MCQOPTIONS

Explore topic-wise MCQs in Economics.

This section includes 16 Mcqs, each offering curated multiple-choice questions to sharpen your Economics knowledge and support exam preparation. Choose a topic below to get started.

1.	Which of the following statements regarding the loanable funds market is not true ?
A.	A decrease in a country’s net capital outflow shifts the demand for loanable funds to the left
B.	An increase in domestic investment shifts the demand for loanable funds to the right
C.	An increase in a country’s net capital outflow shifts the supply of loanable funds to the left
D.	An increase in a country’s net capital outflow raises its real interest rate
Answer» D. An increase in a country’s net capital outflow raises its real interest rate

2.	Which of the following statements regarding the market for foreign currency exchange is true ?
A.	An increase in Pakistan’s net capital outflow increase the supply of rupees and the rupees depreciate
B.	An increase in Pakistan’s net capital outflow increase the demand of rupees and the rupees appreciate
C.	An increase in Pakistan’s net capital outflow increase the demand of rupees and the rupees depreciate
D.	An increase in Pakistan’s net capital outflow increase the supply of rupees and the rupees appreciate
Answer» B. An increase in Pakistan’s net capital outflow increase the demand of rupees and the rupees appreciate

3.	Which of the following statements about trade policy is true ?
A.	A country’s trade policy has no impact on the size of its trade balance
B.	None of these answers
C.	A restrictive import quota decreases a country’s net exports
D.	A restrictive imports quota increases a country’s net exports
Answer» B. None of these answers

4.	Which of the following statement regarding the loanable funds market is true ?
A.	A decrease in the government budget deficit increase the real interest rate
B.	An increase in the government budget deficit shifts the supply of loanable funds to the right
C.	An increase in private saving shifts the supply of loanable funds to the left
D.	An increase in the government budget deficit shifts the supply of loanable funds to the left
Answer» E.

5.	Which of the following groups would not benefit from an EU imports quota on Japanese cars ?
A.	Eu consumers who buy electronics from Japan
B.	EU farmers who export grain
C.	employees of EU car manufacturers
D.	Shareholders of German carmaker BMW
Answer» C. employees of EU car manufacturers

6.	Which of the following groups would be most harmed by a UK government budget deficit ?
A.	Foreigners who wish to buy assets in the UK
B.	BAe Systems wishing to sell aircraft to Saudi Arabia
C.	UK residents wishing to buy foreign Produced cars
D.	Lenders of loanable funds
Answer» C. UK residents wishing to buy foreign Produced cars

7.	The Phrase “twin deficits” refers to ?
A.	A country’s trade deficit and its government budget deficit
B.	The fact that if a country has a trade deficit, its trading partners must also have trade deficits
C.	the equality of a country’s saving deficit and its investment deficit
D.	a country’s trade deficit and its net capital outflow deficit
Answer» B. The fact that if a country has a trade deficit, its trading partners must also have trade deficits

8.	If the EU imposes a quota on the importing of clothing produced in China, so reducing UK imports of clothing, which of the following is true regarding UK net exports ?
A.	Net exports will rise
B.	None of these answers
C.	Net exports will fall
D.	Net exports will remain unchanged
Answer» E.

9.	If the EU imposes a quota on the importing of clothing produced in China, so reducing UK imports of clothing Which of the following is true regarding the market for foreign currency exchange ?
A.	The demand for pounds decreases and the pound depreciates
B.	The Supply of pounds increases, and the pound depreciates
C.	The Supply of pounds decreases, and the pound appreciates
D.	The demand for Pounds increases and the pound appreciates
Answer» E.

10.	Capital flight ?
A.	decreases a country’s net exports and increases its long-run growth path
B.	increases a country’s net exports and increases its long-run growth path
C.	increases a country’s net exports and decreases its long-run growth path
D.	decreases a country’s net exports and decreases its long-run growth path
Answer» D. decreases a country’s net exports and decreases its long-run growth path

11.	An increasing in Europe’s taste for UK produced Hondas would cause the pound to ?
A.	depreciate and would increase UK net exports
B.	appreciate and would increase UK net exports
C.	depreciate and would decrease UK net exports
D.	appreciate, but the total value of UK net export stays the same
Answer» E.

12.	An increase in the Pakistan’s government budget deficit ?
A.	Increase Pakistan’s net exports and decrease Pakistan’s net capital outflow
B.	decreases Pakistan’s net exports and Pakistan’s net Capital outflow the Pakistan’s same amount
C.	Increase Pakistan’s net exports and Pakistan’s net capital outflow the same amount
D.	decreases Pakistan’s net exports and increase Pakistan’s net capital outflow
Answer» C. Increase Pakistan’s net exports and Pakistan’s net capital outflow the same amount

13.	An increase in the government budget deficit ?
A.	has no impact on the real interest rate and fails to crowed out investment
B.	decreases the real interest rate and crowds out investment
C.	None of these answers
D.	Increases the real interest rate and crowds out investment
Answer» E.

14.	An increase in Pakistan’s private saving ?
A.	increase Pakistan’s net exports and Pakistan’s net capital outflow the same amount
B.	Increase Pakistan’s net exports and decrease Pakistan’s net capital outflow
C.	decreases Pakistan’s net exports and Pakistan’s net capital outflow the same amount
D.	decrease Pakistan’s net exports and increase Pakistan’s net capital outflow
Answer» B. Increase Pakistan’s net exports and decrease Pakistan’s net capital outflow

15.	An export subsidy should have the opposite effect of ?
A.	A government budget deficit
B.	Capital flight
C.	An increase in Private saving
D.	A tariff
Answer» E.

16.	An example of a trade policy is ?
A.	A tariff on sugar
B.	All are examples of trade policy
C.	capital flight because it increases a country’s net exports
D.	an increase in the government budget deficit because it reduces a country’s net exports
Answer» B. All are examples of trade policy