MCQOPTIONS
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MCQOPTIONS
This section includes 38 Mcqs, each offering curated multiple-choice questions to sharpen your Economics Mcqs knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Credit risk refers to a bond’s ? |
| A. | Probability of default |
| B. | Price-earnings ratio |
| C. | dividend |
| D. | tax treatment |
| Answer» B. Price-earnings ratio | |
| 2. |
If Pakistani citizens become less concerned with the future and save less at each real interest rate ? |
| A. | Real interest rates rise and investment falls |
| B. | Real interest rates rise and investment rises |
| C. | Real interest rates fall and investment rises |
| D. | Real interest rates fall and investment falls |
| Answer» B. Real interest rates rise and investment rises | |
| 3. |
An increase in the budget surplus ? |
| A. | Shifts the supply of loanable funds to the left and increase the real interest rate |
| B. | Shift the supply of loanable funds to the right and reduces the real interest rate. |
| C. | Shifts the demand for loanable funds to the right and increases the real interest rate. |
| D. | Shifts the demand for loanable funds to the left and reduces the real interest rate |
| Answer» C. Shifts the demand for loanable funds to the right and increases the real interest rate. | |
| 4. |
An increase in the budget deficit will ? |
| A. | raise the real interest rate and decrease the quantity of loanable funds demanded for investment |
| B. | lower the real interest rate and increase the quantity of loaable funds demanded for investment |
| C. | raise the real interest rate and increase the quantity of loandable funds demanded for investment |
| D. | lower the real interest rate and decrease the quantity of loanable funds demanded for investment |
| Answer» B. lower the real interest rate and increase the quantity of loaable funds demanded for investment | |
| 5. |
An increase in the budget deficit is ? |
| A. | an increase in public saving |
| B. | a decrease in private saving |
| C. | None of these answers |
| D. | a decrease in public savings |
| Answer» E. | |
| 6. |
An increase in the price of a good along a stationary demand curve ? |
| A. | improves the material welfare of the buyers. |
| B. | decrease consumer surplus |
| C. | improves market efficiency. |
| D. | increase consumer surplus. |
| Answer» C. improves market efficiency. | |
| 7. |
If a market generates a side effect or externlity then free market solutions ? |
| A. | maximize producer surplus |
| B. | are efficient |
| C. | are inefficient |
| D. | are equitable |
| Answer» D. are equitable | |
| 8. |
Adam smith’s invisible hand concept suggests that a competitive market outcome ? |
| A. | maximizes total surplus |
| B. | generates equality among the members of society |
| C. | minimizes total surplus |
| D. | both maximizes total surplus and generates equality among the members of society |
| Answer» B. generates equality among the members of society | |
| 9. |
If buyers are rational and there is no market failure ? |
| A. | free market solutions are efficient |
| B. | free market solutions maximize total surplus |
| C. | all of these answers |
| D. | free market solutions are equitable |
| E. | free market solutions are efficient and free market solutions maximize total surplus |
| Answer» F. | |
| 10. |
If a benevolent social planner chooses to producer less than the equilibrium quantity of a good, then ? |
| A. | total surplus is maximized |
| B. | the value placed on the last unit production by buyers exceeds the cost of production. |
| C. | producer surplus is maximized |
| D. | the cost of production on the last unit produced exceeds the value placed on it by buyers. |
| E. | consumer surplus is maximized |
| Answer» C. producer surplus is maximized | |
| 11. |
Producer surplus is the area ? |
| A. | below the supply curve and above the price |
| B. | below the demand curve and above the supply curve |
| C. | below the demand curve and above the price |
| D. | above the demand curve and below the price |
| E. | above the supply curve and below the price |
| Answer» E. above the supply curve and below the price | |
| 12. |
If a producer has market power (can influence the price of the product in the market) then free market solutions ? |
| A. | are equitable. |
| B. | are efficient |
| C. | maximize consumer surplus |
| D. | are inefficient |
| Answer» E. | |
| 13. |
Suppose that the price of a new bicycle is Rs300 Natalie values a new bicycle at Rs 400 it costs Rs200 for the seller to produce the new bicycle. What is the value of total surplus if Natalie buys a new bike ? |
| A. | Rs500 |
| B. | Rs300 |
| C. | Rs200 |
| D. | Rs400 |
| Answer» C. Rs200 | |
| 14. |
The seller’s cost of production is ? |
| A. | none of these answers. |
| B. | the minimum amount the seller is willing to accept for a good |
| C. | the seller’s producer surplus |
| D. | the maximum amount the seller is willing to accept for a good |
| E. | the seller’s consumer surplus |
| Answer» C. the seller’s producer surplus | |
| 15. |
Which of the following is an example of equity finance ? |
| A. | Corporate bonds |
| B. | Company shares |
| C. | All of these answers are equity finance |
| D. | Government bonds |
| Answer» C. All of these answers are equity finance | |
| 16. |
An increase in the budget deficit that causes the government to increase its borrowing ? |
| A. | Shifts the supply of loanable funds to the right |
| B. | Shift the demand for loandbale funds to the left |
| C. | Shift the demand for loanable funds to the right |
| D. | Shift the supply of loanable funds to the left |
| Answer» E. | |
| 17. |
If the government increases investment tax credits and reduces taxes on the return to saving at the same time ? |
| A. | the real interest rate should fall |
| B. | the real interest rate should rise |
| C. | the impact on the real interest rate is indeterminate |
| D. | the real interest rate should not change |
| Answer» D. the real interest rate should not change | |
| 18. |
If Pakistani citizens become more thrifty we would expect ? |
| A. | The supply of loanable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to fall. |
| B. | The demand for loanable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to rise |
| C. | The demand for loandable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to fall |
| D. | The supply of loandable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to rise |
| Answer» B. The demand for loanable funds in the Pakistan loanable funds market to shift to the right and the real interest rate to rise | |
| 19. |
If the Supply of loanable funds is very inelastic (steep) Which policy would likely increase saving and investment the most ? |
| A. | a reduction in the budget deficit |
| B. | an increase in the budget deficit |
| C. | an investment tax credit |
| D. | None of the above |
| Answer» B. an increase in the budget deficit | |
| 20. |
If an increase in the budget deficit reduces national saving and investment we have witnessed a demonstration of ? |
| A. | intermediation |
| B. | equity finance |
| C. | crowding out |
| D. | the investment fund effect |
| Answer» D. the investment fund effect | |
| 21. |
Which of the following financial market securities would probably pay the highest interest rate ? |
| A. | A bond issued by a startup company |
| B. | A government bond issued by the government of France. |
| C. | A bond issued by a blue-chip company |
| D. | An investment funds with portfolio of corporate bonds issued by blue chip companies |
| Answer» B. A government bond issued by the government of France. | |
| 22. |
Jamil has ten pairs of football boots and saleem has none. A pair of football boots cost Rs50. to produce. If jamil values an additional pair of boots at RS100 and saleem values a pair of boots at Rs40, then the maxime ? |
| A. | efficiency Saleem should receive the glove |
| B. | Efficiency Jamil should receive the glove |
| C. | equity Jamil should receive the glove |
| D. | consumer surplus both should receive a glove |
| Answer» C. equity Jamil should receive the glove | |
| 23. |
If GDP = Rs1,000 Consumption = Rs 600 taxes = Rs 100, and government purchases = Rs200, how much is saving and investment ? |
| A. | Saving = Rs 300 investment = Rs 300 |
| B. | Saving = Rs 200 investment = Rs 100 |
| C. | Saving = Rs 100 investment = Rs 200 |
| D. | Saving = Rs 0 investment = Rs 0 |
| Answer» E. | |
| 24. |
A financial intermediary is a middleperson between ? |
| A. | buyers and sellers |
| B. | husbands and wives. |
| C. | borrowers and lenders. |
| D. | labor unions and firms |
| Answer» D. labor unions and firms | |
| 25. |
Medical care clearly enhance people’s lives. Therefore, we should consume medical care until ? |
| A. | everyone has as much as they would like |
| B. | the benefit buyers place on medical care is equal to the cost of producing it |
| C. | buyers receive no benefit from another unit of medical care. |
| D. | we must cut back on the consumption of other goods. |
| Answer» C. buyers receive no benefit from another unit of medical care. | |
| 26. |
If a market is efficient then_______? |
| A. | the market allocates buyers to the sellers who can produce the good at least cost |
| B. | all these answers |
| C. | none of these answers |
| D. | the quantity produced in the market maximizes the sum of consumer and producer surplus |
| E. | the market allocates output to the buyers that value it the most |
| Answer» C. none of these answers | |
| 27. |
In general, if a benevolent social planner wanted to maximize the total benefits received by buyers and sellers in a market, the planner should? |
| A. | choose a price below the market equilibrium price |
| B. | allow the market to seek equilibrium on its own. |
| C. | Choose any price the planner wants because the losses to the sellers (buyers) from any change in price are exactly offset by the gains to the buyers ( |
| D. | choose a price above the market equilibrium price |
| Answer» C. Choose any price the planner wants because the losses to the sellers (buyers) from any change in price are exactly offset by the gains to the buyers ( | |
| 28. |
An increase in the price of a good along a stationary supply curve______________? |
| A. | increase producer surplus |
| B. | does all the things describe in these answers |
| C. | decrease producer surplus |
| D. | improves market equity |
| Answer» B. does all the things describe in these answers | |
| 29. |
If a buyer’s willingness to pay for a new Honda is Rs20,000 and she is able to actually buy it for Rs18,000 her consumer surplus is ? |
| A. | Rs18,000 |
| B. | Rs20,000 |
| C. | Rs2,000 |
| D. | Rs0. |
| Answer» D. Rs0. | |
| 30. |
Consumer surplus is the area ? |
| A. | below the demand curve and above the price. |
| B. | above the supply curve and below the price. |
| C. | above the demand curve and below the price. |
| D. | below the supply curve and above the price. |
| E. | below the demand curve and above the supply curve |
| Answer» B. above the supply curve and below the price. | |
| 31. |
Suppose there are three identical vases available to be purchased. Buyer 1 is willing to pay Rs30 for one, buyer 2 is willing to pay Rs25 for one, and buyer 3 is willing to pay Rs20 for one. If the price is Rs25, how many vases will be sold and what is the value of consumer surplus in this market ? |
| A. | Three vases will be sold, and consumer surplus is Rs80 |
| B. | One vase will be sold, and consumer surplus is Rs5. |
| C. | One vase will be sold, and consumer surplus is Rs30 |
| D. | Three vases will be sold, and consumer surplus is Rs0. |
| E. | Two vases will be sold, and consumer surplus is Rs5. |
| Answer» F. | |
| 32. |
If a benevolent social planner chooses to produce more than the equilibrium quantity of a good, then ? |
| A. | the value placed on the last unit of production by buyers exceeds the cost of production |
| B. | the cost of production on the last unit produced exceeds the value placed on it by buyers. |
| C. | consumer surplus is maximized |
| D. | total surplus is maximized |
| E. | producer surplus is maximized |
| Answer» C. consumer surplus is maximized | |
| 33. |
A buyer’s willingness to pay is that buyer’s ? |
| A. | minimum amount they are willing to pay for a good |
| B. | producer surplus. |
| C. | consumer surplus |
| D. | maximum amount they are willing to pay for a good |
| E. | none of these answers |
| Answer» E. none of these answers | |
| 34. |
Total surplus is the area_______________? |
| A. | above the supply curve and below the price |
| B. | below the demand curve and above the price |
| C. | below the demand curve and above the supply curve |
| D. | below the supply curve and above the price |
| E. | above the demand curve and below the price |
| Answer» D. below the supply curve and above the price | |
| 35. |
If government spending exceeds tax collections? |
| A. | there is a budget deficit |
| B. | None of these answers |
| C. | There is a budget surplus |
| D. | private saving is positive |
| Answer» B. None of these answers | |
| 36. |
Which of the following sets of government policies is the most growth oriented ? |
| A. | Lower taxes on the returns to saving, provide investment tax credits and lower the deficit |
| B. | Increase tax on the returns to saving Provide investment tax credits and increase the deficit |
| C. | Increase tax on the returns to saving Provide investment tax credits and lower the deficit |
| D. | Lower taxes on the returns to saving Provide investment tax credits and increase the deficit |
| Answer» B. Increase tax on the returns to saving Provide investment tax credits and increase the deficit | |
| 37. |
National Saving (or just saving) is equal to ? |
| A. | none of these answers |
| B. | investment + consumption expenditures |
| C. | private saving + public saving |
| D. | GDP government purchases |
| Answer» D. GDP government purchases | |
| 38. |
If the public consumes Rs 100 billion less and the government purchases Rs100 billion more (other things unchanging), Which of the following statement is true ? |
| A. | Saving is unchanged |
| B. | There is an increased in saving and the economy should grow more quickly |
| C. | There is a decrease in saving and the economy should grow more slowly |
| D. | There is not enough information to determine what will happen to saving |
| Answer» B. There is an increased in saving and the economy should grow more quickly | |