Time: 90 min
If the equilibrium price of
bread is $2 and the government imposes a $1.50 price ceiling
on the price of bread:
► The demand for bread will decrease because suppliers will reduce their
supply.
► A surplus of bread will emerge.
► More bread will be produced to meet the increased demand.
► There will be a shortage of bread.
Assume leisure is a normal
good. If income effect equals substitution effect then a wage rate increase
will lead a person to:
► Increase hours of work.
► Decrease hours of work.
► Not change hours of work.
► None of the given options.
The following table shows a
firm’s Total Product of labor. What is the Marginal Product of labor between 20 and 30units of labor?
|
Table
|
|
|
Quantity
of Labor
|
Total
Product
|
|
0
|
0
|
|
10
|
100
|
|
20
|
230
|
|
30
|
340
|
|
40
|
410
|
|
50
|
460
|
► 340 units.
► 220 units.
► 11 units.
►
110 units.
The long-run average total cost
curve:
► Traces out the points on the lowest short-run average
total cost curve for each level of production.
► Is inversely related to the depth of the short-run marginal cost curve.
► Traces out the midpoints on an average of several short-run average total
cost curves.
► Is downward-sloping under decreasing returns to scale.
A monopolistically competitive
firm in the long run equilibrium:
► Will make negative profit.
► Will make zero profit.
► Will make positive profit.
► Any of the given are possible.
The market structure in which
strategic considerations are most important is:
► Monopolistic competition.
► Oligopoly.
► Pure competition.
► Pure monopoly.
The market structure in which
there is interdependence among firms is:
► Monopolistic competition.
► Oligopoly.
► Perfect competition.
► Monopoly.
Which one of the following
characteristics is common in monopolistic competition and oligopoly?
► Free entry and exit from the industry.
► Strategic behavior.
► Standardized products.
► Advertising.
The long run aggregate supply
curve will shift to the right if:
► The price level increases.
► Factors of production (such as labor and capital)
increase.
► Expenditures (such as consumption and net exports) increase.
► The prices of inputs used to produce goods and
services (such as wages and the price of oil) decrease.
An assumption of classical
economics is:
► Prices and wages are inflexible.
► Self-correction takes a long time.
► Supply creates its own demand.
► Investment and saving are seldom equal.
Real GDP is equal to:
► Nominal GDP – Inflation.
► Nominal GDP + Inflation.
► Nominal GDP/ Inflation.
► Inflation/ Nominal GDP.
If we compare Gross Domestic
Product (GDP) with Gross National Product (GNP) then:
► GNP = GDP – Net income from abroad.
► GNP = GDP + Net income from abroad.
► GNP = NNP – Net income from abroad.
► GNP = NNP + Net income from abroad.
Suppose an economy is at full
employment equilibrium in the classical model. What will be the long run
effect of an increase in government spending in this economy?
► Price level will increase.
► The aggregate demand curve will shift upward.
► Output level will remain constant.
► All of the given options.
Which of the following best
describes the ''Capital widening''?
► More capital per unit of
labour.
► More capital and more labour but with the same amount of
capital per unit of labour.
► Increasing the usage of
existing capital.
► Importing capital from the
developed world.
Double counting in national
income refers to:
► Counting a product more than once.
► Counting a product at the final stage of output process.
► Counting both as product and as
factor payment.
► Counting both as real goods and as money flow.
Expenditure of defense is an
item of:
► Public investment.
► Private consumption.
► Public consumption.
► Private investment.
The discounted value of the net
returns that the asset generates over a period of time plus the discounted
value of its disposal value at the end of the period minus the initial purchase
cost is known as:
► Future value.
► Net present value.
► Discounted value.
► Disposal value.
National defense is a good
example of:
► Public good.
► Inferior good.
► Giffen good.
► Private good.
Refer to the above figure, the
potential output in this economy is:
► $7,000 billion at a price level of 1.16.
► $7,000 billion at a price level of 1.12.
► $7,000 billion at a price level of 1.08.
► All of the given options.
The short run in macroeconomic
analysis is a period:
► In which wages and some other prices do not respond to
changes in economic conditions.
► In which full wage and price flexibility
and market adjustment have been achieved.
► Of less than 12 months.
► In which all macroeconomic variables are fixed.
Suppose investment rises by $50
billion at each price level. If the value of the multiplier is 1.5, what is the
amount of change in real GDP demanded at each price level?
► $50 billion.
►
$75 billion.
► $125 billion.
► $150 billion.
According to the classical
school, unemployment was responsive to changes in:
► M/P.
► P.
► M.
► Money wages.
The level of output produced
when the labor market is in equilibrium is called:
► Target output.
► Product market equilibrium output.
► Full-employment output.
► Natural output.
The relationship between
inflation and unemployment is usually that:
► Unemployment changes do not
directly lead to changes in inflation, but inflation changes may cause changes
in unemployment.
► As unemployment falls, nothing happens to inflation.
► As unemployment falls, inflation falls.
► As unemployment falls, inflation increases.
Most nations of the world
are:
► Closed economies.
► Open economies.
► Self sufficient.
► Non trading nations.
|
Disposable
Personal Income
$
|
Consumption
$
|
|
100
|
140
|
|
200
|
220
|
|
300
|
300
|
|
400
|
380
|
|
500
|
460
|
Refer to the above table, when
disposable personal income is $400, what is the amount of personal saving?
► −$40.
► −$20.
► $0.
►
$20.
What will happen if exchange
rate increases from $1 = Pak Rs. 80 to $1 = Pak Rs. 85?
► It will reduce exports of
Pakistan.
► It will increase exports of Pakistan.
► It will increase imports of Pakistan.
► Its imports and exports will remain unchanged.
Which of the following is the
cause of fluctuations in economic activity?
► An increase in aggregate demand.
► A decrease in aggregate demand.
► A decrease in short run aggregate supply.
► All of the given options.
In the endogenous growth model,
the assumption of ------------------ is more plausible.
► Increasing returns to capital.
► Decreasing returns to capital.
► Constant returns to capital.
► All of the given options.
In both the exogenous and
endogenous growth models, we assume constant returns to scale and, therefore,
diminishing returns to capital at the level of the individual firm.
The optimum tax rate in which
government revenue is maximized lies somewhere between:
► 0% and 1%.
► 0% and 50%.
► 50% and 100%.
► 0% and 100%.
The item which serves as a
medium of exchange is known as:
► Gold.
► Capital.
► Silver.
► Money.
Which of the following is
included in M2 but not in M1?
► Currency.
► Demand deposits.
► Time deposits.
► Debit cards.
Which of the following
statements is correct?
► A single bank cannot multiply deposits.
► A single bank can multiply deposits.
► Some banks can multiply deposits and others cannot.
► The banking system as a whole can multiply deposits.
LM curve shows the equilibrium
in:
► Money Market.
► Goods Market.
► Labor Market.
► Financial Market.
What will happen to LM curve if
the central bank increased the supply of real money balances?
► It would become steeper.
► It would become flatter.
► It would shift upward.
► It would shift downward.
Which of the following is (are)
the characteristic(s) of low income countries as compared to high income
countries?
I. Lower rates of
population growth.
II.Greater income inequality.
III. A
large proportion of the labor force in agriculture.
IV. Higher
rates of unemployment.
► I only.
► I and II.
► II and IV.
► II, III and IV.
Which of the following statements
is TRUE about the agriculture sector in low income countries?
► The agricultural sector has been decreasing in size because its productive
workers prefer to migrate to urban areas.
► The agricultural sector is by far the largest producer and the most
productive sector in low-income countries.
► Although the agricultural sector is the largest employer, labor’s
productivity in this sector is very low.
► The agricultural sector has been increasing in size and
in terms of labor productivity as rural farmers increasingly start to mechanize.
Suppose a consumer buys two
goods X and Y. The demand for X is elastic, then a rise in the price of X will
cause:
► Total spending on good Y to rise.
► Total spending on good Y to fall.
► Total spending on good Y to remain unchanged.
► An indeterminate effect on total spending on good Y.
For which of the following
good, the substitution effect of a lowered price is counteracting by the income
effect?
► For an inferior good.
► A substitute good.
► For an independent good.
► For a normal good.
Suppose that 90 units of output
are produced by using 15 units of labor. Which of the following is TRUE in this
context?
► The marginal product of labor is 6.
► The total product of labor is 1/6.
► The average product of labor is 6.
► None of the given options.
What will happen if current
output is more than the profit-maximizing output?
► The next unit produced will increase profit.
► The next unit produced will decrease revenue more than it
increases cost.
► The next unit produced will decrease cost more than it increases revenue.
► The next unit produced will increase revenue without increasing cost.
Suppose the price of coke
increases, what will happen to the demand for pepsi?
► The demand curve for pepsi shifts leftward.
► The demand curve for pepsi shifts rightward.
► The supply curve of pepsi shifts leftward.
► The supply curve of pepsi shifts rightward.
Slope and elasticity of demand
have
► A direct relation.
► An inverse relationship.
► No relation between slope and elasticity.
► None of the given options.
When the slope of a demand
curve is infinity, elasticity of demand is
► Zero elastic.
► Unit elastic.
► Less elastic.
► More elastic.
The reduction in the value of a
capital good due to the wear and tear caused during production is called as:
► Devaluation.
► Cost of capital.
► Depreciation.
► Return to capital.
According to Keynes inflation
and unemployment are:
► Opposite side of same coin.
► Positively related.
► Having no relation.
► None of the given options.
Government budget deficit is
equal to:
► Private sector resource deficit + Current account deficit.
► Current account deficit - Private sector resource
deficit.
► Private sector resource deficit - Current account deficit.
► Current account deficit / Private sector resource deficit.
Money demand decreases when
interest rate:
► Increases.
► Decreases.
► Remains the same.
► All of the given options.
Question No:
49 ( M - 3 )
What are the assumptions of
exogenous growth theory?
Question No:
50 ( M - 3 )
Differentiate between
international trade and international finance.
Question No:
51 ( M - 5 )
A.What is the importance of
current account? How we can calculate current account deficit?
B. How we can reduce current
account deficit?
Question No:
52 ( M - 5 )
Consider the following
table. Find out the GNP and NNP from this information.
|
Items
|
Amount (billion rupees)
|
|
Personal
consumption expenditures
|
458
|
|
Gross
domestic private investment
|
169
|
|
Government
expenditure on goods and services
|
78
|
|
Gross
domestic public investment
|
27
|
|
Exports
surplus
|
15
|
|
Net
foreign investment
|
17
|
|
Depreciation
cost
|
28
|
Question No:
53 ( M - 5 )
“People hold money for
speculation purposes”. Discuss.
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