bank
Commercial bank
Finance companies
None of these

1169. Select the correct statement:

Credit money is better than legal money
Legal money is better than credit money
Both legal money and credit money are equally useful
All money is evil

1170. Select the correct statement:

Central bank creates legal money
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Commercial bank create paper money
Finance companies create fake money
None of the above is true

1171. Select the correct statement:

Central bank creates convertible money
Commercial bank create convertible money
Govt. creates paper money
None of the above is true

1172. Which type of cheque is more safe for transfer of money

Bearer cheque
Traveller cheque
Order cheque
Cross cheque

1173. Which type of cheque is least safe for transfer of money:

Bearer cheque
‘Traveller cheque
Order cheque
Cross cheque

1174. If a person is more interested to earn income, he should deposit his money in:
Demand deposit
Time deposit
Saving account
Profit-loss account

1175. If a person is interested that his amount should be readily available as soon as he
needs he should deposit his money in:
Demand deposit
‘Time deposit
Saving account
Profit-loss account

1176. Which type of card is not issued by commercial banks:

Credit card
Debit card
ATM card
Green card
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1177. Which type of card is not issued by central banks:
Credit card
Debit card
ATM card
None is issued y it

1178. Market rate of interest is:

Always higher than discount rate
Always lower than discount rate
Both are equal
May be higher or lower than discount rate

1179. Most important source of income of commercial banks is:

Interest charged on loans
Profit erned on investments
Income from collecting utility bills
Income from reserves at central bank

1180. Select the true statement:

The central bank charges high interest rate on loans to commercial banks
The central bank does not charge interest on loans to banks
The central bank does not advance loans to commercial banks
None is true

1181. If you borrow from a bank the amount which the bank charges is called:
Bank rate
Discount rate
Interest rate
Borrowing rate

1182. The rate charged by a central bank on loans is called:

Market rate
Discount rate
Lending rate
Tax rate

1183. Changes in discount rate are brought about by State Bank to:
Control inflation
Increase investment activity
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Increase earnings of the bank
(a) and (b) of above

1184. Short term loans can be obtained in:

Stock market
Money market
Capital market
All the markets

1185. Long term loans can be obtained in:

Stock market
Money market
Capital market
Exchange market

1186. Functions of commercial bank are:

Issue currency, create deposit money and provide loans
Accept deposit, create deposit money and provide loans
Accept deposit, provide loans, export goods
Accept deposit, provide loans and control foreign exchange

1187. This is a difficulty of barter:

Lack of double coincidence of wants
Difficulty to use larger scale in production
Lack of divisibility of many goods
All of the above

1188. Velocity of circulation of money means:

Total demand for money
Total supply of money
The average number of times a unit of money changes hands
Annual increase in currency notes

1189. Nationalisation of banks was done in:

1974
1976
1978
1980

1190. National Bank of Pakistan is:

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Industrial bank
Commercial bank
Central bank
Investment bank

1191. Total number of branches of Pakistani banks is approximately:

3000
9000
15000
21500

1192. National Bank of Pakistan was established in:

1949
1959
1969
1970

1193. The bank established for loans to very small enterprises is called:
Micro Finance Bank
Modarba Bank
SME Bank
First Mini Bank

1194. Pakistan has a banking system:

Developed
Underdeveloped
Very unorganised
(a) and (c) of above

1195. Commercial banks in Pakistan are supervised by:

State Bank
National Bank
Finance Minister
World Bank

1196. National Bank is a:

Public sector bank
Private bank
Micro finance bank
Specialised bank
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1197. First Women bank is:
Private bank
Govt. Bank
Non-Scheduled Bank
Investment Bank

1198. Bank rate in Pakistan is:

3%
13%
23%
33%

1199. State Bank was established in:

1948
1950
1952
1954

1200. 10-rupee note is issued by:

National Bank
State Bank
Govt. of Pakistan
Governor State Bank

1201. Acting as lender of last resort, a central bank lends to:

Money markets
Stock exchange
Commercial banks
Does not lend

1202. Which statement is true of the relationship between bond prices and bond yields?
They vary inversely
They tool vary directly
They are not related
They are related in long run and not in the short run

1203. Which is the most widely used of monetary policy:

Clearing house
Open-market operations
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Discount rate
Issuing of notes

1204. When the State Bank wants to decrease money supply in the country, it:
Buys govt. securities in stock market
Sells govt. Securities
Lowers discount rate
(b) and (c) of above

1205. Monetary policy consists of:

Decreasing taxes
Changing total money supply
Checking commercial banks
Printing of money

1206. State Bank of Pakistan has departments:

Issue and banking department
Issue and research department
Banking and research department
Issue, research and banking department

1207. Central bank's rate of lending to commercial banks is called

Interest rate
Discount rate
Money rate
Control rate

1208. When a central bank wants to increase money supply in circulation:

Purchases govt. securities
Lowers bank rate
Directs banks to advance more loans
(a) and (b) of above

1209. State Bank of Pakistan is run by:

Board of directors
Board of governors
Board of managers
Board of bankers

1210. Credit money is controlled by:

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Government
Commercial banks
Central bank
Markets

1211. Every country establishes central bank to:

Issue notes
Supervise commercial banks
Give loans to business
(a) and (b) of above

1212. It is NOT an instrument of monetary policy:

Bank rate
Open market operations
Change in reserve ratio
Issue notes

1213. It creates credit:

Central bank
Commercial bank
Government
Stock exchange

1214. Which is a monetary measure to increase employment:

Increase in govt. expenditure
Reduce govt. Expenditure
Increase in interest rate
Reducing interest rate

1215. In order to reduce consumer borrowing this is raised:

Commercial bank deposits
Government spending
Interest rate
The exchange rate

1216. Treasury bill is used for:

Getting short term loans
Getting long germ loans
Treasury bill is not credit instrument
Treasury bill is a govt. tax bill
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1217. Out of the following the only recognised legal tender is:
Cheque
Bank notes
Draft
Credit card

1218. Open Market Operation is:

Buying and selling bills of exchange
Buying and selling govt. Securities
Buying and selling shares of companies
Buying and selling foreign exchange

1219. In Monopoly at various output levels:

AR = MR
AR < MR
AR > MR
None of these

1220. Excise tax is a part of:

Fixed cost
Variable cost
Implicit cost
Is not a part of cost

1221. The shape of rectangular hyperbola is made by:

MC
AFC
AVC
None of these

1222. As output increases:

MC curve firstly falls then rises
MC firstly rises then falls
MC continuously rises
None of these

1223. Unit cost is another name for:

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MC
AVC
ATC
AFC

1224. All inputs can be varied:

Short run
Long run
Both periods
None of the period

1225. Which statement is true:

ATC + AVC = AFC
ATC + MC = AFC
ATC + AFC = AVC
AFC + AVC = ATC

1226. Which is NOT a cause of shift in cost curves of a firm:

Excise tax
Prices of inputs
Increase in productivity
Price of product

1227. MC is given by:

Slope of TFC
Slope of TC
Slope of AC
None of these

1228. TC
Starts from origin
Does not start from origin
Is parallel to Y-axis
None of these

1229. TVC
Starts from origin
Does not start from origin
Is parallel to Y-axis
None of these
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1230. TC
Rises continuously
Falls after reaching a maximum
Is horizontal
None of these

1231. All the following are U-shaped Except:

AVC
AFC
AC
MC

1232. The cost which a firm incurs for purchasing or hiring factors is called:
Implicit
Explicit
Real
Nominal

1233. The short run:

Is less than one year
Requires that at least one input is fixed
Requires that all inputs are fixed
Is just long enough to permit entry and exit

1234. The long run is a:

Period of three years or longer
Period long enough to allow firms to change plant size and capacity
Period long enough to allow firm to make economic decisions
A period which affects larger than smaller firms

1235. As output increases, AC curve:

Falls
Rises
Remains constant
(a), (b), (c) are all correct

ECONOMIC DEVELOPMENT AND PLANNING

1236. Pakistan started its first five-year plan in:

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1947
1950
1955
1960

1237. Contribution of agriculture in Pakistan's national income is:

21%
31%
41%
51%

1238. Most of our exports consist of:

Cotton products
Machinery
Sports goods
Both (a) and (b)

1239. Pakistan is an economy:

Developing
Developed
Fast growing economy
(a) and (c) of above

1240. Contribution of industrial sector in Pakistan economy is:

29%
19%
9%
Undetermined

1241. The largest sector of Pakistan economy is:

Transport
Agriculture
Industry
Trade

1242. Size of Pakistan's 8th plan was in rupees:

700 billion
1700 billion
2700 billion
3700 billion
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1243. Pakistan produces of its oil requirements:
20%
30%
40%
50%

1244. Investment rate in Pakistan is around:

8%
18%
28%
38%

1245. Which of the following is NOT a characteristic of underdeveloped countries:

Low per capita income
Low growth rate of GDP
Low educational levels
Low population growth rate

1246. Pakistan' income is low because:

Fast growing population
Lack of natural resources
Low saving rate
(a) and (c) of above

1247. The most important factor in economic development is:

Quality of human resources
Quality of natural resources
Quality of governance
Quality of banking system

1248. Which is likely to be higher in a developing country like Pakistan:

Birth rate
GDP per head
Life expectancy
Net investment per head

1249. Economic development:

Is the same as economic growth
Means improvement in lifestyle
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Exists when there is equal distribution of income
All of the above

1250. Economic development is measured on the basis of:

Increase in nominal GNP
Increase in real GNP
Increase in personal incomes
Increase in government revenue

1251. Select the combination which is most likely to be found in developing countries:
Low birth rate and high gross domestic product
Low death rate and high gross domestic product
High birth rate and low GDP per head
Low infant mortality rate and high gross domestic product

1252. Rate of economic development in Pakistan will increase if

Saving rate increases
Money supply increases
Imports increase
All of the above

1253. Rate of economic development will fall if:

Exports increase
Government enterprises are privatized
Smaller % of national income is invested
Banks increase loans

1254. It is a measure of economic development:

Increase in national and per capita income
Increase in working population
Increase in exports and imports
(a) and (c) of above

1255. It is not a factor of economic development:

Money
Land
Capital
Technology

1256. Measurement of economic development is based on:

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Monetary income
Real income
Future income
Permanent income

1257. Pakistan needs:

Economic planning
Population planning
Educational planning
All of the above

1258. The highest govt. body for economic planning in Pakistan is:
Planning Council
Planning Board
Planning Commission
Planning Department

1259. When a country develops:

Per capita income rises
Specialization increase
Urbanization rises
All of the above

1260. Economic planning in Pakistan started:

During 1950's
During 1960's
During 1970's
During 1980's

1261. We can increase rate of economic growth in Pakistan if we increase:

Taxes
Imports
Investment
Population

1262. When economic development takes place:

Market imperfections increase
‘Population increases
Capital stock increases
(b) and (c) of the above
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1263. When economic development takes place:
Exports increase
Imports increase
Capital stock increases
All of the above

1264. When economic development takes place:

Share of services in GDP increases
Share of agriculture in GDP increases
Share of industry in GDP increases
(a) and (c) of above

1265. When economic development takes place:

Specialization increases
Commercialization decreases
Market imperfections increase
None of the above

1266. It is acting as obstacle to economic development of Pakistan:

Lack of capital
Urbanisation
Specialization
Shortage of labour

1267. It is acting as obstacle to economic:

Shortage of money
Urbanisation
Poliitical instability
Shortage of labour

1268. It is acting as obstacle to economic development of Pakistan:

Lack of capital
Fast population growth
Market imperfections
All of the above

1269. Medium-term plan covers:

Less than 2 years
3 to 5 years
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5 to 10 years
10 to 15 years

1270. Economic planning does not need:

Change of government
Determination of objection
Estimation of resources
Fixation of plan period

1271. There are obstacles to rapid economic development of Pakistan:

Social
Political
Cultural
All of the above

1272. It is a good measure of economic development:

Rate of population growth
‘Rate of increase in exports and imports
Rate of increase in money incomes
Rate of change in real incomes

1273. We cannot find per capita income of the country unless we know:
Total money supply
Total GNP
Total budget of the country
Total exports

1274. It is a characteristic of developing economy:

High productivity of capital
High productivity of labour
High surplus in in balance of payments
None of the above

1275. Pakistan started its planning experience with:

London Plan
Karachi Paln
Colombo Plan
Tokyo Plan

1276. Pakistan is underdeveloped because of:

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Lack of minerals, poor technology
Limited area and high mobility of labour
Lack of education and political government
Poor governance and corruption

1277. In Pakistan poverty is measured by:

Per capita income, calorie intake
Percentage of rural population
Difference of incomes in rural and urban areas
Difference between GDP and GNP

1278. Pakistan faces shortage of energy because:

Our population is large
Pakistan lacks resources to produce energy
Lack of proper planning
None of the above

1279. When an economy produces more output per capital the economy is said to be
having:
Inflation
Economic growth
Economic planning
Living standard

1280. In a developing country:

Birth rate is high
Death rate is high
Infant mortality rate is high
All of the above are true

1281. Economic planning in Pakistan is conducted by:

Pakistan Planning Council
Pakistan Planning Board
Pakistan Planning Commission
Pakistan Planning Authority

1282. Which shows equilibrium of national income

Consumption = investment
Saving = Investment
Saving < investment
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Saving > Investment

1283. This may cause an increase in national income:

Rise in exports
Rise in imports
Fall in consumer spending
Increase in saving

1284. If C = 200 and I = 40 then Y will equal:

160
240
800
None of these

1285. Consumption is a function of:

Saving
Investment
Income
None of these

1286. Which one is investment in economics?

Building a factory
Buying shares in stock exchange
Depositing money in bank
Depositing money in housing society

1287. Marginal propensity to consume (MPC) is:

Total income spent on consumption
Ratio of total income consumed
Ratio of additional income consumed
Consumption divided by saving

1288. Which of the following world increase national income:

Increase in taxation
Increase in savings
Increase in Govt. spending
Decrease in consumption spending

1289. Which of the following is a withdrawal from the circular flow of income stream:
Investment

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Subsidies
Taxation
Consumption

1290. Aggregate demand is:

Aggregate saving
Aggregate investment
Aggregate income
Aggregate expenditure

1291. To find net national product, depreciation is:

Added to GNP
Subtracted from GNP
Multiplied with national income
Has no role in national accounting

1292. MPC is:

C/Y
ΔC/ΔY
Y/C
ΔY/ΔC

1293. National income equals:

c+s+g
c+1+g
c-1-g
c-s–g

1294. National income equals:

c+1+t
c+s+t
c+t-g
c-t+g

1295. GDP at constant prices, calculated according to some base year is called:
Actual GDP
Nominal GDP
Real GDP
Net GDP

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1296. MPC cannot be:
Positive
Negative
Zero
More than APC

1297. Which of the following is generally regarded as the true index of economic
growth?
An increase in national income at constant prices during a year
A sustained increase in real per capita income
An increase in national income at current prices over time
An increase in national income along with a corresponding increase in population

1298. The concept of economic growth is:

Identical with the concept of economic development
Narrower than the concept of economic development
Wider as compared to that of economic development
Unrelated to the concept of economic development

1299. Which of the following is not an indicator of economically underdeveloped

countries?
Low per capita income
High death-rate
Low proportion of labor force in the primary sector
High level of illiteracy

1300. The rate of growth of an economy mainly depends upon:

The rate of growth of the labor force
The proportion of national income saved and invested
The rate of technological improvements
All of the above

1301. Among the following determinants of growth, which is a non-economic factor?

Natural resources
Population growth
Favourable legislation
Capital accumulation

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1302. Besides increase in output, economic development is concerned with:
Inputs and their efficiency
Equitable distribution of income
Life sustenance, self-esteem and freedom from want, ignorance and squalor
All of the above

1303. The stationary state as envisaged by Adam Smith, is marked by:

Low rate of profit
Subsistence level wages
High rents
All of the above

1304. Which of the following is inconsistent with Adam Smith's theory of development?
Development process is cumulative in nature
There is no limit to the growth process
Capital accumulation and market extension are two prerequisites for output expansion
There should be no government interference in the working of the economy

1305. The division of labor, according to Adam Smith, is limited by:

The extent of the market
The quantity of capital available
Both (a) and (b)
The size of labor force

1306. Among the various determinants of the growth of national wealth Adam Smith
accorded central place to:
Division of labor
Capital
Natural resources
Technology

1307. Who put forward the theory of social dualism?

A.Lewis
G.Myrdal
J.H.Boeke
A.O.Hirshman

1308. Who coined the phrase 'demonstration effect'?

W.W.Rostow
James Duessenberry
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R.Nurkse
J.K.Galbraith

1309. To achieve full economic growth, Malthus laid special emphasis on the proper
combination of:
Production and distribution
Natural resources and capital
Labor and technology
Production and trade

1310. What according to Malthus puts a stop to the growth process?

Inadequacy of capital accumulation
Deficiency in effective demand
Rapid population growth
Operation of diminishing returns in agriculture

1311. Identify the main factor which according to Malthus makes an economy move
downwards in the long run to the subsistence level:
Population pressure
Overproduction
Excess savings
Exploitation of workers

1312. Which of the following measures, according to Malthus, would be helpful in

raising and maintaining demand at a higher level?
Maintaining unproductive consumption of luxury goods
Expansion of internal and external trade
Ensuring employment to the poor in public works
All of the above

1313. Which of the following statements is not correct in the light of the Malthusian
theory of growth?
Growth of income cannot take place on its own
Population tends to increase in response to rise in income
There can be no general glut or overproduction in the market
Excess savings on the part of capitalists is the cause of overproduction

1314. Which of the following statements is not in agreement with the Malthusian view
on economic growth?
The process of economic growth is automatic
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Deficiency in effective demand halts the growth process
Lasting equilibrium can only be at the subsistence level
Savings are desirable only upto the limit set by the existence of profitable opportunities
for investment

1315. Which sector was emphasised most by Ricardo in the context of economic
growth?
Trade
Industry
Agriculture
Services

1316. In the Ricardian scheme of things, savings are provided by:

Laborers
Capitalists
Landlords
Both (b) and (c)

1317. Whichone of the following, according to Ricardo, would form a bottleneck to

economic growth?
Shortage of land
Rising rent
Shortage of gold and silver
Rising wage bills

1318. Which one of the following statements is not in tune with the Ricardian theory of
growth?
Rent tends to rise
Money wages tend to rise
Profits tend to fall
Profits tend to rise

1319. Which one of the following is not an assumption of the Ricardian theory?
Rising real wages
Fixity of land
Operation of the law of diminishing returns
Perfect competition

1320. Which of the following policy-prescriptions for economic growth was suggested
by Ricardo?
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Government's active participation in the economic field
Free trade in commodities
Control over population growth
Regulation of competition

1321. In the Ricardian system, a crucial role in development was assigned to:
Specialisation
Technological changes
Profits
Government

1322. The stationary state according to Malthus and Ricardo, is characterised by:
The disappearance of profits
Net investment falling to zero
Wages coinciding with the subsistence level
All of the above

1323. Which of the following is not a part of the classical theory of economic
development?
Labor supply would increase with rise in wages
Stationary state
Government interference
Capital accumulation is the basic cause of growth

1324. Which of the following had the approval of the classical economists (particularly
J.S. Mill) as an aid to development?
Subsidizing the poor
Imposition of temporary duties on imports to develop particular industries
Regulation of activities of the rising business class
Appropriating a part of the national product by the government for unproductive uses

1325. The classical theory of economic development is of relevance for the less
developed countries today because it lays emphasis on:
Need for favourable institutional and social initiatives
Extension of markets
Capital accumulation
All of the above

1326. According to the neo-classical theory, economic development is:

Gradual
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Harmonious
Cumulative
All of the above

1327. Unemployment created by some long-term change in demand or technological

conditions in an economy is known as:
Frictional unemployment
Cyclical un-employment
Structural unemployment
Disguised unemployment

1328. Arrange the following Rostow's stages of economic growth in their proper
sequence: I, Traditional society; II. Take-off stage; III. Age of mass consumption; IV.
Drive to maturity
I, II, IV, III
I, II, III, IV
II, I, IV, III
II, I, III, IV

1329. How many stages of economic growth were defined and analysed by Rostow
which all economies are supposed to pass through in the course of their development?
Seven
Five
Four
Three

1330. What causes development in terms of Rostow's theory?

Favourable propensities of people
Changing profile of leading sectors of the economy
A sharp rise in investment
All of the above

1331. Identify the country which was the first to move to the stage of high mass
consumption:
UK
USA
Germany
France

1332. The take-off stage is characterised by:

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Rise in the rate of productive investment from 5% to over 10% of national income
Development of one or more substantial manufacturing sectors with a high growth rate
Quick emergence of a political, social and institutional framework to enable expansion in
various fields
All of the above

1333. Under the 'big-push' strategy of development, large investments are to be directed
towards:
Agriculture
Industry
Power
Transport

1334. The basic logic behind the 'big-push' strategy of development is related to:
Internal economies
External economies
An optimum combination
Both (a) and (b)

1335. In the context of which region was the 'big push' strategy of development
formulated?
South Asia
South East Asia
Eastern Europe
East Africa

1336. The 'big-push' strategy of development was first advocated by:

Paul N-Rosenstein-Rodan
Simon Kuznets
W.A, Lewis
A.O.Hirshman

1337. The justification of the 'big-push' strategy, which involves concentrated efforts in
the form of investments on a large scale, is based on:
Indivisibilities of demand
Complimentarily of demand
Skill formulation
All of the above

1338. The capital-output ratio in developed countries is:

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Generally fluctuating
Fairly stable
Rigidly stationary
Gradually increasing

1339. The incremental capital-output ratio (ICOR) refers to the:

Ratio of investment to change in output
Ratio of capital stock to the total output
Marginal productivity of capital
Relationship between investment that is financed by the citizens of a country and the
income enjoyed by them

1340. The capital-output ratio is determined by:

Sectoral allocation of capital
Level of economic activity
Human and natural resources
All of the above

1341. Which growth model inspired the use of capital-output ratio for development
planning?
The Harrod-Domar model
Solow's mode
Kaldor's model
Feldman's model

1342. The capital-output ratio in a country during the different phases of growth:
Remains unchanged
Fluctuates widely
Changes within narrow limits
Shows a secular declining trend

1343. As an aid to development planning, much use is being made today of the input-
output analysis. Who first used it?
H. Liebenstein
W.W.Leontief
W.A.Lewis
A.O.Hirshman

1344. Which of the following statements is incorrect?

The essence of balanced growth is that the economy should advance at a steady rate with
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savings equal to investment
The thesis of development with unlimited supplies of labor was originally
formulated by R. Nurkse
The capital-output ratio is the inverse of the annual rate of return on productivity of
capital
E.D. Domar assumed that full employment of labor and capital occurred simulataneously

1345. Balanced growth implies:

Simultaneous development of a variety of activities, which support one another
Equal allocation of resources to different sectors
Different sectors growing at their natural rates of growth
Uniform rate of growth of output over time

1346. Development with unlimited supplies of labor hypothesis was originally

formulated by:
Gustav Ranis
W.A.Lewis
R. Nurkse
J.Schumpeter

1347. Which of the following is not correctly matched?

Big-push strategy: Paul N. Rosenstein- Rodan
Balanced growth theory: R. Nurkse
Development with unlimited supplies of labor: A-0. Hirschman
Critical minimum strategy: H. Uebenstein

1348. If the capital-output ratio is 4:1 and the annual growth rate of population is 2.5%,
what will be required rate of investment in the economy in order to achieve 3% growth
per annum in per capita income?
30%
20%
15%
12%

1349. With economic growth, the proportion of labor-force engaged in agriculture:

Increases
Decreases
Remains unaffected
Changes in an uncertain manner

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1350. A strategy of heavy industry is sometimes preferred for a developing economy
because it can:
Generate employment opportunities on a large scale
Provide a strong base for rapid industrialisation
Contain inflationary pressures
Meet deficits in balance of payments in the short-run

1351. In which sphere are shadow prices particularly useful?

Project evaluation and cost-benefit analyses
Calculation of surplus value
Sales policy of firms
Consumers equilibrium

1352. Identify the economist who first advocated a rolling plan for developing
countries?
J. Robinson
N.Kaldor
G.Myrdal
Paul A.Samuelson

1353. Which of the following is inconsistent with the Schumpeter's theory of

development?
The course of growth is continuous
The output expansion, initiated by the entrepreneue, increases in size with time, making it
cumulative
Growth takes place on account of entrepreneurs who, with the help of bank credit, invest
in innovative activity
Capitalism destroys itself by being successful through the erosion of its institutions, by
the hostility of its intellectuals and other elite classes, and also by the weakening of
entrepreneurial innovation

1354. According to the Schumpeter's model, the innovating entrepreneurs get the
necessary finance from:
Voluntary savings
Own resources
Bank credit
Government

1355. Which one of the following was given a central place by Schumpeter in his theory
of development?
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Capital accumulation
Role of the Government
Need for balanced growth
Role of innovations

1356. With which of the following kinds of dualism is H. Myint particularly associated
with?
Technological dualism
Geographical dualism
Financial dualism
Social dualism

1357. Who formulated the theory of circular and cumulative causation which explains
the perpetuation of underdevelopment through growing inequalities between developed
and the underdeveloped countries?
Lewis
Gunnar Myrdal
B. Higgins
J.H.Boeke

1358. The second stage of the theory of demographic transition is characterised by:
High birth-rate and high death rate
High birth-rate and falling death-rate
Low birth-rate and low death-rate
Falling birth-rate and falling death-rate

1359. Which of the following concepts, which are now extensively used in growth
economics, was first formulated by Keynes?
Marginal propensity to consume
Marginal propensity to save
Marginal efficiency of capital
All of the above

1360. According to Keynesian economics, saving and investment are brought into
equilibrium by variations in:
Income
Price
Consumption
Output

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1361. Two economists have been particularly associated with the formulation of
development with surplus labor hypothesis. One is R. Nurkse. Who is the other?
W.A. Lewis
James S. Duessenberry
W.W. Rostow
Simon Kuznets

1362. Perspective planning refers to:

Indicative planning
Annual planning
Structural planning
Long-term planning

1363. J.F. Meade pointed out three principles means of growth. Which of the following
is not on the list?
Growth of working population
Capital accumulation
Devaluation
Technical progress

1364. The Harrod-Domar model is one of the well known models of growth. Which of
the two authors of this model wrote earlier and in which year?
Domar in 1940
Harrood in 1939
Domar in 1946
Domar in 1948

1365. Which of the following models formed the basis of India's Second Five Year
Plan?
Harrod-Domar model
Raj-Sen model
Cambridge model
Mahalanobis model

1366. Which of the following models makes the assumption of constant saving-income
ratio?
Kaldor model
Leontief model
Harrod-Domar model
Joan Robinson model
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1367. Identify the model which is concerned with the 'golden age' equilibrium:
Kaldor model
Joan Robinson model
Keynesian model
Domar model

1368. Some models focus their attention on the maximum rate of growth at which the
economy can grow. Which of the following models is of this type?
Keynesian model
Hicks model
Von-Neumann model
Solow model

1369. Identify the model, which analyses the contribution of technological progress to
the overall growth rate:
Solow model
Kaldor model
Harrod model
Tobin model

1370. Which of the following; is a two-sector model?

Solow model
Harrod-Domar model
Joan Robinson mode
Keynesian model

1371. There is a model of inter-industrial relations where technological relations

between industries are assumed to remain constant. Which one is it?
Mahalanobis model
Feldman model
Leontief model
Lewis model

1372. India's First Five Year Plan was based on:

Mahalanobis model
Feldman model
Harrod-Domar model
Leontief model

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1373. Which of the following models uses three distinct concepts of stages of growth?
Ramsey model
Harrod model
Domar model
Lewis model

1374. Marx refers to the concept of organic composition of capital. Which of the
following ratios stands for this capital? Constant capital = C; Variable capital =
V;Surplus value = S
C/(V+S)
C/V
C/(C+V)
(C+V)/V

1375. Marx had given a concept of unemployment in the context of the capitalist system
which keeps wages down or prevents wages from rising even as demand for labor
increases. What is that concept called?
Surplus labor
Reserve army of labor
Under employment
Disguised unemployment

1376. Marx attributed the capitalist crisis to:

High rate of wages
Falling rate of profit
Inflationary pressures
Exploitation of labor

1377. According to R. Nurkse, the inducement to invest in the context of an

underdeveloped economy is limited mainly by the:
Lack of savings
Size of the market
Lack of investment opportunities
Low productivity of labor

Pricing Factors

1378. Every factor of production gets reward equal to

Value of average product
Value of marginal product

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Value of total product
Total revenue

1379. Under perfect competition, demand for a factor is its

MRP curve
ARP curve
TRP curve
TR – TC

1380. We should employ units of a factor to a point where

MR is negative
MP is equal to price of the factor
MP is positive
MP is rising

1381. If marginal product of labour rises because of new technology

Wages will rise
Wages will fall
Wages will be unaffected
May rise or fall

1382. One of the following is NOT a assumption of the marginal productivity theory
Units of factor are homogeneous
Mobility of factor
Low price of factor
Perfect competition

1383. Increasing the minimum wage for workers will

Sole the unemployment problem
Result in scarcity of workers
Cause a substitution of capital for labor
Decrease the MP of those workers

Pakistan National Income

1384. Pakistan's saving rate is:

5%
15%
25%
35%

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1385. Pakistan's per capita income at constant prices in rupees is:
Rs.32,000
62,000
92,000
9,000

1386. Largest sector of Pakistan economy is:

Agriculture
Industry
Transport
Services

1387. In the world population-wise Pakistan is:

3rd
4th
6th
8th

1388. Population growth rate in Pakistan is:

1%
2%
3%
4%

1389. Contribution of industrial sector in Pakistan's GDP is:

18%
28%
38%
48%

1390. According to Pakistan Economic Survey, per capita income of Pakistan in U.S.
dollars is:
400
800
1600
2000

1391. Which one is per capita income:

Per worker income
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Per person income
Per family income
Per industrial unit income

1392. Base year of Pakistan for national accounting is:

1979-1980
1989-1990
1999-2000
2009-2010

1393. Average growth rate of Pakistan's national income in past five years have been:
36%
26%
16%
6%

1394. Which of the following is an example of primary production:

Production of a computer
Farmer growing wheat
Housewife bakes a cake
Opening of a new school

1395. Which is most likely to cause a more even distribution of income:

An increase in indirect taxes
An increase in managers' salaries
An increase in progressive taxation
An increase in the rate of inflation

1396. If a country's growth rate was 5%, it means there would be 5% increase in:
Industrial output
Retail price index
Government revenue
Goods and service Produced

1397. Pakistan's per capita income is less than:

Japan
Korea
India
All of the above

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1398. Working population is percent of total population of Pakistan:
20%
30%
40%
50%

1399. Literacy rate in Pakistan is:

37%
47%
57%
67%

1400. It increases rate of capital formation:

Less saving
New technology
Rapid population growth
High interest rate

1401. It creates difficulties in measurement of national income of Pakistan:

Low literacy rate
Parliamentary form of govt
Huge imports
High taxes

1402. This step will increase saving in Pakistan:

Increase in taxes
Decrease in taxes
Increase in population
Increase imports

1403. This step will increase investment in Pakistan:

Increase in taxes
Increase in saving
Increase in population
Increase imports

1404. This step will increase investment in Pakistan:

Increase in taxes
Increase population
Increase interest rate
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Decrease interest rate

1405. This step will increase per capita income in Pakistan:

Increase in taxes
Increase in imports
Increase in investment
Increase in population

1406. Pakistan's:
GDP is greater than GNP
GDP is smaller than GNP
GDP is equal to GNP
There is no comparison of GDP and GNP

1407. It creates difficulties in measurement of national income of Pakistan:

Imperfect markets, large population
Large rural area, poor transport system
Illiteracy, underground economy
Underground economy, deficiency of natural resources

1408. The largest share in Pakistan's GNP is that of:

Services
Industry
Agriculture
Banking

1409. Commodity sector contributes to national income of Pakistan:

48%
58%
68%
78%

Nature and Scope of Economics

1410. Father of political economy

Adam Smith
Malthus
Marshall
Samuelson

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1411. He described economics as a science of material welfare:
Robbins
Marshall
Ricardo
Keynes

1412. Economic laws are:

Exact
Approximate
Brief
Definite

1413. Economic laws are:

Scientific
Moral
Natural
Unreal

1414. Economics is a science:

Spiritual
Social
Dismal
Moral

1415. Economic problems arise because of:

Greed
Scarcity
Dishonesty
Laziness

1416. Which statement relates to macroeconomics:

Oil prices are rising in Pakistan
Profit rate is high in textile industry
The firms try to make huge profits
The government has failed to control inflation

1417. Which statement is true?

Economics is a physical and normative science
Economics is a social and natural science
Economics is physical and positive science
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Economics is a social and normative science

1418. Ceteris paribus means:

Other things equal
All variables are independent
Enable economists to simplify reality
That no other assumptions are made

1419. In economics, assumptions:

Make economic theory useless
Mean other things equal
Enable economists to simplify reality
Used in micro and not in macroeconomist

1420. A positive statement:

Concerns 'what is'
Is always accurate
Deals with values and opinions
Cannot be tested in the real world

1421. Normative economics:

Deals solely with the facts
Is never studied in colleges
Involves opinions and interpretations
Is clearly preferable to positive economics

1422. Basic economic problem is:

Inflation
Unemployment
Poverty
Scarcity
Lack of money

1423. Microeconomics concentrates:

In only poor countries
In a country that uses resources inefficiently
In all countries of the world
When society produces unimportant or silly goods

1424. Microeconomics concentrates:

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On inflation
International economic relations
Individual economic units
Economic development of Pakistan

1425. Macroeconomic deals with:

How to buy groceries
Aggregate economic activity
Establishment of a new firm
Industrial activity

1426. Three basic economic problems:

What, how and for whom
Why, where, and when
What, which and how much
What, which, why

1427. Economics:
Is more important than mathematics
Is a social science
Should be made compulsory for every student
None of these

1428. Economic law:

Must be followed
Are hated by people
Show economic behavior of people Are unscientific

1429. Adam Smith was a:

Was a Saint
A modern economist
Good sports man
Classical economist

1430. Marshall in his definition of economics:

Uses the concept of material welfare
Dislikes wealth
Accuses Adam Smith
Praises Robbins

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1431. "Wealth of Nations":
Is another name for United Nations?
Is a book
Indicates total wealth of rich countries
Contains formulas to earn wealth

1432. Marshall wrote the book:

Introduction to economics
Principles of economics
Classical economics
Microeconomic theory

1433. Economic theory means:

Economic policy
Principles of economics
Descriptive economics
Economic facts

1434. Robbins in his definition:

Talks of scarcity of resources
Preaches moral values
Advises neutrality in economics
None of the above

1435. Market system means:

Socialism
Capitalism
A place where goods are traded
All of the above

1436. One or more persons living together and having a common budget is called:
A family
Organisation
Household
All commodities in a house

1437. "Wealth of Nations" was written in:

1976
1876
1776
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1676

1438. Economic principles are also called:

Economic law
Economic theory
Economic model
All of the above

1439. "Wealth of nations" was written by:

Adam Smith
Malthus
Marshall
Newton

1440. Select the correct statement:

Economics affects politics
Economics affects history
Geography affects economics
All of the above are true

1441. Professor Marshall thinks:

Economics studies national welfare
Economics studies personal welfare
Economics studies total welfare
Economics studies material welfare

1442. "Everyone should study economics":

Is a positive statement
Is a normative statement
Is a true statement
Is nonsense

1443. Utility and usefulness are:

Equal
Different
Similar
Unrelated

1444. Rotten eggs are:

Free good
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Economic good
Service
Wealth

1445. Scarcity means that:

Non-availability of goods
High price of goods
Nobody wants to consume it
The good is available but it is not free

1446. The basic economic problem common to all societies is:

Scarcity cannot be totally eliminated
What, how and for whom to produce
Equal distribution of wealth
The achievement of full employment

1447. Human wants are:

One thousand
Few
Innumerable
Countable

1448. Scarcity means:

Non-availability of goods
High price of goods
Less supply than demand
High profit of the firms

1449. Validity of economic theories can never be proved with 100 percent certainty,
because:
Ceteris paribus clause
Limited number of observation is possible
Some observation will be made in future which refute the theory
(b) and (c)

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Akhtar Saba khan

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