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Preface:
This book is primarily designed for students and teachers. This book contains more than 5500 ques-
tions from the core areas of ECONOMICS. The questions are grouped chapter-wise. There are to-
tal 5500+ MCQ with answers. This reference book provides a single source for multiple choice
questions and answers in ECONOMICS. It is intended for students as well as for developers and
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The strategy used in this book is the same as that which mothers and grandmothers have been
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of kids ready to fall for it! They excite the kids, but the real nutrition lies not in the noodles but in
the soup. The problems given in this book are like those noodles/cherries while solving all these
problems are nutritious soup. Now it is your choice to drink the nutritious soups or not!!!.
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Contents
1 Micro Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2 Macro Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
3 Aggregate Supply, Unemployment, Inflation . . . . . . . . . . . . 119
4 Agriculture & Irrigation System of Pakistan . . . . . . . . . . . . 125
5 Alternative Theories Of Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
6 Think like an economist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137
7 Applied Microeconomics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141
8 Asymmetric Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
9 Average and total Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149
10 Payments, Aid and Foreign Investment . . . . . . . . . . . . . . . . . . 151

11 Basic of economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155
12 Budget Deficits, Trade Balance . . . . . . . . . . . . . . . . . . . . . . . . . . 191
13 Capital Formation, Investment Choice . . . . . . . . . . . . . . . . . . . 195

14 Characteristics and Institutions of Developing Countries 197
15 Comparative GDP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
16 Consumer Theory vs. Real Consumers . . . . . . . . . . . . . . . . . . 205
17 Costs, Supply And Perfect Competition . . . . . . . . . . . . . . . . . 209
18 Development Planning and Policymaking: The State, And

the Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 215
19 Economic Development in Historical Perspective . . . . . . . 219
NARAYAN CHANGDER
20 Economic Problems of Developing Countries . . . . . . . . . . . 221
21 Education, Health, And Human Capital . . . . . . . . . . . . . . . . . 225
22 Elasticity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227
23 Employment, Migration, And Urbanization . . . . . . . . . . . . . . 231
24 Entrepreneurship, Organization, And Innovation . . . . . . . . 235
25 ExchangeRate Adjustments And The Balance of Payments

237
26 ExchangeRate Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241
27 ExchangeRate Systems And Currency Crises . . . . . . . . . . . . 247

28 Externality & Internality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
29 Fiscal And Monetary Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 253
30 Foreign Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257
31 Foundations Of Modern Trade Theory . . . . . . . . . . . . . . . . . . 263
32 Global Economic Development . . . . . . . . . . . . . . . . . . . . . . . . . . . 269

33 Human Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 271
34 Income Inequality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277
35 Industrial Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285
36 Inflation & Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287

37 International Factor Movements And Multinational Corpo-
rations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
38 Introduction To economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
39 Labour Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303
40 Long Term Economic Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309
41 Macroeconomic Issues and Analysis . . . . . . . . . . . . . . . . . . . . . 313
42 Macroeconomic Policy Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
43 Marketing In A Global Economy . . . . . . . . . . . . . . . . . . . . . . . . . 325
44 Markets, Eﬀiciency And The Public Interest . . . . . . . . . . . . 341
45 Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 345
46 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355
47 National Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377
48 Equilibrium Of National Income . . . . . . . . . . . . . . . . . . . . . . . . . . 385

49 Money and Value of Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 387
50 Bank System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 391
51 Central Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397
52 Public Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399
53 International and National Trade . . . . . . . . . . . . . . . . . . . . . . . . 407
54 Balance of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413
55 Economy of Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417
56 Pakistan National Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419
57 Economic Development and Planning . . . . . . . . . . . . . . . . . . . 423
58 Transport Communication and Human Resources . . . . . . 427

59 Nature and Scope of Economics . . . . . . . . . . . . . . . . . . . . . . . . . 429
60 Utility and Consumer Behavior . . . . . . . . . . . . . . . . . . . . . . . . . . . 433

61 Human and Capital Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . 437
62 International Economic Organisations . . . . . . . . . . . . . . . . . . . 439
NARAYAN CHANGDER
63 Market Equilibrium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 449
64 Production and Production Function . . . . . . . . . . . . . . . . . . . . 451
65 Scale Of Production and Laws of Returns . . . . . . . . . . . . . . . 453

66 Market and Revenue Curves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 455
67 Wages Rent Interest and Profit . . . . . . . . . . . . . . . . . . . . . . . . . . 457

68 Great Economists and Their Work . . . . . . . . . . . . . . . . . . . . . . . 459
69 Money Banking and International Trade . . . . . . . . . . . . . . . . 467
70 Business and Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475
71 National Income Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483
72 Economic Growth and Development . . . . . . . . . . . . . . . . . . . . . 491

73 Economics and Commercial Geography . . . . . . . . . . . . . . . . . . 501
74 World Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 505
75 Monetary Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509

76 Monetary, Fiscal And Incomes Policy, And Inflation . . . . 513
77 Money, Interest Rates And Output . . . . . . . . . . . . . . . . . . . . . . 517
78 Monopoly & Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525
79 Monopoly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 529
80 National Income And The Standard Of Living . . . . . . . . . . 535
81 Natural Resources and the Environment: Toward Sustain-
able Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 539
82 NonTariff Trade Barriers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543

83 Oligopoly . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 549
84 Population And Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . 553
85 Poverty, Malnutrition, And Income Inequality . . . . . . . . . . . 557

86 Prices, Wages & Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 559
87 Production Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 563
88 Profit Maximizing Under Perfect Competition And Monopoly

567
89 Public Goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 575
90 Regional Trading Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . 579

91 Risks And Diversification & Eﬀicient Market Hypothesis 583
92 Roots of Modern Macroeconomics . . . . . . . . . . . . . . . . . . . . . . 587
93 Rural Poverty and Agricultural Transformation . . . . . . . . . 591
94 Sources of Comparative Advantage . . . . . . . . . . . . . . . . . . . . . . 595

95 Stabilization, Adjustment, Reform and Privatization . . . 601
96 Stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 605
97 Supply and Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 609
98 SupplySide Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 617
99 Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 619
100 Tariffs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 623

101 Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 629
1
102 The Aggregate Demand Aggregate Supply Model . . . . . . 635

103 The Balance of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 639
104 The External Debt and Financial Crises . . . . . . . . . . . . . . . . . 643
105 The International Economy And Globalization . . . . . . . . . . 647
106 The Meaning and Measurement of Economic Development

655
107 The National Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 659
108 The Phillips Curve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 665
109 The Philosophy of Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 669

110 Theories of Economic Development . . . . . . . . . . . . . . . . . . . . . 677
111 Trade Policies For the Developing Nations . . . . . . . . . . . . . . 681
112 Trade Regulations And Industrial Policies . . . . . . . . . . . . . . . 687
113 World Economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 691

NARAYAN CHANGDER
1. Micro Economics
1. Which of the following is a worker? 5. The of a a decision is what is given

(A) Land up when the alternative choice is not se-
(B) Labor lected.
(C) Capital (A) opportunity cost
(D) Entrepreneurship (B) trade off
(C) none of the above
2. In this type of economy, the government
(D) none of above
places control on businesses, but the indi-
vidual decides what to make. 6. What is micro economics?
(A) Mixed (A) A measure of how much one eco-
(B) Market nomic variable responds to changes in an-
(C) Command other economic variable.
(D) Traditional (B) The claim that, other things equal, the
quantity supplied of a good rises when the
3. Using the pizza store graphic, what mar- price of the good rises
ket structure best fits the pizza industry? (C) The increase in output that arises
(A) Monopoly from an additional unit of input
(B) Oligopoly (D) The study of how households and
(C) Perfect competition firms make decisions and how they inter-
(D) Monopolistic competition act in markets
4. What is an economic problem? 7. What is the “Labor Force”?

(A) Problem of making optimum utiliza- (A) All people participating or available
tion of resouces for work
(B) Making choice in the presence of (B) A team of communist super heroes
scarcity (C) The amount of product a consumer
(C) Problem of coice of techenique of pro- wants to buy
duction (D) The Big picture of world view of eco-
(D) Problem of allocation of resources nomics
1. B 2. A 3. D 4. B 5. A 6. D 7. A 8. B
4 Chapter 1. Micro Economics
8. Globalization has led to a rapid increase in 13. Which of the following is the best defini-
which of the following? tion of COSTS?
(A) water stress (A) The total amount of income a busi-
(B) international trade ness makes from selling products or ser-
vices
(C) population density
(B) The amount of money a business has
(D) birth rate
left over after paying for materials.
9. when people want or need more of (C) The total amount of money a business
NARAYAN CHANGDER
something than there is. spends.
(A) Scarcity (D) none of above
(B) Profit
14. Repaying a loan
(C) Opportunity Cost
(A) Filing for bankruptcy
(D) Tax
(B) Liability Payment
10. Jake enjoys having either a chicken bolog- (C) Credit Worthiness
nese or prawn aglio olio for his dinner. A (D) Satisfying a loan
drop in the price of prawn increases the
marginal utility per dollar of prawn and 15. Trade offs result in giving up something of
causes Jake to buy more prawn and less value to get what is most.
chicken to restore maximum utility. This (A) wanted
best illustrates the
(B) not wanted
(A) Law of diminishing marginal utility
(C) none of the above.
(B) Income effect
(D) none of above
(C) Substitution effect
(D) Law of increasing total utility 16. If there people who want the goods
available, there is a
11. Which of the following assumption is not (A) aren’t many, high demand
true in respect of PPC?
(B) many, low demand
(A) All the resources are fixed and are
(C) aren’t many, low demand
transferable
(D) none of above
(B) There is fullar utilization of resources
17. How do supply and demand influence mar-
(C) Advanced techenique of production is ket price?
used (A) Supply determines market price be-
(D) Only two goods can be produced in an cause the seller sets the price.
economy (B) The price is determined by the highest
price consumers are willing to pay.
12. Father of economics?
(C) The price is determined by the lowest
(A) Adam smith
price producers are willing to accept.
(B) Charles Babbage
(D) The market clearing price is where
(C) Martin Luther King quantity demanded is equal to quantity
(D) none of above supplied.
9. A 10. C 11. C 12. A 13. C 14. D 15. A 16. C 17. D 18. B

5
18. Which factor related to a functioning legal

system compromises development?
(A) Inflation
(B) Proporty rights
(C) Unemployment
(D) None of the above
19. Nike if the cost of rubber gets cheaper

(A) Demand; Increase
(A) enter; rise
(B) Demand; Decrease
(B) enter; fall
(C) Supply; Increase
(C) leave; rise
(D) Supply; Decrease
(D) leave; fall
20. Disadvantages for this type of business in- (E) profit from the market; remain the
clude: owner pays for everything, hard to same.
get money to start from the bank, owner
might lack skills & unlimited liability. 24. If the value of marginal utility is neither
zero nor negative, then how will total util-
(A) Sole Proprietorship ity change?
(B) Partnership (A) Total utility will be maximum
(C) Corporation (B) Total utility will decrease
(D) Franchise (C) Total utility do not change
(D) Total utility will increase
21. Which of the following is not a business
practice outlawed by the competition and 25. study of how people (including com-
consumer act? panies/countries) make choices on buy-
(A) Monopolisation ing, selling, using, and distributing
goods/services.
(B) Price Discrimination
(A) Economics
(C) Deregulation
(B) Consumer Science
(D) Exclusive Dealing
(C) Opportunity Costs
22. A company in Mexico ships fruit to the (D) none of above
United State for sale without paying any
tariffs (trade taxes). This is an example 26. Comfort Engaging with Strangers
of which of the following? (A) The ability to use computers for ba-
(A) free trade sic tasks, such as developing documents,
sending emails and searching the internet
(B) vertical trade for information.
(C) subsistence agriculture (B) Abilities an individual develops that
(D) comparative advantage helps him/her succeed. Personal capabili-
ties are developed by a combination of ob-
23. In the long run we would expect firms to servation, training and hands-on trial and
the market and the market price to error.
19. C 20. A 21. C 22. A 23. B 24. D 25. A 26. D

(C) Understanding how individuals and (C) a. Specialization increases the de-
businesses earn money and what they mand for a product.
spend money on. Understanding impor- (D) a. Specialized workers are generally
tant financial terms. Learning how to cre- more highly educated.
ate a budget.
(D) The ability to interact in a friendly and 31. Which is NOT a characteristic of a
effective way with people you don’t know. monopoly?
The ability to seem welcoming and easy to (A) Seller sets the market price
NARAYAN CHANGDER
talk to, even with people who are different (B) Entry into the market is easy
in age, appearance or background. (C) Firm sells a unique product
(D) One seller
27. Money exchanged between an individual
and a store for a good or service. 32. Shortest lifespan
(A) Revenue (A) Sole Proprietorship
(B) Wages (B) Partnership
(C) Rent (C) Corporation
(D) Income (D) none of above
28. Which is a Fundamental Question of Eco- 33. This is a set of EXTERNAL motivators
nomics? that are designed to INFLUENCE people’s
(A) When should a product be produced? choices.
(A) Purchasing Power
(B) What product or service should be (B) Protectionism
produced? (C) Incentive Policies
(C) What product should I buy? (D) none of above
(D) Why should I produce this good or 34. High levels of mercury found in canned
service? tuna. Market: canned tuna
29. a second supply curve has been introduced (A) Demand Up
into the market because producers are will- (B) Demand Down
ing to supply more or less at every price (C) Supply Up
due to a change in the market place other (D) Supply Down
than price
(A) Change in Demand or Shift 35. Opportunity Cost is
(B) Change in Demand or Movement (A) The alternatives you didn’t choose
(C) Change in Supply or Shift (B) The second best alternative
(D) Change in Supply or Movement (C) The negative aspects of an action
(D) The choice you made
(E) IDK
36. Billy was trying to make a choice between
30. In what way does specialization increase
a new game for his Wii or a new skate-
productivity?
board. He decided to use his money to buy
(A) Specialization reduces scarcity a new game for his Wii. He had to give
(B) a. Specialization reduces the cost of up the skateboard for the Wii game. The
production. skateboard was his
27. A 28. B 29. C 30. B 31. B 32. A 33. C 34. B 35. B 36. C
7
(A) scarcity 41. Which of these is not the IMPORTANCE of

(B) benefit secondary sector?
(C) opportunity cost (A) contributing exports
(D) none of above (B) contribution to employment
(C) contribution to the GDP
37. At a price of $4, this firm will produce (D) contributing money
items in the run.
42. factors of production
(A) land, labor, capital, entrepreneurship
(B) land, labor, money, entrepreneurship
(C) lumber, hammers, nails, paint

(D) limited resources and unlimited re-
sources
(A) 8; long
(B) 9; short 43. in increasing returns to factor total produc-
(C) 9; long tion
(D) 11; short (A) increases
(E) 8; short (B) increases with diminishing rate
(C) decreases
38. A major problem faced by both producers
(D) increases with increasing rate
and consumers in market economics is
(A) lack of freedom 44. According to the graph, what is the quan-
(B) lack of efficiency tity at equilibrium?
(C) lack of profit motive
(D) lack of economic security
39. Determined by lower opportunity cost

(A) absolute advantage
(B) comparative advantage
(C) cost benefit advantage
(D) opportunity advantage
40. This happens when DEMAND exceeds

SUPPLY at a given price point! There is
NOT ENOUGH product or service in the
market.
(A) Shortage (A) 14
(B) Surplus (B) 400
(C) Market (C) 600
(D) none of above (D) 1200
37. E 38. D 39. B 40. B 41. D 42. A 43. D 44. C 45. B 46. A
45. The provides public goods and ser- 50. Where does India rank in the world in
vices. terms of industrial production?
(A) people (A) India is one of the world’s leading in-
(B) government dustrial countries.
(C) none of the above (B) Industry is growing in India, but it is
(D) none of above not comparable to agriculture.
(C) India was once an industrial leader,
46. Any point inside PPC represents:- but has fallen behind in recent years.
NARAYAN CHANGDER
(A) Underutilized resources (D) none of above
(B) fully utilized resources
(C) Unattainable of resources 51. Definition of Marginal Utility
(D) all of the above (A) the satisfaction from consumption
(B) to total satisfaction from consuming a
47. In the short run, if a firm produces the product
level of output at which marginal revenue
(C) the extra satisfaction from the last
is equal to marginal cost but price is less
unit consumed
than average total cost, the firm will:
(D) the extra consumption from last unit
(A) always shut down production
consumed
(B) expand output to lower its average
fixed cost 52. What is supply?
(C) continue to operate if price is greater (A) The amount of goods available
than its average variable cost (B) The increase in output that arises
(D) increase out put to increase revenue from an additional unit of input
48. If the corn industry is perfectly competi- (C) The cost of producing one more unit
tive and the market price for corn is $3 of a good
per bushel. How many bushels will Farmer (D) The financial gain made in a transac-
Kardashian sell at $3.50 per bushel? tion
(A) more than she would at a price of $3
53. What is the definition of a need?
per bushel
(B) some, but fewer than she would at $3 (A) something you would like to have
per bushel (B) something you have to have to live
(C) just as many as she would at $3 per (C) when the item that you want is hard
bushel to find
(D) none (D) the amount of people who want to
(E) more info is needed about the prices purchase an item
of other farmers
54. An unemployment rate of between 4% to
49. Which is NOT a comparative advantage In- 6% is evidence of a healthy economy. It
dia has in IT? means that the economy is at
(A) Workers can be paid lower wages (A) lowest employment
(B) Training is extensive (B) maximum employment
(C) Large population (C) capacity
(D) Most already speak english (D) stability
47. C 48. D 49. C 50. A 51. C 52. A 53. B 54. B

9
55. Mary Ann runs a car dealership selling (B) stability

only government produced cars. At the (C) productivity
end of the month Mary Ann must give all (D) carelessness
of the money she made back to the gov-
ernment. 61. What is the fundamental problem of every
(A) Traditional society?
(A) labor costs
(B) Free Market
(B) scarcity
(C) Mixed
(C) economic interdependence
(D) Command
(D) market fluctuation
56. When’s the best time to go to the den- 62. A product market is in equilibrium:
tist?
(A) when there is a surplus of the product.
(A) 4:00 pm
(B) Tooth-hurtie (B) when there is a shortage of the prod-
(C) three-thirsty five uct.
(D) none of above (C) when consumers want to buy more of
the product than producers offer for sale.
57. If bananas are scarce this time of year,
which statement would be true? (D) where the demand and supply curves
(A) the supply of bananas is low intersect.
(B) the demand for bananas is low
63. What term refers to the market clearing
(C) the stores have too many bananas price or where quantity supplied and quan-
(D) the supply of bananas is high tity demanded meet?
(A) Elasticity
58. A gov’t. or group imposed price control or
limit on how low a price can be charged for (B) Surplus
a product, good, commodity, or service (C) Shortage
(A) Price floor (D) Equilibrium
(B) Price ceiling 64. The country of North Korea has a dictator
(C) Equilibrium that makes almost all of the economic de-
(D) Price control cisions. What type of economy is this?
(A) Traditional
59. Money that the government collects from (B) Market
individuals and businesses to pay for pub- (C) Command
lic goods and services
(D) Centrally Planned
(A) Rand
(B) Tax 65. Productive efficiency is about
(C) dollar (A) ensuring the cost of production are as
low as they can be
(D) serving
(B) using the most up-to-date technologi-
60. Technological progress, encouraging inno- cal method
vation, and and American work ethic are (C) making as much profit as possible
all ways to increase what? (D) All of the above
(A) ingenuity (E) None of the above
55. D 56. B 57. A 58. A 59. B 60. C 61. B 62. D 63. D 64. C 65. A 66. A
66. Which of the following is a cost of MER? 72. In a command economy, who holds power
(A) Greater work intensity over the economy?
(B) Lower inflation (A) The people
(C) Increased living standards (B) The government
(D) Productivity growth (C) Beyonce
(D) The traditions of your ancesetors
67. Which type of business organization has
the advantage of limited liability but the 73. This tax is put on goods imported to the
NARAYAN CHANGDER
disadvantage of less control over business U.S. from other countries
decisions? (A) Income tax
(A) perfect competition (B) Medicare
(B) partnership (C) Tariff
(C) sole proprietorship (D) Import Exercise Tax
(D) corporation
74. Why do markets exist?
68. This type of economy discourages new (A) to allow people to exchange goods
ideas and new ways of doing things. and services
(A) traditional (B) to allow people to earn money
(B) market (C) to increase profits for business own-
(C) mixed ers
(D) command (D) to concentrate the productive efforts
of individuals
69. What is the definition of human capital?
(A) the people who make up the work 75. Which are the top 3 largest economies in
force the world?
(B) taxes collected from a country’s work- (A) Denmark, Chile, Mexico
ers (B) Chad, Serbia, Afghanistan
(C) money paid to workers for producing (C) US, China, Japan
goods (D) South Africa, Greenland, Peru
(D) none of above
76. Assets that are not already pledged as a
70. change in price causes large change in de- guarantee to repay another loan
mand (A) unencumbered
(A) Elasticity (B) lien
(B) Income Effect (C) shares
(C) Substitutes (D) securities
(D) Complements
(E) IDK 77. What is an Oligopoly
(A) small number of corporations running
71. A decrease in the price of a good will a market
(A) increase supply. (B) one corporations running a market
(B) decrease supply. (C) multiple number of corporations run-
(C) increase quantity supplied. ning a market
(D) decrease quantity supplied. (D) a person owning no corporations
67. D 68. A 69. A 70. A 71. D 72. B 73. C 74. A 75. C 76. A 77. A 78. A
78. B 78. C 78. D
11
78. Factors of production are this will have on the Japanese car manu-
(A) land facturers?
(B) labour (A) The input costs of Japanese made
(C) capital cars to the US will increase
(D) entreprenuers (B) The quantity supply of Japanese
made cars sold in the US will decrease
79. What is the Law of Demand? (C) The input costs of Japanese made
(A) A situation in which quantity supplied cars in the US will decrease
is greater than quantity demanded (D) The quantity demand of Japanese
(B) Where consumers buy more of a good made cars sold in the US will decrease
when its price decreases and less when
83. Which scenario is an example of a
its price increases
monopoly?
(C) The cost of producing one more unit
(A) A local water company is the sole
of a good.
provider of water for a small town.
(D) The point at which the costs of pro-
(B) A dry cleaner specializes in environ-
ducing a product equal the revenue made
mentally friendly cleaning methods.
from selling the product.
(C) A farmer produces green beans for
80. U.S. coins and currency are accepted by sale at a farmer’s market.
people because (D) A small number of cereal companies
(A) there is a gold reserve as a guarantee produce most of the cereal on the market.
to depositors
84. Robin has been working throughout the
(B) of the confidence in the U.S. govern-
week to get ready for the store opening on
ment
Friday. The tiles for the entryway weren’t
(C) the government will reimburse depos- delivered on time, but Robin took the com-
itors for all funds saved in a bank pany van and picked up the tiles at the ven-
(D) currency is not used in the United dor’s warehouse. When the utility didn’t
States connect the electricity on Monday, Robin
stayed on hold for an hour before finding
81. Scarcity causes economic problem. Which a supervisor who sent a utility tech right
of the following statements is true about away.The type of entrepreneurial behav-
scarcity? ior that Robin has been exhibiting over the
(A) Scarcity is our inability to satisfy all of past week can best be described as:
our wants. (A) independence
(B) Scarcity problem arises because our (B) optimism
wants are greater than resources avail-
(C) determination
able.
(D) computer literacy
(C) The poor and the rich both face
scarcity. 85. Type of market structure with only one
(D) All of the above. seller who dominates the market?
(A) Perfect/Pure Competition
82. The United States imports many cars from
Japan. Suppose that the price of mate- (B) Monopolistic Competition
rial(s) that Japan uses in making cars de- (C) Oligopoly
clines. What is the INITIAL (first) effect (D) Monopoly
79. B 80. B 81. D 82. C 83. A 84. C 85. D

86. What is the equilibrium price? 91. In Economics, the term capital is used to
describe
(A) the amount of money invested.
(B) the amount of money grained from
profits.
(C) the main City in a country which pro-
duces the most goods.
(D) the amount of created resources.
NARAYAN CHANGDER
92. Describes a given change in price that
causes a relatively smaller change in quan-
tity demanded
(A) $3 (A) demand elasticity
(B) $4 (B) microeconomics
(C) $5 (C) inelastic
(D) $6 (D) diminishing marginal utility
(E) income effect
87. Production Possibility curve can be
(A) Concave 93. Total Utility will fall if marginal utility is
(B) Convex ?
(C) Straight (A) equal
(D) All of the above can be possible (B) negative
(C) positive
88. Total Utility is at maximum when marginal (D) decreassing
utility equals
(A) 0 94. This is when quantity DEMANDED is lower
(B) 1 than quantity SUPPLIED.
(C) 2 (A) Price Floor
(D) 3 (B) Price Ceiling
(C) Surplus
89. What type of economic system allows the (D) Shortage
government to decide what to produce,
how to produce and for whom to pro- 95. John Keyes believes in
duce? (A) Everyone is equal
(A) Market (B) Government intervention
(B) Mixed (C) Consumers own goods and services
(C) Command (D) Money is everything
(D) Traditional
96. In the circular flow model, what do indi-
90. What is a traditional economic system? viduals SELL to businesses
(A) People own their own assets (A) Services
(B) People are rich (B) Money
(C) People are self-sufficient (C) Resources
(D) Country owns the resources (D) Goods
86. C 87. D 88. A 89. C 90. C 91. D 92. C 93. B 94. C 95. B 96. C 97. A
13
97. An entrepreneur is 101. The price of a t-shirt is set by how much

(A) someone who is willing to take a risk the businesses are willing to pay.
to begin a new business (A) Market
(B) someone who is always successful in (B) Traditional
whatever he or she attempts (C) Mixed
(C) a businessman who relies on money (D) Command
from the government to finance a new
business 102. An investment security that includes
(D) none of above many different stocks purchased and held
together.
98. What will be the shape of a PPC when (A) Individual Retirement Account
Marginal Opportunity cost along the PPC
(B) IRA
decreases?
(C) Mutual Fund
(A) Straight Line
(D) Stocks
(B) Concave to the Origin
(C) Convex to the Origin 103. A group of buyer and sellers of a partic-
(D) Both B & C ular good or service
(A) Supply
99. Markets like automobiles, cell phones, ca-
ble TV, and internet providers are exam- (B) Demand
ples of which market structure? (C) Agency
(A) Monopoly (D) Market
(B) Oligopoly
104. According to the circular flow model
(C) Perfect competition where can you buy and sell a haircut?
(D) Monopolistic competition (A) The Resource Market
100. James has found a great deal. A lo- (B) The Product Market
cal gardening service owner wants to re- (C) The Labor Market
tire right away. She offers to sell James (D) The Barber Shop
her truck, her equipment and all her cus-
tomer relationships for $100,000, but she 105. Google controls 67% of the web search
demands an answer within 36 hours or market. The company has grown and
she’ll make the offer to someone else. branched off into email, online maps, GPS
The annual revenue from these customers tracking systems, online data storage and
is $250,000 at prices higher than James mobile phones. There are competitors like
charges. James estimates the value of Microsoft and Yahoo, but they own just
the used truck and equipment is over 18% and 11% of the market, respec-
$100,000. What type of financing should tively. Which market structure(s) best fit
James seek? Google? (There are two possible answers,
(A) online credit pick both)
(B) angel investors (A) Perfect competition
(C) bank credit (B) Monopolistic competition
(D) none - the numbers indicate this will (C) Oligopoly
not be a good deal (D) Monopoly
98. C 99. B 100. A 101. A 102. C 103. D 104. B 105. C 105. D 106. D
106. What is marginal utility? (C) Debt owed to someone that is paid in
(A) It is the additional utility derived from monthly payments
additional unit of consumption (D) failure to repay a loan
(B) It is the change in total utility due to
the change in unit of consumption 112. Something produced that is long-lasting,
and used to make other things that we
(C) None of the two
value
(D) Both the above
(A) Scarcity of capital
NARAYAN CHANGDER
107. If the number of hours you studied for (B) Scarcity of labor
Economics 201 increases your confusion of
(C) Scarcity of labor
concepts, you can say that studying have
a (D) none of above
(A) neutral correlation.
113. A business partnership has who
(B) no correlation. share the risks and the profits.
(C) negative correlation. (A) One owner
(D) random correlation.
(B) No more than three owners
(E) positive correlation.
(C) Two or more owners
108. All of the following are factors of produc- (D) Five or more owners
tion except
(A) Land 114. What is a need?
(B) Money (A) Nothing
(C) Labor (B) Something you have to have to live
(D) Chicken (C) Something you would like to have
(D) Ice cream
109. Which of the statement is correct ?
(A) TU can be positive and negative. 115. What is the Equilibrium Quantity?
(B) MU always falls.
(C) TU always rises.
(D) TU always falls.
110. What is consumer equilibrium?

(A) A point of equal satisfaction
(B) A point of difference satisfaction
(C) A point of saturation
(D) A point of maximum satisfaction
111. What Is Line Of Credit?

(A) Funds contributed by investors to a (A) 50
business
(B) 60
(B) A loan that provides the borrower a
maximum amount of money he/she can (C) 70
borrow (D) 80
107. C 108. B 108. D 109. B 110. D 111. B 112. A 113. C 114. B 115. C 116. B
15
116. Which of the following best describes Mi- 121. What is the economic problem?
croeconomics? (A) scarcity
(A) The study of overall production and (B) opportunity cost
consumption. (C) needs and wants
(B) The study of behavior of individual (D) productive resources
agents and markets.
122. Inflation is
(C) The study of household centered eco-
nomic systems. (A) A general increase in prices and fall
in the purchasing value of money.
(D) The study of small industries and com-
(B) A situation in which unlimited wants
panies.
exceed the limited resources available to
117. the term of market economy in which the fulfill those wants.
productive resources are privately owned (C) The financial gain made in a transac-
(A) capitalism tion.
(B) mixed economy (D) A moderate but sustained downturn
in the economy. Recessions are part of
(C) command economy
the economy’s normal cycle of ups and
(D) none of them downs.
118. Total amount of satisfaction I get from 123. If resources are perfectly adaptable to
consuming G or S or doing an activity making two different products
(A) Total Utility (A) the PPC for these products will for a
(B) Marginal Utility straight line
(C) Utility (B) the PPC for these products will be con-
(D) Negative Utility cave from the origin
(C) the PPC for these products will be ei-
119. Selling ther horizontal or vertical
(A) How a business moves a specific cus- (D) then both products have increasing
tomer to buy their service or offering marginal opportunity costs
(B) Shares of ownership in a company. 124. Measure of responsiveness that shows
(C) Costs that vary somewhat based on how a dependent variable responds to a
the number of units you sell. change in an independent variable
(D) All people or companies associated (A) demand
with an enterprise; can be internal or ex- (B) marginal utility
ternal. (C) demand schedule
120. What is the definition of Gross Domestic (D) elasticity
Product (GDP)? (E) substitutes
(A) the amount collected in taxes from 125. The study of economics is primarily con-
the people of a country in a given year cerned with:
(B) the value of all the products a country (A) demonstrating that capitalistic
buys from overseas nations in a year economies are superior to socialistic
(C) the total value of goods and services economies.
a country produces in a year (B) determining the most equitable distri-
(D) none of above bution of society’s output.
117. A 118. A 119. A 120. C 121. A 122. A 123. A 124. D 125. D

(C) keeping private businesses from los- 130. The first four Apples Hassan consumes
ing money. have total utility of 15, 27, 37, and 45
(D) choices/decisions that are made due respectively. What is the marginal utility
to lack of resources of the 4th Apple?
(A) 124 units of utility
126. Time human beings spend producing
(B) 45 units of utility
goods and services
(C) 11.25 units of utility
(A) Scarcity of labor
(D) 8 units of utility
NARAYAN CHANGDER
(B) Scarcity of capital
(C) Scarcity of land 131. Which two countries would be likely to
(D) none of above trade with one another?
(A) Two countries that are located far
127. Type of business owned by multiple away from each other.
shareholders?
(B) Two countries that both have about
(A) Sole Proprietorship the same population.
(B) Partnership (C) Two countries whose people both
(C) Corporation speak the same language.
(D) Monopoly (D) Two countries that each specialize in
producing different goods.
128. The main function of the Federal Reserve
System in the U.S. economy is to 132. Type of business that earns the most
(A) establish monetary policy profit?
(B) establish fiscal policy (A) Sole Proprietorship
(C) establish trade policy (B) Partnership
(D) balance the federal budget (C) Corporation
(D) Monopoly
129. The arrows 1 to 2 in this diagram repre-
sent which aspect of the economy? 133. Based on the following table, Canada has
the absolute advantage in
Hours needed for 1 unit Amount procuded in 24 hours

Cheese Jam Cheese Jam
Canada 6 2 4 12
USA 3 4 8 6
(A) Cheese and USA has an absolute ad-

vantage in Jam.
(B) neither good and USA has an absolute
advantage in Jam.
(C) Jam and USA has an absolute advan-
tage in Cheese.
(A) Productive Resources (D) (cannot be answered due to lack
(B) Goods and Services of information).
(C) Rent, Wages, Interest, Profit (E) neither good and USA has an absolute
(D) Revenue advantage in Cheese.
126. A 127. C 128. A 129. B 130. D 131. D 132. C 133. C 134. C

17
134. Which country is a major producer of syn-

thetic rubber?
(A) Brazil
(B) Saudi Arabia
(C) Taiwan
(D) United States
135. A legal decision requiring a person or

company to pay another person or com-
pany.
(A) Lien
(B) Judgement
What is the total tax revenue?
(C) Debt (A) $57.5
(D) Legal Filings (B) $650
(C) $20
136. Based on the following table, what is the (D) $750
opportunity cost of producing a unit of Jam
for Canada? (E) $35.5
139. John Doe decided to quit a job that paid

Cheese Jam Cheese Jam $25,000 a year to enroll in a certification
Canada 6 2 4 12 course at a local community college. The
USA 3 4 8 6
tuition for the one year course is $8000.
What is the John’s opportunity cost?
(A) 4/3 Cheese (A) $25000
(B) 1/3 Cheese (B) $8000
(C) $33000
(C) 6 Cheese
(D) There is no opportunity cost because
(D) 1 Cheese he will make more after completing the
(E) 3 Cheese certification.
140. Money received by an individual from a

137. what do we call someone who took a risk
business in exchange for their labor
and start a business?
(A) Income
(A) manager
(B) Wages
(B) entrepreneurship
(C) Revenue
(C) entrepreneur (D) Proft
(D) enterprise
141. What is a high price a signal for?
138. Refer to the following diagram. The tax (A) government to enact price controls
imposed is indicated by the neon-green (B) producers to offer less & consumers
vertical line. to buy more
135. B 136. B 137. C 138. D 139. C 140. A 141. C 142. C

(C) producers to offer more & consumers (C) sole proprietorship

to buy less (D) monopoly
(D) suppliers to reduce sales until prices
peak 146. Ramon decided to open his own soft-
ware business. He borrowed money from
142. If my government is selling me bread for a bank to buy computers and office equip-
$5 a loaf, and I have no choice but to buy ment, and he hired one assistant. What
that type of bread, I live in a econ- is one DISADVANTAGE of Ramon’s type of
omy. business organization?
NARAYAN CHANGDER
(A) Traditional (A) limited liability
(B) Market (B) ease of start-up
(C) Command (C) flexibility
(D) Mixed (D) unlimited liability
143. (5) The nation of Namibia is working 147. SSEMI 2 b: How are equilibrium price
hard to eliminate poverty in the country. and quantity determined in most markets
The government has taken ownership of in the U.S. Economy?
the factors of production, and now every- (A) government sets the price
one is guaranteed a job. Which of the fol-
(B) consumer and producer interaction
lowing most likely represents the type of
economic system found in Namibia? (C) by a point on a production possibili-
ties curve
(A) Market
(D) by the law of demand
(B) Command
(C) Mixed 148. A well-known dirt bike manufacturer an-
(D) Traditional nounces that it will discontinue producing
its most popular model of dirt bike. What
144. Perfect competition means is likely to happen to the price of this
(A) every firm will make a loss in the long model of dirt bike?
run (A) The price will fall because no one will
(B) profit are perfectly competitive buy the dirt bike in the future.
(C) abnormal profit will continue until the (B) As supplies shrink, some people will
industry reaches closure be willing to pay more for it.
(D) supernormal profit are competed (C) Price will stay the same since the
away manufacturer will change its mind.
(D) The price will fall since people will buy
145. Susan, Phil, Robert, and Martina are all
parts of the bike to make it themselves.
lawyers. After several years of working
for big firms, they decide to pull their re- 149. SSEMI 4 c: Company X sells a good
sources and start their own law practice where there is a lot of competition. Com-
together. The four of them will make all panies enter and leave the market often.
their business decisions together and will Company X stays in business because they
share all of the profits and financial risk. constantly use advertising to make their
Their new law firm is a product seem different. In which market
(A) partnership structure does Company X operate?
(B) corporation (A) Pure Competition
143. B 144. D 145. A 146. D 147. B 148. B 149. B

19
(B) Monopolistic Competition

(C) Oligopoly
(D) Monopoly
150. Benefits in Islamic Economy

(A) Monopoly
(B) Profit
(C) Avoid riba
(D) Inefficiency
154. (A) Shut Down
(B) Stay open and take a loss
151. List the four market structures in order
from LEAST competitive to MOST competi- (C) Normal Profit
tive. (D) Positive Economic Profit
(A) Oligopoly, Monopoly, Perfect Compe- 155. Which type of economic system takes
tition, Monopolistic Competition care of those in poverty?
(B) Perfect Competition, Oligopoly, (A) Capitalism
Monopoly, Monopolistic Competition (B) Free Enterprise
(C) Command
(C) Monopoly, Oligopoly, Monopolistic
Competition, Perfect Competition (D) Free Market
(D) Monopoly, Monopolistic Competition, 156. All of the following are characteristics of
Perfect Competition, Oligopoly a free market economy EXCEPT
(A) centrally planned economy
152. Given change in price that causes a pro- (B) private ownership of property and re-
portional change in quantity demanded sources
(C) competition between business
(A) elastic
(D) desire to make a profit
(B) microeconomics
157. is setting aside income for future
(C) unit elastic use.
(D) change in quantity demanded (A) checking
(E) substitution effect (B) spending
(C) savings
153. A point above the PPF curve represents (D) penalty
(A) efficiency 158. Which market has no competition?

(A) perfect competition
(B) inefficiency
(B) oligopoly
(C) Unemployment (C) monopoly
(D) Unattainable (D) monopolistic competition
150. C 151. C 152. C 153. D 154. D 155. C 156. A 157. C 158. C 159. D 160. D
159. Which of the following is an advantage (D) collusion

of sole proprietorships: (E) monopoly
(A) Limited liability
(B) Unlimited financial power 165. What is an increase in the currency sup-
(C) Dual taxation ply RELATIVE to the population? This in-
crease results in RISING PRICES for goods
(D) Quick decision making
and services.
160. Which is an example of a renewable re- (A) Bounded rationality
NARAYAN CHANGDER
source?
(B) Gross Domestic Product
(A) Timber
(C) Inflation
(B) Windpower
(C) Water (D) none of above
(D) All of the above
166. When quantity supplied and quantity de-
161. Postal service manded is equal
(A) Natural monopoly (A) surplus
(B) Government monopoly (B) shortage
(C) Technological monopoly (C) equilibrium
(D) Geographic monopoly (D) law of demand
162. Which of the following explains the law
167. When someone or a business chooses to
of supply?
specialize or produce certain items.
(A) When price goes up, quantity de-
manded goes up. (A) Entrepreneur
(B) When price goes down, quantity de- (B) Economics
manded goes down. (C) Voluntary Exchange
(C) When price goes up, quantity supplied (D) Specialization
goes up.
(D) When price goes down, quantity sup- 168. People start making more money
plied goes down.
163. A market structure in which one firm has (B) Demand; Decrease
a monopoly because of its location is a (C) Supply; Increase
(A) natural monopoly.
(B) geographic monopoly.
(C) technological monopoly. 169. Economics is a
(D) government monopoly. (A) Science
164. Market situation in which a large number (B) Social science
of well-informed and independent buyers (C) Arts
and sellers exchange identical products
(D) none of above
(B) non-price competition 170. Based on the following table, what is the
(C) oligopoly opportunity cost of moving from D to E?
161. B 162. C 163. B 164. A 165. C 166. C 167. D 168. A 169. B 170. B
21
Situation Capital Goods Consumer Goods (D) The ability to pursue a task without
A 0 2000 being told to by someone else. Individ-
B 150 1750 uals who are self-motivated can find the
C 300 1500 strength to start and finish a task without
D 550 1050 giving up.
E 700 500
F 950 0 174. the making of gain in business activity
for the benefit of the owners of the busi-
ness, money left over after all expenses
(A) 550 capital goods are paid
(B) 550 consumer goods (A) Profit
(C) 1050 consumer goods (B) Supply
(D) 150 capital goods (C) Wages
(D) Income
171. A person who takes a risk to start a busi-
ness. Ex. Bill Gates, founder of Microsoft (E) IDK
(A) cashier 175. Which situation might cause the price of
(B) entrepreneur a piece of sugar candy to increase?
(C) capitalist (A) A disease destroys much of the
(D) proprietor world’s supply of sugar.
(B) New machinery brings down the cost
172. A person or a business with a strong of manufacturing candy.
credit score and the financial resources (C) A good sugar substitute for making
that make it like they will be able to pay candy is found.
any loan.
(D) Many new producers start selling
(A) collateral candy.
(B) dividend
176. Sanitation and water are part of ser-
(C) credit-worthy
vice
(D) net income
(A) private
173. Self-motivation (B) public
(A) The ability to find solutions to difficult (C) personal
or complex issues. The process of work- (D) community
ing through the details of a challenge or
crisis–often under pressure–to reach a 177. How many types of economic systems do
solution. we talk about in this class?
(B) An individual’s self-commitment to (A) 3
overcome obstacles to achieve long-term (B) 5
goals. The ability to keep pursuing your (C) 4
dream despite challenges and defeats. (D) 2
Perseverance, resilience and backbone.
(C) The ability to pursue what you think is 178. The curve derived by joining all bundles
right or necessary to do despite tempta- which give equal level of satisfaction is
tions to quit. Self-command, persistence called
and resolve. (A) Budget Line
171. B 172. C 173. D 174. A 175. A 176. B 177. C 178. B

(B) Indifference Curve (B) Graph B

(C) Budget Set (C) Graph A
(D) Price Line (D) Graph C
179. A constant opportunity cost graphs as a 183. A point inside a production possibilities
(A) curved line curve best illustrates:
(B) vertical line (A) unemployment.
(C) horizontal line
NARAYAN CHANGDER
(B) the efficient use of resources.
(D) straight line (C) the use of best-available technology.
180. Which completes the definition best? (D) unlimited wants.
“Economics is the study of how
184. Based on the following table, Canada has
(A) corporations maximize share prices
a comparative advantage in Hours
(B) money is circulated in the economy needed for 1 unitAmount procuded in 24
(C) scarce resources are allocated hours Cheese Jam Cheese Jam Canada 6
(D) nations trade goods and services 2 4 12 USA 3 4 8 6 (adsbygoogle = win-
dow.adsbygoogle || []).push();
181. There is widespread death of people due
(A) neither and USA has a comparative
to Indo-Pak war. How will the PPC of In-
advantage in Cheese.
dia be affected?
(A) PPC will not be affected (B) Cheese and USA has a comparative
advantage in Jam.
(B) Rightward shift of PPC
(C) Jam and USA has a comparative ad-
(C) Leftward shift of PPC
vantage in Cheese.
(D) neither and USA has a comparative
182. Which of the following four graph (A, B, advantage in Jam.
C, D) represents the market for Winter
Coats in the middle of Canadian Summer? 185. Which of the following product will have
the most inelastic demand?
(A) University education
(B) Automobiles
(C) Oranges and bananas
(D) Penicillin antibiotics
186. Increase in price of bread from $2.50 to

$3.20 will increase the supply from 800 to
1250 units. Using midpoint (arc) method,
what is the elasticity of supply?
(A) 1.55
(B) 0.55
(C) 2.00
(D) 2.31
(A) Graph D (E) 1.79
179. D 180. C 181. C 182. B 183. A 184. C 185. D 186. E 187. A

23
187. Based on the following table, what is the 192. the change in demand for a product
opportunity cost of producing a unit of Jam caused by the impact of a change in its
for USA? price affecting the spending power of the
consumer
Cheese Jam Cheese Jam
Canada 6 2 4 12
(A) Demand Schedule
USA 3 4 8 6
(B) Quantity Demanded
(A) 3/4 Cheese (C) Income Effect

(B) 1/3 Cheese (D) Wages Effect
(C) 4 Cheese (E) IDK
(D) 4/3 Cheese
(E) 1/3 Cheese 193. if demand is perfectly elastic than de-
mand curve would be
188. Graph showing the quantity demanded
at every price (A) horizontal
(A) demand curve (B) vertical
(B) change in demand (C) rectangular hyperbola
(C) Law of Demand
(D) none of these
(D) complements
(E) market demand curve
194. What is the effect on PPC if there is
189. This is WHERE buyers and sellers MEET growth of resouces ?
to to exchange goods & services (A) PPC shifts towards left hand side
(A) Shortage
(B) PPC shifts towards right hand side
(B) Export
(C) Market (C) There is movement on the same PPC
(D) none of above (D) No effect on PPC
190. According to MU theory, consumers max-

195. All of the following are examples of pri-
imize satisfaction when they
vate financial institutions except
(A) can get much more of one good than
another. (A) Member One Credit Union
(B) can get credit and spend beyond their (B) Carter Bank & Trust
income levels. (C) BB&T
(C) equalize marginal utility per dollar of
(D) Long & Foster Property Management
all goods consumed.
(D) are completely satisfied with all
196. When the U.S. government purchases a
goods consumed.
submarine from a company, the govern-
191. What is opportunity cost? ment has made a major transaction in the
(A) The cost of taking every chance. (A) factor market
(B) The cost of what you give up when one
(B) public market
alternative is chosen.
(C) The cost of starting a business. (C) product market
(D) The cost of taking every opportunity. (D) foreign exchange market
188. A 189. C 190. C 191. B 192. C 193. A 194. B 195. D 196. C 197. B
197. Which of the following is not one of the (B) Inverse

three basic questions all economic systems (C) Direct
must answer?
(D) Reverse
(A) How will goods and services be pro-
duced?
203. Products where the use of one product
(B) How long will it take to produce the increases the use of another
goods and services?
(A) demand curve
(C) What goods and services will be pro-
NARAYAN CHANGDER
duced? (B) change in demand
(D) none of above (C) Law of Demand
(D) complements
198. What is the definition of a want?
(A) the good things about a choice (E) market demand curve
(B) the amount of item that a store has in
204. The short run is a time period
stock
(C) what you must pay for an item (A) which is less than 3 months.
(D) something you would like to have (B) which is very short.
(C) in which there is at least 1 fixed factor.
199. In my country, the government makes all
the economic decisions.
(D) in which all factors are variable.
(A) Traditional
(B) Command 205. Money paid by a businesses in exchange
(C) Market for an individual’s labor
(D) Mixed (A) wages
200. Economics is the study of how things are (B) revenue
and (C) income
(A) ran / done (D) profit
(B) bought / sold
(C) Neither 206. Which of the following is an example of
(D) service / goods a natural resource?
(A) a computer
201. I finally have the $159.99 to buy new
Airpods to fit in with my friends. Although, (B) a police officer
when I go to checkout, it’s $171!? Why is (C) sewing machine
that? (D) cotton
(A) Sales tax
(B) Income tax 207. An obligation you have to pay someone
(C) Social security else money.
(D) Tariffs (A) asset
(B) commissions
202. The relationship between price and quan-
tity in DEMAND is (C) lien
(A) Indirect (D) liability
198. D 199. B 200. B 201. A 202. B 203. D 204. C 205. A 206. D 207. D 208. C
25
208. Which is an essential characteristic of a 214. The U.S. is trading salmon to Peru in ex-
command economic system? change for anchovies. Based on relative
(A) Workers must join workers’ associa- opportunity costs
tions/unions. (A) The U.S. must have the comparative
(B) There are a wide variety of consumer advantage in salmon
goods available. (B) The U.S. must have absolute advan-
(C) Government officials plan the nation’s tage in salmon
economy. (C) The U.S. must have comparative ad-
(D) Business owners are encouraged to vantage in anchovies
make profits. (D) The U.S. must have absolute advan-
tage in anchovies
209. sanitation and water are part of ser-
vice 215. Which of the following is a need?
(A) community (A) Ice cream
(B) private (B) Houses
(C) public (C) Basketballs
(D) organized (D) Candy!!! (I want candy)
210. What is used to show the relationship 216. Which market structure has the least
between people and businesses? competition?
(A) Supply & Demand (A) Perfect/Pure Competition
(B) Production Possibilities (B) Monopolistic Competition
(C) Circular Flow (C) Oligopoly
(D) 3 Economic Questions (D) Monopoly
211. pollution is caused when electricity is
217. The principle that consumers tend to buy
generated by
less of a good or service when its price in-
(A) air creases, all else held equal, is called
(B) dust (A) a. the law of supply
(C) coal (B) a. the law of demand
(D) water (C) a. the law of increasing cost
212. The demand curve for a perfectly compet- (D) a. the law of maximum satisfaction
itive firm is:
218. Payment for the use of the land is
(A) perfectly inelastic.
(A) rent
(B) perfectly elastic.
(B) labor
(C) downward sloping.
(C) wages
(D) relatively but not perfectly elastic.
(D) none of above
213. which of these is a primary sector?
219. Kenneth needed a new shirt for the foot-
(A) fishing
ball game this Friday. He went to the mall
(B) vehicle and purchased a shirt from H&M. Which
(C) teaching market does Kenneth receive his wages to
(D) producing purchase the shirt?
209. C 210. C 211. C 212. B 213. A 214. A 215. B 216. D 217. B 218. A 219. B
(A) product market 224. Which market structure has the least sell-
(B) factor market ers?
(C) firms (A) Perfect/Pure Competition
(D) household (B) Monopolistic Competition
(C) Oligopoly
220. Which one drama/movie below related (D) Monopoly
with Central Planned Economy?
(A) 225. If the City of Calgary has a problem
NARAYAN CHANGDER
with overuse of public swimming pools,
(B)
the best solution to protect infrastructure
(C) is to
(D) (A) increase the maintenance budget.
(E) (B) decrease the management costs.
(F) (C) reduce the quality of pools and facili-
(G) ties.
(H) (D) increase the usage fees.
221. If the marginal cost of producing a cer- 226. Which of the following statement is
tain level of toys is greater than the about microeconomics?
marginal benefit (A) The growth increased by 5.0 percent
(A) resources have been over-allocated last year
to toy production (B) Inflation is about to increased 3.6 per-
(B) resources have been under-allocated cent this year
toward toy production (C) The factors of production is limited re-
(C) children are sad but adults are happy sources
(D) The general price level increased by 4
percent last year
(D) there will too many clowns to
many clowns 227. Economic Rent
222. An individual or company that owns (A) the extra amount earned
shares in a company (B) extra amount taken away
(A) lien holder (C) the side amount made after a given
amount of time
(B) brokerage
(D) getting money from yo baby mamma
(C) angel investors
(D) shareholder 228. Semi-Variable Costs
(A) All people or companies associated
223. Papa Johns offer a better pizza deal that with an enterprise; can be internal or ex-
Pizza Hut this weekWhat type of determi- ternal.
nant is this?
(B) A company that provides a good or
(A) Substitute service to another company.
(B) Complimentary (C) Shares of ownership in a company.
(C) Price Expectation (D) Costs that vary somewhat based on
(D) # of Sellers the number of units you sell.
220. C 220. D 221. A 222. D 223. A 224. D 225. D 226. C 227. A 227. D 228. D
229. C
27
229. Economics is necessary for 234. The price elasticity of supply is concerned
(A) Human resources management with
(B) Any society (A) change in supply due to change in
(C) Management market prices.
(D) none of above (B) change in supply due to producer’s
ability to fulfill the market demand.
230. Which term describes a business that has
(C) change in price due to change in mar-
operations all over the world?
ket demand.
(A) trade bloc
(D) change in supply due to change in
(B) common market
market competition.
(C) micro-enterprise
(E) change in price due to change in quan-
(D) multinational corporation.
tity demanded.
231. Why does every economic decision in-
volve an opportunity cost? 235. a government payment or benefit to pro-
ducer of specific products
(A) scarce resources and unlimited
wants (A) Microeconomics
(B) few decisions have marginal benefit (B) Subsidy
(C) prices are always too high (C) Substitute
(D) trade-offs are impossible (D) Compliment
232. In a capitalist society (E) IDK
(A) The government owns all the re-
236. How does indifference curve slope?
sources
(B) The government make all the deci- (A) It slope right ward to the down
sions (B) It slope upward to the right
(C) Decisions are made by the ungrateful (C) It is horizontal to x axis
cat (D) It slope down ward to the right
(D) All resources are privately owned
237. What type of economy do most countries
233. Assume that a profit-maximizing, per- in the world have?
fectly competitive firm has economic
losses in the short run. If the firm con- (A) Market economy
tinues to produce and sell its goods, then (B) Command economy
which of the following must be true? (C) Traditional economy
(A) The firm is covering all of its fixed and (D) Mixed economy
variable costs of production.
(B) The firm is covering all of its fixed 238. Market structure in which a few very
costs but not all of its variable costs of pro- large sellers dominate the industry
duction. (A) perfect competition
(C) The firm must have raised the price of (B) non-price competition
its goods in order to minimize its losses.
(C) oligopoly
(D) The firm is covering all of its variable
costs but not all of its fixed costs of pro- (D) collusion
duction. (E) monopoly
230. D 231. A 232. D 233. D 234. A 235. B 236. D 237. D 238. C 239. B
239. In a economic system, the govern- (C) innovations

ment owns resources and controls produc- (D) intellectual property
tion, prices, and wages.
(A) traditional 245. Heather is seeking to start a business.
(B) command She is seeking to be in control of all as-
(C) market pects of the business. What is a poten-
tial risk of the business organization she
(D) mixed
should set up?
NARAYAN CHANGDER
240. This is basically the ideas that go into the (A) a. Heather would risk nothing.
process of creating a good or providing a
(B) a. Heather would lose her popularity.
service.
(A) Capital
(C) a. Heather would risk losing partners.
(B) Entrepreneurship
(C) Land
(D) a. Heather would be liable for all
(D) Labor costs and damages.
241. The marketplace in which final goods or
services are offered for purchase by busi- 246. The human ability to produce a good or
nesses and the public service: Talents, skills, physical labor, etc.
the work that goes into the production of
(A) Product market
a good or service.
(B) Law of demand
(A) Human resources or Labor
(C) Price control
(B) Land
(D) Voluntary exchange
(C) Capital
242. If the marginal rate of substitution
(D) Entrepreneurship
(MRS) declines, then the indifference curve
is:-
247. Marginal Utility
(A) concave to the origin
(A) is always positive
(B) straight line cutting both the axis
(B) is always negative
(C) convex to the origin
(D) none of the above (C) can be positive or negative but not
zero
243. This is when quantity SUPPLIED is lower (D) can be positive or negative or zero
than quantity DEMANDED.
(A) Price Floor 248. describes the relationship between
(B) Price Ceiling change in output to different amounts of
(C) Surplus single input while other inputs are held
constant
(D) Shortage
(A) Raw Materials
244. government provided goods and services (B) Law of Variable Proportions
that markets cannot provide and that are
shared by consumers (C) Production Function
(A) public goods (D) Total Cost
(B) private products (E) IDK
240. B 241. A 242. C 243. D 244. A 245. D 246. A 247. D 248. C 249. E
29
249. Change in quantity demanded due to a (C) MRS

change in relative price (D) price ratio of the commodity
(A) elastic
(B) microeconomics 253. Which market structure has the most
(C) unit elastic competition?
(D) change in quantity demanded (A) Perfect/Pure Competition
(E) substitution effect (B) Monopolistic Competition
(C) Oligopoly
250. Refer to the following diagram. The tax
imposed is indicated by the neon-green (D) Monopoly
vertical line.
254. All of the following are reasons the
United States and Virginia trades with
other countries EXCEPT
(A) to buy goods at a lower cost
(B) to obtain goods they cannot produce
(C) decrease employment
(D) to sell goods to other countries
255. Given the decreasing opportunity cost,

the PPC is
(A) Convex
(B) Concave
(C) linear
What is the total revenue without tax in- (D) a vertical line
cidence?
(A) $1150 256. An untapped deposit of natural gas is un-
(B) $1600 der what factor of production?
(C) $800 (A) Natural Resource
(D) $710 (B) Capital
(E) $575 (C) Labor
251. How has the multifunctional platform im- (D) Land
pacted women in Africa?
257. A legal agreement that an asset is part
(A) More time is spent doing chores
of a guarantee to a lender, when the
(B) More time taking care of young chil- lender can take possession of the assets
dren and sell it to recover the funds owed by
(C) More time for an education the borrower
(D) none of above (A) Judgement
252. The slope of budget line is:- (B) Overdraft
(A) concave (C) Overhead
(B) convex (D) Pledged
250. B 251. C 252. D 253. A 254. C 255. A 256. A 257. D 258. D

258. An investment worth money; a financial (C) the international businessmen who
instrument indicating ownership. want to expand small parts of their produc-
(A) lien tion
(B) mortgage (D) rural village men and women who
(C) share wish to set up small businesses to help
their families
(D) securities
259. Which is an example of a natural re- 264. is the most basic or fundamental eco-
NARAYAN CHANGDER
source? nomic problem.
(A) factory (A) Scarcity
(B) deposit of coal (B) Labor
(C) irrigation canal (C) Greed
(D) none of above (D) Capital
260. A payment that is owed every month
265. Other types of debt that you owe some-
(A) Obligation one other than a mortgage
(B) Debt
(A) notes payable
(C) Equity
(B) liquid assets
(D) Capital
(C) lien
261. Which of the following is NOT an exam- (D) securities
ple of MER?
(A) Deregulation 266. What does this curve represent?
(B) Competition Policy
(C) Changing interest rates
(D) Environmental Management
262. The absolute advantage is measured pri-

marily by what factor?
(A) The number of items produced.
(B) The added costs such as taxes and
transportation fees.
(C) The all inputs needed to produce an
item.
(D) The capital needed to produce an
item.
263. Who has benefited from the micro-credit

industry in India? (A) demand
(A) those working to set up new com-
(B) supply
puter industries
(B) the failed businessman who has had (C) equilibrium
a hard time getting traditional loans (D) shortage
259. B 260. A 261. C 262. C 263. D 264. A 265. A 266. B 267. A

31
267. Which of the following is an example of 272. in the short run, output will change as
allocative efficiency? one input is varied while others are held
(A) The agriculture sector shifting 3 constant
farms into 1 in order to lower cost of pro- (A) Law of Variable Proportions
duction. (B) Production Function
(B) A reduction in tariffs to increase in- (C) Raw Materials
dustry innovation.
(D) Total Product
(C) Increasing infrastructure between
towns to reduce transport time. (E) IDK
(D) Mr Meyer increasing his rate of teach- 273. Michael has $10; he wants to see the
ing on Thursdays before the 10:25 bell new Star Wars movie and go to the tram-
268. form of government in which people poline park. He decides to go to the tram-
choose leaders by voting poline park with some friends. What is his
opportunity cost?
(A) Democracy
(B) Monarchy (A) the admission price of the trampoline
park
(C) Communism
(B) the time spent at the trampoline park
(D) none of above
269. Debt that is obtained over the internet (C) the amount of gas used to drive to the
and is much more expensive that a bank trampoline park
loan (D) the value of viewing the movie
(A) Internet Loan
(B) Online Credit 274. Point C represents
(C) Credit Card Loan
(D) Pro Forma Credit
270. Which market structure has the least
price control?
(C) Oligopoly
(D) Monopoly
271. The Gross National Product (GNP) is
(A) I’m not sure Mr. Szymkowiak. I need
to study this concept more!
(B) all of the goods and services pro-
duced annually in a nation OR the mar-
ket value of goods and services by all cit-
izens of a country- both domestically and
abroad (A) efficient production
(C) a type of food (B) inefficient production
(D) the measure of total quality of eco- (C) unattainable production
nomic life in a nation in 1 year (D) planned production
268. A 269. B 270. A 271. B 272. A 273. D 274. B 275. C

275. What is the full name of PPF ? 281. A company’s legal financial debts or obli-
(A) Production Possibility Force gations that arise during the course of busi-
(B) Power production Curve ness operations
(C) Production possibility curve (A) Price control
(D) None of these (B) Equilibrium
(C) Price floor
276. A movement along the production possi- (D) Liability
bilities curves implies
NARAYAN CHANGDER
(A) labor force has increased 282. What is usually the main source of tax
(B) productivity has increased revenue for developing countries’ govern-
ment?
(C) society has chosen a different set of
output (A) Income Tax
(D) improvement in technological know- (B) Corporate Tax
how (C) Export and Import Tax
(D) Progressive Tax
277. Which business type makes up approxi-
(E) Inheritance Tax
mately 75% of all businesses?
(A) Sole Proprietorship 283. Which decreases first as more of a good
(B) Partnership is consumed?
(C) Corporation (A) total utility
(D) none of above (B) average utility
(C) marginal utility
278. Which form of business organization is
(D) marginal physical product
easiest to organize but is LEAST able to
benefit from specialization? 284. Which type of economic system lacks in-
(A) sole proprietorship centives for individuals to innovate?
(B) partnership (A) Free Market
(C) limited partnership (B) Free Enterprise
(D) corporation (C) Mixed Market
279. A mixed economy is an economy that (D) Command
(A) Changes from a pure free to a pure 285. Which of the following best describes
planned economy how the price of something would change
(B) has elements of dictatorship if a whole lot of people wanted to buy it?
(C) is a mix of pure free and pure planned (A) The price would rise.
economies (B) The price would drop.
(D) has a minimum governments inter- (C) The price would stay the same.
ventions (D) The price would be different in differ-
280. Budget line is ent places.
(A) Straight line and downward sloping 286. One disadvantage of a corporation is
(B) Straight and upward sloping (A) unlimited liability for shareholders
(C) Convex but upward sloping (B) complicated decision making process
(D) concave and convex both
276. C 277. A 278. A 279. C 280. A 281. D 282. C 283. C 284. D 285. A 286. B
33
(C) a lack of specialization

(D) inability of shareholders to earn a
profit
287. What is a business owned and operated

by two or more people?
(A) Sole Proprietorship
(B) Partnership
(C) Corporation
(D) none of above
288. An inefficient distribution of goods and

services in the free market
(A) $20
(A) Determinants of supply
(B) $30
(B) Market failure
(C) $35
(C) Liability (D) $125
(D) Externalities
292. Characteristics include owned by two or
289. There are many sellers of blue jeans. more people and may be general or limited
Each blue jean seller makes their product (A) Sole Propriotorship
slightly different to set it apart from oth- (B) Partnership
ers. There is free entry and exit into the
(C) Corporation
blue jean market. Which market structure
does this describe? (D) none of above
(A) Perfect Competition 293. What is a planned economy?

(B) Oligopoly (A) Government decides how resources
(C) Monopoly can be used
(B) Consumers decide the goods and ser-
(D) Monopolistic Competition
vices
290. Value of next best alternative that is (C) Communism
given up when an economic choice is made (D) Socialism
(A) alternative choice 294. Production is the process of changing
(B) opportunity choice materials into economic goods.
(C) opportunity cost (A) raw
(D) alternative cost (B) goods
(C) services
291. The table shows the dollar value of the (D) none of the above
total benefit Edward receives from buying
various quantities of volleyballs. What is 295. There are several points posted on the
the marginal benefit received from buying following Production Possibility Frontier
the 3rd volleyball? (PPF) graph.
287. B 288. B 289. D 290. C 291. B 292. B 293. A 294. A

299. Type of market structure with a large

number of buyers and sellers, with prod-
ucts that are essentially the same?
(C) Oligopoly
(D) Monopoly
NARAYAN CHANGDER
300. Economic is a study of
(A) Human behaviour
(B) Mathematics
(C) Community
(D) none of above
The situation(s) that is/are impossible to 301. Which statement is true about the circu-
attain, indicated by which letter(s)? lar flow diagram?
(A) C and D (A) A Households are demanders in the
(B) A product market and suppliers in the factor
(C) B and C market
(D) B (B) A Business are demanders in the
(E) A and B product market and suppliers in the factor
market.
296. Karl Marx had a theory about
(A) Communism (C) A Households are demanders in the
factor market and suppliers in the product
(B) Socialism
market.
(C) Objectivism
(D) fascism (D) A Businesses and households are not
components of the circular flow diagram.
297. When a person dies, who made lots of
money (think millions of dollars), the gov- 302. Management depends on
ernment collects this type of tax. (A) Economics
(A) Social security
(B) Demand
(B) Estate tax
(C) Medicaid (C) Business policies
(D) Corporate income tax (D) none of above
298. Select one benefit for consumers of mi- 303. (2) Which of the following resources
croeconomic reform would economists classify as “capital”?
(A) productivity growth (A) Raw Bauxite in a South African mine
(B) economic growth
(B) A hammer used in framing a house
(C) cheaper inputs into the production
process (C) A worker hired to repair engines
(D) cheaper prices of goods and services (D) Trees used to make paper
295. B 296. A 297. B 298. D 299. A 300. A 301. A 302. A 303. B 304. D
35
304. Movement along the Demand curve to 309. Capitalism flourishes here in this eco-
the right is called nomic system.
(A) decrease in demand (A) Traditional
(B) decrease in quantity demanded (B) Market
(C) increase in demand (C) Command
(D) increase in quantity demanded (D) Mixed
305. The self-interest of the participants in 310. All are constant, decrease in AD tend to
an economy is guided into promoting eco- cause increase in
nomic self-interest by (A) employment
(A) private sector regulations. (B) nominal interest rate
(B) the invisible hand. (C) GDP and national income
(C) market power. (D) unemployment rate
(D) individual property rights. 311. What is economics?
(E) government intervention. (A) The study of shapes
306. If you could rate this class what would it (B) scarcity
be (C) The study of the choices people make
(A) 1-3 when making purchases
(B) 3-5 (D) push and pull factors
(C) 5-7 312. Which of the following is an ELASTIC
(D) 7-9.79 good?
(E) 9.80-10 (A) Insulin
(B) EpiPen
307. If the entire Production Possibility Fron-
tier shifted to higher values, it is most (C) Gasoline
likely caused by (D) Chips
(A) technological breakthrough in one of 313. The money a person borrows to buy real
the two goods. estate.
(B) technological breakthrough in both (A) mortgage
goods. (B) lien
(C) increased in spending. (C) notes payable
(D) decrease in demand for one product (D) maturity
over the other.
(E) decrease in demand for the two prod- 314. The town of Utopia has three gas sta-
ucts. tions. The owners of these gas stations
make decisions together about when to
308. When you reach around the age of 62, raise and lower gas prices. It would be
you are now eligible for this monthly pay- difficult for another gas station to enter
ment. People who disabled or cannot this market. Which market structure best
work are also eligible for this one. describes the market for gas in Utopia?
(A) Social Security (A) Perfect competition
(B) Property tax (B) Monopolistic competition
(C) Estate tax (C) Oligopoly
(D) Social Media (D) Monopoly
305. B 306. D 306. E 307. B 308. A 309. B 310. D 311. C 312. D 313. A 314. C
315. Additional cost associated by producing 321. “Wants always exceed limited resources
one additional unit of product. to satisfy client or society.” This state-
(A) Fixed Costs ment refers to
(B) Average Costs (A) economics
(C) Marginal Costs (B) scarcity
(D) Emplicit Costs (C) choices
(D) opportunity cost
316. Which of the following is one of the four
NARAYAN CHANGDER
CATEGORIES of scarce resources? 322. If I produce meat but, the government
has to check to make sure I can put this
(A) land
product on the market, what economic sys-
(B) credit cards tem is this?
(C) money (A) Mixed
(D) air (B) Traditional
(C) Market
317. If OPEC decided to cut oil production for
the coming year, what would be the MOST (D) Command
LIKELY effect? 323. What major limitation is not considered
(A) a. prices would not change in Circular Flow Diagram of physical and
(B) a. oil prices would probably rise monetary flow?
(C) a. oil prices would probably decline (A) human resources
(D) a. the price for substitute products (B) non-renewable resources
would decline (C) capital costs
(D) market fluctuations
318. A movement upward and to the left
along a demand curve is called a(n) 324. What is an indifference curve?
(A) increase in demand. (A) A curve giving maximum satisfaction
(B) decrease in demand. (B) A curve giving equal satisfaction
(C) decrease in quantity demanded. (C) A curve giving equal profit
(D) increase in quantity demanded. (D) A curve giving less utility
319. Which of the following is not character- 325. Which of these is NOT one of the ques-
istics of a planned economy? tions that a society has to address?
(A) What to produce
(A) Central Planning Authority
(B) For whom to produce
(B) Private ownership of resources
(C) How much to charge
(C) Public ownership of resources
(D) How to produce
(D) Advocacy of social justice
326. network of institutions, markets,
320. If there is destruction of resources in an and contracts that bring lenders and bor-
economy the PPC rowers together
(A) Shifts towards left hand side (A) Financial system
(B) Brings unemployment (B) banks
(C) Shifts towards right hand side (C) Private Enterprise
(D) None of the above (D) none of above
315. C 316. A 317. B 318. C 319. B 320. A 321. B 322. A 323. B 324. B 325. C
326. A 327. A
37
327. The method a country uses to answer the 332. All of the following are ways to be fis-
three economic questions cally responsible EXCEPT
(A) Economic System (A) keeping to a budget
(B) Economic Resources (B) saving for the future
(C) spending more money each month
(C) Capitalism
than you earn
(D) none of above (D) having insurance
328. (3) Which of the following is NOT a con- 333. Which location identifies where MOST of
sumer good? the world economies would be placed on
(A) a bulldozer at a construction site this graphic?
(B) a Happy Meal at McDonalds
(C) a pack of Doritos in a vending machine
(D) a television set for sale at an appli-

ance store
329. Name the economic value achieved

through the spread of education in the con-
text of production potential (A) At point A
(A) Increase in efficiency (B) At point B
(C) Between points A & B
(B) Effective utilization of resources
(D) Between points C & D
(C) Economic growth
(D) All of these 334. Which is true about scarcity?
(A) All resources are scarce but some are
330. Under a command system, who owns the more scarce than others
factors of production? (B) Scarcity will go away if people use
(A) Consumers their resources to their fullest potential
(C) Scarcity does not exist in places
(B) Elders
where people are rich
(C) Government (D) Scarcity is not a reason why people
(D) Businesses have to make economic decisions
331. Which would cause a increase in the sup- 335. The gap between TC and TVC is
ply of computers? (A) rising
(B) decreasing
(A) An increase in the demand for com-
puters (C) constant
(D) increases than decreases
(B) An increase in business taxes for com-
puters 336. Payments for the factors of production
(C) An decrease in the incomes of con- (A) rent, wages, interest profit
sumers (B) rent wages income profit
(D) A decrease in the price of parts for (C) rent wages investment profit
making computers (D) rent subsidy interest profit
328. A 329. D 330. C 331. D 332. C 333. C 334. A 335. C 336. A 337. B
337. This is the idea where the mother coun- (B) the grater feeling of having money
try prospers and the colonies suffer later than now
(A) Capitalism (C) the grater feeling of having money
(B) Mercantilism now rather than later
(C) Command Economy (D) you broke, you don’t got time to worry
(D) Socialism about that
338. Equipment, inventory or other goods 343. An effective ceiling price will result in
NARAYAN CHANGDER
that are pledged to the bank in the case (A) abundance of good and decrease in
the company can not make a loan payment demand.
(A) mortgage (B) shortage of good decrease in demand.
(B) securities
(C) share (C) shortage of goods and increase in de-
mand.
(D) collateral
(D) will help the customers.
339. Perfect competition pushes firms to
344. Oil, natural gas, and coal
(A) maximum sales
(A) human resources
(B) take over other firms
(B) natural resources
(C) maximum possible output
(C) entrepreneurship
(D) efficiency
(D) capital resources
340. Which of the following statement is not
True ? 345. Which business type has the most sales
in the USA?
(A) Two indifference curve can intersect
each other (A) Sole Proprietorship
(B) an indifference curve never touch ei- (B) Partnership
ther axis (C) Corporation
(C) Higher Indifference curve gives (D) none of above
higher level of satisfaction
346. Which is not a requirement for a market
(D) Indifference Curve is convex to the
to have perfect competition?
origin
(A) Diverse buyers and sellers participate
341. which of these is a cause of shifting of in a market
demand curve in right hand side if goods (B) Sellers offer the same products
are normal (C) Sellers can freely enter and exit the
(A) increase in income of consumer market
(B) increase in price of substitute goods (D) Consumers and producers are in-
(C) decrease in price of complementary formed about products
goods
347. In the product market
(D) all of these
(A) firms buy goods and services from
342. Time value of money households.
(A) the grater feeling of having no money (B) firms sell goods and services to
households.
338. D 339. D 340. A 341. D 342. C 343. C 344. B 345. C 346. A 347. B
39
(C) firms sell resources to households. 352. What is microeconomics?

(D) firms buy resources from house- (A) The focus on the economy of micro-
holds. organisms.
(B) Focusing on the bigger parts of the
348. Chris spent his entire income on two economy as a whole.
goods. At his current consumption, the (C) Focusing on the minor parts of econ-
marginal utility of Y is 12 and the marginal omy.
utility of Z is 4. If the price of Y is $2.00
and the price of Z is $1, then to what (D) The focus on the individual person
should he do to maximize utility? contribution to the economy.
(A) consume more Y and Z 353. How do banks, credit unions, and sav-
(B) consume more Z and less Y ings and loans, encourage savings?
(C) consumer more Y and less Z (A) pay interest on deposits
(B) free gift card to a saver
(D) maintain his consumption
(C) free checking account
349. This single farmer is experiencing (D) low interest rates on loans
354. What country is not an example of capi-

talism
(A) Germany
(B) U.S.A
(C) North Korea
(D) China
355. Owning an asset without any associated

(A) economic loss. debt
(B) economic profit. (A) Lein
(C) break-even. (B) Judgement
(D) normal profit. (C) Free and Clear
(E) long run equilibrium. (D) Pledged
350. Classless Society 356. If the consumer prefer the bundle (5,7)
(A) Democracy to (3,8) his preference will be called
(A) Monotonic
(B) Monarchy
(B) Indifferent
(C) Communism
(C) Convex
(D) none of above
(D) None of these
351. Want satisfying power of a commodity 357. Which of the following is the equation
is called for figuring out PROFIT?
(A) Utility (A) Profit = Revenue - Cost
(B) Demand (B) Profit = Cost - Revenue
(C) Consumers equilibrium (C) Revenue = Profit - Cost
(D) None of these (D) Costs = Profit - Revenue
348. C 349. A 350. C 351. A 352. C 353. A 354. C 355. C 356. D 357. A 358. C
358. In a socialist society 363. Which of the following is NOT a Market

(A) Resources own themselves Structure?
(B) Animals owns all the resources (A) Perfect Competition
(C) The government owns all resources (B) Oligopoly
(C) Monopoly
(D) Everyone owns goods and services
(D) Corporation
359. What is #1?
364. In Circular Flow Diagram of physical and
NARAYAN CHANGDER
monetary flow, what is the input and out-
put of firms?
(A) Input: income and resource services
Output: commodities and consumption
(B) Input: commodities and costs Output:
revenue and resource services
(C) Input: commodities and consumption
Output: income and resource services
(D) Input: revenue and resource ser-
(A) Income vices Output: commodities and costs
(B) Revenue (E) Input: commodities and consumption
Output: revenue and resource services
(C) Expenditures
(D) Goods & Services 365. What is the remuneration of an en-
trepreneur?
360. mental and physical effort that is under- (A) profit
taken for reward is known as (B) wage
(A) remuneration (C) salary
(B) labour (D) rent
(C) wage
366. which of the following is not a determi-
(D) salary
nants of individual demand.
361. In which market structure does a firm (A) distribution of income
have greatest control over its product’s (B) price
price? (C) income of consumer
(A) perfect competition (D) taste and preference
(B) monopoly
367. Perfect competition is best described as
(C) oligopoly a market with
(D) monopolistic competition (A) few firms producing essentially the
same product
362. This is when quantity SUPPLIED is higher
(B) many firms producing essentially the
than quantity DEMANDED.
same product
(A) Price Floor
(C) many firms producing very different
(B) Price Ceiling products
(C) Surplus (D) few firms producing very different
(D) Shortage products
359. C 360. B 361. B 362. C 363. D 364. D 365. A 366. A 367. B 368. A
41
368. Which of the following is true of a per- 374. Using resources to produce goods
fectly competitive firm in long-run equilib- wanted by society
rium? (A) societal proficiency
(A) It produces its output at minimum av- (B) productive efficiency
erage total cost
(C) allocatrive efficiency
(B) It earns positive economic profits
(C) Its price exceeds marginal cost (D) resource efficiency
(D) Its price exceeds marginal revenue 375. Willingness to buy more or less of a prod-
369. The least competitive market structure uct at the same price
(A) Monopoly (A) demand curve
(B) Oligopoly (B) change in demand
(C) Monopolistic competition (C) Law of Demand
(D) Perfect competition (D) complements
370. Price control will most likely result in (E) market demand curve
(A) helping the producers by generating
376. There are several points posted on the
more revenuer.
following Production Possibility Frontier
(B) creating more competition hence re- (PPF) graph.
ducing monopolies.
(C) creating a fair and balanced
economies.
(D) hurting the consumers that needed
the most help.
371. Cash or securities that can be immedi-
ately turned into cash, which can then re-
pay any loan amount outstanding.
(A) mortgage
(B) commissions
(C) assets
(D) liquid assets
372. What are the two types of poverty?
(A) Comparative and absolute poverty
(B) Investments and relative poverty
(C) Relative and population poverty
(D) Absolute and relative poverty The most efficient points are indicated by
which letter(s)?
373. In my country, the government tells me
(A) A
where to work.
(A) Traditional (B) C and D
(B) Command (C) C
(C) Market (D) B
(D) Mixed (E) A and B
369. A 370. D 371. D 372. D 373. B 374. C 375. B 376. B 377. B

377. Compared to an online loan, a bank loan (C) oligopoly

is: (D) natural monopoly
(A) only for adults above a certain age
(B) less expensive (lower interest rate) 383. Which of the following countries could
(C) more expensive (higher interest rate) face development adversities if suddenly
its economy received state-of-the-art tech-
nology
(D) approximately equal in terms of inter-
est rates (A) USA
NARAYAN CHANGDER
(B) Japan
378. Which of the following is an advantage
of general partnerships: (C) Canada
(A) Limited capital (D) Korea
(B) Unlimited liability (E) Kenya
(C) Easy to end
384. The income effect explains that when the
(D) Combined capabilities price of a good increases, consumers will
379. is a legal decision requiring a person consume
or company to pay another person or com- (A) less of the more expensive good and
pany more of some other good
(A) Judgement (B) more of the more expensive good and
(B) Inventory less of some other good
(C) Guarantor (C) more of the good because their real
(D) Crowdfun incomes are lower after the price in-
crease
380. a cost that does not vary depending on (D) less of the good because their real in-
production or sales levels comes are lower after the price increase
(A) Fixed Cast
(B) Marginal Utility 385. Economics is the study of
(C) Fixed Cost (A) how society manages its unlimited re-
(D) Demand Schedule sources.
(E) IDK (B) how to reduce our wants until we are
satisfied.
381. The method for attracting customers
(C) how to fully satisfy our unlimited
based on an alternative OR a different pre-
wants.
sentation of costs or pricing is called
(D) how to avoid having to make trade-
(A) Legacy Effect
offs.
(B) Psychological Pricing
(C) Bounded Rationality 386. This is when the government controls
(D) none of above ALL aspects of production.
(A) Planned Economy
382. Which market structure is BEST indicated
by the soda market? (B) Bounded Rationality
(A) monopoly (C) Legacy Effect
(B) pure competition (D) none of above
378. D 379. A 380. C 381. B 382. C 383. E 384. D 385. C 386. A 387. A
43
387. PPC is concave because 393. The law of demand is illustrated by a de-
(A) MOC rises mand curve that is:
(B) MRS rises (A) Vertical
(C) MRT falls (B) Horizontal
(D) Both MRT and MRS falls (C) Upward sloping
388. Can produce more or requires less (D) Downward sloping
time/resources
(A) production advantage 394. Which of the following is a micro eco-
nomic calculation?
(B) resource advantage
(C) absolute advantage (A) GDP
(D) comparative advantage (B) unemployment rate
(C) interest on a loan
389. Which type of economy is run by the busi-
nesses & business owners? (D) CPI
(A) Command
395. What is the Equilibrium Price?
(B) Mixed
(C) Communist
(D) Market
390. The use of advertising, giveaways, or

other promotional campaigns to convince
buyers one product is better than another
(B) non-price competition
(C) oligopoly
(D) collusion
(E) monopoly
(A) 1
391. A factor that makes it difficult for firms
(B) 2
to enter a market is called
(C) 3
(A) a barrier to entry
(B) an obstacle to entry (D) 4
(C) a block to entry
396. Refer to Exhibit 6. As we move from
(D) an impediment to entry point A to point D,
392. at a point the gain from each addition in- (A) the opportunity cost of eggs in terms
put declines of bacon falls.
(A) Marginal Cost (B) the opportunity cost of eggs in terms
(B) Trade-offs of bacon rises.
(C) Diminishing Returns (C) the opportunity cost of eggs in terms
(D) Microeconomics of bacon is constant.
(E) IDK (D) the economy becomes less efficient.
388. C 389. D 390. B 391. A 392. C 393. D 394. C 395. C 396. B 397. C
397. One critical difference between bank (A) Cost refers to the negative aspects
loans and online loans is: a decision could have whereas opportu-
(A) applicants only have to be completely nity cost only refers to the alternative you
truthful on a bank loan application didn’t choose
(B) none they are pretty much the same (B) Opportunity cost refers to the neg-
ative aspects a decision could have
(C) the amount of information the appli-
whereas cost only refers to the alterna-
cant must provide
tive you didn’t choose
(D) the amount of money the applicant
NARAYAN CHANGDER
(C) They are interchangeable (they mean
can request
the same thing but are different parts of
398. Market situation in which there is only speech)
one seller of a product that has no close (D) There are multiple opportunity costs
substitutes to an individuals decision but only one cost
(A) perfect competition 403. Jennifer Lopez is seen wearing a new
(B) non-price competition short and sleek dress. People now want
(C) oligopoly this dress. Which demand determinant is
this most likely to fall under?
(D) collusion
(A) Change in Consumer Income
(E) monopoly
(B) Change in Consumer Tastes
399. Trying to satisfy unlimited wants with (C) Change in Price of Substitute Good
limited resources defines and is the (D) Change in Consumer Price Expecta-
fundamental problem of economics. tions
(A) scarcity
404. What should be the unemployment rate
(B) needs
of a sustainable and healthy Economy?
(C) wants (A) 40 - 45%
(D) microeconomics (B) 30 - 35%
400. Which of the following market structures (C) 0%
results in allocative efficiency? (D) 15 - 20%
(A) Monopoly (E) 4 - 6%
(B) Monopolistic Competition 405. When a resource becomes scarce, what
(C) Perfect Competition happens to its cost?
(D) Oligopoly (A) The cost increases.
(B) The cost stays the same.
401. People start making more moneyWhat
(C) The cost goes down.
type of determinant is this?
(D) The cost always doubles.
(A) Consumer Income
(B) Consumer Taste 406. Government intervention is necessary in
(C) Input Price the economy because
(D) Profit Opportunities (A) the government wishes to overcome
weaknesses in the free market economy.
402. What is the difference between cost and (B) the government has power of
opportunity cost? monopoly.
398. E 399. A 400. C 401. A 402. A 403. B 404. E 405. A 406. A

45
(C) the government has interests in the (C) remains the same
specific sector. (D) becomes negative and then turns pos-
(D) the government wishes to share with itive
the private sector.
412. Illustrates the demand of everyone inter-
407. If Mark Etts expresses a desire to sell his ested in purchasing a product
corn at a local farmer’s market, he must
(A) demand curve
be aware that the product is standardized
and that he will have no control over the (B) change in demand
price. The market structure he is MOST (C) Law of Demand
likely participating in is (D) complements
(A) monopolistic competition
(E) market demand curve
(B) oligopoly
(C) perfect competition 413. What are the 3 economic questions?
(D) monopoly (A) What to produce? How To Produce?
For whom to produce?
408. Which type of economy has central own-
ership and lack of individual choice? (B) Who to produce? Why you produce?
Like to produce?
(A) Market Economy
(C) Why to produce? Tell who to pro-
(B) Command Economy
duce? Things to produce?
(C) Mixed Economy
(D) none of above
(D) Traditional Economy
414. Government regulates certain indus-
409. “There is an alternative technique of pro-
tries.
ducing goods and services”. This state-
ment refers to (A) traditional
(A) What product should be produce? (B) command
(B) How product should be produce? (C) market
(C) How much product should be pro- (D) mixed
duce?
(D) For whom product should be pro- 415. graph showing various quantities sup-
duce? plied at each and every price that might
prevail in the marketgraph showing vari-
410. Which of the following can be scarce? Se- ous quantities supplied at each and every
lect all that apply. price that might prevail in the market (se-
(A) money lect all that are right)
(B) food (A) Demand Curve
(C) water (B) Supply Curve
(D) trees (C)
(D)
411. As more of a good is consumed, marginal
utility (E)
(A) increases (F)
(B) decreases (G) IDK
407. C 408. B 409. B 410. A 410. B 410. C 410. D 411. B 412. E 413. A 414. D
415. B 415. C 415. D 416. A 417. A
416. anything that it used to make a good 422. Which of the following explains the law
or service. of demand?
(A) Resources (A) When price goes up, quantity de-
(B) Good manded goes up.
(B) When price goes down, quantity de-
(C) Service
manded goes down.
(D) none of above (C) When price goes up, quantity supplied
goes up.
NARAYAN CHANGDER
417. supply & demand determines what
gets produced (D) When price goes down, quantity sup-
plied goes down.
(A) Free Market Economy
(B) Closed Economy 423. Dan has $5,000. He wants to invest his
money in the type of business that has the
(C) Socialism
least amount of liability. In which type of
(D) none of above business should he invest?
(A) corporation
418. PPC rightward shift
(B) partnership
(A) additional resources
(C) proprietorship
(B) technology
(D) none of above
(C) trade
(D) all of these 424. In my country my job is the same one
that my family has done over the past 200
419. An example of a negative externality years.
would be (A) Traditional
(A) added jobs (B) Command
(B) boosts to local businesses (C) Market
(C) pollution (D) Mixed
(D) decrease in drive time 425. Payment for risk taking or entrepreneur-
ship is called
420. A market economy has ownership of (A) profit
property and resources.
(B) capital
(A) private (C) rend
(B) government (D) labor
(C) tribal
426. Scarcity forces people to
(D) none of above
(A) Make Choices
421. What do the households provide busi- (B) satisfy all their wants and needs
nesses? (C) Give up opportunity cost
(A) Revenue (D) none of above
(B) Wages 427. In a confederation, who has most of the
(C) Resources power?
(D) Goods and services (A) individual voters
418. D 419. C 420. A 421. C 422. B 423. A 424. A 425. A 426. A 427. B 428. D
47
(B) local governments (C) Traditional economy

(C) national government (D) Mixed economy
(D) none of above
434. Which of the statements is not related to
428. There are four types of economic sys- Economic problems
tems. Most economies are (A) What to Produce
(A) Traditional (B) For Whom to Produce
(B) Command (C) Where to Produce
(C) Market (D) How to Produce
(D) Mixed
435. All of the following are examples of pri-
429. A market structure in which a few large vate property EXCEPT
firms dominate a market (A) Sheetz
(A) Perfect Competition (B) Ruth’s Place
(B) Monopolistic Competition (C) U. S. Postal Service
(C) Oligopoly
(D) Eagle Cinema
(D) none of above
436. In this type of economy, the individual
430. What is Economics? decides who to sell their products to.
(A) The study of people and choices. (A) Traditional
(B) The study of buying things. (B) Mixed
(C) The study of selling things.
(C) Market
(D) The study of things.
(D) Command
431. not enough of something that people
437. Goods and services can be categorized as
want
private or
(A) Scarcity
(A) public
(B) Opportunity Cost
(B) open
(C) Tradeoff
(C) neither
(D) none of above
(D) none of above
432. which of these is not a type of efficiency
that micro economic reform aims to im- 438. Chief executives of big businesses are
prove known as
(A) allcoative (A) managers
(B) technical (B) CEO
(C) dynamic (C) entrepreneurs
(D) time (D) representatives
433. Which of the following is an economic 439. The circular flow model of a market econ-
system in which economic decisions are omy shows
made according to social roles & culture? (A) how profits are made
(A) Market economy (B) what inputs are required for what out-
(B) Command economy puts
429. C 430. A 431. A 432. D 433. C 434. C 435. C 436. C 437. A 438. C 439. D
440. B
(C) how many firms can support the 445. What would be the most likely result of
needs of how many households rent control?
(D) the interactions between households (A) Lower rent with lower quality housing.
and firms in the free market
(B) Lower rent with higher quality hous-
440. What will be the shape of the Indiffer- ing.
ence curve when its slope increases? (C) Higher rent with lower quality hous-
(A) convex to origin ing.
NARAYAN CHANGDER
(B) concave to origin (D) Higher rent with higher quality hous-
(C) straight line ing.
(D) none of these 446. Business organization in which all part-
ners are responsible for the management
441. father of economics, wrote the and financial obligations of the business
wealth of nations, and believed in a con-
(A) sole proprietorship
cept known as the invisible hand.
(B) limited partnership
(A) Adam Smith
(C) partnership
(B) David Ricardo (D) corporation
(C) Thomas Malthus (E) limited life
(D) none of above
447. Sharon decided to open a dry-cleaning
442. Which is NOT an example of non-price business. She borrowed some money from
competition? her sister and took a loan from a bank. She
hired one helper. What is one disadvan-
(A) Excellent service
tage of Sharon’s business?
(B) 50% off deal
(A) no separation of ownership and con-
(C) Attention getting advertisements trol
(D) Free kids meal with every adult meal (B) ease of organizing the firm
(C) unlimited liability
443. the increase in utility obtained by con-
(D) double taxation
suming or using one more unit of a good
or service 448. Define what a need is
(A) Marginal Utility (A) Something that you want
(B) Microeconomics (B) Something you need for survival
(C) Regular Utility (C) Relative scarctity
(D) Fundamentals (D) Money
(E) IDK 449. This is something that encourages or mo-
tivates someone to produce a good or ser-
444. The slope of indifference curve is:- vice:
(A) Concave (A) Competition
(B) convex (B) Profit
(C) Straight line (C) Incentive
(D) MRS (D) Investment
441. A 442. B 443. A 444. D 445. A 446. C 447. C 448. B 449. C 450. A
49
450. Economic growth is depicted by 454. What type of business organization has
(A) shift in the production possibilities the advantage of specialization but the dis-
frontier outward advantage of unlimited liability?
(B) a movement from inside the curve to- (A) sole proprietership
ward the curve. (B) partnership
(C) a shift in the production possibilities (C) corporation
frontier inward. (D) oligopoly
(D) a movement along a production pos-
455. Who are the players in our economy
sibilities frontier toward capital goods.
(A) People, planet, profit
451. Desire, ability, and willingness to buy a (B) Consumers, government, businesses
product and financial institutions
(A) demand (C) Karl Marx, Adam Smith, John Keyes
(B) marginal utility (D) Land, labour, capital, enterprise
(C) demand schedule
456. In this type of economies, the individual
(D) elasticity decides who to sell their products to.
(E) substitutes (A) Traditional
452. Based on the graph of a perfectly com- (B) Mixed
petitive firm, which of the following state- (C) Market
ments is TRUE? (D) Command
457. knowledge and use of advanced tools
and processes
(A) WiFi
(B) Technology
(C) Internet
(D) Technological Advancement
(E) IDK
458. Some goods include: cars, clothes,
games, computers, etc.
(A) public
(A) Price is equal to average total cost (B) private
(B) New firms are likely to enter the mar- (C) neither
ket in the long run
(D) none of above
(C) Economic profits are zero
(D) The market is in long run equilibrium 459. Which type of economic system encour-
ages new ideas because people have pri-
453. Which market structure involves selling vate property? MORE THAN ONE AN-
identical products? SWER
(A) Perfect Competition (A) Mixed Market
(B) Monopolistic Competition (B) Free Market
(C) Oligopoly (C) Command
(D) Monopoly (D) Centrally Planned
451. A 452. B 453. A 454. B 455. B 456. B 456. C 457. B 458. B 459. A 459. B
460. How much is the US’ economy? 466. PPC is

(A) $1, Bob (do you even get this refer- (A) straight line
ence)? (B) convex to origin
(B) $1 Million
(C) downward sloping
(C) $21.5 Trillion
(D) none of these
(D) It can’t be measured because we are
that awesome, brah! America rules!! 467. If the quantity supplied of a product is
less than the quantity demanded, then:
NARAYAN CHANGDER
461. Nike and Under Armour sell similar prod-
ucts. This leads to a decrease in price and (A) There is a shortage of the product
an increase in quality. (B) There is a surplus of the product
(A) Free Market (C) The product is a normal good
(B) Command (D) The product is an inferior good
(C) Traditional
(D) none of above 468. I know that the iPhone 8 is coming out
next year but really need a phone badly.
462. The market for milk is an example of per- I’m thinking about buying an iPhone 7
fect competition. Why? when the new iPhone comes to the market
(A) Sellers offer a nearly identical prod- because it will be much cheaper than to-
uct day’s price. What determinant of demand
(B) Anyone can start a dairy farm or leave does this suggest?
the dairy business at any time (A) Change in Price of Complementary
(C) Many people buy and sell milk Good
(D) All of the above (B) Change in Consumer Price Expecta-
tions
463. When income of the Consumer decreases
(C) Change in Number of Consumers in
, the budget line
the Market
(A) Shifts rightward
(D) Change in Consumer Income
(B) shifts leftward
(C) No change 469. Which of the following is an example of
(D) Rotates inward a good?
(A) hair stylist
464. Man-made resources used in the produc-
tion process i.e. machines in a factory. (B) dog walker
(A) Labour (C) orange creme soda
(B) Capital (D) candy bar
(C) Household
470. Which of the following is NOT a char-
(D) Revenue acteristic of a perfectly competitive mar-
465. The reward/payment for capital is: ket?
(A) Land (A) Free entry and exit
(B) Profit (B) Numerous sellers
(C) Interest (C) Perfect information
(D) Labour (D) No substitutes
460. C 461. A 462. D 463. B 464. B 465. C 466. C 467. A 468. B 469. C 469. D
470. D 471. D
51
471. When a major car company lowers its

prices, other car makers will probably
(A) maintain existing prices.
(B) raise their prices.
(C) go out of business.
(D) lower their prices.
472. Government controls everything!

(A) Democracy
(B) Communism
(C) Monarchy
(D) none of above (A) A
473. Labor, real capital, entrepreneurship, (B) 0GKC
and natural resources are all examples of (C) 0FJC
(A) outputs (D) FGKJ
(B) inferior goods (E) EFJH
(C) factors of production 477. Please complete the following sentence:
(D) public goods are people whose efforts and skills go
into the production of goods and services.
474. receipts gained from adding one addi- (A) Labor
tional unity
(B) Markets
(A) < Unity
(C) Economics
(B) Marginal Cost
(D) Resources
(C) Marginal Benefits
(D) Marginal Revenue 478. A rational person does not act unless a.
the action is ethical.
(E) IDK
(A) b. the action produces marginal costs
475. Utility is the that exceed marginal benefits.
(A) benefit or satisfaction that a person (B) the action produces marginal benefits
gets from the consumption of a good or that exceed marginal costs.
service (C) the action makes money for the per-
(B) measure of how useful a resource is son.
in the production process (D) none of these answers.
(C) measure of productivity associated 479. Rivalry in which every seller tries to get
with a good or service what other sellers are seeking at the same
(D) economic term for consumption pos- time
sibilities (A) Economic competition
476. At price G, the area of which rectan- (B) Externalities
gle represents total revenue for the profit- (C) Voluntary exchange
maximizing perfect competitor? (D) Price control
472. B 473. C 474. D 475. A 476. B 477. A 478. C 479. A 480. A 480. B 480. C
480. D
480. What do y’all eat for thanksgiving (C) a large plague of destructive
(A) Turkey grasshoppers
(B) Ham (D) a decline in the rate of technological
(C) Cheesecake improvements
484. At equilibrium under ordinal approach
481. As the price of a good rises in a market, the MRS should be equal to
it acts as a signal: (A) MRTS
NARAYAN CHANGDER
(A) consumers that they should buy a (B) Price Ratio
greater quantity of the good.
(C) Price
(B) to producers that they should supply
a greater quantity of the good. (D) Income
(C) to consumer that they should in-
485. When the quantity supplied is greater
crease their demand for the good.
than the quantity demanded
(D) to producers that they should in-
crease their supply of the good. (A) a shortage has occurred.
(B) a surplus has occurred.
482. Point A represents
(C) it doesn’t mean anything.
(D) government intervenes.
486. The degree to which a demand or supply

is sensitive to changes in price or income
(A) elasticity
(B) production
(C) utility
(D) scarcity
487. With which term is a command economic

system MOST closely associated?
(A) Entrepreneurship
(B) Economic Freedom
(C) Perfect competition
(A) efficient production (D) Governmental regulation
(B) inefficient production
(C) unattainable production 488. Describes change in demand when a
change in price causes a relatively larger
(D) economic growth
change in quantity demanded
483. Given a concave PPC for corn and com- (A) elastic
puters, which of the following would cause
(B) microeconomics
the PPC to shift outward?
(A) a decrease in available farmland (C) unit elastic
(B) an increase in the labor productivity (D) change in quantity demanded
of both industries (E) substitution effect
481. B 482. A 483. B 484. B 485. B 486. A 487. D 488. A 489. A

53
489. Physical space on which production oc- needs to be accomplished to others. Both
curs, and the natural resources that come verbal (or spoken) and written communi-
with it cation skills are important.
(A) Scarcity of land
493. A point inside the PPC represents
(B) Scarcity of capital
(A) Underutilization of resources
(C) Scarcity of labor
(B) Unattainable combination
(D) none of above
(C) Fuller utilization of resouces
490. All of the following are possible oppor- (D) Inefficient use of any one of the two
tunity costs to the decision to go out for resouces
Pizza
(A) You could have gone out for Chinese 494. law of economics stating that as a per-
food son increases consumption of a product,
(B) Eaten at home instead while keeping consumption of other prod-
ucts constant, there is a decline in the ben-
(C) You could have gone to your friends
efit that person receives from consuming
house
each additional unit of that product
(D) You will have consumed a lot of food
(A) Legal Utility
491. An unemployed factory worker is under (B) Income Effect
what factor of production? (C) Supply VS Demand
(A) Labor
(D) Diminishing Marginal Utility
(B) Capital
(E) IDK
(C) Natural resource
(D) Land 495. Quantity demanded of a product varies
inversely with its price
492. Grit
(A) demand curve
(A) The ability to find solutions to difficult
(B) change in demand
or complex issues. The process of work-
ing through the details of a challenge or (C) Law of Demand
crisis–often under pressure–to reach a (D) complements
solution. (E) market demand curve
(B) An individual’s self-commitment to
overcome obstacles to achieve long-term 496. Compound Interest is
goals. The ability to keep pursuing your (A) interest on interest
dream despite challenges and defeats. (B) interest that decreases over time
Perseverance, resilience and backbone.
(C) money interest spent immediately
(C) Working with others to address a
(D) none of above
challenge. Individuals using their skills in
harmony with others to complete a task. 497. For the law of demand, as price rises,
Effective team work involves trust among what happens to quantity demanded?
team members. Collaboration and coop-
(A) it goes up
eration.
(B) it goes down
(D) The ability to accurately convey infor-
mation about what you are thinking, any (C) it stays the same
questions you may have and what you feel (D) it is not effected
490. D 491. A 492. B 493. D 494. D 495. C 496. A 497. B 498. A

498. Which of the following industries is an 504. When the production of goods are inade-
example of a monopoly? quate to fulfill the needs of a society, the
(A) utilities/water economy is
(B) department stores (A) a failure.
(C) auto industry (B) expanding.
(D) commercial airlines (C) most likely a Socialist one.
(D) experiencing scarcity.
499. When economists measure the respon-
(E) most likely a Capitalist one.
NARAYAN CHANGDER
siveness of consumers to changes in price,
they are measuring: 505. Selling goods and services is an example
(A) the percentage change in price of
(B) the price elasticity of demand. (A) Free Enterprise
(C) the price elasticity of supply. (B) Freedom of Speech
(D) income elasticity. (C) Free Services
500. Which of these is not a cause of corrup- (D) none of above
tion? 506. Incentives play a greater role in
(A) Reduced trust (A) Command economy
(B) Unfair reallocation of resources (B) communism
(C) Corrupt officials (C) capitalism
(D) Improved legal system (D) socialism
501. Which of the following is real capital? 507. Which of the following is not an example
(A) a pair of shoes of Deregulation
(B) a construction crane (A) A reduction of tariffs on wool.
(C) a savings account (B) The removal of rules regarding poppy
(D) a share of IBM stock farming.
(C) A decrease in the number of live stock
502. The is the agency in the United States
allowed for exportation.
Department of Commerce that is responsi-
ble for collecting the data used to GDP. (D) A increase in the number of cars al-
lowed for importation into Australia.
(A) GNP
(B) Bureau of Economic Analysis 508. One benefit of starting a corporation
(C) President is
(D) None of the above (A) You are the only one responsible
(B) There is limited liability
503. The relationship between an opposing
person or business in a commercial set- (C) You have to come up with ALL of the
ting that many times will result in a better start money
product for consumers. (D) none of above
(A) Investment 509. Price discrimination is when a business
(B) Capitalism charges costumers different prices for
(C) Free Enterprise same products
(D) Competition (A) false
499. B 500. D 501. B 502. B 503. D 504. D 505. A 506. C 507. C 508. B 509. B
510. A
55
(B) true 515. The condition of consumer equilibrium un-

(C) maybe der cardinal approach in case of one com-
modity is
(D) none of above
(A) price of commodity should be rising
510. In economics cost control means (B) price of commodity should equal to be
(A) Determining cost marginal utility
(C) price of commodity should be de-
(B) Decision of production
creasing
(C) Prepare plan for products
(D) none of these
(D) none of above
516. What is Production Possibility Frontier
511. If the government makes me produce 70 or PPF?
T-Shirts, what economic system is this? (A) It is a mathematical model used for
(A) Mixed calculating the per unit opportunity cost
(B) Traditional for a given item.
(B) It is a graphical representation of the
(C) Command
maximum output obtain from a given un-
(D) Market limited resource base.
(C) It is a mathematical model used for
512. Which of the following is an economic
determining the inflation rate and its rela-
system in which the government and peo-
tionship to the unemployment rate.
ple are used to decide how to use scarce
resources? (D) It is a mathematical model used for
determining the inflation rate and its rela-
(A) Market economy
tionship to the economic growth.
(B) Command economy (E) It is a graphical representation of the
(C) Traditional economy relationship between the output of prod-
(D) Mixed economy ucts and the limited resources available
to produce the products.
513. Challenging a current market system
with a new idea which may be better for 517. What type of economic system allows
the future can be considered as a private businesses to decide what to pro-
duce, how to produce and for whom to pro-
(A) negative statement. duce?
(B) market projection. (A) Market
(C) positive statement. (B) Mixed
(D) normative statement. (C) Command
(E) economic projection. (D) Traditional
514. What is the probability of Mr Meyer con- 518. Joe is starting a small home-based con-
verting an A- into an A. sulting business. He possesses computer
knowledge but lacks marketing skills. The
(A) 10/10
form of business ownership that Joe
(B) 3/10 should consider establishing is a(n)
(C) 1 in 1,000,000 (A) corporation
(D) 0.01 (B) sole proprietorship
511. C 512. D 513. D 514. D 515. B 516. E 517. A 518. D 519. C

(C) monopoly (C) The act of making a business different

(D) partnership.
(D) Funds lent to a business with an
519. Which is NOT a characteristic of perfect agreement that the business will repay
competition? the lender with interest
(A) Numerous buyers and sellers
(B) Standardized product 525. Perfect competition is characterized by
(C) Differentiated product (A) a large number of sellers and buyers.
NARAYAN CHANGDER
(D) Independent buyers and sellers
(B) diverse products.
520. What term refers to a factor that causes (C) sellers acting together to set prices.
the supply or demand curve to shift? (D) uninformed buyers and sellers.
(A) Determinant
(B) Demand 526. Gov’t-mandated legal minimum or maxi-
mum prices set for specified goods
(C) Supply
(A) Price control
(D) Elasticity
(B) Price floor
521. The amount of money owed in repay- (C) Economic competition
ment for borrowing - examples are like a (D) Product market
VISA card or a car loan.
(A) Debt 527. Which of the following economic problem
(B) Shortage is not presented by PPC?
(C) Protectionism (A) What to produce
(D) none of above (B) How to produce
(C) For whom to produce
522. Limited resources force individuals, busi- (D) Growth of resources
nesses, and nations to make
(A) costs 528. Which of these factors are true about
(B) pay offs how education lead to economic develop-
ment?
(C) trade offs
(A) Education lead to better living stan-
(D) none of the above
dards
523. Which of the following is an INELASTIC (B) Education improves of the role of
good? women in society
(A) Nikes (C) All of these
(B) EpiPen (D) Education increases awareness and
(C) Samsung Galaxy communication, leading to social change
(D) Chips 529. Which country below has applied Capital-
524. What Is Credit? ism Economy?
(A) Costs that do not vary based on the (A) Nigeria
units sold by the enterprise (B) Roman
(B) The amount a policy holder pays for a (C) United State
insurance policy (D) Hong Kong
520. A 521. A 522. C 523. B 524. D 525. A 526. A 527. C 528. C 529. C 530. C
57
530. The market value of all the inputs a firm (B) Planned/command
uses in production. (C) Mixed
(A) Implicit Costs (D) Free Market
(B) Explicit Costs
535. Who has the power in a federal govern-
(C) Total Costs ment?
(D) Marginal Costs (A) the King makes most of the important
531. Refer to Exhibit 6. If the economy is op- decisions
erating at point C, the opportunity cost of (B) power is shared among different lev-
producing an additional 20 units of bacon els of government
is (C) a central committee makes all of the
(A) none of these answers political decisions
(B) a combination of production that can (D) none of above
be reached if we reduce the production of 536. By 1920, World War I had ended, and
eggs by 20 units the U.S. economy was
(C) a combination of production that can (A) booming
be reached if there is a sufficient advance (B) recessing
in technology.
(C) neither
(D) a combination of production that is in-
(D) none of above
efficient because there are unemployed
resources. 537. Equation of Budget Line is
(A) P1X1+P2X2 <M
532. Which the following does NOT illustrate
opportunity cost? (B) P1X1+P2X2 = M
(A) If I spent more on food, I must spend (C) P1X1+P2X2 >M
less on clothes. (D) P1X1+P2X2 <= M
(B) If I buy computer, I could nit own on 538. In a command economy, the means of
a 29” television. production are owned by
(C) If I study today, I must give up going (A) individuals
to the football game. (B) families
(D) If I buy book, I also can buy new (C) religious leaders
shoes.
(D) the government
533. What is Allocative Efficiency 539. At price $5, the firm is operating in
(A) ?????????????????????
(B) location of the economy state
(C) state of economy where production
represents consumer preference
(D) state of the economy where trade
represent customer preference
534. A economy is a market-based sys-

tem in which the government is involved (A) long run equilibrium at break even.
to some extent. (B) short run equilibrium with an eco-
(A) Traditional nomic loss.
531. C 532. D 533. C 534. C 535. B 536. A 537. B 538. D 539. A

(C) long run equilibrium with an economic 545. In which analysis Utility can be measured
loss. in numbers?
(D) short run equilibrium with an eco- (A) Ordinal Analysis
nomic profit. (B) Cardinal Analysis
(E) short run equilibrium at break even. (C) Utility Analysis
540. Who spends a higher part of GDP on (D) None of these
healthcare, leading to development?
546. The substitution effect explains that
NARAYAN CHANGDER
(A) Australia when the price of a good increases, con-
(B) Syrian Arab Republic sumers will consume
(C) Ghana (A) less of the more expensive good and
(D) Brazil more of some other good
(B) more of the more expensive good and
541. The system in which people make their less of some other good
own decisions about how to save re- (C) more of the good because their real
sources as capital and how to use their cap- incomes are lower after the price in-
ital to provide goods or services: crease
(A) Investment (D) less of the good because their real in-
(B) Capitalism comes are lower after the price increase
(C) Free Enterprise
547. Which of these is not a benefit derived
(D) Competition
from the empowerment of women
542. The influential book written by Adam (A) Women receive greater incomes
Smith was: (B) Greater and more productive work-
(A) The Worldly Philosophers force
(B) The Wealth of Nations (C) Greater enrollment in primary educa-
(C) The Age of the Economist tion
(D) The Affluent Society (D) Improvements in the financial system
543. The government has little to no role in (E) Improvements in health

the production of goods in this type of
economy. 548. What is the best definition for producer
(A) Traditional surplus?
(B) Mixed (A) The amount a buyer would gain be-
fore the tax being paid.
(C) Command
(B) The difference between what the
(D) Market buyer’s willingness to pay minus the
amount the buyer actually pays.
544. No creativity, inefficient
(C) The amount a seller is paid by the
(A) Democracy
buyer for a given item minus the seller’s
(B) Monarchy cost.
(C) Communism (D) The value of everything that a pro-
(D) none of above ducer earns as a result of selling an item.
540. A 541. B 542. B 543. D 544. C 545. B 546. A 547. D 548. C

59
549. Mrs. Johnson spends her entire daily (C) government restrictions to the pro-
budget on potato chips, at a price of $1 duction o too many goods and services
each, and onion dip at a price of $2 each. (D) Inefficient production methods to ex-
At her current consumption bundle, the pand the production
marginal utility of chips is 12 and the
marginal utility of dip is 30. Mrs. John- 554. The system in which individuals in a mar-
son should ket economy are free to undertake eco-
(A) do nothing; she is consuming her util- nomic activities with little or no control by
ity maximizing combination of chips and the government:
dip (A) Capitalism
(B) increase her consumption of chips un-
(B) Investment
til the marginal utility of chip consumption
equals 30 (C) Free Enterprise
(C) decrease her consumption of chips (D) Communism
until the marginal utility of chip consump-
tion equals 30 555. “In order to save cost, the “Food In-
(D) decrease her consumption of chips dustry” should use more labor than ma-
and increase her consumption of dip un- chines.”This statement refers to
til the marginal utility per dollar is equal (A) What to produce?
for both goods (B) How to produce?
550. Movement along the demand curve (C) How many to produce?
(A) elastic (D) None of the above
(B) microeconomics
556. What does this curve represent?
(C) unit elastic
(D) change in quantity demanded
(E) substitution effect
551. What is scarcity?

(A) Limited resources, limited wants
(B) Limited resources, unlimited wants
(C) Unlimited resources, limited wants
(D) Unlimited resources, unlimited wants
552. How many TCE point will eddie get of

economics
(A) above 20 ?
(B) 20-18 for a medium HA
(C) 16.9
(D) fail? 0 points? (A) supply
553. The problem of scarcity arises due to (B) equilibrium
(A) human being greed (C) demand
(B) limited available resource (D) surplus
549. D 550. D 551. B 552. C 553. B 554. C 555. B 556. C 557. A

557. total output produced by a firm 563. MR DARP stands for

(A) Total Product (A) marginal revenue
(B) Marginal Product
(B) demand
(C) Marginal Revenue
(C) average revenue
(D) Marginal Cost
(E) IDK (D) price
(E) all of the above
558. the amount of output per unit of input
NARAYAN CHANGDER
measured during a specific period of time
(A) Demand 564. What is the most common economic sys-
tem today?
(B) Supply
(C) Product (A) command
(D) Productivity (B) mixed
(E) IDK (C) traditional
559. This is when the % change in price is (D) none of above
LESS than the percent change in demand.
(A) Elastic Supply 565. Goods and services are the that sat-
(B) Inelastic Supply isfy our needs and wants.
(C) Price Floor (A) products
(D) Price Ceiling (B) goods
560. The amount of goods or services that (C) services
can be BOUGHT or purchased with a given
amount of money is called
(A) Protectionism
566. Which statement is correct?
(B) Planned Economy
(C) Purchasing Power
(D) none of above
561. Which law bans monopolies?

(A) Tea Act
(B) Anti-Trust Act
(C) Townsend Act
(D) Monopoly Act (A) Country A has an absolute advantage
in chairs
562. An economic system in which individuals
and businesses make decisions about what (B) Country B has an absolute advantage
to produce. in shirts
(A) Market economy (C) Country A has a comparative advan-
(B) Mixed economy tage in both goods
(C) Communism (D) Country A has a comparative advan-
(D) Command economy tage in chairs
558. D 559. A 560. C 561. B 562. A 563. E 564. B 565. A 566. A

61
567. If there was a price floor at $7, what (B) mixed

would the surplus be? (C) market
(D) command
572. The Law of Supply:
(A) Is the exact replica of the Law Of De-
mand
(B) Reflects producers offering more of a
good as its price increases and less as its
price falls
(C) Has an inverse relationship with price.
(D) Reflects producers offering less of a

good as its price increases and more of as
(A) 3
its price falls.
(B) 4
(C) 5 573. Which of the following is a labor re-
source?
(D) 6
(A) water
568. Demand is how many people want the (B) painter
goods that are available. If people (C) paint
want the goods available, there is (D) paper
(A) many, high demand
(B) aren’t many, high demand
system in which the government and in-
(C) aren’t many, low demand dividuals are used to decide how to use
(D) many, low demand scarce resources?
(A) Market economy
569. The owners of a corporation are called
(B) Command economy
(A) Directors
(C) Traditional economy
(B) Partners
(D) Mixed economy
(C) Shareholders
(D) Founders 575. the value of money that has been used
up or spent to produce something
570. Business organization in which at least (A) Cost
one partner is not active in the daily run- (B) Expenditures
ning of the business
(C) Total Revenue
(A) sole proprietorship (D) Microeconomics
(B) limited partnership (E) IDK
(C) partnership
576. What are the four types of economic ac-
(D) corporation
tivities?
(E) limited life
(A) primary, secondary and locus
571. A economy’s government makes all (B) primary, secondary and temptation
of the major economic decisions. (C) primary, secondary and tertiary
(A) traditional (D) none of the above
567. B 568. A 569. C 570. B 571. D 572. B 573. B 574. D 575. B 576. C
577. This is how much a currency is worth 581. Opportunity cost is defined as
when you TRADE IT for another country’s (A) the cost of the second best option that
currency. will have to be forgone in order to select
(A) Shortage the best option.
(B) Per Capita GDP (B) the fixed cost involved in the short
(C) Exchange Rate term.
(C) the cost used in a factor of production.
(D) none of above
NARAYAN CHANGDER
578. Point D represents (D) the cost related to the optimum level
of production.
582. Jane spends all her weekly allowance to
buy only two goods: soda and apples. Ac-
cording to the table above, if her prefer-
ences are characterized by the law of di-
minishing marginal utility, then which of
the following statements is correct?
(A) Jane is maximizing her utility

(B) Jane can buy more soda and fewer ap-
ples to maximize her utility
(A) efficient production
(C) Jane can buy more apples and less
(B) inefficient production soda to maximize her utility
(C) unattainable production (D) Jane can buy more apples and the
(D) production production same amount of soda to maximize her util-
ity
579. How do you satisfy your unlimited
wants in a world of limited resources? 583. Type of market structure with many buy-
(A) by making more money ers and sellers that are similar, but their
products are different?
(B) by making choices
(C) by stealing
(D) by setting a budget
(C) Oligopoly
580. Why is indifference curve convex to the (D) Monopoly
origin? 584. What is Australia’s economic system?
(A) MRSxy is same (A) planned socialist
(B) MRSxy increases (B) Market socialist
(C) MRSxy decreases (C) Planned capitalist
(D) None of the above (D) Market capitalist
577. C 578. C 579. B 580. C 581. A 582. C 583. B 584. D

63
585. Should the following firm shutdown? (D) The government acts as a referee to
make sure everyone obeys the laws.
589. According to the graph, what is the quan-

tity at equilibrium?
(A) Yes
(B) No
(C) Not enough information present
(D) none of above
(A) 14
586. An advantage of a corporation is that
(A) owners pay fewer taxes than owners (B) 400
of other forms of business. (C) 600
(B) the business is subject to little govern- (D) 1200
ment regulation.
590. In the long run firms produce at the out-
(C) owners have limited liability for debt. put level that has the minimum.
(A) average variable cost.
(D) owners have direct and immediate
(B) average total cost.
control over daily management of the busi-
ness. (C) average fixed cost.
(D) marginal cost.
587. In economics, the value of the next best
(E) total revenue.
alternative is called
(A) Scarcity 591. A person stocks shelves at a grocery
(B) Productivity store and receives a wage. They have com-
(C) Opprotunity Cost pleted an exchange in which part of the
circular flow model?
(D) Supply and Demand
(A) Individuals
588. Which statement is a characteristic of a (B) Businesss
traditional economy?
(C) Factor Market
(A) The government decides which items
(D) Product Market
should be produced.
(B) The basic economic questions are an- 592. What is an economic system where only
swered by custom and tradition. the government makes the economic deci-
(C) Prices are set by the interaction of sions?
consumers and producers. (A) traditional economy
585. B 586. C 587. C 588. B 589. C 590. B 591. C 592. D

(B) free enterprise (C) increase the equilibrium quantity.

(C) mixed economy (D) increase the demand for bananas.
(D) command economy
599. cost that change when the production of
593. The right to take possession of collateral business changes
until a debt is repaid. (A) Opportunity Cost
(A) collateral (B) Circular Flow Model
(B) lien (C) Inelastic Cost
NARAYAN CHANGDER
(C) mortgage (D) Variable Cost
(D) notes payable (E) IDK
594. A PPC that is bowed out from the origin 600. What is the slope of PPC
represents (A) Downward concave
(A) constant opportunity cost (B) Downward convex
(B) increasing opportunity cost (C) Upward concave
(C) decreasing opportunity cost (D) Upward concave
(D) no opportunity cosr
601. Why would a company need to issue
595. Given that the price elasticity of demand stock?
for a good is 4.5, what is the change in (A) To increase its’ customer base.
quantity demanded if the price is increased (B) To raise money.
by 15%?
(C) To stop the government from regulat-
(A) 6.75% increase
ing it.
(B) 67.5% increase
(D) To show customers that it’s success-
(C) 0.675% increase ful.
(D) 4.5% increase
602. Something of value
596. Opportunity cost is the (A) liability
(A) answer (B) asset
(B) requirement (C) debt
(C) trade off (D) equity
(D) best
603. Oreo cookies are now extremely expen-
597. Public utilities are an example. sive to purchase. Instead of buying Oreo
(A) Perfect Competition cookies, I now want to buy Chips Ahoy.
(B) Natural Monopoly What determinant of demand does this
likely fall under?
(C) Monopolistic Competition
(A) Change in Price of Complementary
(D) Oligopoly
Good
598. Higher price for hotdogs will most (B) Change in Price of Substitute Good
likely (C) Change in Consumer Price Expecta-
(A) increase the demand for ketchup. tions
(B) decrease the demand for hotdog (D) Change in Number of Consumers in
buns. the Market
593. B 594. B 595. B 596. C 597. B 598. B 599. D 600. A 601. B 602. B 603. B
604. A
65
604. Unit price minus cost of goods sold 608. When individuals work for businesses,
(A) Profit per unit what do they get in return?
(B) Cost of good profit (A) Capital
(C) Net Income (B) Labor
(D) Per Unit Income
(C) Income
605. According to the graph, which of the fol- (D) Raw materials
lowing MUST be true in the long run?
609. SSEMI 4 b: Which provides the greatest
incentive for entrepreneurs to take risks?
(A) profits
(B) inflation
(C) prices
(D) interest
610. When a product is selling at equilibrium

price,
(A) producers can not supply enough of it
(A) The equilibrium price will be P2, since (B) consumers want more
that is where marginal cost equals mini- (C) producers supply what consumers de-
mum average variable cost mand
(B) If the price is above P3, new firms will
(D) daily price changes occur
enter the industry
(C) If the price is above P2, new firms will 611. Why do countries trade?
enter the industry
(A) To brag
(D) The equilibrium price will be above P3,
since firms must make an economic profit (B) Because different countries special-
to stay in business ize in different things
606. an efficient communication help to (C) Because every country has different
interests
(A) communicate
(B) advertise (D) Because we like to eat Italian food in
America
(C) televise
(D) inform and be informed
612. a good that is consumed with another
607. Goods made by people to be used specifi- good
cally to produce goods and services: Tools, (A) Fundamentals
office equipment, roads, factories, etc.
(B) Elasticity
(A) Labor
(C) Complements
(B) Land
(C) Entrepreneurship (D) Substitutes
(D) Capital (E) IDK
605. B 606. D 607. D 608. C 609. A 610. C 611. B 612. C 613. D

613. When companies compete in a market 616. Which equation stand for budget line
economy, what is usually the result? (A) PxQx +PyQy=M
(A) People pay much higher prices for (B) PxQx +PyQy<M
goods. (C) PxQx +PyQy>M
(B) There are frequent shortages of (D) None of the above
goods on the market.
(C) Producers refuse to sell some of their 617. The local power plant is under what fac-
products. tor production?
NARAYAN CHANGDER
(A) Labor or Human resources
(D) Consumers are able to buy goods for
the best available price. (B) Capital
(C) Land
614. an arrangement between producers and (D) Entrepreneurship
consumers to conduct voluntary exchange
of goods and services 618. Which of the following would not shift
(A) Market the supply curve for iphones?
(B) Microeconomics (A) an increase in the price of iphones
(B) a decrease in the number of sellers of
(C) Pure Market
iphone
(D) Store
(C) an increase in the price of plastic, an
(E) IDK input into the production of iphones
615. Refer to the following diagram. The tax (D) an improvement in the technology
imposed is indicated by the neon-green used to produce iphones
vertical line. 619. Which provides the greatest incentive
for entrepreneurs to take risks?
(A) prices
(B) inflation
(C) profits
(D) interest
620. What does the government get from

businesses and households?
(A) Capital
(B) Land
(C) Taxes
(D) Wages
621. suppliers will normally offer more for

What is the producer surplus without the sale at high prices and less at lower prices
tax? (A) Supply VS Demand
(A) $800 (B) Law of Supply
(B) $350 (C) Law of Demand
(C) $700 (D) Law of Microeconomics
(D) $1500 (E) IDK
614. A 615. A 616. A 617. B 618. A 619. C 620. C 621. B 622. B

67
622. Investment in capital goods has helped 627. Which statement best describes a com-
China do well in which world markets? mand economy?
(A) fashion design (A) The production of goods and services
(B) consumer goods is determined primarily by markets, but
(C) educational software the allocation of goods and services is de-
(D) none of above termined primarily by government.
(B) The production of goods and services
623. Select the following answers that are is determined primarily by government,
true about sales taxes? but the allocation of goods and services
(A) In many states, groceries are exempt is determined primarily by markets.
from sales taxes
(C) The production and allocation of
(B) Citizens can vote to impose a sales goods and services is determined primar-
taxes on themselves ily through markets.
(C) These taxes are also called excise
(D) The production and allocation of
taxes
goods and services is determined primar-
(D) They fund Social Security ily through government.
624. What is NOT a possible positive exter-
nality on development generated by ins- 628. Households and businesses are:
frastructure? (A) both buyers in the resource market.
(A) Children can get to school becasue of (B) both sellers in the product market.
an increase in roads and road quality.
(C) sellers in the resource and product
(B) Sewage and water treatment facili-
markets respectively.
ties increasing the health of the work-
force. (D) sellers in the product and resource
(C) Firms gain higher profits. markets respectively.
(D) It helps farmers gain access to larger
markets and hence, more profit. 629. Minimum Wage would be an example of
??
625. What is the additional income earned (A) Price Floor
over a lifetime called compared to some-
one who does NOT have this educational (B) Price Ceiling
background? (C) Surplus
(A) Psychological Pricing (D) Shortage
(B) Legacy Effect
(C) College Wage Premium 630. Which is a fundamental question of eco-
(D) none of above nomics?
(A) For whom will goods and services be
626. Which of the following is a natural re-
produced?
source?
(A) house (B) How will goods and services be pro-
(B) construction worker duced?
(C) wood (C) Where will goods and ser
(D) furniture designer (D) none of above
623. A 623. B 624. C 625. C 626. C 627. D 628. C 629. A 630. A 631. B
631. In the short run, a perfectly competitive 635. Pick the belief most likely to held by pro-
firm produces output and breaks even if: ponents of capitalist markets?
(A) the firm produces the quantity at (A) economic resources should be pub-
which P < ATC. licly owned
(B) the firm produces the quantity at (B) freedom of enterprise is essential to
which P = ATC. efficiency
(C) the firm produces the quantity at (C) a price system is not efficient in allo-
which P > ATC. cating resources
NARAYAN CHANGDER
(D) the firm produces the quantity at (D) a central planning board should direct
which P = (TR/Q + TC/Q) × Q. all resources
632. What is the business cycle? 636. Someone buys a car in exchange for a
(A) A moderate but sustained downturn large amount of money. They have com-
in the economy. Recessions are part of pleted an exchange in which part of the
the economy’s normal cycle of ups and circuclar flow model?
downs. (A) Product Market
(B) The situation that occurs when an (B) Factor Market
economy is growing and people are spend- (C) Firms
ing more money; their purchases stimu- (D) Individuals
late the production of goods and services,
which in turn stimulates employment 637. Interdependence and price leadership are
(C) The alternating periods of economic characteristics of firms in what kind of
expansion and economic recession market structure?
(D) A situation in which unlimited wants (A) monopoly
exceed the limited resources available to (B) oligopoly
fulfill those wants (C) monopolistic competition
(D) perfect competition
633. What term means “The percentage of
the labor force that is jobless and actively 638. Economics growth is
looking for work” (A) increase in the amount of spending by
(A) Labor Force consumers
(B) Unemployment Rate (B) percentage increase in real GDP
(C) Supply Curve (C) increase in annual government spend-
(D) Equilibrium ing
(D) amount of capital consumed in a year
634. Online loans are:
(A) only available to companies in a lim- 639. What is most likely to occur to supply as
ited number of industries the price of an item decreases?
(B) easier to obtain but more expensive (A) The supply will be unaffected.
than bank loans (B) The supply of an item will rise.
(C) easier to obtain and less expensive (C) There will be more producers enter-
than bank loans ing the market.
(D) easier to obtain and about the same (D) The supply of that item will decrease
cost as a bank loan as producers make less.
632. C 633. B 634. B 635. B 636. A 637. B 638. B 639. D 640. B

69
640. Which statement is true 645. A business owner who prefers to main-
(A) Scarcity doesn’t exist for everyone tain complete control of all business activi-
(B) Nothing in life is free ties might consider structuring the venture
(C) Rarely do we use economic thinking as a(n)
(D) Sometimes there is no downside to a (A) sole proprietorship
decision (B) general partnership.
641. What is #6? (C) franchise
(D) corporation.
646. The opposite of expansion, is called a

, decline in business activity.
(A) recession
(B) inflation
(C) neither
(D) none of above
(A) Productive Resources 647. Butch is currently spending his entire
(B) Revenue lunch budget on 3 sodas and 4 hot dogs.
(C) Expenditures At his current level of consumption, his
(D) Income marginal utility for sodas is 5 utils and his
marginal utility for hot dogs is 10 utils. In
642. Listing that shows quantities demanded order to maximize his total utility, Butch
of a product at all prices should:
(A) demand
(A) Consume more sodas & fewer hot
(B) marginal utility
dogs regardless of prices
(C) demand schedule
(B) Consume more hot dogs & fewer so-
(D) elasticity
das regardless of prices
(E) substitutes
(C) Maintain current consumption if so-
643. Law of demand shows relation be- das are $1 each and hot dogs are $2 each
tween:
(A) a) Income and price of commodity (D) Maintain current consumption if so-
(B) b) Price and quantity of a commodity das are $2 each and hot dogs are $1 each
(C) c) Income and quantity demand
(D) d) Quantity demanded and quantity 648. The principle of diminishing marginal util-
supplied ity can be used to explain:
644. As an individual consumes an additional (A) Why Todd’s 2nd soda is more enjoy-
good or servce, their satisfaction de- able than his 1st.
creases (B) Why Todd’s 2nd soda is less enjoyable
(A) Marginal Utility than his 1st.
(B) Law of Diminishing Marginal Utility (C) Why Amy’s 1st soda is more enjoyable
(C) Utility than Todd’s 1st soda.
(D) Negative Utility (D) none of above
641. D 642. C 643. B 644. B 645. A 646. A 647. C 648. B

649. What choice below describes the follow- (D) raise the price until she has maxi-
ing definition: the theory of social sci- mized her profits.
ence that deals with issues such as money,
banking, wealth, resources, interest rates, 653. How do you find the Total Cost?
inflation, unemployment, business cycles, (A) fixed costs + the profit
investing, etc. (B) marginal revenue + marginal cost
(A) Economics (C) fixed costs + variable costs
(B) Life! (D) variable costs + marginal cost
NARAYAN CHANGDER
(C) I’m not sure, Mr. S.! Can you help me
654. Some people who provide are: doc-
out?
tors, lawyers, teachers, comedians, and
(D) KFC nurses.
(A) money
(B) services
(C) needs
655. Canada was one of the few (if not only)

countries to weather the financial crisis of
2007–08. What is the primary reason for
Canada’s success?
(A) Mark Joseph Carney, the Governor of
the Bank of Canada.
(B) Controls put in placed by the free mar-
ket “invisible hand”.
650. (A) Shut Down (C) Proper Government regulations on
(B) Stay open and take a loss the free market economy.
(C) Positive Economic Profit (D) International trade agreements be-
(D) Normal Profit tween Canada and other first world na-
tions, such as NAFTA.
651. The basic economic questions are EX-
CEPT: 656. Government and private sector in Islamic
economy make an economic decision based
(A) What to produce
on:
(B) For whom should be produce
(A) Books
(C) Why to produce
(B) Opinion
(D) How much to produce
(C) Al-Quran and Hadith
652. Zoe’s Bakery determines that P < ATC (D) Internet
and P > AVC. Zoe should:
(A) continue to operate even though she 657. What is a business owned by stockhold-
is taking an economic loss. ers/investors but operated by others?
(B) continue to operate, as she is making (A) Sole Proprietorship
an economic profit. (B) Partnership
(C) shut down immediately, as she is tak- (C) Corporation
ing an economic loss. (D) none of above
649. A 650. A 651. C 652. A 653. C 654. B 655. C 656. C 657. C 658. A
71
658. The ideal price and level of output occurs (C) Sole Proprietorship
where (D) Limited Partnership
(A) Marginal Revenue and Marginal Cost
cross 664. This part of the market determines SUP-
(B) MR = AVC PLY
(C) Average Fixed Cost equal ATC (A) buyers
(D) MR = MT (B) sellers
(C) consumers
659. Which of the following will not shift a
(D) us
country’s production possibilities frontier
outward? 665. Producers
(A) an advance in technology (A) use and pay for goods and services
(B) an increase in the labour force (B) make or grow goods and sell services
(C) an increase in the capital stock
(D) a reduction in unemployment (C) want to grow goods and sell services
660. Most expensive to start
(D) are people who live in a neighborhood
(B) Partnership 666. A measurement of the total goods and
(C) Corporation services produced within a country is
(D) none of above the
(A) Marginal Revenue
661. The definition of the law of diminishing
(B) Gross Domestic Product (GDP)
marginal utility
(C) Total Costs (TC)
(A) As more units are consumed the
marginal utility falls. (D) Law of Supply
(B) As more units are consumed the 667. Principle is different than principal. A
marginal utility increases. principal is the leader of a school. Principle
(C) As price decreases quantity de- is
manded increases. (A) the amount of profits a company
(D) As price increases consumers are earns in a fiscal year
willing to pay more. (B) the amount of money a company pays
662. The necessary condition in Indifference its employees during a month
curve analysis for equilibrium is (C) the amount of money provided to sup-
(A) MUx = Px pliers
(B) MUx/Px = MUy/Py (D) the amount of money borrowed from
a bank or lending company
(C) MRSxy = - P1/P2
(D) MRSxy increases 668. Which is NOT an example of a service?
663. What type of business organization sells (A) construction worker
stock to raise money? (B) teacher
(A) Partnership (C) animal groomer
(B) Corporation (D) car
659. D 660. C 661. A 662. C 663. B 664. B 665. B 666. B 667. D 668. D 669. A
669. The percentage of a loan a bank or on- (A) C and D

line credit company charges when a small
(B) D
business receives a loan.
(A) Origination fee (C) A
(B) Supply Fee (D) B
(C) Principle Fee
(E) A and B
(D) Pledged Fee
NARAYAN CHANGDER
670. Type of market structure with only a few 673. Disadvantage of Central Planned Econ-
sellers? omy
(A) Perfect/Pure Competition (A) Social justice
(B) Limited choice of product and ser-
(C) Oligopoly vices
(D) Monopoly
(C) Public goods
671. What is the relationship between quan- (D) Profit
tity supplied and price?
(A) a. They are not related.
674. Monopolistically competitive firms are
(B) a. They are directly related. considered inefficient in allocating soci-
(C) They are inversely related ety’s resources for which of the following
(D) They are related through demand. reasons?
672. There are several points posted on the (A) In long-run equilibrium, the marginal
following Production Possibility Frontier benefit exceeds the price charged by the
(PPF) graph. firms.
(B) In long-run equilibrium, the price is
greater than the marginal cost.
(C) In long-run equilibrium, average total
costs are minimized.
(D) In long-run equilibrium, the firm is
earning economic profits.
675. In economic terms, which action shows a

person acting as an investor?
(A) A person sells a car to a neighbor.
(B) A person puts money in a savings ac-
count.
(C) A person drives students to school.
(D) A person buys a new pair of shoes.
The most inefficient points are indicated by
which letter(s)? 676. This firm is experiencing
670. C 671. B 672. D 673. B 674. B 675. B 676. B

73
680. In a unitary government, who has most

of the power?
(A) individual voters
(B) local governments
(C) national government
(D) none of above
681. The 4 Factors of Production are:
(A) Land, Money, Enterprise & Buildings
(B) Labour, Money, Raw materials, &
(A) economic loss. Land
(B) economic profit. (C) Land, Labour, Needs, & Wants
(C) normal profit. (D) Land, Labour, Capital, & Enterprise
(D) accounting profit.
682. Which of the following is a condition for
(E) break-even profit. maximizing utility?
677. Products shipped from the United States (A) marginal utility per dollar is maxi-
to other countries around the world are mized
called (B) entire budget is spent
(A) imports (C) equal quantity of both products
(B) exports (D) marginal utility is maximized
(C) services 683. All the goods and services produced by
(D) needs a business during a given period of time
with a given amount of input is the..
678. What Is Default?
(A) Variable costs
(A) Failure to repay a loan
(B) Economic expansion
(B) Unit price minus cost of goods sold (C) Total product
(C) The merchandise that a company sells (D) Fixed costs
to its customers
(D) Funds contributed by investors to a 684. Occurs in an economy when the produc-
business tion or consumption of a specific good im-
pacts a 3rd party that is not directly re-
679. Unlimited liability means? lated to the production or consumption
(A) The owner is personally liable to (A) Equilibrium
cover business debts and any costs the (B) Voluntary exchange
business can not cover (C) Externalities
(B) The owner(s) do not have to cover all (D) Product market
business costs personally in the case of
them being sued or going into debt 685. Which country has a history of starva-
(C) A corporation is not responsible for tion because of their economy?
taking care of lawsuits (A) China
(D) A sole Proprietorship will have (B) Japan
enough money and coverage to pay any (C) North Korea
and all debts (D) none of above
677. B 678. A 679. A 680. C 681. D 682. B 683. C 684. C 685. C

686. Who are the main recipients for micro- 691. What do you need to produce other
credit? goods and services?
(A) Rich women (A) consumer goods
(B) Poor men (B) capital goods
(C) Poor children (C) nondurable goods
(D) Poor women (D) Gross Domestic Product (GDP)
(E) All of the above 692. Economic forces such as supply and de-
NARAYAN CHANGDER
mand are balanced.
687. Which market structure did John D. Rock-
(A) Liability
efeller’s Oil industry fall under?
(B) Voluntary exchange
(A) Monopoly
(C) Equilibrium
(B) Oligopoly
(D) Externalities
(C) Perfect Competition
(D) Monopolistic Competition 693. Which of the following is not part of the
opportunity cost of going on holiday?
688. If the cost of producing a good goes up, (A) the money you spent on a theatre
the price will go show there
(A) go down. (B) the money you could have made if you
had stayed at home and worked
(B) go up.
(C) the money you spent on food
(C) stay the same/
(D) the money you spent on airline tick-
(D) none of above ets.
689. Land is 694. Only one seller sells a product for which
(A) the natural resources used to provide there are no close substitutes
goods & services (A) Monopoly
(B) the people involved in providing (B) Oligopoly
goods and services (C) Monopolistic competition
(C) the raw materials used to provide (D) Perfect competition
goods and services
(D) the bringing together of the other fac- 695. People learn that taquis cause cancer
tors of production to provide goods and (A) Demand; Increase
servies (B) Demand; Decrease
690. The reason that firms in perfect competi-
tion earn zero economic profit in the long
run is that: 696. Which economy is dictated by supply and
(A) Firms are small demand and the buyers and sellers?
(B) There are a large number of sellers (A) Market
(C) There are no barriers to entry or exit (B) Socilaism
(D) Each firm has control over market (C) Mixed
price (D) Command
686. D 687. A 688. B 689. A 690. C 691. B 692. C 693. C 694. A 695. B 696. A
75
697. Based on the following table, what is the 701. Private ownership and property rights
opportunity cost of moving from C to B? are more common in
(A) Traditional economies
Situation Capital Goods Consumer Goods (B) Capitalism
A 0 2000
B 150 1750 (C) Communism
C 300 1500 (D) Command economies
D 550 1050
E 700 500 702. In the short run, the firm will realize an
F 950 0 economic loss but will continue to produce
if the price is:
(A) 150 Capital Goods

(B) 300 Consumer Goods
(C) 300 Capital Goods
(D) 1/2 Consumer Goods
698. Which of the following is true about a

shareholder in a corporation?
(A) A shareholder is part owner of that
business.
(B) A shareholder may not share in the
earnings of that corporation.
(C) A shareholder may not transfer his
share to another party without permission. (A) below P2
(B) between P1 and P2
(D) A shareholder is liable for any debts (C) between P2 and P3
accumulated by that corporation. (D) between P3 and P4
699. When Marginal Utility is zero what hap- 703. Least common form of business organi-
pens to Total Utility? zation?
(A) Became Zero (A) Sole Proprietorship
(B) Became Maximum (B) Partnership
(C) Became Minimum (C) Corporation
(D) None of these (D) Monopoly
700. What do you call a guy with a rubber 704. who was the writer for Wealth of Na-
toe? tions
(A) Shoe Lace (A) Plato
(B) Footloose (B) Karl Marx
(C) Roberto (C) Paul Samuelson
(D) none of above (D) Adam Smith
697. A 698. A 699. B 700. C 701. B 702. C 703. B 704. D 705. C

705. Which of the following is NOT considered (C) Monopolistic Competition

a productive resource? (D) Oligopoly
(A) Natural resources
(B) Capital resources 710. Which Southern and Eastern Asian coun-
try could be described as an autocracy?
(C) Napital resources
(A) Japan
(D) Labor resources
(B) China
(C) North Korea
NARAYAN CHANGDER
(D) none of above
711. Limited Liability applies to

(A) Sole Proprietorships
(B) small business owners
(C) Corporations and partnerships
(D) Only Corporations
712. In the short run, a profit-maximizing

firm, faced with U-shaped average cost
curves, is producing a level of output at
706. (A) Shut Down which the average total cost of production
(B) Stay open and take a loss is minimized. At this level of output, which
(C) Making a normal profit of the following is true for the firm?
(D) Making a positive profit (A) Marginal cost equals average total
cost.
707. Which best describes the majority of the (B) Marginal cost equals average vari-
farms in India? able cost.
(A) small, family owned farms
(C) Marginal cost equals average fixed
(B) collective farms owned and worked cost.
by entire villages
(D) Profit per unit equals marginal cost.
(C) large cooperatives owned and oper-
ated by the government 713. An industry that is dominated by a few
(D) none of above large firms is
(A) monopolistic competition.
708. If a price is above equilibrium price, it
creates a (B) a monopoly.
(A) shortage (C) perfect competition.
(B) surplus (D) an oligopoly.
(C) market price 714. What is the economy when you go hunt
(D) demand just like your father?
709. A market that has a few sellers of basi- (A) Traditional
cally the same goods. (B) Command
(A) Perfect Competition (C) Mixed
(B) Pure Monopoly (D) Market
706. B 707. A 708. B 709. D 710. C 711. C 712. A 713. D 714. A 715. A
77
715. SSEMI2 a: Which explains why a supply 719. The supply of Oranges exceeds the de-
line is upward sloping? mand while the supply of Apples are hin-
(A) the Law of Supply states there is a di- dered due to weather. Which of the fol-
rect relationship between price and quan- lowing statement is true about this partic-
tity ular market?
(B) the Law of Demand states there is (A) The price of Orange and Apples will
an indirect relationship between price and decrease.
quantity (B) The price of Orange will decrease as
(C) the Law of Supply compares marginal the Apples market is experiencing a s
costs and marginal benefits in a constant scarcity.
rate (C) The price of Orange will increase
(D) the Law of Demand shows a positive as the Apples market is experiencing a
relationship between two goods, creating scarcity.
the slope (D) The price of Orange and Apples will
increase.
716. If the demand of a product drops, you
(E) The inflation rate will increase due to
would expect the price of the product
the shortage of Apples.
to
(A) rise 720. Which of the following is an example of
(B) stay the same economics?
(C) go up (A) The government of the United States
(D) decrease is divided into three branches.
(B) The United States declared its inde-
717. The Alberta beef market to shrunk as pendence from Great Britain.
during the Mad Cow Disease crisis. This is
(C) The people of the United States come
an example of what Economic property?
from many different places.
(A) An example of the “invisible hand” in
(D) The United States buys oil for use at
action.
home from other countries.
(B) Market failure due to Alberta’s
monopoly on the beef industry. 721. PPC can be straight line, when
(C) Externality causing the market to (A) MRT is constant
shrink during a crisis.
(B) MRT and opportunity cost rise
(D) Exogenous variables causing the mar-
(C) MOC falls
ket demand for beef to drop.
(D) none of these
(E) Endogenous variables causing the
market demand for beef to drop.
722. Field of economics that deals with behav-
718. The law of demand states that if the ior and decision making by small units
price of CD’s rise, consumers will (A) elastic
(A) Buy more CDs (B) microeconomics
(B) Buy fewer CDs (C) unit elastic
(C) Quantity demanded will not change (D) change in quantity demanded
(D) none of above (E) substitution effect
716. D 717. D 718. B 719. C 720. D 721. A 722. B 723. D

723. Which country is a major center for 729. Which points represent productive effi-
sneaker design? ciency
(A) Brazil
(B) Saudi Arabia
(C) Taiwan
(D) United States
724. What type of economy does America
NARAYAN CHANGDER
have?
(A) Mixed
(B) Traditional
(C) Market
(D) Command
725. Mr. Simpson is liable for all the debts of
his company. Mr.Simpson has which type
of business organization?
(B) monopoly (A) ABCD
(C) perfect competition (B) ABC
(C) AB
(D) corporation
(D) AD
726. A schedule or curve that shows the var-
ious combinations of two products a con- 730. The following are characteristics of a
sumer can purchase with a specific amount pure planned economy except
of money income is: (A) Achieves an equal income distribution
(A) A tradeoff
(B) public ownership of resources
(B) A budget line
(C) price mechanism of lesser impor-
(C) A tangent point
tance
(D) An optimal output
(D) stimulates innovation
727. The Country of North Korea has a dic- 731. Who or what answers the basic economic
tator that makes all of the economic de- questions in a free market economy?
cisions. What type of economy is this?
(A) Individuals and Businesses
(A) Traditional
(B) Government
(B) Market (C) Custom
(C) Command (D) Individuals, Businesses, and Govern-
(D) Centrally Planned ment
728. The higher the price, the lower the quan- 732. Price is determined based on the of
tity demanded a good?
(A) Law of supply (A) total utility or value
(B) Price floor (B) marginal utility
(C) Price ceiling (C) usefulness
(D) Law of demand (D) resale value
724. A 725. A 726. B 727. C 728. D 729. C 730. D 731. A 732. B

79
733. Which of the following does not illus- 738. The image above shows a firm making
trate opportunity cost?
(A) If I spent more on food, I must spend
less on clothes.
(B) If I buy computer, I must do without
a 55” television.
(C) If I study today, I must give up going
to the football game.
(D) If I increase the spending now,
means more spending in the future.
734. A barrier to entry is

(A) An obstacle that makes it difficult for
new firms to enter a market. (A) Economic Profit
(B) A commitment on the part of big busi- (B) Economic loss
ness to allow smaller companies to com- (C) Breaking even
pete.
(D) Shutting down
(C) An obstacle that prevents additional
workers from entering an industry, such 739. listing of the various quantities of a
as a union. particular product supplied at all possible
(D) none of above prices in the market
(A) Supply
735. Sara’s Hair Palace is a small, locally
(B) Supply VS Demand
owned beauty salon in Sterling. This rep-
resents what type of business? (C) Law of Supply
(A) corporation (D) Supply of Schedule
(B) partnership (E) IDK
(C) sole proprietorship 740. Slope of the Budget Line is equal to
(D) none of above (A) Price Ratio
736. In which of the following would one per- (B) MRSxy
son be responsible for all of the risks but (C) MRTxy
also receive all of the profits? (D) None of these
(A) Corporation
741. The free exchange of goods and services
(B) Proprietorship between buyers and sellers in some sort
(C) Partnership of marketplace
(D) Dual owner business (A) Price control
(B) Determinants of supply
737. Papa Johns offer a better pizza deal that
Pizza Hut this week (C) Voluntary exchange
(A) Demand; Increase (D) Law of demand
(B) Demand; Decrease 742. Which of the following is not a matter of
(C) Supply; Increase micro economics?
(D) Supply; Decrease (A) Producer’s Behaviour
733. D 734. A 735. C 736. B 737. A 738. A 739. D 740. A 741. C 742. C
(B) Market Demand 748. The law of demand states that as a price
(C) Monetary Policy goes demand
(D) Price Determination (A) goes up goes down.
743. The relationship between price and quan- (B) goes up goes up.
tity in SUPPLY is
(C) goes down goes down.
(A) Indirect
(B) Inverse (D) goes down stays the same.
NARAYAN CHANGDER
(C) Direct
(D) Reverse 749. Economics is a social science concerned
with:
744. At a price of $2, below the AVC, this firm
(A) the best use of scarce resources to
will produce items.
achieve the maximum satisfaction of eco-
nomic wants.
(B) increasing the level of productive re-
sources so there is a minimum level of in-
come.
(C) increasing the level of productive re-
sources so there is maximum output in so-
ciety.
(A) 8
(B) 9 (D) the best use of scarce resources paid
for at the minimum level of cost to con-
(C) 11
sumers and businesses.
(D) 0
(E) need more information.
750. To determine whether a business oppor-
745. Revenues after cost tunity is realistic, the entrepreneur must:
(A) notes payable (A) develop a pro forma that shows a
(B) assets profitable enterprise
(C) net income (B) develop a bank credit application
(D) maturity
(C) develop effective advertising
746. The amount of money borrowed
(D) develop a network of angel investors
(A) Principle
(B) Interest
751. Assuming the economy is currently oper-
(C) Premium
ating at full employment. What is the op-
(D) Origination fee portunity cost to an economy of increasing
747. A person or organization that uses a capital investment?
product or service is a(n): (A) A rise in consumption
(A) consumer
(B) A fall in consumption
(B) economist
(C) loan shark (C) A rise in productivity
(D) debtor (D) A fall in productivity
743. C 744. D 745. C 746. A 747. A 748. A 749. A 750. A 751. B 752. A
81
752. Which of the following scenario will in- 757. Which of the following is NOT a capital
crease both the equilibrium price and quan- resource?
tity of an inferior good? (A) microwave
(A) Decrease in consumer income. (B) table
(B) Decrease in the number of substitu- (C) jacket
tion products. (D) cotton
(C) Increase in consumer income.
758. Which market structure has the most
(D) Increase in the number of substitu-
price control?
tion products.
(E) Decrease in consumer demand.
753. In the circular flow model, what do indi- (C) Oligopoly
viduals sell to the factor market (D) Monopoly
(A) Services
759. People buy Coke instead of Pepsi be-
(B) Money
cause Coke went on sale.
(C) Productive Resources
(A) Change in Supply
(D) goods
(B) Change in Quantity Supplied
754. What are capital goods? (C) Change in Demand
(A) factories and machines used to make (D) Change in Quantity Demanded
the goods
760. Which of the following statements cor-
(B) workers who make the goods and per- rectly identifies a difference between per-
form services fect competition and monopolistic competi-
(C) money spent to train workers to use tion?
new technology (A) In perfect competition there are no
(D) none of above barriers to entry, but there are strong bar-
riers in monopolistic competition.
755. What percentage of India’s population (B) In perfect competition there are many
work in agriculture? firms, but in monopolistic competition
(A) 25% there are only a few firms.
(B) 50% (C) In perfect competition the firms all
(C) 75% sell products that are exactly the same,
but in monopolistic competition each firm
(D) none of above
sells a slightly differentiated product.
756. In order to save cost, the “Milk Indus- (D) In perfect competition there are few
try” should use more labour than machine. consumers, but in monopolistic competi-
This statement refers to tion there are many consumers.
(A) What product should be produce? 761. What is the production possibilities
(B) Where product should be produce? curve?
(C) For whom product should be pro- (A) a graph that shows how much an
duce? economy can produce between 2 goods
(D) How product should be produce? (B) how much money something is
753. C 754. A 755. B 756. D 757. D 758. D 759. C 760. C 761. A 762. C
(C) the opportunity one has to give up in 766. Points on the production possibilities
order to gain something else frontier are
(D) land, labor, capital, entrepreneurs (A) inefficient.
(B) normative.
762. The slope of indifference curve is equal
(C) unattainable.
to
(D) efficient.
(A) price ratio
(B) marginal opportunity cost 767. Products used in place of other products
NARAYAN CHANGDER
(C) marginal rate of substitution (A) demand
(D) all of these (B) marginal utility
(C) demand schedule
763. SSEMI 4 c: A market structure in which
(D) elasticity
there is only one seller is known as a
(E) substitutes
(A) Pure competition
(B) Monopolistic competition 768. What is the difference between a short-
(C) Oligopoly age and scarcity?
(A) A shortage is temporary but scarcity
(D) Monopoly
always exists
764. What to produce in Mixed Economy (B) A shortage results from rising prices;
refers to: scarcity results from falling prices
(A) Public goods (C) A shortage is lack of all goods and ser-
(B) Private goods vices; scarcity concerns a single item
(D) There is no real difference between a
(C) Intermediate goods
shortage and scarcity
(D) Public and private goods
769. What is a market economy?
(A) Where everyone is equal
(B) Consumers influence the types of
goods and services
(C) The government are involved with ev-
erything
(D) Environment is important
770. Which of the following statements is nor-

mative?
(A) a. Large government deficits cause
an economy to grow more slowly.
(B) People work harder if the wage is
higher.
765. (A) Shut Down
(C) The unemployment rate should be
(B) Take loss but stay open lower.
(C) Normal Profit (D) Printing too much money causes infla-
(D) Positive Economic Profit tion.
763. D 764. D 765. C 766. D 767. E 768. A 769. B 770. C 771. B

83
771. In my country producers decide what and 775. Formal organization of sellers that agree
how much to make based on what people to act together to set prices and limit out-
want to buy. put
(A) Traditional (A) Monopoly
(B) Market (B) Price maker
(C) Command (C) Oligopoly
(D) Cartel
(D) Mixed
776. Scarcity can best be defined as
772. This single farmer is experiencing
(A) A Shortage of a product
(B) Where demand is greater than supply
(C) Unlimited wants vs Limited resources
(D) Limited wants vs unlimited resources
777. What type of economy does the United

States have?
(A) Traditional
(B) Command
(C) Market
(D) Mixed
(A) economic loss.
(B) economic profit. 778. what is given up when one more unit of
product is produced
(C) break-even.
(A) Trade-offs
(D) normal profit.
(B) Marginal Costs
(E) long run equilibrium. (C) Opportunity Costs
773. Celery & Ranch if Hot Wings are on sale (D) Marginal Benefits
this week (E) IDK
(A) Demand; Increase 779. Uninsurable risk is an unstable risk
(B) Demand; Decrease where the insurance is against the law
(C) Supply; Increase (A) false
(D) Supply; Decrease (B) true
(C) ask Mr king
774. Economics is (D) none of above
(A) studying goods, services, and how
780. What is the best example of scarcity
people can get them.
(A) The restuarant is not crowded tonight
(B) studying trees, bushes, and other
plants.
(B) The school parking lot only has 150
(C) studying animals and wildlife. spaces but 200 students want to park
(D) studying food, and how food is made. there
772. B 773. A 774. A 775. D 776. C 777. D 778. B 779. B 780. B 781. B
(C) There are 500 houses in the subdivi- 786. When a society invests in education, it
sion and 250 of them are occupied improves the standard of living by improv-
(D) A person decided to dye her hair ing
blonde instead of red (A) labor
(B) capital goods
781. In the PRODUCT market, (C) human capital
(A) firms buy goods and services from (D) entrepreneurship
households
NARAYAN CHANGDER
(B) firms sell goods and services to 787. To trade.
households (A) Taxes
(C) firms sell resources to households (B) Barter
(D) firms buy resources from households (C) Service
(D) Producer
782. The study of economics includes all of
these as part of its definition except 788. The merchandise that a company sells to
customers
(A) Unlimited wants and needs but lim-
(A) Assets
ited resources
(B) Cost of Goods
(B) The way we use scarce resources
(C) Inventory
(C) The decisions we make
(D) Manufacturer
(D) Business opportunities created
789. Extra usefulness gained from using one
783. Which factor might cause an increase in more unit of a product
the supply of a product? (A) demand
(A) a. A decrease in productivity (B) marginal utility
(B) a. Fewer sellers in the marketplace (C) demand schedule
(C) a. A decrease in government regula- (D) elasticity
tions (E) substitutes
(D) a. An increase in the cost of raw ma-
790. If the Price is $2, there will be
terials
784. Economics gives a to any business or-

ganisation.
(A) Objective
(B) Goals
(C) Directions
(D) none of above
785. The United States economy is based on

this system:
(A) Command (A) A surplus of 45
(B) Market (B) A shortage of 85
(C) Traditional (C) A shortage of 45
(D) Socialist (D) A surplus of 85
782. D 783. C 784. C 785. B 786. C 787. B 788. C 789. B 790. C 791. B
85
791. What is a want? 797. When individuals work for businesses,

(A) A person what resource are they providing?
(B) Something you would like to have but (A) Capital
don’t need to live (B) Labor
(C) Purple (C) Loans
(D) Something you need to live (D) Raw materials
792. The statement that “the human being’s 798. All of the following are characteristics of
want cannot be fully satisfied with limited a mixed economy EXCEPT
resources is called (A) lack of consumer choice
(A) opportunity cost (B) government makes decisions for the
public sector
(B) choices
(C) individuals and business owners
(C) scarcity
make decisions for the private sector
(D) desire
(D) competition
793. Toal Costs= 799. What is the equilibrium quantity?
(A) Variable Costs- Fixed Costs
(B) Fixed Costs - Variable Costs
(C) Fixed Costs + Variable Costs
(D) Variable Costs Divided By Fixed Costs
794. When a consumer consumes two goods

X and Y , she will attain equilibrium when
(A) MUx = MUy
(B) MUx/Px = MUy/Py
(C) Px/MUx = Py/MUy
(D) None of these
(A) 3
795. A formal agreement to set prices or to (B) 4
otherwise behave in a cooperative man- (C) 5
ner (D) 6
800. When a company issues a check for an
(B) non-price competition amount greater than the amount the com-
(C) oligopoly pany has deposited in the bank.
(D) collusion (A) Overdraft
(E) monopoly (B) Legal obligation
(C) Lein
796. People Celery & Ranch if Hot Wings are
on sale this weekWhat type of determi- (D) Bankrupt
nant is this? 801. The gap between ATC and AVC is
(A) Substitute (A) MC.
(B) Complimentary (B) AFC.
(C) Price Expectation (C) TFC.
(D) # of Sellers (D) constant throughout.
792. C 793. C 794. B 795. D 796. B 797. B 798. A 799. C 800. A 801. B
802. Anyone who makes or grows a good or (B) Demand; Decrease

performs a service. (C) Supply; Increase
(A) Barter (D) Supply; Decrease
(B) Consumer
807. Business organization recognized by law
(C) Producer as a separate legal entity having all the
(D) Profit rights of an individual
803. Arrows 4 and 7 on this circular flow dia- (A) sole proprietorship
NARAYAN CHANGDER
gram demonstrate (B) limited partnership
(C) partnership
(D) corporation
(E) limited life
808. The thing that you give up (the next best
alternative) when you make a decision is
known as
(A) Opportunity Cost
(B) Scarcity
(C) Incentive
(D) Choice
809. What is market failure?
(A) Goods & Services
(A) It is a situation in which a product or a
(B) Expenditures service failed to generate enough demand
(C) Productive Resources to be successful.
(D) Income (B) It is a situation in which wrong prod-
ucts and services in the wrong market re-
804. which sector is usually the biggest in de-
sults in low demand and eventual failure.
veloped countries?
(A) primary sector (C) It is a situation in which market on its
(B) secondary sector own fails to allocate resources efficiently.
(C) tertiary sector
(D) informal sector (D) It is a situation in which a firm exits a
market due to financial failure.
805. This type of government typically goes
with the Command Economy. 810. What will eventually happen to an econ-
(A) Democracy omy when resources are not allocated
properly?
(B) Dictatorship
(A) It will result in a market failure.
(C) Autocracy
(B) It will result in slow rate of inflation
(D) Communism
growth.
806. Situation NOW if you want to buy an (C) It will result in larger income gaps be-
XBOX but are waiting for the Black Friday tween the rich and poor.
sale (D) It will experience a rapid growth.
(A) Demand; Increase (E) It will experience scarcity.
802. C 803. C 804. C 805. D 806. B 807. D 808. A 809. C 810. A

87
811. A decrease in supply or a shift of the sup- (C) 3 tomatoes

ply curve to the left: (D) 10 tomatoes
(A) If more suppliers enter the market
place. 815. A fishing village would be an example of
(B) A fall in the cost of an input occurs. which economic system:
(C) If government ends regulation. (A) Market
(D) If government places an excise tax on (B) Command
goods. (C) Free Enterprise
812. In my country, central planners decide (D) Traditional
when we should expand old factories and
build new ones. 816. What is the definition of economics?
(A) Traditional (A) The study of human behavior and atti-
(B) Command tudes
(C) Market (B) The study of past events and the im-
pact they have had on people
(D) Mixed
(C) The study of political and social inter-
813. Which of the following is an example of actions
an employee with a good work ethic?
(D) The study of the production and distri-
(A) Harper arrives at work 15 minutes bution of goods and services
early everyday with a positive attitude
(B) Bryce complains about each task he 817. Which one of these is not a characteristic
is asked to perform. of entrepreneur?
(C) Ty is late for work 2 or 3 days each (A) organized
week. (B) good looking
(D) Savannah spends a portion of the (C) creative
workday on her phone texting her friends.
(D) risk taker
814. Based on the PPF, the marginal opportu-
nity cost of producing the 7th carrot is 818. The factors which influence the quantity
of a product or service supplied
(A) Voluntary exchange
(B) Determinants of supply
(C) Liability
(D) Economic competition
819. The idea that resources are limited; we

don’t have an unlimited supply of what we
want
(A) scarcity
(B) supply
(A) 2 tomatoes (C) demand
(B) 8 tomatoes (D) inflation
811. D 812. B 813. A 814. A 815. D 816. D 817. B 818. B 819. A 820. A
820. is a fee paid to the investor so money (D) Mrs. Williams will charge more for
can be used to fund loans. her cookies to compete with Mr. Shimer.
(A) interest
825. This perfect competitor will shut down
(B) money below which price/output relationship?
(C) penalty
(D) bank
821. In Economy are three group of deci-
NARAYAN CHANGDER
sion makers
(A) Firms, banks, and traders
(B) firms, households and banks
(C) households, governments and firms
(D) household, governments and banks
822. Who or what answers the basic economic
questions in a mixed economy?
(A) Individuals and Businesses
(B) Government
(C) Custom (A) A
(D) Individuals, Businesses, and Govern- (B) K
ment (C) M
(D) L
823. Money paid by a company to a person
who owns stock in that company. (E) R
(A) liquid assets 826. If a price is below the equilibrium price it
(B) assets q creates a
(C) dividend (A) shortage
(D) mortgage (B) surplus
824. Mrs. Williams sell chocolate chip cook- (C) market price
ies in town. Mrs. Williams is the only (D) supply
one to make these particular cookies. Re-
827. The actual thing you gave up to have
cently, Mr. Shimer has moved to town
something else. Everything has a cost
and opened a store that sells chocolate
chip cookies. Most people agree that they (A) Opportunity Cost
are the same quality and taste as Mrs. (B) Tradeoff
Williams’ cookies. What will likely happen (C) Incentive
to the price of Mrs. Williams’ cookies? (D) none of above
(A) Nothing because most people will
refuse to buy Mr. Shimer’s cookies. 828. The law of diminishing marginal returns
causes the MC curve to be
(B) With new competition the price will
fall. (A) upward sloping.
(C) Mr. Shimer and Mrs. Williams will (B) downward sloping.
join forces and keep the prices the same. (C) U shaped.
(D) constant.
821. C 822. D 823. C 824. B 825. E 826. A 827. A 828. C 829. A

89
829. Basic economic problem 833. is the primary function of eco-

(A) scarcity nomics.
(B) shortage (A) Financial study
(C) synonym (B) Maintaining rules
(D) simile (C) Controlling on staff
(D) none of above
830. Which of the following is NOT a determi-
nant of the supply of peanut butter? 834. Decline in extra satisfaction from using
(A) The price of peanuts additional quantities of a product
(B) The wages of peanut butter factory (A) demand elasticity
workers (B) microeconomics
(C) The income of peanut butter con- (C) inelastic
sumers
(D) diminishing marginal utility
(D) Existing peanut butter making tech-
(E) income effect
nology
831. Indifference Curve analysis of Con- 835. which of these is NOT a cost of micro eco-
sumer’s equilibrium is also called nomic reform
(A) Marshallian Anaysis (A) Higher unemployment
(B) Gossen’s Analysis (B) closure of business
(C) Hicks and Allen Analysis (C) lower inflation
(D) None of these (D) distribution
832. At what price-output relationship will 836. Select one cost of microeconomic reform
this perfect competitor operate in the long (A) a decrease in the rate fo unemploy-
run? ment
(B) greater efficiency and productivity
(C) Greater work intensity
(D) Higher economic growth
837. What are capital resources?

(A) things from nature used to produce
goods
(B) the machines, tools, and buildings
used to produce goods
(C) the people used to produce goods
(D) none of above
838. How many licks it take to the center of

(A) A a tootsie pop
(B) K (A) 1
(C) M (B) 765778
(D) L (C) 209.7
(E) R (D) 364
830. C 831. C 832. C 833. A 834. D 835. C 836. C 837. B 838. D 839. D
839. measure in which quantity supplied re- (A) Goods & Services
spond to change in price (B) Factors of Product
(A) Supply VS Demand
(C) Expenditures
(B) Supply Inelasticity
(D) Income
(C) Demand Elasticity
(D) Supply Elasticity 844. Money earned when something is sold.
(E) IDK It is usually stated as a percentage
NARAYAN CHANGDER
(A) commission
840. In a market economy, the allocation of
goods and services is determined mostly (B) collateral
by (C) liquid asset
(A) regulations of the federal govern- (D) liability
ment
(B) decisions of advertisers 845. Organizers of many high-interest sport-
(C) the needs of individuals ing events such as the Super Bowl and
(D) the incomes of individuals the World Series usually set ticket prices
lower than the equilibrium price, citing fair-
841. Individuals who come up with a new idea ness to the public as their reason. What
for a good or service, then they make it a names do economists give to the resulting
reality set price and disequilibrium situation?
(A) resource (A) price ceiling; surplus
(B) human resources (B) price ceiling; shortage
(C) consumer (C) price floor; shortage
(D) entrepreneur (D) price floor; surplus
842. What are the four factors of produc-
846. If there was a price ceiling at $2, what
tion?
would the shortage be?
(A) people, planet, profit
(B) Money, markets„entrepreneur, ob-
jects
(C) Land, people, money, markets
(D) Land, labour, capital, enterprise
843. What is #5/7?
(A) 3
(B) 4
(C) 5
(D) 6
840. D 841. D 842. D 843. B 844. A 845. B 846. D 847. B

91
847. Monopolistically competitive product 851. A point within the PPC represents
markets are inefficient because (A) an impossible position at which to pro-
(A) price equals the marginal value to the duce.
buyer of the last item produced (B) optimal use of resources.
(B) price is greater than marginal cost (C) unemployed resources.
(C) excessive competition prevents other (D) scarcity.
firms from entering the market
(D) homogeneous goods are usually over- 852. Another name for natural resources
priced (A) land
(E) short-run economic profit-making op- (B) unnatural resources
portunities exist (C) water
(D) air
848. What is #3?
853. Mowing lawns, washing the car and tak-
ing out the trash are all ways to earn
money by–
(A) selling a product
(B) providing services
(C) saving for college
(D) none of above
854. Choose the example that goes best with

an oligopoly.
(A) Income (A) apples
(B) Revenue (B) cell phone providers
(C) Expenditures (C) utilities
(D) Goods & Services (D) clothing
849. Who or what answers the basic economic 855. Which of the following is not a feature
questions in a command economy? of indifference curve?
(A) Individuals and Businesses (A) Indifference curve slope
(B) Government (B) Two indifference curves intersect
(C) Custom each other
(D) Individuals, Businesses, and Govern- (C) Higher indifference curve give more
ment satisfaction
(D) It is convex to the origin
850. As more of a good is consumed, total util-
ity 856. Who makes most of the important gov-
(A) increases ernment decisions in an autocracy?
(B) decreases (A) one ruler
(C) remains the same (B) the people
(D) becomes negative and then turns pos- (C) the court system
itive (D) none of above
848. B 849. B 850. A 851. C 852. A 853. B 854. B 855. A 856. A

857. All of the following are essential charac- (C) select the average of prices available
teristics of a perfectly competitive indus- in a competitive market.
try EXCEPT: (D) have no ability to affect the price of a
(A) All products produced by the firms in good in a market.
the industry are homogeneous.
862. a second demand curve has been intro-
(B) All firms in the industry are price tak-
duced into the market because consumers
ers.
are willing to buy more or less at every
(C) Price is equal to marginal revenue for price due to a change in market place other
NARAYAN CHANGDER
every firm in the industry. than price
(D) There are barriers to entry into and (A) Change in Supply/Shift
exit from the industry.
(B) Change in Demand/Shift
858. In the circular flow model, what do busi- (C) Change in Supply/Movement
nesses provide to individuals and house- (D) Change in Demand/Movement
holds? (E) IDK
(A) Goods and services
863. Type of business owned by 2 or more
(B) Public goods and services
people?
(C) Resources
(D) Taxes
(B) Partnership
859. Scarcity of resources include time and (C) Corporation
(D) Monopoly
(A) money
864. What is the opportunity cost of moving
(B) goods from point A to point B
(C) economics
860. Peggy, a recent college graduate, decides

to look for a job instead of going to grad-
uate school. If she is unable to find a job
that suits her interests right away, what
type of unemployment is she MOST likely
experiencing?
(A) structural
(B) seasonal
(C) frictional
(D) cyclical
861. Price takers are individuals in a market

who:
(A) select a price from a wide range of al- (A) 9000 boats
ternatives. (B) 4000 trucks
(B) select the lowest price available in a (C) 3000 trucks
competitive market. (D) 2000 boats
857. D 858. A 859. A 860. C 861. D 862. B 863. B 864. D 865. B

93
865. How much of India’s GDP comes from 869. Oscar spent his entire income on only
farming? two goods: good X and good Y. At his
(A) 10% current consumption of the two goods, the
(B) 25% marginal utility of X is 8 and the marginal
utility of Y is 2. If the price of X is $4.00
(C) 50%
and the price of Y is $0.50, then to maxi-
(D) none of above mize his total utility, Oscar should have:
866. A factory purchases 2 new machines (A) bought more X and more Y
(B) bought more X and less Y
(B) Demand; Decrease
(C) bought less X and more Y
(D) Supply; Decrease (D) maintained his current consumption
867. Refer to the following diagram. The tax 870. An Increase in Supply or a shift of the
imposed is indicated by the neon-green supply curve to the right occurs when:
vertical line.
(A) A rise in input costs happens
(B) If Government pays subsidies for a
good.
(C) If producers expect the price to fall in
the future.
(D) If government regulates a good.
871. Which of the following is true if consum-

ing one unit of a good yields 100 utils and
consuming the second unit of the good in-
creases satisfaction by 20 utils?
(A) the MU of the 1st unit is 20
(B) the MU of the 2nd unit is 80
If the demand line is steeper(let’s say the
intercepts are 75 and 40 instead of 75 (C) the MU of the 2nd unit is 120
and 85), then the demand is said to be (D) the total utility of consuming 2 units
more is 120
(A) artificial.
(B) elastic. 872. Calculations about a business or individ-
(C) distorted. ual that a lending company uses to deter-
(D) inelastic. mine how likely they are to have money
to repay debt payments that are required
868. not having enough resources to sat- in a loan.
isfy all of the needs/wants (A) Maturity
(A) Scarcity
(B) Debt Calculations
(B) Opportunity Cost
(C) Tradeoff (C) Liquidity Ratios
(D) none of above (D) Mortgage
866. C 867. D 868. A 869. C 870. B 871. D 872. C

873. Google controls 67% of the web search 878. What type of economic system is based
market. The company has grown and on customs and beliefs?
branched off into email, online maps, GPS (A) Market
tracking systems, online data storage and
(B) Mixed
mobile phones. There are competitors like
Microsoft and Yahoo, but they own just (C) Traditional
18% and 11% of the market, respec- (D) command
tively.
879. If I choose to produce fish for my town
NARAYAN CHANGDER
(A) Perfect competition
because my mom and dad were fisher-
(B) Monopolistic competition
men/women, what economic system is
(C) Oligopoly this?
(D) Monopoly
(A) Mixed
874. This is when quantity DEMANDED is (B) Market
higher than quantity SUPPLIED. (C) Traditional
(A) Price Floor
(D) Command
(B) Price Ceiling
(C) Surplus 880. The market for breakfast cereal contains
(D) Shortage hundreds of similar products, such as Froot
Loops, corn flakes, and Rice Krispies, that
875. amount producers bring into the market are considered to be different products by
at any given price different buyers. This situation violates
(A) Supply the perfect competition assumption of:
(B) Quantity Demanded (A) many buyers and sellers.
(C) Supply VS Demand (B) a standardized product.
(D) Quantity Supplied (C) complete information.
(E) IDK
(D) ease of entry and exit.
876. A company gets more technology
881. How does high income inequality serve
as a barrier for growth?
(A) All the two
(C) Change in Demand
(D) Change in Quantity Demanded (B) Low savings
(C) Leakages from rich people buying im-
877. Which of the following is the best defini- ported goods
tion of REVENUE?
(D) none of above
(A) The total amount of income a busi-
ness makes from selling products or ser- 882. Miss Bailey’s Favorite Disney Movie
vices is
(B) The amount of money a business has (A) Mulan
LEFT over after paying for their costs.
(B) Pocahontas
(C) The total amount of money a business
spends. (C) Hercules
(D) The amount of money a business (D) Moana
loses every month. (E) Tangled
873. C 873. D 874. D 875. D 876. A 877. A 878. C 879. C 880. B 881. A 882. E
95
883. How do you calculate the consumer sur- 888. This perfect competitor will maximize
plus on a Supply-Demand graph? profits at what output level?
(A) It is the area above the Demand curve
and under the market price.
(B) It is the area above the Supply curve
and under the market price.
(C) It is the area under the Supply curve
and above the market price.
(D) It is the area under the Demand curve
and above the market price.
884. Rizal Park is under what factor of pro-
duction?
(A) Land
(B) Capital
(C) Natural Resource
(D) Entrepreneurship (A) A
885. If the government needs more money to (B) B
pay for public goods and services, what (C) C
are 3 ways the government can raise more
(D) D
revenue?
(A) raise taxes 889. What is a characteristics of a market
(B) have a bake sale economy?
(C) borrow funds (A) lack of choice
(D) charge fees (ex. parks)
(B) competition
886. Which of the following means “individ- (C) individual choice
ual could not meet all needs with limited
(D) central ownership of property
resources”?
(A) Scarcity 890. For a perfectly competitive firm produc-
(B) Choices ing the profit-maximizing quantity, the av-
(C) Scarcity erage total cost is $10 and the average
(D) Desire variable cost is $8. If the market price for
its product is $10, which of the following
887. Which is not one of the Five Fundamental is true for the firm?
Questions?
(A) It is sustaining a loss and should shut
(A) How will the goods and services be
down.
produced?
(B) How should the system accommodate (B) It is earning zero economic profit and
change? will remain in business.
(C) Who is to receive the output of the (C) It will temporarily shut down until
system? price rises.
(D) When should goods and services (D) The firm is earning positive economic
should be produced? profit.
883. D 884. A 885. A 885. C 885. D 886. C 887. D 888. C 889. B 890. B 891. C
891. What is the definition of scarcity? 897. Debt that includes a legal obligation by
(A) the good things about a choice the borrower to repay the debt personally
(B) what you must pay for an item if the business is unable to make its sched-
uled debt payment.
(C) when the item you want is hard to find
(A) Stakeholder
(D) an extra reason to purchase some- (B) Liability Debt
thing (C) Secured Debt
(D) Unsecured Debt
NARAYAN CHANGDER
892. Things required to live such as food,
shelter, clothing, air 898. Economics means
(A) Need (A) Study of wealth of Nations
(B) Want (B) Study of commerce
(C) Tradeoff (C) Study of account
(D) none of above (D) none of above
893. The concept of “invisible hand” best ap-
899. Type of business owned by 1 person?
plies to what kind of economies?
(A) Traditional economies.
(B) Partnership
(B) Mixed economies.
(C) Corporation
(C) Command economies.
(D) Monopoly
(D) Market economies.
(E) Free economies. 900. What is ONE advantage of a Corpora-
tion?
894. How to produce in Capitalism Economy
refers to (A) Difficult to start
(A) Labor intensive (B) Make all of the decisions
(B) Capital intensive (C) Easy to raise money!
(C) The cheapest method (D) none of above
(D) Inefficiency method 901. A good that is always used with another
895. which of these is an example of a pri- good
mary sector? (A) Complement
(A) fishing (B) Inferior
(B) vehicle (C) Normal
(C) teaching (D) Substitute
(D) teaching
902. One of the equal parts into which a
896. The DVD Player factory isn’t making as company’s capital is divided, entitling the
much money as it used to holder to a proportion of the profits.
(A) Demand; Increase (A) securities
(B) Demand; Decrease (B) share
(C) Supply; Increase (C) assets
(D) Supply; Decrease (D) liability
892. A 893. D 894. C 895. A 896. D 897. C 898. A 899. A 900. C 901. A 902. B
903. D
97
903. People buy less soda because it is too

expensive.
(C) Change in Demand
(D) Change in Quantity Demanded
904. The flow of money to households, firms,

markets for factors of production, and
markets for goods and services
(A) Circular flow diagram
(B) Voluntary exchange
What is the deadweight loss (DL) due to
(C) Product market tax incidence?
(D) Price control (A) $53.5
(B) $35.5
905. Consumers will maximize satisfaction (C) $375
when
(D) $710
(A) the price of each good is exactly equal
to the price of every other good consumed 908. A firm ceases to exist when the owner
dies, quits, or sells the business
(B) the price of each good is exactly equal
to the total utility derived from the con- (B) limited partnership
sumption of every other good (C) partnership
(C) the marginal utility of the last dollar (D) corporation
spent on each good is exactly equal to the (E) limited life
marginal utility of the last dollar spent on 909. Which of the following is NOT one of the
any other good three basic questions of economics when
(D) marginal utility is equal to average looking at economic systems?
utility (A) What goods and services will be pro-
duced?
906. Extent to which a change in price causes (B) What is the price of the goods?
a change in demand (C) Who is responsible for producing
(A) demand elasticity goods and services?
(B) microeconomics (D) How will goods and services be dis-
tributed to customers?
(C) inelastic
(D) diminishing marginal utility 910. Costs that do not change when the
quanity of output produced changes?
(E) income effect
(A) Fixed Costs
907. Refer to the following diagram. The tax (B) Variable Costs
imposed is indicated by the neon-green (C) Explicit Costs
vertical line. (D) Implicit Costs
904. A 905. C 906. A 907. C 908. E 909. B 910. A

911. In order to obtain a degree at the Uni- 915. How does education affect income (how
versity of Calgary, you decided to give up much money you make)?
your full time job. What is the best state- (A) education goes up, income goes up
ment that describe your situation from Eco- (B) income goes up, education goes up
nomics point of view? (C) education goes up, income goes down
(A) The cost of obtaining an education is
always beneficial compared to having a (D) income goes down, education goes
low paying full time job. up
NARAYAN CHANGDER
(B) The time spent on studying and at-
tending classes is the capital cost of ob- 916. The PRIMARY reason that natural mo-
taining an education. nopolies are allowed to exist in areas such
(C) The lost time and money from a full as energy production is that
time job is the capital cost of obtaining an (A) a. it would be too difficult to regulate
education. these industries.
(D) The time spent on studying and at- (B) a. it is more efficient for society to
tending classes is the opportunity cost of allow one company to be in control.
obtaining an education. (C) a. it is not in the public interest to
(E) The lost time and money from a full deregulate the providing of utilities.
time job is the opportunity cost of obtain- (D) a. it would create inflationary pres-
ing an education. sures to allow more than one company to
compete.
912. The law of demand states that
917. Which of the following is the best defini-
(A) consumers demand a larger quantity
tion of PROFIT?
of a good when price is low.
(A) The total amount of income a busi-
(B) consumer demand increases when
ness makes from selling products or ser-
price is low.
vices
(C) sellers supply a larger quantity of a
(B) The amount of money a business has
good when price is high.
left over after paying for their costs.
(D) sellers increase supply when price is
(C) The total amount of money a business
high.
spends.
913. What is ONE advantage of a sole propri- (D) none of above
etorship?
918. Select the 3 recognized forms of money
(A) You make ALL the decisions in the United States.
(B) Easy to raise money (A) debit cards
(C) You have to share profits (B) federal reserve notes
(D) none of above (C) checks
914. additional output due to an extra vari- (D) credit cards
able of input 919. The fall in total surplus as a result of mar-
(A) Supply VS Demand ket distortion is known as
(B) Marginal Product (A) a tax revenue loss.
(C) Diminishing Returns (B) deadweight loss.
(D) Marginal Revenue (C) efficiency loss.
(E) IDK (D) elasticity loss.
911. E 912. A 913. A 914. B 915. A 916. B 917. B 918. A 918. B 918. C 919. B
99
920. If total utility increases from 150 to 210 924. The Rock is making candles in a perfectly
utils after consuming a 4th candy bar, then competitive market. When he produces
what’s the marginal utility per dollar of 500 candles, his total cost is $250. If he
the 4th candy bar if the price is $2? produces one more candle, his total cost
(A) 60 utils per dollar rises to $260. In order to maximize profit,
he should produce the additional candle
(B) 110 utils per dollar
(A) only if the market price exceeds $250
(C) 30 utils per dollar for a candle.
(D) 75 utils per dollar (B) if the market price for a candle is $12.
921. What is a benefit of MER (C) only if the market price exceeds $260
(A) Greater working intensity for a candle.
(B) Higher inflation (D) if the market price for a candle ex-
ceeds $0.50.
(C) Decreased Consumer prices (E) if his price exceeds his ATC.
(D) Decreased distribution of resources
925. If a man buys a pair of pants for $10 and
922. What is #2/4? sells them for $20 he will make a —
(A) profit
(B) service
(C) donation
(D) none of above
926. How do individuals contribute to the cir-
cular flow of economic activity?
(A) Businesses buy goods and services
from individuals
(B) Businesses purchase productive re-
sources in product markets
(A) Goods & Services (C) Individuals provide labor for factor
(B) Factors of Product markets and buy goods in product mar-
kets
(C) Expenditures
(D) Individuals buy productive resources
(D) Income from factor markets and provide labor for
product markets
923. A monopolistically competitive firm ad-
vertises in order to: 927. An increasing in the production of a good
can be accomplished only by along PPC
(A) shift the demand curve for its product
to the left (A) Decreasing the production of other
good
(B) make its product more similar to its (B) Increasing the production of other
competitors’ good
(C) reduce the industry’ s barriers to en- (C) holding constant the production of an-
try other good
(D) make the demand for its product less (D) producing at a point on the corner of
price elastic the curve
920. C 921. C 922. D 923. D 924. C 925. A 926. C 927. A 928. D

928. What is the motive of a rational con- 932. Below are the concept in economic prob-
sumer? lems EXCEPT:
(A) To get equal satisfaction (A) Choices
(B) To get more satisfaction (B) Externalities
(C) To get less satisfaction
(C) Opportunity Cost
(D) To get maximum satisfaction
(D) Scarcity
929. Competition and profit motive are impor-
NARAYAN CHANGDER
tant characteristics of a: 933. Consumers
(A) command economy (A) use and pay for goods and services
(B) traditional economy
(B) make or grow goods and sell services
(C) market economy
(D) socialist economy
(C) want to grow goods and sell services
930. Refer to the following diagram. The tax
imposed is indicated by the neon-green (D) are people who live in neighborhoods
vertical line.
934. In the circular flow diagram, what hap-
pens in the factor market?
(A) Households sell goods and services
to businesses.
(B) Households sell resources to busi-
nesses.
(C) Businesses sell goods and services to
households.
(D) Businesses sell resources to house-
holds.
935. The traditional economy employs this

system of exchanging goods and services:
What is the consumer surplus without the
(A) Capitalism
tax?
(A) $1500 (B) Profit
(B) $350 (C) Investment
(C) $700 (D) Bartering
(D) $3000
936. A change in quantity supplied is caused
931. What must be TRUE in order to be Unem- by:
ployed?
(A) a change in technology
(A) You have to have a college degree
(B) You can’t find work, but are actively (B) a change in the cost of an input
looking (C) the price elasticity of supply
(C) You are unqualified for the job (D) a change in the price of the produced
(D) You live in your parent’s basement good
929. C 930. C 931. B 932. B 933. A 934. B 935. D 936. D 937. A

101
937. This is the VALUE of all goods & services 941. Rent control would be an example of ??
produced in a country in a period of time (A) Price Floor
DIVIDED BY that country’s population or
(B) Price Ceiling
number of people.
(C) Surplus
(A) Per Capita GDP
(D) Shortage
(B) Debt
(C) Purchasing Power 942. Consumers are told that the consumption
(D) none of above of cauliflower will significantly reduce the
risk of cancer. Which of these scenarios
938. The amount a firm receives for the sale is likely to happen in the cauliflower mar-
of its output. P x Q = ket?
(A) Profit (A) The demand curve will shift to the left
and the price of cauliflower will fall
(B) Total Revenue
(B) a. The supply curve will shift to the
(C) Marginal Revenue
right and the price of cauliflower will rise
(D) Average Profit
(C) a. The supply curve will shift to the
right and the price of cauliflower will fall
939. In the long run we would expect firms
to the industry and the market price (D) a. The demand curve will shift to the
to right and the price of cauliflower will rise
943. Study of the economic behavior of indi-

viduals and firms
(A) demand elasticity
(B) microeconomics
(C) inelastic
(E) income effect
(A) leave; rise
(B) leave; fall 944. In a society with a market economy,
(C) enter; rise property rights are generally enforced by
(D) enter; fall (A) the banks

(B) the courts
(E) enter; remain the same.
(C) the producers
940. In the economy of the Bushmen of the (D) the consumers
Kalahari Desert the people follow the ex-
amples of their ancestors. This is what 945. What is a product that is BROUGHT into
kind of economy? a country called?
(A) Traditional (A) Import
(B) Market (B) Surplus
(C) Command (C) GDP
(D) Centrally planned (D) none of above
938. B 939. A 940. A 941. B 942. D 943. B 944. B 945. B 946. A 947. A
946. Which item would provide you with the 952. The United States has decided to spend
least marginal utility? more money on military goods and less on
(A) a second copy of the daily newspaper. education. The opportunity cost for spend-
ing more money on military goods would
(B) a second drink of water when you’re be which of the following?
thirsty. (A) the satisfaction of destroying our en-
(C) a second pair of sneakers. emies
(D) a second car. (B) the money used to fund the military
NARAYAN CHANGDER
(C) money to spend on education
947. Study of choice under conditions of (D) better paid soldiers
scarcity.
(A) Economics 953. What is relative scarcity?
(B) Scarcity (A) Too many needs and wants compared
(C) Supply to the resources available
(D) none of above (B) The country has too many resources
(C) People have too many needs and can
948. Which of the following is a disadvantage not cope
of corporations:
(D) something they need for survival
(A) High taxes
(B) Unlimited life 954. the amount of money that a company re-
(C) Unlimited liability ceives from its production and sales in a
given period of time
(D) financial power
(A) Supply Curve
949. An indifference curve is downward slop- (B) Total Revenue
ing due to (C) Total Taxes
(A) Monotonic preferences (D) Fundamental
(B) convex preference (E) IDK
(C) transitivity
(D) none of these 955. The core problem in economics study is
(A) Money
950. What is the condition of consumer equi- (B) Scarcity
librium in case of single commodity?
(C) Production
(A) MU=TU
(D) Allocation
(B) MU>TU
(C) TU>P 956. What is a disadvantage of partner-
(D) MU=P ships?
(A) ease of formation
951. Cash, publicly traded stocks, govern-
(B) owners share responsibilities
ment bonds or corporate bonds that can be
quickly turned into cash (C) limited liability
(A) dividend (D) possibility of personality conflict
(B) asset 957. Choosing to buy a bicycle instead of a
(C) cash instrument scooter demonstrates
(D) maturity (A) efficiency.
948. A 949. A 950. D 951. C 952. C 953. A 954. B 955. B 956. D 957. D
103
(B) supply. (B) limited partnership

(C) economic systems. (C) partnership
(D) opportunity cost. (D) corporation
958. A person who comes up with a product (E) limited life
or service, and finds the money and time
to produce this new product. 962. In the graph pictured, TC is total cost and
TR is total revenue. At what quantity is
(A) Entrepreneur
profit maximized?
(B) Incentive
(C) Specialization
(D) Barter
959. Productive efficiency occurs when a firm

produces output at a level at which:
(A) price exceeds average total cost
(B) average total cost is at a minimum
(C) price equals marginal cost
(D) marginal revenue exceeds average
revenue
960. Based on the cost and output data in the

table shown, a perfectly competitive firm
will shut down if price falls below: (A) Q1
(B) Q2
(C) Q3
(D) Q4
963. Situation in which the amount of some-

thing available is insufficient to satisfy the
desire for it
(A) Scarcity
(B) Economics
(C) Demands
(D) none of above
964. Which is NOT a characteristic of an

(A) $15 oligopoly?
(B) $16 (A) Many sellers, few buyers
(C) $18
(B) Standardized or differentiated prod-
(D) $20 ucts
961. A business owned and run by one person (C) More control of prices
(A) sole proprietorship (D) Little freedom to enter/exit market
958. A 959. B 960. A 961. A 962. C 963. A 964. A 965. A

965. The total demand for goods and services 971. If a country does not invest in its hu-
in an economy is known as man capital, how can it affect the coun-
(A) Aggregate demand try’s gross domestic product (GDP)?
(B) Aggregate supply (A) Investment in human capital has little
effect on a country’s GDP
(C) National demand
(B) Most workers want to keep their jobs
(D) gross national product
just as they are and do not care about GDP
966. This is when the % change in price is
NARAYAN CHANGDER
GREATER than the percent change in de- (C) GDP may go down because poorly
mand. trained workers will not be able to do their
jobs as well
(A) Elastic Supply
(D) none of above
(B) Inelastic Supply
(C) Price Floor 972. To trade goods
(D) Price Ceiling (A) Taxes
(B) Barter
967. How does poverty affect demand?
(C) Service
(A) make it stable (D) Producer
(B) decreases it
973. Which of the following is true?
(C) causes an increase
(A) If price falls below average variable
(D) make it unstable
cost, the firm will shut down in the short
968. Easiest form of business to start? run.
(A) Sole Proprietorship (B) Total revenue and marginal revenue
are the same in perfect competition.
(B) Partnership
(C) Economic profit per unit is found by
(C) Corporation subtracting MC from price.
(D) Monopoly (D) Economic profit is always positive in
the long run.
969. A is something you give up to get
something else. 974. amount of a product that would be of-
(A) Opportunity Cost fered for sale at all possible prices that
(B) Benefit could prevail in the market, a direct rela-
tionship
(C) Demand
(A) Demand
(D) Service
(B) Supply
970. The price charged by a perfectly compet- (C) Supply VS Demand
itive firm is (D) This is Fundamentals
(A) higher the more the firm produces. (E) IDK
(B) lower the more the firm produces.
975. If a local government sets an apartment
(C) the same as the market price. rent control price below the equilibrium,
(D) indeterminate. what is the MOST LIKELY outcome?
(E) different than the price charged by (A) a. The demand and supply will in-
competing firms. crease.
966. B 967. B 968. A 969. A 970. C 971. C 972. B 973. A 974. B 975. C
105
(B) a. The increased supply will create a (B) Capital

surplus. (C) Land
(C) a. The increased demand will create (D) Entrepreneurial Skills
a shortage.
(D) a. The demand will decrease and the 981. A perfectly competitive market in equi-
supply will increase. librium is allocatively efficient and it max-
imizes:
976. Sam loves science and wants to become a (A) total revenue
doctor but he is learning how to make clay (B) total consumer surplus
bricks like his father and grandfather.
(C) total producer surplus
(A) Free Market
(D) the sum of total consumer surplus
(B) Traditional and total producer surplus
(C) Mixed
982. What is #8?
(D) Command
977. In the circular flow diagram, what hap-

pens in the product market?
(A) Households sell goods and services
to businesses.
(B) Households sell resources to busi-
nesses.
(C) Businesses sell goods and services to
households.
(D) Businesses sell resources to house- (A) Productive Resources
holds.
(B) Revenue
978. I am a farmer in Africa, and have always (C) Expenditures
traded for my goods. I have a econ- (D) Income
omy.
(A) Traditional 983. Barry and two associates have been op-
erating a business that is not going well.
(B) Command
Barry is stressed out because the company
(C) Market is over $200,000 in debt and he knows
(D) Mixed that if it goes out of business, he and his
two associates will have to pay it out of
979. It is comes from Greek word mikros, their own pockets. It sounds like Barry
meaning “small” and his two associates have a
(A) Micro (A) partnership.
(B) Microeconomics (B) corporation.
(C) Economics (C) sole proprietorship.
(D) none of above (D) stock.
980. The library building on your campus is un- 984. Change in quantity demanded because
der what factor of production? a price change altered consumer’s real in-
(A) Labor come
976. B 977. C 978. A 979. A 980. B 981. D 982. B 983. A 984. E

(A) demand elasticity (B) Partnership

(B) microeconomics (C) Corporation
(C) inelastic (D) Monopoly
988. Which is the source of nearly all of
(E) income effect
Japan’s GDP?
985. Mrs. Arnold is spending all her money in- (A) agriculture
come by buying bottles of soda and bags of (B) military production
NARAYAN CHANGDER
pretzels in such amounts that the marginal (C) industry & services
utility of the last bottle is 60 utils and the
marginal utility of the last bag is 30 utils. (D) none of above
The prices of soda and pretzels are $.60 989. Making something got easier, so the
per bottle and $.40 per bag respectively. price to produce is now cheap
It can be concluded that:
(A) the two commodities are substitute
goods
(B) Mrs. Arnold should spend more on (C) Change in Demand
pretzels and less on soda (D) Change in Quantity Demanded
(C) Mrs. Arnold should spend more on 990. We will have 400 extra students next
soda and less on pretzels year and they will all want to get spir-
(D) Mrs. Arnold is buying soda and pret- itwear at the school store
zels in the utility-maximizing amounts (A) Demand; Increase
986. Kenny spends $5 a week on apples and (B) Demand; Decrease
oranges. If the price of both goods is $1 (C) Supply; Increase
per unit, how many apples and oranges, (D) Supply; Decrease
respectively, does he purchase per week
if he wants to maximize his utility? 991. In my country we have no need for
money. By custom, some of us hunt, oth-
ers farm, and we are all taken care of.
(A) Traditional
(B) Command
(C) Market
(A) 0 and 5 (D) Mixed
(B) 1 and 4 992. The date a loan (or debt or liability) is
(C) 2 and 3 repaid in full.
(D) 3 and 2 (A) securities
987. Most common form of business organiza- (B) lien
tion? (C) credit-worthy
(A) Sole Proprietorship (D) maturity
985. C 986. B 987. A 988. C 989. B 990. A 991. A 992. D

2. Macro Economics
1. Positive statements are (E) The average of the net household in-
(A) macroeconomic. come in a particular economy.
(B) microeconomic. 4. What term refers to studying small eco-
(C) statements of description that can be nomics like businesses and people?
tested. (A) Economics
(D) statements of prescription that in- (B) Macroeconomics
volve value judgments. (C) Microeconomics
2. The four types of economic systems are: (D) Personal Finance
(A) Traditional, Command, Mixed, & Mar- 5. What are the two strands of economics?
ket (A) Microeconomics and Macroeco-
(B) Traditional, Command, Combined, & nomics
Market (B) Small and big economics
(C) Communism, Capitalism, Free Mar- (C) Land, labour, capital, enterprise
ket, and Macroeconomics
(D) none of above
(D) Microeconomics, Macroeconomics,
Individual, and Traditional. 6. What term means “How individuals make
economic choices”
3. What is gross domestic product (GDP)? (A) Macro-economics
(A) The rate at which the average prices (B) Micro-economics
of commodities increase/decrease over a
(C) Unemployment
given set period of time.
(D) Supply
(B) A measurement of employed and un-
employed persons within a given nation. 7. What is gross national product (GNP)?
(C) The net exchange of shares at a par- (A) Total income earned by a nation’s res-
ticular (country specific) stock market. idents in the production of goods and ser-
(D) Total monetary (dollar) value of all vices.
goods and services produced by everyone (B) Total income of nation’s residents mi-
in a particular economy. nus losses from depreciation.
1. C 2. A 3. D 4. C 5. A 6. B
108 Chapter 2. Macro Economics
(C) Total net products produced by raw (B) If a Canadian owns a factory in Japan,
materials that are obtained within the ge- the output of this Japanese factory will
ographic and national boundaries of a na- contribute to both Canadian and Japanese
tion. For example, Alberta oil obtained GDP.
within Canada will contribute to GNP, but (C) A Canadian who permanently work in
not oil imports from USA even if they were Japan will contribute to both Canadian
refined in Canada. and Japanese GDP.
(D) Total net products and services pro- (D) GDP includes only the value of final
NARAYAN CHANGDER
duced by local companies and government goods.
agencies as opposed to multinational com-
(E) A Canadian who permanently work in
panies.
Japan will contribute only to the Canadian
(E) Total net income earned by a nation’s GDP.
permanent residents regardless of where
they were located when the income was 12. Which of the following statement is true
earned. about GDP?
8. It is comes from Greek word, makros, (A) GDP reflects the market value of all
meaning “large” final goods produced among a given pop-
ulation.
(A) Macro
(B) GDP reflects the distribution of in-
(B) Micro come among a given population.
(C) Eco
(C) Middle class income earners con-
(D) none of above tributes to GDP more than the upper or
lower class income earners.
9. All of the following regrading inflation is
correct except (choose the best possi- (D) GDP can be simply summarized as the
ble answer) trade balance of a country.
(A) increases the purchasing power of (E) GDP can be used as a direct indicator
the dollar. of quality of life in a country.
(B) decrease the GDP and GNP. 13. The study of the economy as a whole
(C) decrease the profits of bankers (A) Macroeconomics
(lenders).
(B) Microeconomics
(D) decrease the standard of living.
(C) Economics
10. Xiaomi launches $10bn Hong Kong stock (D) none of above
market listing.
(A) Business news 14. The four types of economic systems are:
(B) Economic news (A) Traditional, Command, Mixed, & Mar-
ket
(C) Microeconomics
(B) Traditional, Command, Combined, &
(D) Macroeconomics
Market
11. Which of the following statement is true? (C) Communism, Capitalism, Free Mar-
(A) If a Canadian owns a factory in Japan, ket, and Macroeconomics
the output of this Japanese factory will (D) Microeconomics, Macroeconomics,
contribute to Canadian GDP. Individual, and Traditional.
7. E 8. A 9. A 10. A 11. D 12. A 13. A 14. A 15. A

109
15. a fee charged by a government on a prod- 20. Given the following data from a small
uct, income, or activity tiny nation, compute the real GDP (real
(A) Tax gross domestic product) for year 2014 us-
ing year 2012 as the base year.
(B) Revenue
(C) Macroeconomics Year Price of bread Quantity of bread Price of butter Quantity of butter
2012 $1 100 $2 50
(D) Fundamentals 2013 $1.50 200 $3 150
2014 $2 250 $4 200
(E) IDK
16. The four types of economic systems are: (A) $650

(A) Traditional, Command, Mixed, & Mar- (B) $200
ket (C) $750
(B) Traditional, Command, Combined, & (D) $300
Market (E) $850
(C) Communism, Capitalism, Free Mar-
ket, and Macroeconomics 21. What is nominal GDP (nominal gross do-
(D) Microeconomics, Macroeconomics, mestic product)?
Individual, and Traditional. (A) The production of goods and services
valued at normalized prices.
17. The strengthening dollar isn’t going to (B) The production of goods and services
last, says portfolio manager obtained during a normal (stable) econ-
(A) Business news omy.
(B) Economic news (C) The production of goods and services
(C) Microeconomics valued at constant prices.
(D) Macroeconomics (D) There is no such term used by
Economists. Stop making these non exist-
18. What Hong Kong’s sky-high home prices ing terms.
mean for investors (select three)
(E) The production of goods and services
(A) Business news valued at current prices.
(B) Economic news
22. Statements of opinion: “Minimum Wage
(C) Microeconomics
should be $50/hour.”
(D) Macroeconomics
(A) normative
19. Which of the following is a government (B) positive
purchase? (C) micro
(A) Purchasing land for municipal recre- (D) macro
ation facilities.
(B) Tax breaks for corporations to pro- 23. Positive statements are
mote investment. (A) macroeconomic.
(C) Increased tax funding to Science and (B) microeconomic.
Engineering. (C) statements of description that can be
(D) Federal government contributions to tested.
Canada Pension Plan. (D) statements of prescription that in-
(E) Employment Insurance payments. volve value judgments.
16. A 17. B 17. D 18. B 18. C 18. D 19. A 20. A 21. E 22. A 23. C
24. With relative to each other, which of the 28. Typically, gross domestic product (GDP)
following countries provide the best stan- deflector is
dard of living for most of its citizens? (A) a negative value.
Country GDP in millions Population in millions (B) exponentially increases over period
A $10,400 30.1 of time.
B $7,000 12.7
C $9,000 80.6 (C) a positive value.
D $15,000 40.5 (D) 90% lower than the nominal GDP.
NARAYAN CHANGDER
(E) 50% higher than the nominal GDP.
(A) Country C
(B) Country B 29. Which of the following is true?
(C) Country A (A) The Consumer Price Index (CPI) is the
(D) The information provided here is not best indicator of the economic growth of
adequate to answer this question. a nation.
(E) Country D
(B) The Gross Domestic Product (GDP)
25. Macroeconomics is a study of is negatively correlated with the life ex-
(A) large economic units pectancy rate.
(B) economic activity as a whole (C) The Gross Domestic Product (GDP) is
(C) the performance of national economy positively correlated with the adult liter-
acy rate.
(D) decision making by household (D) The “catch up” effect mostly ob-
served in the developed world.
26. the higher the price of the product, the less
the consumer will demand (E) The household activities such as cook-
(A) Law of Supply ing food for your family is included in the
Consumer Price Index (CPI).
(B) Law of Microeconomics
(C) Macroeconomics 30. What is the study of production, employ-
(D) Law of Demand ment, prices and policies on a nationwide
(E) IDK scale?
27. What is consumer price index or CPI? (A) Inflation
(A) A measure which provides the most (B) Macroeconomics
complete outlook of the entire economy of
(C) Pyschological pricing
a nation.
(B) A measure of the overall cost of the (D) none of above
goods and services bought by a typical
consumer. 31. What is the first step in computing con-
sumer price index or CPI?
(C) A measure of the ability of a typical
person in a society to obtain goods and (A) Compute the basket’s cost
services. (B) Calculate GDP
(D) A measure of how much debt a typical
(C) Determine the basket
person has in a given society.
(E) A measure of individual economic sta- (D) Choose a base year
tuses of a population. (E) Find the prices
24. B 25. A 25. B 25. C 26. D 27. B 28. C 29. C 30. B 31. C 32. B 32. D
111
32. The Bank of England raises interest rates, (C) $45

signals confidence in strengthening econ- (D) $20
omy. (E) $54
(A) Business news
(B) Economic news 37. In a given country, the gross domestic
product (GDP) increased by 12% during
(C) Microeconomics
the year. At the same time inflation was
(D) Macroeconomics at 8%. Hence the real GDP was .
33. Which of the following is NOT paired up (A) increased by 4%
correctly? (B) increased by 8%
(A) Macro = big (C) decreased by 4%
(B) Micro = small (D) decreased by 12%
(C) Normative = facts (E) decreased by 8%
(D) Command = socialism (F) increased by 12%
34. Bank of America to shift 125 British jobs 38. This economic concept deals with ethics
to Ireland ahead of Brexit (select three) and opinions
(A) Business news (A) Normative Economics
(B) Economic news (B) Economics
(C) Microeconomics (C) Macroeconomics
(D) Macroeconomics (D) Positive Economics
35. In macroeconomics, what are invest- 39. listing of the various quantities of a par-
ments? ticular product demanded at all possible
prices in the market
(A) Money saved within a particular eco-
nomic system (eg. country). (A) Macroeconomics
(B) Microeconomics
(B) Capital spending of companies and co-
operation. (C) Supply Schedule
(C) Spending by the government for the (D) Demand Schedule
well being of their citizens (eg. building (E) IDK
roads)
40. is studying how National Income is de-
(D) Money spent by the consumer on rived and usage of it.
goods and services.
(A) Microeconomics
36. Given the following data from a small tiny (B) Macroeconomics
nation, compute a typical basket price for (C) Managerial Economics
year 2012, if a basket of goods includes (D) Empirical Economics
24 breads and 15 butters.
41. What term means, “Big picture or World
Year Price of bread Quantity of bread Price of butter Quantity of butter
2012 $1 100 $2 50 view of economics”
2013 $1.50 200 $3 150
2014 $2 250 $4 200 (A) Micro-economics
(B) Macro-economics
(A) $83 (C) Unemployment
(B) $35 (D) Labor Force
33. C 34. A 34. B 34. D 35. B 36. E 37. A 38. A 39. D 40. B 41. B
42. Inflation can be best described as 47. The study of factors of production falls
(A) A measure of the ability of a popula- under
tion to obtain a certain product or service. (A) economic pursuit
(B) contemporary economic
(B) Rate of increase in costs for goods (C) microeconomics
and services. (D) macroeconomics
(C) Rate at which the stock market index
increase or decrease. 48. Given the following data from a small
NARAYAN CHANGDER
tiny nation, compute the nominal GDP
(D) Rate of increase in economic pres- (nominal gross domestic product) of year
sures on a given system. 2013 using year 2012 as the base year.
(E) Rate at which the average prices are Year Price of breadQuantity of bread Price
rising. of butterQuantity of butter 2012 $1100
$2502013 $1.50200 $31502014 $2250
43. The study of the economy as a whole $4200
(A) Macroeconomics (A) $300
(B) Microeconomics (B) $650
(C) Economics (C) $750
(D) none of above (D) $200
(E) $850
44. Study of behavior of individual house-
holds, firms, and governments 49. In the circular-flow diagram of Firms and
(A) Microeconomics Household economic activities, which of
the following is part of GDP?
(B) Macroeconomics
(A) Labour, land and capital
(C) Economics
(B) Good and services bought by con-
(D) none of above sumers
(C) Goods and services sold by firms
45. factories of Production, resources that go
into making products (D) Wages, rent and profit
(A) Outputs (E) Factors of production
(B) Inputs 50. the branch of economics that studies how

(C) Fundamentals individuals, households, and firms make
decisions to distribute limited resources
(D) This is Macroeconomics
(A) Microeconomics
(E) IDK
(B) Macroeconomics
46. amount of goods desired and able to be (C) Quantity Demand
purchased by consumers and business (D) Demand Schedule
(A) Microeconomics (E) IDK
(B) Quantity Supply
51. If not adjusted for change in CPI, the GDP
(C) Quantity Demand will the cost of living.
(D) Macroeconomics (A) not take into account for
(E) IDK (B) be reduced dramatically
42. E 43. A 44. A 45. B 46. C 47. D 48. C 49. D 50. A 51. C 52. A
113
(C) overestimate (D) Macroeconomics

(D) underestimate (E) IDK
52. Sainsbury’s vows Asda will cut prices. 58. What is Macroeconomics?
(A) Business news
(A) The focus of opportunity costs.
(B) Economic news
(B) The focus on the individual parts of
(C) Microeconomics
the economy.
(D) Macroeconomics
(C) The focus on the economy as a whole.
53. Trump announces tariffs on $60bn in Chi-
nese imports. (D) The focus of people buying and sell-
(A) Business news ing.
(B) Economic news
(C) Microeconomics 59. London introduces charge on most pollut-
ing vehicles.
(D) Macroeconomics
(A) Business news
54. Positive statements are (B) Economic news
(A) macroeconomic.
(C) Microeconomics
(B) microeconomic.
(D) Macroeconomics
(C) statements of description that can be
tested. 60. Given a Nominal GDP of $1100 and a Real
(D) statements of prescription that in- GDP of $760, compute the GDP deflator.
volve value judgments.
(A) ≈ 69
55. study of parts of an economy, such as eco- (B) ≈ 860, 000
nomic behavior, decision-making, banking (C) ≈ 63
systems
(D) ≈ 696
(A) micro-economics
(B) macro-economics (E) ≈145
(C) economics
61. This economic concept deals with facts and
(D) government statistics
56. If the Nominal GDP is increased by a factor (A) Normative Economics
of two and the Real GDP is increased by a (B) Economics
factor of two, the GDP Deflator will
(C) Macroeconomics
(A) triple.
(D) Positive Economics
(B) remains the same.
(C) double. 62. There are macroeconomics goals
(D) quadruple. EXCEPT
57. sum of the fixed and variable costs (A) maintaning price stability
(A) Sumed Up Cost (B) equilibrium in balance of payment
(B) Fixed Cost (C) full employment
(C) Total Cost (D) inflation
53. B 53. D 54. C 55. A 56. B 57. C 58. C 59. B 59. C 60. E 61. D 62. D 63. E
63. As an macroeconomics student, you pur- (E) It only measures goods and services
chased a used textbook directly from your produced because the other values such
friend for $100. If the regular market as quality of health care and education
price of the textbook is $200, during this cannot be measured,
particular transaction, how much you and
your friend has contributed to the GDP? 66. Study of how individuals make choices
with limited resources- people, cities,
(A) $400 stores.
(B) $100 (A) normative
NARAYAN CHANGDER
(C) $200 (B) positive
(D) $300 (C) micro
(E) $0 (D) macro
64. When calculating consumer price index, all 67. study of production, employment,
of the following issues are taken into con- prices, and policies (will unemployment
sideration by Economists except rise if there is an increase in taxes)
(A) introduction of new products to the (A) Macroeconomics
market. (B) Microeconomics
(B) changes to political or government (C) Opportunity Cost
policies. (D) none of above
(C) increase or decrease in quality of he 68. What are the components of GDP?
product over time. (A) Investment, distribution of wealth
(D) substitution of products. and government purchases.
(E) availability of a product within a given (B) Consumption, investment, net im-
market. ports and net exports.
(C) Investment, net imports and net ex-
65. Which of the following statement best de- ports.
scribe GDP?
(D) Investment, distribution of wealth
(A) It is not a good indicator of soci- and net exports.
ety’s welfare because unlike GNP, the
(E) Consumption, investment, govern-
GDP does not take into account quality of
ment purchases and net exports.
life attributes such as health care and ed-
ucation. 69. The problems studied in macroeconomics
(B) It measures all transactions within a are
country including social values such as (A) inflation rate in Malaysia
quality of health and environment. (B) price of inferior goods
(C) It is a good measurement of society’s (C) supply of smartphone
welfare because it measures a nation’s (D) market of Perodua car
economic stability through assessment of
government policies. 70. How marketing built Lego into the world’s
favourite toy brand
(D) It is a good measurement of society’s
welfare because it measures a nation’s (A) Business news
ability to purchase the inputs that can be (B) Economic news
used to help produce items that contribute (C) Microeconomics
to welfare. (D) Macroeconomics
64. B 65. D 66. C 67. A 68. E 69. A 70. A

115
71. Aggregate Demand is a tool of of basket in base year and multiply by 100.
(A) Positive Economics
(B) Normative Economics (E) Diving the annual GDP by the price of
basket of goods & services of the current
(C) Microeconomics
year and multiply by 100.
(D) Macroeconomics
76. This is the study of how individual con-
72. Market demand is sumers, workers and small business make
(A) Microeconomic variable LOCALIZED decisions.
(B) Macroeconomic variable (A) Protectionism
(C) Both Micro and Macro economic vari- (B) MacroEconomics
able (C) MicroEconomics
(D) None of these (D) none of above
73. If the GDP grew by 15 percent during 77. a measure of the satisfaction and benefit
5-year period while population grew by gained from consumption of goods and ser-
5 percent and and the GDP deflator in- vices
creased by 7 percent, you should conclude (A) Microeconomics
that real GDP per person (B) Batman’s Belt
(A) decreased. (C) Utility
(B) There is not enough information is (D) Macroeconomics
provided to answer the above question. (E) IDK
(C) grew, by more than 15 percent.
78. Equilibrium in macroeconomics occurs
(D) grew, but by less than 15 percent. when
(E) was unchanged. (A) AD more than AS
74. Study of the individual parts of the econ- (B) AS more than AD
omy (C) AD equal AS
(A) microeconomics (D) Totap value of output more than total
(B) macroeconomics value of expenditure
(C) behavioral economics 79. Which of the following is an intermedi-
(D) quantitative economics ate good and therefore, excluded from
the Gross Domestic Product (GDP) calcu-
75. How do you calculate the consumer price lation?
index or CPI? (A) Illegal products purchased in a back
(A) Diving the annual GDP by the price of alley of the Geoscience building.
basket and multiply by 100. (B) Paper purchased by Nelson Education
(B) Dividing the base year GDP by the to print the Macroeconomics textbook.
price of basket of goods & services of the (C) Shares of a company purchased from
current year and multiply by 100. a bank by a customer.
(C) Diving price of basket in base year by (D) Government and private sector in-
the price of basket of goods & services of vestments on science and engineering
the current year and multiply by 100. projects at the University of Calgary.
(D) Diving the price of basket of goods & (E) Government construction of a rail-
services of the current year by the price road across Canada.
71. D 72. A 73. D 74. A 75. D 76. C 77. C 78. C 79. B

80. Erica is deciding on permanently moving 85. Which of the following includes trans-
to Vancouver. She is currently earning actions relating to imported goods into
$60,000 per year in Calgary. Before she Canada?
moves, she wants to make sure she can (A) Nominal Gross Domestic Products
maintain the same standard of living in
(B) Real Gross Domestic Products
Vancouver. Given the CPI (Consumer Price
Index) for Calgary = 120 and the CPI in (C) Consumer Price Index
Vancouver = 190, how much does she has (D) Gross National Products
to earn in Vancouver to maintain the same
NARAYAN CHANGDER
standard of living as Calgary? 86. Micro and macro economics are of eco-
nomics.
(A) $84,000
(A) Function
(B) $75,000
(B) Scope
(C) $50,000
(C) Objective
(D) $120,000
(D) none of above
(E) $95,000
87. Global oil demand to rise despite push for
81. The study of factors of production falls
renewables
under
(A) Business news
(A) economic pursuit
(B) contemporary economic (B) Economic news
(C) microeconomics (C) Microeconomics
(D) macroeconomics (D) Macroeconomics
82. This happens when SUPPLY exceeds DE- 88. Given the following data from a small
MAND tiny nation, compute the real GDP (real
gross domestic product) for year 2014 us-
(A) Macroeconomics
ing year 2013 as the base year.
(B) Import
(C) Surplus 2012 $1 100 $2 50
2013 $1.50 200 $3 150
(D) none of above 2014 $2 250 $4 200
83. Which of the following is not related to

Macro Economics? (A) $750
(A) Market Supply (B) $850
(B) National Income (C) $675
(C) Aggregate Demand (D) $300
(D) Central Bank’s Policy (E) $975
84. Brazil’s food inflation: don’t blame it all 89. Eataly’s sights set on China with possible
on the weather joint-venture
(A) Business news (A) Business news
(B) Economic news (B) Economic news
(C) Microeconomics (C) Microeconomics
(D) Macroeconomics (D) Macroeconomics
80. E 81. D 82. C 83. A 84. B 84. D 85. C 86. B 87. B 87. C 88. E 89. A 90. C
117
90. Which of the following is not part of the 2012 $1 100 $2 50
nominal interest rate? 2013
2014
$1.50
$2
200
250
$3
$4
150
200
(A) Interest rates posted by banks
(B) Inflation rate
(A) $650
(C) Consumer Price Index
(D) Real interest rate (B) $200
(C) $750
investment that contributes heavily to (D) $300
GDP? (E) $850
(A) A foreign investor buying Canada GIC
bonds. 95. Macroeconomics is concerned with the
study of
(B) A company buying equipment to open
a factory. (A) Malaysians response towards change
(C) A family purchasing a house without in the price of sugar
a mortgage. (B) production methods and costs
(D) A Canadian investing in a poor coun- (C) effect of reduction of wages in the
try with lower GDP. service sector
(E) Payments made by the government (D) general price level
for Canadian Pension Plan.
92. Which of the following is not measured by 96. is studying how National Income is de-
the Gross Domestic Product (GDP)? rived and usage of it.
(A) Changes in Consumer Price Index (A) Microeconomics
(CPI). (B) Macroeconomics
(B) Economic investments made by indi- (C) Managerial Economics
viduals.
(D) Empirical Economics
(C) Value of total capital of a company or
a corporation.
97. Gold demand slides to eight-year low in
(D) Environmental impact of the eco- third quarter of 2017.
nomic growth.
(A) Business news
(E) Household expenditures on day-to-
day items. (B) Economic news
(C) Microeconomics
93. Study of behavior of individual house-
holds, firms, and governments (D) Macroeconomics
(A) Microeconomics
98. similar products that people will buy if the
(B) Macroeconomics price of a product goes up
(C) Economics
(A) Elasticity
(D) none of above
(B) Macroeconomics
94. Given the following data from a small tiny (C) Fundamentals
nation, compute the nominal GDP (nominal
gross domestic product) of year 2013 us- (D) Substitutes
ing year 2013 as the base year. (E) IDK
91. B 92. D 93. A 94. C 95. D 96. B 97. B 97. C 98. D 99. A
99. The four types of economic systems are: (A) normative

(A) Traditional, Command, Mixed, & Mar- (B) positive
ket (C) micro
(B) Traditional, Command, Combined, & (D) macro
Market
(C) Communism, Capitalism, Free Mar- 103. Calculate the CPI for year 2015 using
ket, and Macroeconomics 2010 as the base year using the following
(D) Microeconomics, Macroeconomics, information. CPI-2015 = $100 and CPI-
NARAYAN CHANGDER
Individual, and Traditional. 2010 = $75
(A) ≈ 133
100. Which of the following is the best indica-
tor for the economic health of a country? (B) None of the answers are correct.
(A) Historical inflation rates (C) ≈ 75
(B) Development of natural resources (D) ≈ 100
(C) CPI (E) ≈ 50
(D) Nominal GDP
104. unprocessed natural products used in
(E) Real GDP production
(F) Growth of industries (A) Fundamentals
101. Which of the following combination is (B) This is Macroeconomics
NOT TRUE? (C) Supply Schedule
(A) national output - macroeconomics (D) Raw Materials
(B) individual decision - microeconomics (E) IDK
(C) total labor in certain sector - macroe-
conomics 105. The rich make too much money
(D) price of essential goods - microeco- (A) positive
nomics (B) normative
102. You getting up this morning and not (C) micro
sleeping in past 1st period. (D) macro
100. E 101. C 102. C 103. A 104. D 105. B

3. Aggregate Supply, Unemployment,
Inflation
1. During Periods of rising inflation and ris- (C) frictional unemployment and struc-
ing interest rates we expect the demand tural unemployment
for real cash to: (D) cyclical unemployment and structural
(A) rise unemployment
(B) fall
5. The quantity theory of money says that
(C) not change changes in lead to equivalent changes
(D) fluctuate in but have no effect on
(A) prices, wages, output and employ-
2. The equilibrium inflation rate is deter-
ment
mined by the intersection of and
(B) output prices, employment
(A) demand , supply
(C) nominal money, the price level, output
(B) IS, LM and employment
(C) AD, AS (D) nominal money output prices
(D) Labour demand, labour supply
6. The abolition of income tax would proba-
3. If inflationary expectations increase the bly the number of workers in employ-
Phillips curve will ment and the equilibrium rate of unem-
(A) Become Upwarding sloping ployment
(B) shift to the right (A) increase, reduce
(C) shift to the left (B) increase, increase
(D) become vertical (C) reduce, increase
(D) reduce, reduce
4. The natural rate of unemployment is gen-
erally thought to be the sum of: 7. All of the following are types of monetary
(A) frictional unemployment and sea- policy expect:
sonal unemployment (A) a nominal money stock target
(B) frictional unemployment and cyclical (B) a balanced budget
unemployment (C) an inflation target
1. A 2. C 3. B 3. C 4. C 5. C 6. A 7. B
120 Chapter 3. Aggregate Supply, Unemployment, Inflation
(D) The pursuit of a target real interest 12. The classical view of the labour market is
rate basically consistent with the assumption
of aggregate supply curve
8. The expectations augmented Phillips (A) a vertical (or almost vertical)
curve was the Work of which group of
(B) a downward sloping
economists?
(C) a horizontal (or almost horizontal)
(A) New classical economists
(D) an upward sloping
(B) Keynesian.
NARAYAN CHANGDER
(C) Monetarists 13. Monetarists believe that a reduction in
can be achieved by reducing
(D) Marxists.
(A) unemployment prices
9. In the long run, the Phillips curve will be (B) inflation wages
vertical at the natural rate of unemploy- (C) unemployment wages
ment if: (D) inflation, the quantity of nominal
(A) the long-run aggregate demand curve money
is horizontal at the natural rate of inflation
14. The classical model of macroeconomics as-
sumes
(B) the long run aggregate demand curve
is vertical at potential GDP (A) wages and prices are sticky
(B) wages and prices are flexible
(C) the long run aggregate demand curve
is vertical at potential GDP (C) the economy may operate below full
capacity
(D) The long run supply curve is horizon-
tal at the natural rate of inflation (D) the economy is always at full capacity
10. An advocate of the classical model of the (E) a and c

economy would claim that unemployment (F) 6. b and d
is created when the is above its equi-
librium level in the 15. Those who hold the classical view of the
labour market are likely to believe that:
(A) price level, aggregate economy
(A) neither monetary nor fiscal policy will
(B) tax rate, government budget
have an effect on output and employment
(C) wage rate, labour market
(D) interest rate, market for loanable (B) monetary but not fiscal policy will
funds have an effect on output and employment
11. If the income tax rate changes from 30% (C) Fiscal, but not monetary policy will
to 40% on income over Rs30,000 and have an effect on output and employment
a person’s income is Rs 31,000 then her
marginal tax rate is:
(D) both monetary and fiscal policy will
(A) 30% have an effect on output and employment
(B) 10%
16. The relative-wage explanation for the ex-
(C) 70% istence of downwardly sticky wages em-
(D) 40% phasises:
8. C 9. C 10. C 11. D 12. A 13. D 14. F 15. A 16. A

121
(A) the contention that workers in one in- (B) the inflation rate, the unemployment
dustry may be unwilling to accept a wage rate
cut unless they know that workers in other (C) interest rates, output
industries are receiving similar cuts (D) output, employment
(B) employment contracts that stipulate
workers wages usually for a period of one 21. Doubts about the natural and the exis-
to three years tences of the Phillips curve arose in the
1970s when the economy experienced:
(C) unspoken agreements between work-
ers and firms that firms will not cut (A) a high rate of inflation: along with a
vwages low rate of unemployment
(D) the incentive that firms may have to (B) simultaneously low rates of inflation
hold wages above the market clearing and unemployment
rate (C) simultaneously high rates of inflation
and unemployment
17. Expansionary fiscal policy in the classical (D) a high rate of unemployment along
model will cause aggregate demand to with a low rat of inflation
potential output
(A) exceed 22. In the events of an increase in the inter-
national price of oil that encouraged the
(B) fall below
central bank to accept lower real interest
(C) fluctuate around rates, inflation would most likely:
(D) remain equal to (A) fall
(B) increase
18. The measured unemployment rate can be
pushed below the natural rate, but: (C) remain the same
(A) only in the short run, and not without (D) fluctuate
inflation 23. The equilibrium rate of unemployment at
(B) only in the long run and not without any real wage, is the difference between
inflation and
(C) only is the short run and only if the (A) those willing to work at the going
price level is constant wage labour demand
(D) only in the long run and only if the (B) labour demand those willing to work
price level is constant at the going wage
(C) labour demand, labour supply
19. An unspoken agreement between workers
(D) those willing to work at the going
and firms that the firm will not cut wages
wage labour supply
is known as:
(A) an implicit or social contract 24. We would normally expect the size of the
(B) a relative-wage contract labour force to be than the number or
workers willing to accepts job offers at
(C) employment at will
any real wage rate
(D) an explicit contract
(A) Smaller
20. The Phillips curve shows the trade-off be- (B) Larger
tween and (C) the same size
(A) the inflation rate, interest rates (D) none of above
17. D 18. A 19. A 20. B 21. C 22. B 23. D 24. B 25. A

25. Even though explicit contracts may lead (C) that can be sustained in the long run
to layoffs during recessions explicit con- without inflation
tracts may still be efficient because such (D) that can be sustained in the long run,
contracts: if the inflation rate is zero
(A) minimise negotiation costs
30. At the intersection of AD and AS equilib-
(B) minimise unemployment effects
rium is achieved in
(C) guarantee that only the least produc-
(A) the goods market
tive workers will be laid off.
NARAYAN CHANGDER
(B) the money market
(D) will equitable spread the layoffs
among junior and senior workers (C) the labour market
(D) all of these
26. When economists use the term real busi-
ness cycle theory they are suggesting that 31. Policies to reduce unemployment by reduc-
business cycles are caused by: ing union power, tax cuts, reductions in un-
(A) Shifts in aggregate supply employment benefit and investment subsi-
(B) changes in export demand due to the dies are examples of:
state of the world economy (A) Keynesian policies
(C) business confidence (B) Supply-side policies
(D) business expectations (C) Monetarist Policies
(D) Classical policies
27. The Keynesian model is a good guide to
behaviour and the classical model de- 32. Governments may contribute to inflation-
scribes behaviour in ary pressure on account of building up
(A) long run, short run large:
(B) flexible imperfect markets (A) numbers of employees
(C) short-term long run (B) welfare plans
(D) long run, imperfect markets (C) budget deficits
(D) expenditures
28. The Phillips curve indicates that there is
a: 33. The AD schedule indicates that infla-
(A) negative relationship between the in- tion is associated with output
flation rate and labour demand (A) higher, lower
(B) positive relationship between labour (B) higher , higher
supply and the inflation rate (C) lower, lower
(C) positive relationship between the in- (D) zero, zero
flation rate and the employment the
(D) negative relationship between the in- 34. Possible causes of involuntary unemploy-
flation rate and the unemployment rate ment are
(A) minimum wage agreements
29. Potential GDP is the level of aggregate
output: (B) trade
(A) that can be produced if structural un- (C) scale economies
employment is zero (D) insider-outsider distinctions
(B) that can be produced at a zero unem- (E) efficiency wages
ployment rate (F) 6. all of the above
26. A 27. C 28. D 29. C 30. D 31. B 32. C 33. A 34. F

123
35. If somebody is prepared to work at the 40. one of the tenets of the classical view of
going wage rate but cannot find work then the labour market is that the wage ad-
they are victims of: justments that are necessary to clear the
(A) voluntary unemployment labour market occur:
(B) classical unemployment (A) quickly
(B) slowly
(C) voluntary unemployment
(C) very infrequently
(D) Frictional unemployment
(D) instantly
36. According to the classical economists,
41. If input price prices adjusted very rapidly
those who are not working
to output prices as classical economists ar-
(A) have chosen not to work at the mar- gue the phillips curve would be:
ket wage (A) Vertical or or nearly vertical
(B) have given up looking for a job, but (B) upward sloping
would accept a job at the current wage if
(C) downward sloping
one were offered to them.
(D) horizontal or nearly horizontal
(C) are too productive to be hired at the
current wage 42. The Phillips curve is a graph showing the
(D) are unable to find a job at the current relationship between:
wage rate (A) the price level and the unemployment
rate
37. The costs of inflation are (B) the inflation rate and the unemploy-
(A) shoe leather costs ment rate
(B) menu costs (C) the level of aggregate output and the
price level
(C) income redistribution
(D) the inflation rate and the level of ag-
(D) uncertainly
gregate demand
(E) all of the above
43. Which school of economic thought sug-
38. If a person thinks they are better off after gested that one possible cause of inflation
a 10% wage increase, and all prices have was a ‘push’ from the cost side?
risen 10% then they are experiencing (A) New classical economists
(A) inflation (B) Keynesian.
(B) a supply shock (C) Marxists
(C) crowding out (D) Monetarists
(D) inflation illusion 44. The long-run Phillips curve is at the
39. In the classical model, potential output
(A) horizontal, natural rate of inflation
cannot be increased by:
(B) horizontal natural rate of unemploy-
(A) monetary growth
ment
(B) better technology (C) vertical natural rate of inflation
(C) more capital (D) vertical equilibrium rate of unemploy-
(D) higher labour supply ment
35. C 36. A 37. E 38. D 39. A 40. A 41. A 42. B 43. B 44. D 45. A
45. The Short run Phillips curve can shift in re- (D) structural unemployment
sponse to changes in:
(A) Inflationary expectations 47. The view of the Phillips curve that pre-
vailed in the 1960s implied that policies
(B) unemployment
that:
(C) the inflation rate
(A) lower unemployment rate will tend to
(D) wage rates lower the inflation rate
46. A person who is made redundant because (B) lower unemployment rate will tend to
NARAYAN CHANGDER
of the contraction of an industry is a victim raise the inflation rate
of: (C) raise inflation rate will tend to raise
(A) frictional unemployment the unemployment rate
(B) demand-deficient unemployment (D) lower inflation rate will tend to raise
(C) classical unemployment the unemployment rate
46. D 47. B
4. Agriculture & Irrigation System of
Pakistan
1. One third of the nation’s energy need is 5. What Pheromones are environmentally
fulfilled by: friendly and safe for other useful insects
(A) forest sector end:
(B) oil (A) human being
(C) gas (B) cows
(D) LPG (C) pets
(D) predators
2. The annual requirement of edible oil is
nearly: 6. How much wood the forest sector pro-
vide?
(A) 1.5 million tones
(A) 4.5 million hectare
(B) 1.6 million tones
(B) 3.5 million hectare
(C) 1.7 million tones
(C) 5.5 million hectare
(D) 1.9 million tones
(D) 2.5 million hectare
3. What is the contribution of forestry to the
7. Agriculture employs about of the total
agriculture sector?
labour-force
(A) 0.4% (A) 45%
(B) 3.4 (B) 55%
(C) 1.4 (C) 15%
(D) 2.4 (D) 35%
4. Which one of the following is the main cash 8. Uptill now how much of the water-logged
crop of Pakistan? and saline land has been reclaimed?
(A) cotton (A) 12 million acres
(B) rice (B) 18 million acres
(C) wheat (C) 16 million acres
(D) None of them (D) 14 million acres
1. A 2. D 3. A 4. A 5. D 6. B 7. A 8. B 9. D
126 Chapter 4. Agriculture & Irrigation System of Pakistan
9. What is the total landmass of the coun- 15. Which is/are major oil seeds crop(s) of the
try? country ?
(A) 78.98 million hectare (A) cotton
(B) 89.98 million hectare (B) rapeseed & sunflower
(C) 98.87 million hectare (C) safflower
(D) 87.98 million hectare (D) All of these
10. The total forest area of Pakistan is esti- 16. Which is the longest canal of Pakistan?
NARAYAN CHANGDER
mated at: (A) Lloyd Canal
(A) 5.20 million hectare (B) Fordwah Canal
(B) 53.20 million hectare (C) Abbasie Canal
(C) 6.20 million hectare (D) Nara Canal
(D) 4.20 million hectare 17. How many reclamation schemes has been
completed by the government?
11. Forests and rangelands support 30 million
herds of livestock. How much amount this (A) 50
livestock contributes to Pakistan’s annual (B) 60
export earnings? (C) 80
(A) $500 million (D) 65
(B) $350 million
18. Which is the oldest hydroelectricity project
(C) $400 million in Pakistan?
(D) $300 million (A) Mangla
12. Which province of Pakistan is the largest (B) Tarbela
Edible oils producing province (C) Warsak
(A) Punjab (D) Malakand Dargai
(B) Balochistan 19. Forest area of Balochistan is:
(C) Sindh (A) 1.33 million hectare
(D) kK.P.K (B) 0.33 million hectare
13. Malakand Dargai Project started its oper-
ation in: (D) 0.83 million hectare
(A) 1935 20. Lint cotton is a major:
(B) 1938 (A) cash item
(C) 1947 (B) import item
(D) 1946 (C) export item
(D) None of these
14. Pakistan is the largest Cotton Producer
country in the world. 21. The period of Rabi Season is
(A) Fifth (A) October-May
(B) Fourth (B) May-Aug
(C) Sixth (C) October-June
(D) Eight (D) All of them
10. C 11. C 12. A 13. B 14. B 15. D 16. A 17. C 18. D 19. B 20. C 21. A 22. A
127
22. Which province of Pakistan is the largest 28. In 2010-11 the yield of rice in Pakistan
rice producing province was:
(A) Punjab (A) 1836 kgs/hec
(B) Sindh (B) 2030 kgs/hec
(C) K.P.K (C) 2035 kgs/hec
(D) Balochistan (D) 2040 kgs/hec
23. How much is contributed by agriculture to 29. Nearly of land is cultivated through
GNP of the country? tube-wells ponds and rain water
(A) 20.9% (A) 25%
(B) 35% (B) 55%
(C) 40% (C) 15%
(D) 15% (D) 35%
24. What is total forest area of Azad Kash- 30. When the Indus Water Treaty was
mir? signed?
(A) 0.53 million hectare (A) 19th September 1960
(B) 1.32million hectare (B) 19th September 1962
(C) 0.42 million hectare (C) 19th December 1965
(D) 0.55 million hectare (D) 19th November 1964
25. Which one is the single largest component 31. What is the total estimated forest area of
of agriculture sector in the country? Sindh?
(A) forestry (A) 0.92 million hectare
(B) livestock (B) 2.92 million hectare
(C) poultry (C) 1.92 million hectare
(D) fisheries (D) 0.92 million hectare
26. Cash crops cover nearly of the cropped 32. Pakistan is the largest milk producer
areas country in the world.
(A) 25% (A) Fifth
(B) 55% (B) Fourth
(C) 15% (C) Sixth
(D) 35% (D) Eight
27. How much of the total area cultivated is 33. Arid Zone Research Centre, of PARC is sit-
under irrigation system? uated at:
(A) 65% (A) Quetta
(B) 70% (B) Lahore
(C) 80% (C) Islamabad
(D) 85% (D) Faisalabad
23. A 24. C 25. B 26. A 27. B 28. A 29. A 30. A 31. A 32. A 33. A 34. C 35. B
34. Pakistan is the largest Date Palm Pro- 40. Which province of Pakistan is the largest
ducer country in the world. cotton producing province
(A) Fifth (A) Punjab
(B) Fourth (B) Sindh
(C) Sixth (C) K.P.K
(D) Eight (D) Balochistan
35. What is the annual average growth rate 41. Which are Pakistan’s major seasons for
NARAYAN CHANGDER
of agriculture in last decade? agriculture crops?
(A) 3.5% (A) Kharif and Barani
(B) 4.5% (B) Kharif and Rabi
(C) 5.5% (C) Barani and Rabi
(D) 6.5% (D) Kharif ,Rabi and Barani
36. The production of wheat in 2001-2 42. The total forest area of Punjab is:
dropped by 2.9 percent. What was the (A) 1.69 million hectare
size of wheat crop this year?
(A) 18475 thousand tones
(B) 13475 thousand tones
(C) 19475 thousand tones
(D) 16475 thousand tones 43. What is the total forest are of KHYBER
PAKHTUNKHWA?
37. National Arid-land Development and Re- (A) 1.91 million hectare
search Institute (NADRI) is at:
(A) Islamabad
(B) Lahore
(C) Faisalabad
(D) Peshawar 44. Which province of Pakistan is the largest
tobacco producing province
38. What is the contribution of forest sector (A) Punjab
in GDP?
(B) Balochistan
(A) 0.1%
(C) K.P.K
(B) 3.1
(D) Sindh
(C) 1.1
(D) 2.1 45. The total land area of Balochistan is 34.7
mha (or 85.74 million acres), out of which
39. Investment in agriculture sector is Rs only are cultivated
(A) 49.9 billion (A) 14 % or 3.4 mha
(B) 50.9 billion (B) 24 % or 5.4 mha
(C) 45.9 billion (C) 34 % or 7.4 mha
(D) 45.1 billion (D) 54 % or 11.4 mha
36. A 37. A 38. A 39. C 40. A 41. B 42. A 43. D 44. A 45. A 46. D 47. D
129
46. In Northern Areas total forest area is: 52. One-third of the forest area is productive
(A) 0.55 million hectare and the remaining two-third is maintained
for:
(A) Timber
(B) Environmental protection
(C) Wild life
47. Which is the second largest staple food (D) sanctuaries
crop in Pakistan?
53. How much irrigation water shortage was
(A) Wheat witnessed last year?
(B) flour (A) 23.8%
(C) Wheat & flour (B) 10.8%
(D) rice (C) 35.8%
(D) 30.8%
48. The total land area of Sindh is 14.1 mha
(or 34.84 million acres) out of which 54. What is the total length of canals in Pak-
are cultivated istan?
(A) 39 % or 5.45 mha (A) 6429 Kilometer
(B) 32 % or 3.85 mha (B) 3344 Kilometer
(C) 31 % or 4.49 mha (C) 6234 Kilometer
(D) 33 % or 4.45 mha (D) 6345 Kilometer
49. Pakistan is the largest Apricot Pro- 55. Nimbokil-60EC is formulated for the con-
ducer country in the world. trol of:
(A) Fifth (A) pest
(B) Fourth (B) agricultural insect pest
(C) Sixth (C) household pests
(D) Eight (D) herbs
50. What was the total inflow of irrigation 56. Agriculture contributes about to the
water in 2001-2? GDP
(A) 25%
(A) 91 MAF
(B) 55%
(B) 86.9 MAF
(C) 15%
(C) 100.9 MAF
(D) 35%
(D) 76.9 MAF
57. In the Mid mid of 2011 the share of agri-
51. The period of Rabi season is culture in employment is:
(A) October-May (A) 45%
(B) May-Aug (B) 40%
(C) October-June (C) 43%
(D) January-May (D) 41%
48. A 49. B 50. A 51. A 52. B 53. D 54. A 55. B 56. A 57. A 58. D 59. B
58. Pakistan is the largest tobacco Pro- 64. How much of the total export earning is
ducer country in the world. through agriculture?
(A) Sixth (A) 45%
(B) Seventh (B) 55%
(C) Fifth (C) 65%
(D) Eight (D) 75%
59. Trimmu Sindhnai link canal links the 65. Nomboli is formulated for the control of:
NARAYAN CHANGDER
Chenab with (A) household pest
(A) Jhelum (B) pests
(B) Ravi (C) agricultural insect pest
(C) Chenab (D) herbs and shrubs
(D) None of these
66. Jamrao Canal is located in the province
60. Pakistan spends annually US$ $ 788 mil- of:
lion on the import of: (A) Punjab
(A) sugar (B) Balochistan
(B) vegetable oil (C) Sindh
(C) tea (D) Kpk
(D) edible oil
67. Total population of livestock in Pakistan
61. Rasul headworks was constructed on the is
river (A) 120 million
(A) Indus (B) 120.5 million
(B) Sutlej (C) 130.5 million
(C) Chenab (D) 122.6 million
(D) Jhelum
68. Which one is the main source of foreign
62. Pakistan is the largest Chickpea Pro- exchange earning?
ducer country in the world. (A) textile
(A) Fifth (B) foreign remittances
(B) Second (C) agriculture
(C) Sixth (D) manufacturing
(D) Eight
69. Cotton accounts for 11.5 percent of value
63. What is the share of local edible oil to the added in agriculture. How much it account
national need? in GDP?
(A) 22% (A) 20%
(B) 30% (B) 4%
(C) 16% (C) 3.5%
(D) 29% (D) 2.7%
60. D 61. D 62. B 63. D 64. C 65. A 66. C 67. D 68. C 69. D 70. D
131
70. Rice account for 6.6 percent in value 76. Out of the total land area of Pakistan
added in agriculture. What is its contribu- the total land area of Punjab is 20.6 mha
tion in GDP? (about 50.90 million acres) out of which
(A) 19% are cultivated
(B) 1.6% (A) 54 % or 11.04 mha
(C) 22% (B) 57 % or 12.00 mha
(D) 6.1% (C) 58 % or 12.04 mha
(D) 59 % or 13.04 mha
71. What is the share of forest area as per-
cent of the total geographical area of the 77. About of land is cultivated through ir-
country? rigation water
(A) 3.8 (A) 75%
(B) 2.8 (B) 55%
(C) 4.8 (C) 15%
(D) 4.5 (D) 35%
72. Which province of Pakistan is the largest 78. The domestic requirement of oil seed has
bajra producing province? almost doubled during the last:
(A) Punjab (A) 6/7 years
(B) K.P.K (B) 9/10 years
(C) Sindh
(C) 7/8 years
(D) Balochistan
(D) 3/4 years
73. What yield of cotton crop is recorded in
79. During the year 1999-2000 how much
Pakistan?
timber was contributed by the forest sec-
(A) 645 kgs/hec tor?
(B) 570 kgs/hec (A) 243 thousand cubic metres
(C) 641 kgs/hec
(B) 343 thousand cubic metres
(D) 621 kgs/hec
(C) 425 thousand cubic metres
74. The share of sugarcane crop in value added (D) 543 thousand cubic metres
in agriculture is 6.3 percent What is the
share in GDP? 80. Food crops cover about of cropped ar-
eas
(A) 5.1%
(B) 1.5% (A) 75%
(C) 6% (B) 55%
(D) 4% (C) 15%
(D) 35
75. Kinds of forest in Pakistan are conifer-
ous forest, irrigated plantation riverrain 81. At what rate (average) agriculture grew
forests and: over the last decade?
(A) Mangrove forest (A) 4.5%
(B) Scrub forests (B) 6%
(C) private plantations (C) 8%
(D) All of these (D) 5.4%
71. C 72. A 73. B 74. B 75. B 76. A 77. A 78. C 79. C 80. A 81. A 82. A
82. The Upper Swat Canal starts from 88. The Indus Water Treaty was mediated by
(A) Malakand (A) IMF
(B) Abazai (B) USA
(C) Kabul (C) World Bank
(D) Jhelum (D) Britain
83. The Triple Project was designed to carry
89. The link canal which irrigates the district
surplus water from the jhelunito chenab
NARAYAN CHANGDER
of D.G khan and D.I khan starts from
and from chenab to the:
(A) Sutlej (A) Chashma Barrage
(B) Upper Bari Doaab (B) Jinnah Barrage
(C) Ravi (C) Sulmaki Headworks
(D) None of these (D) Trimmu Headworks
84. Pakistan is the largest largest Pro- 90. is the backbone of the Pakistan econ-
ducer country in the world. omy and the mainstay of our national eco-
(A) Fifth nomic life.
(B) Fourth (A) Industrial
(C) Seventh (B) Service
(D) Sixth (C) Agriculture
85. Which is the main staple food of the pop- (D) Trade
ulation and largest grain crop of the coun-
try? 91. Kharif crop includes
(A) rice (A) Rice & Sugarcane
(B) pulses (B) Cotton and maize
(C) wheat (C) Bajra and Jawar
(D) None of these (D) All of them
86. Irrigation was developed in the Indus Val- 92. Which Province of Pakistan is the largest
ley Civilization by around wheat producing province?
(A) 4500 BCE (A) Punjab
(B) 4100 BCE (B) Sindh
(C) 4200 BCE (C) K.P.K
(D) 4000 BCE
(D) Balochistan
87. Livestock sector accounts for nearly 36
percent of agriculture value added and 93. How many persons in rural areas are en-
about 9.0 percent of the: gaged in livestock raising?
(A) GDP (A) 25-30 million
(B) GNP (B) 35-40 million
(C) export earnings (C) 20-30 million
(D) budget (D) 30-35 million
83. C 84. C 85. C 86. A 87. A 88. C 89. A 90. C 91. D 92. A 93. D 94. A
133
94. In Pakistan what is the yield of sugar- (C) Sindh

cane? (D) None of these
(A) 48042 kg/hec
101. is the most important staple food of
(B) 54378 kg/hec
Pakistan
(C) 45000 kg/hec
(A) Rice
(D) 74538 kg/hec (B) Wheat
95. Annual growth rate of agriculture for the (C) Cotton
year 2010-11 was (D) Sugarcane
(A) 3.5%
102. What is the total length of Seven canals
(B) 4.5% built under Indus Water Treaty?
(C) 2.5% (A) 650 KM
(D) 5% (B) 621 KM
96. The annual growth rate of edible oil is: (C) 910 KM
(A) 10% (D) 615 KM
(B) 9% 103. How much of the total area is cultivated
(C) 15% in Pakistan?
(D) 7% (A) 35%
(B) 45%
97. Which one of the following is the largest
sector of Pakistan’s economy? (C) 55%
(D) 25%
(A) Agriculture
(B) Banking 104. Use of Borom and Zink can improved:
(C) Industry (A) rice yield
(D) Manufacturing (B) sugar yield
(C) cotton yield
98. What was the yield of wheat in 2010-
11? (D) sunflower yield
(A) 2237 kgs/hec 105. The main export items of the country are
(B) 2314 kgs/hec crop cotton and:
(C) 2217 kgs/hec (A) Sugar
(D) 2247 kgs/hec (B) cotton vast products
(C) sugar products
99. Pakistan’s largest food crop is:
(D) wheat
(A) Rice
(B) Wheat 106. Total land area of Khyber Pakhtunekhwa
(C) Cotton comprises of 10.2 mha (25.20 million
acres), out of which nearly are culti-
(D) Sugarcane
vated
100. Nara Canal is located in the Province of (A) 10% or 1.93 mha
(B) 20% or 3.93 mha
(A) Punjab (C) 29% or 5.93 mha
(B) Balochistan (D) 35% or 7.93 mha
95. D 96. A 97. A 98. B 99. B 100. C 101. B 102. B 103. D 104. C 105. B
106. A 107. B
107. Guddu Barrage was constructed on: 108. What growth rate was witnessed in agri-
culture sector last fiscal year?
(A) River Ravi
(A) 1.4%
(B) River Indus
(B) 2%
(C) River Jheulum (C) 1.9%
(D) River Sutlej (D) 2.9%
NARAYAN CHANGDER
108. A
5. Alternative Theories Of Firm
1. Public limited companies may not max- (D) a large number of subordinates
imise their profits because:
5. Sales maximisation is likely to take place
(A) they are afraid of encouraging
in markets that are:
takeovers.
(A) contestable
(B) shareholders have little control over
(B) perfectly competitive
managers.
(C) oligopolistic
(C) shareholders want higher dividends.
(D) export-oriented
(D) both the first and third option.
6. If firm’s satisfice this means that:
2. The divorce of owner ship and control
(A) managers need to be paid enough to
causes a problem usually referred to by
stop them leaving the company
economists as:
(B) objectives such as profit are not max-
(A) profit myopia
imised
(B) principal-agent problem.
(C) short-run profits are maximised
(C) merger mania.
(D) long-run profits are maximsed
(D) moral hazard
7. The merger of fibre producer and a clothing
3. Identify below those who are not stake- firm would be merger
holders in a company. (A) horizontal
(A) Owners (B) vertical
(B) Customers (C) conglomerate
(C) Employees (D) homogeneous
8. A firm may be unable to maximise profits
4. Williamson suggests that managers might because it:
NOT try to achieve: (A) does not know its MC and MR
(A) respect of other managers. (B) has too much information
(B) maximum profits. (C) has too little information
(C) job security (D) The first and third option
1. B 2. B 3. D 4. B 5. C 6. B 7. B 8. D 9. B
136 Chapter 5. Alternative Theories Of Firm
9. Growth maximisation is the same as: 15. Fear to take-overs will lead firms to max-
(A) sales revenue maximisation imise:
(B) maximisation the growth of sales rev- (A) growth.
enue. (B) sales revenue
(C) Sales maximisation (C) managers utility
(D) long-run profit maximisation. (D) profits.
10. Firms that engage in satisficing behaviour 16. Galbraith’s idea that firms are controlled
NARAYAN CHANGDER
are likely to be: by a technostructure supports theo-
(A) Like other firms in their industry. ries
(B) growth maximisers. (A) Williamson’s
(C) leading firms in their industry (B) classical economic
(D) unlike other firms in their industry (C) Marxist
11. The merger of two clothing firms would be (D) monetarist
a merger
17. A sale maximising firm will produce
(A) horizontal
where:
(B) vertical
(A) AR minus AC is maximised
(C) homogeneous
(B) MC = MR
(D) conglomerate
(C) quantity sold is maximised
12. The divorce of ownership and control (D) sales revenue is maximised
tends to occur in:
(A) sole proprietors 18. When firm build in Organisational slack
(B) partnerships they do this in order to:
(C) public limited companies (A) cope with unforeseen changes
(D) monopolies (B) maximise growth.
(C) minimise conflict within the firm
13. Which of the following is NOT a common
reason for a merger? (D) both options one and three
(A) To increase competition 19. The merger of a clothing firm and a soft-
(B) To reduce uncertainty ware producer would be a merger
(C) To achieve faster growth (A) horizontal
(D) To achieve economies of scale (B) vertical
14. The traditional profit-maximising theory (C) conglomerate
of the firm has been criticised by some (D) homogeneous
economists because:
(A) firms do not know how to maximise 20. Behavioural theories of the firm concen-
profits. trate on the interests of
(B) firms have other aims (A) common; different parts of the firm
(C) it does not explain monopolistic com- (B) common; mangers
petition (C) conflicting; managers
(D) Both the first and second option (D) conflicting; different parts of the firm
10. A 11. A 12. C 13. A 14. D 15. D 16. A 17. D 18. D 19. C 20. D
6. Think like an economist
1. In which of the following cases is the as- (A) labour

sumption most reasonable? (B) land
(A) To address the impact to taxes on in- (C) money
come distribution an economist assumes (D) capital
that everyone earn the same income.
(B) To address the impact of money 4. Economic models are
growth on inflation, an economist as- (A) Usually made of wood and plastic
sumes that money is strictly coins. (B) built with assumptions.
(C) To model the benefits of trade. an (C) useless if they are simple.
economist assumes that there are two (D) created to duplicate reality.
people and two goods
(D) To estimate the speed at which a 5. Points on the production possibilities fron-
beach ball falls, a physicist assumes that tier are:
if falls in a vacuum. (A) infficient
(B) normative
2. Which of the following statements about
(C) unattainable
microeconomics and macroeconomics is not
true? (D) efficient
(A) The study of very large industries is a 6. Suppose two economists are arguing
topic within macroeconomics about policies that deal with unemploy-
(B) Macroeconomics is concerned with ment One economist says The govern-
economy-wide phenomena ment should fight unemployment because
(C) Microeconomics is a building block for it is the greatest social evil The other
macroeconomics economist response Nonsense Inflation is
the greatest social evil These economists
(D) Microeconomics and macroeco-
nomics cannot be entirely separated (A) really don’t disagree at all It just ap-
pears that they disagree.
3. Which of the following is not a factor of (B) disagree because they have different
production? values.
1. C 2. A 3. C 4. B 5. D 6. B
138 Chapter 6. Think like an economist
(C) none of these answers. (A) If Susan works for BAe Systems and
(D) disagree because they have different receives a salary payment, the transac-
scientific judgments. tion takes place in the market for good
and services.
7. Which of the following issues is related to (B) If BAe Systems sells a military air-
microeconomics? craft, the transaction takes place in the
(A) the impact of oil prices on car produc- market for factors for production
tion (C) None of these
NARAYAN CHANGDER
(B) The impact of money on inflation (D) The factors of production are owned
(C) The impact of technology on eco- by households
nomics grwoth
12. Which of the following will not shift a
(D) The impact of the deficit on saving country’s production possibilities frontier
outward?
8. Positive statements are:
(A) an advance in technology
(A) Macroeconomic
(B) an increase in the labour force
(B) Microeconomics
(C) an increase in the capital stock
(C) statements of description that can be
(D) a reduction in unemployment
tested
(D) Statements of prescription that in- 13. The scientific method requires that:
volve value judgments. (A) the scientist be objective
9. Economic growth is depicted by: (B) The scientific use precision equip-
ment.
(A) a shift in the production possibilities
(C) only correct theories are tested
frontier outward.
(D) only incorrect theories are tested.
(B) a movement from inside the curve to-
ward the curve. (E) the scientist use test tubes and have
clean lab.
(C) a shift in the production possibilities
frontier inward 14. Suppose two economists are arguing
(D) a movement along a production pos- about policies that deal with unemploy-
sibilities frontier toward capital goods. ment. One economist says. The govern-
ment could lower unemployment by one
10. Which of the following statements is nor- percentage point if it would just increase
mative? government spending by 50 billion dollars
(A) Large government deficits cause an The other economist responds Nonsense
economy to grow more slowly and poppycock! If the government spent
(B) People work harder if the wage is an additional 50 billion dollars it would re-
higher duce unemployment by only one tenth of
one percent. and that effect would only
(C) The unemployment rate should be
be temporary! These economists
lower
(A) None of these answers
(D) Printing too much money causes infla-
tion (B) Disagree because they have different
scientific judgments
11. Which of the following statements regard- (C) really don’t disagree at all. It just ap-
ing the circular-flow diagram is true? pears that they disagree
7. A 8. C 9. A 10. C 11. D 12. D 13. A 14. B 15. A

139
(D) disagree because they have different 16. Which of the following is most likely to
values. produce scientific evidence about a the-
ory?
15. In making which of the following state-
ments is an economist acting more like a (A) A lawyer employed by Renault ad-
scientist? dressing the impact of air bags on passen-
(A) A reduction in unemployment bene- ger safety.
fits will reduce the unemployment bene- (B) An economist permanently employed
fits will reduce the unemployment rate. at a leading university analysing the im-
(B) The rate of inflation should be re- pact of bank regulations on lending to
duced because it robs the elderly of their small businesses
savings.
(C) The unemployment rate should be re- (C) An economist employed by the Trades
duced because unemployment robs indi- union congress doing research on the im-
viduals of their dignity. pact of trade policy on workers wages
(D) The state should increase subsidies (D) A radio talk show host collecting data
to universities because the future of our from listeners on how capital markets re-
country depends on education. spond to texation
16. B
NARAYAN CHANGDER
7. Applied Microeconomics
1. The theory of the second best suggests (B) Unitarily elastic

that in the absence of perfect competition (C) Elastic
a privatized industry should charge a price (D) inelastic
of:
(A) p = Z 5. De-regulation is where the government.
(B) P = MC + Z (A) removes barriers to entry
(C) p = MC (B) imposes higher standards of conduct
(D) P = MC - Z
(C) removes barriers to entry and mini-
2. In the country X it is now becoming possi- mum product quality standards
ble to buy electricity from a gas company (D) breaks up private sector monopolies.
and gas from an electricity company. This
is called: 6. A merger between a paper producer and a
(A) deregulation book publisher is an example of:
(B) making markets contestable (A) a conglomerate merger.
(C) natural monopoly. (B) a horizontal merger
(D) cross-subsidisation. (C) a complementary products merger.
(D) a vertical merger
3. In the UK, electricity industry parts are a
and other parts are 7. Supporters of antimonopoly enforcement
(A) nationalised; privatised argue that the real gain from such enforce-
(B) natural monopoly; potentially compet- ment:
itive (A) is that if encourages firms to engage
(C) cartel; a sellers market in research which leads to new products
(D) monopolistic competition duopoly (B) is the revenue generated from the
fines paid by those individuals who are
4. Evidence suggests that the price elasticity found guilty of antitrust violation.
of demand for motoring is: (C) Is that this policy serves to deter
(A) absolutely inelastic firms from engaging in such practices as
1. B 2. B 3. B 4. B 5. C 6. D 7. C
142 Chapter 7. Applied Microeconomics
collusion, price-fixing and deceptive ad- 13. Sales staff are keen to sell extended war-
vertising ranties because:
(D) is that it force firms to produce effi- (A) extended warranties offer value for
ciently. money.
(B) the cost of repair will usually exceed
8. Between 1990 and 1999 car ownership the cost of the warranty
per thousand of the population fell in:
(C) they are paid commission on each ex-
(A) Spain tended warranty they sell.
NARAYAN CHANGDER
(B) Belgium (D) They are concerned about customer
(C) USA satisfaction.
(D) UK
14. A merger in which firms at various stages
9. A horizontal merger is a merger of: in a production process combine is a:
(A) firms producing unrelated products (A) production merger
(B) firms producing complementary prod- (B) vertical merger
ucts (C) conglomerate merger.
(C) firms at various stages in a produc- (D) horizontal merger
tion process.
15. The external benefits of using cars are
(D) firms producing the same product and the external costs are
10. Antimonopoly legislation is undertaken to (A) low; low
competition and market regulation is (B) high; high
undertaken to competition. (C) low; high
(A) restrict; promote (D) high; low
(B) restrict; restrict
16. Spending on motoring as a % of household
(C) promote; promote
expenditure in the UK shows that motor-
(D) promote; restrict ing is:
(A) Environmentally damaging
11. A firm charging different buyers different
prices for the same product is practicing: (B) an inferior good
(A) Competitive pricing. (C) a potential public good
(B) Price discrimination (D) a superior good
(C) price discounting. 17. Antimonopoly laws are based on the
(D) price fixing. proposition that:
(A) increasing market power is the best
12. A conglomerate merger is a merger of: way to achieve efficiency.
(A) firms producing the same product (B) competition is the best way to achieve
(B) firms at various stages in production efficiency.
process. (C) public ownership is the best way to
(C) firm producing complementary prod- achieve efficiency
ucts (D) regulation is the best way to achieve
(D) firms producing unrelated products. efficiency.
8. C 9. D 10. D 11. B 12. D 13. C 14. B 15. C 16. D 17. B

143
18. Which city has the following transport pol- 19. Economists use the term regulatory cap-
icy? ture to mean a situation where the private
(A) Car licences are very expensive ve- sector firms being regulated:
hicle entry to the city centre is very re- (A) Persuade the regulator to operate in
stricted road pricing is being introduced the industry’s interests
and modern cheap rail transport is being
expanded. (B) Persuade the regulator to act in the
firms interests.
(B) London
(C) Athens (C) Bribe the regulator.
(D) Singapore (D) Persuade the government to change
(E) New york the regulatory regime.
18. D 19. A
NARAYAN CHANGDER
8. Asymmetric Information
1. Which of the following is not a property 4. Refer to Figure 1. Under pairwise majority
required of a perfect voting system? voting which outcome wins?
(A) The median voter always wins (A) C
(B) no dictators (B) These preferences suffer from the
Condorcet paradox so there is no clear
(C) independence of irrelevant
winner
(D) transitivity (C) B
2. Nicole wants to avoid buying a car that is (D) A
a lemon. She takes a car she would like to 5. Which of the following help explain why
buy to her mechanic before she purchases firms pay bonuses to workers during par-
it. This is known as ticularly profitable years to prevent work-
(A) screening ers from becoming disgruntled?
(B) signalling (A) people are rational maximizers
(C) moral hazard (B) People are reluctant to change their
minds
(D) adverse selection
(C) People are inconsistent over time
3. Which of the following is true under pair- (D) People care about fairness
wise majority rule if people vote for the
6. Suppose that 40 percent of the voting pop-
outcome closest to their most preferred
ulation wish to spent Rs1,000 for artwork
outcome?
in City Hall, 25 percent wish to spent
(A) The average preferred outcome wins Rs20,000 and 35 percent wish to spend
Rs 22,000 What is the median preferred
(B) There is no clear winner due to Ar- outcome, the average preferred outcome
row’s Impossibility Theorem. and the modal preferred outcome?
(C) The outcome preferred by the median (A) Rs20,000; Rs20,000; Rs22,000
voter wins (B) Rs1,000; Rs14,333; Rs1,000
(D) The outcome preferred by the great- (C) Rs20,000; Rs13,100; Rs1,000
est number of voters wins. (D) Rs1,000; Rs20,000; Rs22,000
1. A 2. A 3. C 4. B 5. D 6. C
146 Chapter 8. Asymmetric Information
7. Which of the following must be true about (C) screener

a signal that is used to reveal private in- (D) signaller
formation in order for the signal to be ef-
fective? 12. Which of the following is not a method
(A) It must be “as seen on TV” firms use to avoid the moral hazard prob-
lem in the employment relationship?
(B) It must be free to the signalling party
(A) They pay employees with delayed
compensation such as a year-end bonus
(C) It must be costly to the signalling
NARAYAN CHANGDER
party but less costly to the party with
higher-quality product (B) They buy life insurance on their work-
ers
(D) It must be applied to an inexpensive
product (C) They pay above equilibrium wages
(D) They put hidden video cameras in the
8. Refer to Fiqure 1, If we first compare A workplace
to C, and then compare the winner to B,
which outcome is the winner? 13. In the ultimatum game, what split would
(A) A be rational for both the person proposing
the split and the person who must accept
(B) C
or reject the split?
(C) B
(A) There is no rational solution
(D) These preferences suffer from the
(B) 75/25
Condorcet paradox so there is no clear
winner (C) 99/1
(D) 1/99
9. A life insurance company forces Enzo to (E) 50/50
have a medical examination prior to sell-
ing him insurance 14. Which of the following is a response
(A) transitivity to People’s inconsistent behaviour over
(B) impossibility time?
(C) independence (A) all of these answers
(D) unanimity (B) forced contributions to a retirement
plan
10. Jamil’s car is in need of repair so John de- (C) year-end bonuses
cides to sell it t avoid the repair bill. Un- (D) efficiency wages
aware of the problem, Shahab buys the
car. This is an example of 15. Which of the following is not true about
(A) hidden actions how people make decisions?
(B) adverse selection (A) people give too much weight to a
(C) moral hazard small number of vivid observations
(D) adverse selection (B) People are sometimes too sure of
their own abilities
11. Markus is a travelling salesman for an ap- (C) All of these answers are actually true
parel company. In this employment rela- statements about how people make deci-
tionship, Markus is the sions.
(A) agent (D) People are always rational maximiz-
(B) principle ers
7. C 8. C 9. A 10. A 11. A 12. B 13. C 14. B 15. D

147
(E) People are reluctant to change their (A) C

minds in the face of new information (B) B
16. Which of the following is an example of a (C) A
signal that is used to reveal private infor- (D) These preferences do not exhibit tran-
mation? sitivity so there is no clear winner.
(A) Enzo carefully chooses a special gift 19. Refer to Figure 1 What precent of the pop-
for josephine ulation vote for A when the choiceis be-
(B) Josephine earns her MBA from the tween A and B?
Harvard Business School (A) 75 percent
(C) Lexus advertises its cars during the (B) 35 percent
football World Cup Final.
(C) 60 percent
(D) All of these answers are correct
(D) 40 percent
17. Jamil’s friend dies of a sudden heart at- (E) 25 percent
tack. Jamil rushes to his doctor for an
expensive physical examination. This re- 20. Which of the following best demonstrates
sponse demonstrates that the problem of moral hazard?
(A) People give too much weight to a (A) Josephine doesn’t buy health insur-
small number of vivid observations ance because it is too expensive and she
is healthy
(B) People easily change their minds
when confronted with new information (B) A life insurance company forces Enzo
to have a medical examination prior to
(C) People enjoy going to the doctor
selling him insurance
(D) People tend to plan ahead and follow
(C) Enzo drives more recklessly reck-
through on their plans
lessly after he buys car insurance
18. Refer to Figure 1. Using Borda count, (D) Fatima chooses to attend a well-
Which outcome is preferred? respected college
16. D 17. A 18. A 19. C 20. C

NARAYAN CHANGDER
9. Average and total Cost
1. In the long run, if a very small factory (B) wages paid to factory labour
were to expand its scale of operations it (C) interest payments on borrowed finan-
is likely that it would initially experience cial capital
(A) an increase in average total costs (D) payments on the lease for factory
(B) diseconomies of scale equipment
(C) economies of scale (E) salaries paid to upper management
(D) constant returns to scale
5. Naila owns a small pottery factory. She
2. Accounting profit is equal to total revenue can make 1000 pieces of pottery per year
minus: and sell them for Rs 100 each. It costs
(A) implicit costs Naila Rs 20,000 for the raw materials to
(B) variable costs produce the 1,000 pieces of pottery She
has invested Rs100,000 in her factory and
(C) the sum of implicit and explicit costs.
equipment: Rs50,000 from her savings
(D) explicit costs. and Rs50,000 borrowed at 10 per cent.
(E) marginal costs (Assume that she could have loaned her
money out at 10 her per cent, too) Naila
3. If a production function exhibits diminish-
can work at a competing pottery factory
ing marginal product the slope of the cor-
for Rs40,000 per year. The accounting
responding total-cost curve
profit at Naila’s pottery factory is:
(A) is liner (a straight line)
(A) Rs30,000
(B) could be any of these anwers
(B) Rs35,000
(C) becomes steeper as the quantity of
output increases (C) Rs75,000
(D) become flatter as the quantity of out- (D) Rs70,000
put increases.
6. Economic profit is equal to total revenue
4. Which of the following is a variable cost in minus:
the short run? (A) variable costs
(A) rent on the factory (B) implicit costs
1. C 2. D 3. C 4. B 5. C 6. B
150 Chapter 9. Average and total Cost
(C) explicit costs (A) average total cost are falling

(D) marginal costs (B) average total cost are raising
(C) average total cost are maximized
7. When marginal costs are below average
(D) average total cost are minimized
total costs,
(A) average fixed cost are rising 10. The efficient scale of production is the
(B) average total cost are falling quantity of output that minimizes:
(C) average total cost are raising (A) average fixed cost
NARAYAN CHANGDER
(D) average total cost are minimized (B) average total cost
(C) average variable cost
8. If a production function exhibits diminish- (D) marginal cost
ing marginal product. its slope
(A) is linear ( a straight line) 11. If as the quantity produced increase a
production function first exhibits increas-
(B) becomes steeper as the quantity of
ing marginal product and later diminish-
the input increase
ing marginal product, the corresponding
(C) could be any of these answers marginal-cost curve will:
(D) becomes flatter as the quantity of the (A) be flat (horizontal)
input increase
(B) slope upward
9. If marginal costs equal average total (C) slope downward
costs, (D) be U-shaped.
7. B 8. D 9. D 10. B 11. D
10. Payments, Aid and Foreign
Investment
1. Hollis Chenery and Alan Strout identity 3. I = S + F The equation above states that
three development stages in which growth a country can increase its new capital for-
proceeds at the highest rate permitted by mation (or investment) through is
the most limiting factors These factors are (A) own domestic savings and by inflows
1. the skill limit of capital from abraod
2. the savings gap (B) stock market and fiscal policy
3. the fiscal gap (C) savings from abroad and financial out-
4. the foreign exchange gap flow
(A) 1 and 2 only (D) savings and financial liberalization
(B) 2 and 4 only 4. MNCs can help the developing country to
(C) 1 , 2 and 3 only 1. Finance a savings gap or balance of
(D) 1, 2 and 4 only payments deficit
2. Obtain foreign technology by adapt-
2. Barro and Lee find that ceteris paribus, ing existing processes
IMF lending has 3. Generate appropriate technology by
adapting existing processes
(A) negative effect on economic growth 4. Employ domestic labor, especially in
during the simultaneous five-year period skilled jobs
but has a significantly positive effect on
(A) 1 and 2 only
growth in the subsequent five years
(B) 3 and 4 only
(B) no effect on economic growth during
(C) 1 , 2 and 3 only
the simultaneous five-year period but has
a significantly negative effect on growth (D) All the above
in the subsequent five years 5. In a portfolio investment
(C) a significantly positive effect on (A) investors are directly involved in man-
growth in the subsequent five years aging the operations
(D) an exponentially negative effect on (B) as in direct investment investors ex-
growth ten years port goods and services abroad
1. D 2. B 3. A 4. D 5. D
152 Chapter 10. Payments, Aid and Foreign Investment
(C) investors transfer the technology to (B) proponents of basic-needs attain-

local investors ment opposed food-aid
(D) investors have no control over opera- (C) U.S farm interests wanted to reduce
tions surplus grain stocks
6. Japan’s programs (D) agricultural production suffered ex-
cessively due to weather changes
1. are understaffed politically muddled
and administratively complex 10. Which of the following statement is NOT
NARAYAN CHANGDER
2. are biased toward Asia true about OECD aid?
3. go primarily to leas developed coun-
tries in Africa (A) During the 1980s OECD countries con-
4. focus on loans and the grant element tributed four fifths of the world’s bilateral
of aid is low official development assistance to LDCs
(A) 1, 2 and 3 (B) In the early 1990s the OECD con-
(B) 1, 2 and 4 tributed 98 percent of all aid
(C) 2, 3 and 4 (C) The OECD aid increased fro $6.9 bil-
lion in 1970 to $8.9 billion in 2001
(D) All the above
(D) In 2001, only Denmark Norway , Swe-
7. Columbia’s Jagdish Bhagwati criticizes den, the Netherlands, and Luxembourg ex-
United States administrations inability to ceeded the aid target for LDCs
distinguish between benefits of free trade
(A) and the dangers of free capital move- 11. Aid or official development assistance
ments for LDCs with poorly developed fi- (ODA) includes
nancial institutions 1. developments grants
(B) and the dangers of a trade deficit 2. loans with at least 25 percent grant
(C) and the external openness of income element
growth among the poorest 40 percent of 3. military assistance
LDCs 4. technical cooperation
(D) and MNC domination and its effects (A) 1 and 2 only
on income distribution
(B) 1, 2 and 3 only
8. An annual summary of country’s interna- (C) 1, 2 and 4 only
tional economic and financial transactions
(D) All the above
is
(A) the capital account 12. The IMF is an agency charged with provid-
(B) the international balance of payments ing
statements (A) technical assistance to stock market
(C) the long term current account and financial market problems
(D) the trade account (B) loans for post-World War II recon-
struction
9. The U.S real food aid, as well as food
reserves dropped from the 1960s to the (C) short-term credit for international
1980s partly because balance of payments defiits
(A) the transportation and storage cost (D) bonds denominated in U.S dollars as
increased tremendously a loan to LDCs
6. B 7. A 8. B 9. C 10. C 11. C 12. C 13. B

153
13. Bilateral aid 1. increasing the LDC’s technological

(A) is technical aid given by IMF dependence on foreign sources re-
(B) is given directly by one country to an- sulting in less technological innova-
other tion by local workers
(C) is aid with repayment in inconvertible 2. Hamper local entrepreneurship and
currency investment in infant industries
3. increase unemployment rates from
(D) is a loan at bankers’ standards
unsuitable technology
14. For Harvard’s Dani Rodrik Globalization 4. Restrict subsidiary exports when
involves they undercut the market of the par-
(A) decreasing autonomy of the nation- ent company
state involves (A) 1 and 2 only
(B) the increasing international integra-
(B) 3 and 4 only
tion of markets for goods services and
capital (C) 1, 2 and 3 only
(C) changes of a traditional culture of a (D) All the above
country to a western culture
(D) giving aid to poor countries to im- 18. Dani Rodrik points out that
prove their economy politics and social
status (A) an economy more open to foreign
trade and investment faces a more inelas-
15. U.S total official development assistance tic demand for unskilled workers
to developing countries is
(B) employers and consumers can more
(A) lowest among the OECD countries
readily replace domestic workers with for-
(B) higher currently than it was in the eign workers by investing abroad or buy-
1960s and 1970s ing imports
(C) is equivalent to Holland’s aid
(C) globalization increases job insecurity
(D) None of the above statements is true
(D) financial liberalization in LDCs leads
16. The balance on current account
to collapse of the economy
1. equals the absolute value of the bal-
ance on capital account 19. Carmen Reinhart and Kenneth Rogoff ex-
2. is financed by savings plain the paradox of capital flows from
3. is net grants minus remittances poor to rich countries by
4. includes goods services and unilat-
eral transfers (A) the brain drain from from LDCs to DCs
(A) 1 and 2 only
(B) 2 and 3 only (B) the price role of political and credit-
(C) 1 and 4 only market risk in many LDCs
(D) None of the above (C) the law of increasing returns that im-
plies that the marginal productivity of cap-
17. Some economists and third-world policy
ital is higher in LDCs
makers criticize MNCs arguing that they
have a negative effect on the developing (D) the fat that the DC capital market is
country because they perfectly competitive
14. B 15. D 16. C 17. D 18. C 19. B

NARAYAN CHANGDER
11. Basic of economics
1. Estimated income and plane for expendi- 4. Government granted monetary assistance
ture is called Budget. What is Budget to a person or a group in support of an en-
deficit? terprise regarded as being in public inter-
(A) Less Public spending than amount of est. This is called subsidy. Point out the
revenue corporation statement which is also a subsidy?
(B) Balance between public spending and (A) Financial assistance given by one per-
amount of revenue son or government to another
(C) More public spending than amount of (B) Financial assistance given to poor
revenue people
(D) None of them (C) Financial assistance given to aged
people
2. The term Cartel refers to: (D) Financial assistance given to small
(A) A combination of firms for business companies
purposes
5. USA is the chief exporter of:
(B) An official agreement between gov-
ernments at war, especially for exchange (A) Coal
of prisoners (B) Copper
(C) Unity of parties, factions or nations in (C) Cotton
a common cause (D) All of these
6. What is called the result of a state’s bor-
3. The branch of economics ‘Microeconomics’ rowing from its population, from foreign
deals with: governments or from international institu-
(A) small units, including individual com- tions?
panies and small group of consumers (A) National debt
(B) Economics of homes (B) Public debt
(C) Economics of stock market (C) Both of them
(D) Economics of provinces (D) None of them
1. C 2. D 3. A 4. A 5. D 6. C 7. B
156 Chapter 11. Basic of economics
7. The economics system planned economy 12. “Term bond” are bonds whose principle is
is: payable at maturity. What does mean by
(A) In which economists control produc- Term certificate?
tion (A) A bond with a longer time to maturity
(B) In which production and distribution
of wealth is under government’s control (B) A certificate of deposit whose princi-
(C) In which technocrats control produc- pal is payable at maturity
tion (C) A certificate of deposit with a shorter
NARAYAN CHANGDER
(D) In which government controls distri- time to maturity
bution (D) certificate of deposit with a longer
time to maturity
8. Bank issued a document that authorizes
the bearer to receive money from one of 13. What is called protection of domestic pro-
its foreign branches or from another bank ducers by impeding or limiting the impor-
abroad. What such document is called? tation of foreign goods and services?
(A) letter of Credit (A) Domestication
(B) Letter of expression (B) Protectionism
(C) Demand draft (C) Localization
(D) Letter of intent (D) National interest
9. How is termed the legal proceeding in 14. Beyond any mortgage thereon and liability
which debtor remains unable to pay his therein, the residual value of a business or
creditors in full? property is called equity. Which of the fol-
(A) Bankruptcy lowing are also included by term equity?
(B) Default (A) The market value of securities less
(C) Total loss any debt incurred and common stock and
(D) Crash preferred stock
(B) Funds provided to a business by the
10. What is called the stock that sells at a high sale of stock
price? (C) Both of them
(A) Blue chip (D) None of them
(B) Blue Chipper
(C) An extremely valuable asset or prop- 15. Who among the following is most bene-
erty fited from inflation?
(D) All of these (A) Government pensioners
(B) Creditors
11. When supply exceeds demand, sellers
(C) Savings Bank Account holders
must lower prices to stimulate sales, when
demand exceeds supply, prices increase as (D) Debtors
buyers compete to buy goods. What this 16. A very rapid growth in prices in which
theory is called in economics? money loses its value to the point where
(A) Cost push theory even barter may be preferable is known
(B) Supply and Demand theory as:
(C) Fundamental theory (A) Inflation
(D) Ricardo’s theory (B) Hyper-inflation
8. A 9. A 10. D 11. B 12. B 13. B 14. C 15. D 16. B

157
(C) Deflation 22. India is the chief exporter of :

(D) Disinflation (A) Mica
(B) Rubber
17. Blue chip company is used in the context
of general equities. What does it refer? (C) Silver
(A) A multinational company (D) Gold
(B) Large and creditworthy company
23. Failure to make timely payment of inter-
(C) A conglomerate company est or principal on a debt security or to
(D) A consortium of companies otherwise comply with the provisions of
a bound indenture is called?
18. What is called the crop which is grown for
(A) Rolling debt
sale rather than the farmer’s own use?
(B) Bad debt
(A) Business Crop
(C) Rescheduling
(B) Cash crop
(D) Default
(C) Money Crop
(D) Earning Crop 24. What is called the advocacy of protecting
domestic producers by impeding or limiting
19. Which of the following is referred by prin- the importation of foreign goods an ser-
ciple ? vices?
(A) Total amount of money being bor- (A) Domestication
rowed or lent
(B) Protectionism
(B) Party affected by agent decision in a
principal agent relationship (C) Localization
(C) Both of them (D) National interest
(D) None of them
25. What is referred by the discount rate?
20. What is called the minimum price of a com- (A) Advance deduction of the interest in
modity that is fixed by government in or- purchasing, selling or lending a commer-
der to save the interests of producer of cial paper
raw materials? (B) State (central) Bank’s interest rate on
(A) Floor price loans to its member banks
(B) Fixed price (C) Both of them
(C) Bid price (D) None of them
(D) Basic price
26. Indemnity is:
21. What is called when government spend- (A) Security against damages loss, or in-
ing overwhelms government revenue re- jury
sulting in government borrowing?
(B) A legal exemption from liability for
(A) Budget deficit damages
(B) Deficient financing (C) Compensation for damages loss, or
(C) Unbalanced spending injury suffered
(D) Deficit spending (D) All of these
17. B 18. B 19. C 20. A 21. D 22. C 23. D 24. B 25. C 26. D 27. B
27. Term the interchange of commodities 32. What is called the amount of non-military
across political political frontiers without foreign aid which a country received?
restriction such as tariffs, quotas, or for- (A) Grands
eign exchange controls? (B) Official Development Assistance
(A) Open tarde (ODA)
(B) Free trade (C) Foreign aid
(C) Open sky trade (D) Friendly aid
(D) Easy trade
NARAYAN CHANGDER
33. How is termed the ability to buy?
28. A central bank or monetary authority hold (A) Purchasing power
foreign currency for the purpose of ex-
(B) Income level
change intervention and the settlement of
intergovernmental claims. Term the cur- (C) Gross purchasing power
rency? (D) Purchasing power parities (PPP)
(A) Reserve currency 34. Hard currency is defined as:
(B) Hot currency (A) Currency traded in foreign exchange
(C) Pegged currency market for which demand is persistently
(D) Hard currency relative to the supply
(B) Currency Which is used in times of
29. Government policy about exports and im-
war
ports is called:
(C) Currency which loses its value very
(A) Monetary policy
fast
(B) Fiscal policy
(D) None of these
(C) Commercial policy
(D) Finance policy 35. What is called the excess of purchase price
over fair market value of net assets that
30. Which of the following is rate of interest are acquired under the purchase method of
the major international banks charge each accounting?
other for borrowings? (A) Bonus
(A) New york Interbank Offered Rates (B) Uplevel
(NIBOR)
(C) Goodwill
(B) international Interbank Offered
Rates (IOBOR) (D) Upgradation
(C) London Interbank Offered Rate (LI- 36. Which of the following is indicated by the
BOR) term unemployed?
(D) USA Interbank Offered Rate (UIBOR) (A) Employed only part time when one
needs full time employment
31. Minimum price of a commodity, fixed by
government to save the interest of pro- (B) Inadequately employed
ducer of raw materials is called: (C) Note fully used or employed
(A) Floor price (D) All of them
(B) Fixed price 37. Which economics term describes the take
(C) Bid Price over of one textile manufactures by an-
(D) Basic Price other?
28. A 29. C 30. C 31. A 32. B 33. D 34. A 35. C 36. D 37. B
159
(A) Diversification 43. Interest is:

(B) horizontal integration (A) Payment made for the use of another
(C) monopoly person’s money
(D) vertical integration (B) Payment made for the use of bank’s
money
38. Term a tax that is levied by a country (C) Share in profit
of source on income paid, usually on divi-
(D) Devaluation in the Currency
dends remitted to the home country of the
firm operating in a foreign country? 44. Who is a “Lame Duck” in a stock market?
(A) Wealth tax (A) A new investor
(B) Withholding tax (B) A old investor
(C) Income tax (C) A member of the stock exchange who
(D) None of these cannot meet his obligations:
39. From each according to his ability to each
according to his need is the theoretical slo- 45. How i measured the change in the cost
gan of: of basic goods and services in comparison
(A) Feudal System with a fixed base period?
(B) Capitalist System (A) Human Development Index (HDI)
(C) Fascist System (B) Consumer Price Index (CPI)
(D) Communist System (C) Complete Price Index (CPI)
(D) Comparative Price Index (CPI)
40. Term the sole legal right to print or publish
anything that belongs to the author? 46. Term the average income of the people of
(A) property right a country during a year?
(B) Sole right (A) National income
(C) Copyright (B) Domestic income
(D) rights (C) Protection Income
(D) Per capita Income
41. Which term is used for a country’s hold-
ings of intentionally acceptable means of 47. What can a government do to increase de-
payment? mand in its economy?
(A) Holdings (A) Budget for a surplus
(B) Reserves (B) Cut taxes
(C) Foreign currency (C) Encourage savings
(D) Treasure (D) Reduce its expenditure
42. The term Remittance refers to: 48. In Planned economy’ Production and dis-
(A) Sending of money to someone at distribution of Wealth is under control of:
tance (A) Private sector
(B) The sum of money sent (B) Government
(C) Both of them (C) Bank
(D) None of them (D) None of the above
38. B 39. D 40. A 41. B 42. C 43. A 44. C 45. B 46. D 47. B 48. A 49. D
49. Depression is a drastic decline in a national 55. There is a decentralized market where ge-
or international economy. It’s characteris- ographically dispersed dealers are linked
tic is: by telephones and computer screens. The
(A) Decreasing business activity market is for securities not listed on a
(B) Falling prices stock or bond exchange. Name the mar-
ket?
(C) Unemployment
(D) All of these (A) Grey market
(B) Over-the counter (OTC)
NARAYAN CHANGDER
50. Name the political and economic system in
(C) Open market
which the government owns and controls
the means of production to benefit all the (D) Back market
people?
56. What is called the situation in which a
(A) Communism
debtor remains unable to pay his creditors
(B) Socialism in full?
(C) Capitalism
(A) Bankruptcy
(D) Authoritarianism
(B) Default
51. Barter is the trade of goods or services (C) Total loss
with:
(D) Crash
(A) free exchange of money
(B) exchange of services 57. P2P is business slang. What does it re-
(C) exchange of goods and services fer?
(D) None of them (A) To startups or internet startup
52. Capital Flight from a country is called: (B) Path to profitability
(A) removal of individual and corporate (C) Both of them
investment (D) None of them
(B) removal of capital drain
(C) removal of income 58. What is called the centres around the abil-
ity of a national economy to generate
(D) All of these
enough interests and principal on its for-
53. An market in which prices are in an up- eign debt?
ward trend is known as: (A) National economic risk
(A) Bull market (B) Country economic risk
(B) Beamish market (C) Country finance risk
(C) Upward market
(D) Foreign exchange risk
(D) Hot market
59. What is called the difference in the value
54. Balance of sheet is understood as:
of a nation’s imports over exports or ex-
(A) Profit in a year ports over imports?
(B) Statements of accounts that shows
(A) Trade deficit
debit and credit accounts under the broad
heads (B) Trade simples
(C) Performance of a company (C) Both a&b
(D) Accurate economic position (D) Not a nor b
50. B 51. C 52. D 53. A 54. B 55. B 56. A 57. C 58. C 59. C 60. C
161
60. Which of the following is not required (B) Poverty line

while computing Gross National Product (C) Both of them
(GNP)? (D) None of them
(A) Net foreign investment
(B) Private investment 66. Name the company in which the liability of
the shareholders is limited to the amount
(C) Per capita income of citizens
of their shares?
(A) Limited company
61. Which country is the chief exporter Alu- (B) Incorporation
minium? (C) Cooperative
(A) USA (D) Corporation
(B) Britain
67. Term the rules and particles that govern
(C) France
the management of an organization?
(D) Germany
(A) Internal laws
62. What is referred by the hard currency? (B) By laws
(A) Any currency backed by gold or silver (C) Character
bullion rather than credit (D) Memorandum of articles
(B) Stable currency value of which does
not fluctuate greatly 68. Downsizing is:
(C) Both of them (A) to make in a smaller size
(D) None of them (B) to make in a actual size
(C) to make in a half size
63. National income refers to: (D) None of the above
(A) Money value of goods and and ser-
vices produced in a country during a year. 69. Which country is the chief exporter of
jute?
(B) Money value of stocks and shares of (A) Bangladesh
a country during a year. (B) India
(C) Money value of capital goods pro- (C) Both of them
duced by a country during a year. (D) None of them
(D) None of these
70. The balance of payment is:
64. What is the period called 12-months plan (A) Balance between a nation’s expendi-
of a country to use its funds? ture on imports and its receipts from ex-
(A) Fiscal period ports
(B) Calendar year (B) Total sum a state owned
(C) Year unit (C) Total liabilities of a nation
(D) Fiscal year (FY) (D) Shortfall in budget
65. How is termed the minimum income level 71. What is called a check that is returned by
below which a person is considered to be a bank because it is not payable, usually
living in poverty? because of insufficient funds?
(A) Poverty level (A) Bounce
61. A 62. C 63. A 64. D 65. C 66. A 67. B 68. A 69. C 70. A 71. A 72. A
(B) Return 78. We measure national national income by

(C) Grossed this method.
(D) Refused (A) Expenditure method
72. Which of the following is not rated by (B) Income method
credit rating agencies? (C) Product method
(A) Shares (D) All of the above
(B) Debentures and bonds
NARAYAN CHANGDER
(C) Commercial paper 79. Mention an international trade policy com-
(D) Government securities petitive devaluations and increased protec-
tive barriers that one country institute to
73. What is called degree of buyer’s respon- gain at the expense of its trading part-
siveness to price changes? ners?
(A) Production & Supply (A) Nationalist policy
(B) Demand push Supply
(B) Domestic policy
(C) Demand & Supply
(C) Protectionist policy
(D) Demand pull supply
(D) Beggar-thy-beighbour
74. What is Debt retirement?
(A) To write off debt 80. When the stock market is down falling it
(B) To reschedule debt is called:
(C) To repay debt in easy installments (A) Bullish
(D) The complete repayment of debt (B) Bearish
75. The situation with increasing unemploy- (C) Falling
ment and inflation is terms as: (D) Crashing
(A) Hyperinflation
(B) Reflection 81. In the context of equities What is called a
(C) Stagflation firm with two divisions that may split into
(D) Galloping two companies and issue original share-
holders two shares for every old share
76. Term a film that is engaged in two or more they have?
unrelated businesses?
(A) Spreadsheet
(A) Conglomerate
(B) Splinter
(B) Multinational
(C) gaint (C) Family growth
(D) Incorporation (D) Butterfly
77. Which exchange rate system is character- 82. What is referred by the term ‘Portfolio’?
ized by the absence of government inter-
vention? (A) A collection of investments, real
and/or financial
(A) Free float
(B) Clean float (B) Net assets of a company
(C) Both of them (C) Total profit of company in a year
(D) None of them (D) Total unmovable assets of a company
73. C 74. D 75. C 76. A 77. C 78. D 79. D 80. B 81. D 82. A 83. C
163
83. Devaluation of currency can help to in- 88. What is the cost effective?
crease exports if elasticity of demand of (A) Cheap things
exportable items in other countries is:
(B) Sub standard things
(A) Less then one
(C) Economical in terms of the goods or
(B) Greater than one
services received for the money spent
(C) Equal to one
(D) Free in terms of the goods or services
(D) Zero received for the money spent
84. How is known the process in which an in-
89. The amount value of an asset in business
vestment company continually offers new
records is not necessarily identical to the
shares and buys existing shares back on
amount that the asset could bring on the
demand and uses its capital to invest in di-
open market. What is it called?
versified securities of other companies?
(A) Open value
(A) combine fund
(B) Book value
(B) Mutual fund
(C) Liquid fund (C) Real value
(D) Stock holding company (D) Artificial value
85. By the way of an underwriter, the sale 90. What is called a place of work where all
of a new security is issued to the pub- workers within a section must belong to a
lic a transaction that must be registered single official recognized trade union?
with the securities and exchange commis- (A) Monopolized shop
sion. How is know this process
(B) Monopolized area
(A) Registering
(C) Closed shop
(B) Going public
(D) Monopolized market
(C) Debuting
(D) Public offering 91. Bank loans are usually altered to have
longer maturities in order to assist the
86. Which term is used for the period of com- borrower in making the necessary repay-
petition in which each competitor tries to ments. What these loans are called?
cut retail prices below the others?
(A) Rearranged loans
(A) Price competition
(B) Rescheduled loans
(B) Price support
(C) Altered loans
(C) Price war
(D) None of these
(D) Price battle
87. What is called increased demand for a lim- 92. What is called the market in which forces
ited supply of goods and service result of of demand and supply are not in the con-
which is increase in consumer prices? trol of government?
(A) Demand push (A) Market Economy
(B) Demand pull (B) Free Market
(C) Cost pull (C) Both of them
(D) Demand supply (D) None of them
84. B 85. D 86. C 87. B 88. C 89. B 90. C 91. B 92. C 93. C
93. A seller of goods or services writes a bill 98. Which market is characterized by a small
that is submitted to a purchaser for pay- number of large buyers who control all pur-
ment. What this bill is called? chases and therefore the market price of a
(A) Demand draft good a service?
(B) Draft (A) Oligopoly
(C) Invoice (B) Grey market
(D) Bill of Intent (C) Oligopsony
NARAYAN CHANGDER
(D) Green market
94. A detailed, itemized list, report or record
or things in one’s possession or the pro- 99. The intermediary agent in the purchase
cess of making such a list, or items listed and sale of any good is known as:
in this list, or the stock, is called inventory. (A) Dealer
Which of the following is also inventory? (B) Broker
(A) List of stock a company own (C) Agent
(B) List of assets of a corporation (D) Commission agent
(C) Total obligation of a firm
100. The amount that is paid for carriage of
(D) An evaluation or a survey, as of abili-
goods by chips, railways, airways etc is
ties or resources
called:
95. Which money is called ‘Earnest’ Money? (A) Hire and Fire
(A) Advanced payment to bind a contract (B) Rent
or bargian (C) Transportation Changes
(B) A token of something to come (D) Freight
(C) A promise or assurance
101. Endorsement means anything written
(D) All of these upon the back of the document What does
means by Endorse?
96. Term the written order which directs that
a specified sum of money be paid to a spec- (A) To verify signature
ified person? (B) To verify the person holding cheque
(A) Bill of Exchange B/E (C) To sign one’s name upon the backof
cheque
(B) Bill of Lading
(D) To sign one’s name upon the front of
(C) Bearer Cheque
cheque
(D) None of them
102. What is the rate of exchange or ex-
97. What is Black Money? change rate?
(A) Income on which payment of tax is (A) Power to buy foreign currency
usually evaded (B) Foreign currency holding
(B) Illegally earned money (C) Ratio at which unit of one country’s
(C) Money earned through underhands currency is exchanged for unit of another
deals country currency
(D) None of these (D) None of them
94. D 95. D 96. A 97. A 98. C 99. B 100. D 101. C 102. C 103. C
165
103. Which term is used for a bank account (A) Price index
which can be operated at will? (B) Price indexing
(A) Saving Account (C) Price fixing
(B) Fixed account (D) Price choosing
(C) Current account
109. Who is called Father of Economics?
(D) Fluctuated account
(A) Adam smith
104. What is called bankruptcy practitioner (B) David Ricardo
appointed by secured creditors to oversee (C) David smith
the repayment of debts? (D) Adam Ricardo
(A) Liquidator
110. How is termed the economic theories or
(B) Solicitor mayard Keynes especially those which ad-
(C) Receiver vocate government monetary and fiscal
(D) Agent and stimulate business activity?
(A) Market Economy
105. What is Euro?
(B) Harvard Group
(A) Deposit outside one’s home country
(C) Keynesian
but in the home country currency
(D) London Group
(B) European currency unit, introduced
on jan , 1, 1999 111. What is meant by capital stock?
(C) Both of them (A) Authorized amount of stock for issue
(D) None of them by corporation
(B) The total stated or par value of the
106. Which term is used for the total net value permanently invested capital of corpora-
of all goods and services produced in a tion
country in specified period of time?
(C) Both of them
(A) National income (D) None of them
(B) Public income
(C) Local income 112. Name a default on debt and obligations
by a major financial institution that dis-
(D) Gross income
rupts the stability of the economic sys-
107. Point out the use of the term price fix- tem?
ing? (A) Debt blast
(A) Unlawful agreement between manu- (B) Debt bomb
facturers to set and maintain specified (C) Bad debt
price on typically competing products (D) None of them
(B) Artificial setting of price of commodity
113. What is Free port?
by government
(A) Where no export duties are levied
(C) Both of them
(B) Where no import duties are levied
(D) None of them
(C) Where no export or import duties are
108. A number of relating prices of a group of levied
commodities to their prices during an arbi- (D) Where every thing can be import or
trarily chosen based period is called: export
104. C 105. C 106. A 107. C 108. A 109. A 110. C 111. C 112. B 113. C 114. C
114. A piece of land and whatever physical 119. The comparative advantage comes if
property is on it is called: each trading partners has a product that
(A) Solid asset will bring a better price in another coun-
(B) Unmovable property try than it will at home. Which economist
proposed the principle of comparative ad-
(C) Real estate
vantage
(D) Property
(A) Adam Smith
115. Termed the written statement which ex- (B) David Ricardo
NARAYAN CHANGDER
presses the intention of undersigned to en-
ter into a formal agreement? (C) David Smith
(A) Letter of intent (D) Adam Ricardo
(B) Letter of Credit
120. Pick out the generic term for the securi-
(C) Letter of Expression ties industry firms that buy sell and under-
(D) Papers of Landing write securities?
116. What is called that legal process through (A) Wall street
which a company receives a charter and (B) NASDAQ
state in which it is based allows it to op-
(C) Nikkei index
erate as corporation?
(A) Going legal (D) Yahoo index
(B) Book corporation 121. Group of Singapore, Hong,Kong, Taiwan,
(C) Chartered corporation and south Korea is called:
(D) Incorporation (A) Four Dragons
117. Account is format banking, brokerage or (B) Little Tigers
business relationship established to pro- (C) Four Tigers
vide for regular services. dealings and
other financial transactions. Which of (D) All of these
the following phenomenon(s) are also re-
122. Mention the term for an official act of
ferred by term, Account?
reducing the rate in which one currency is
(A) A precise list or enumeration of finan-
exchanged for another in international cur-
cial transactions
rency markets?
(B) Money deposited for checking sav-
(A) Devolution
ings or breakage use
(C) A customer having business or credit (B) Devaluation
relationship with a firm (C) Price cap
(D) All of these (D) Cut-rate
118. Term the group of countries that have
123. Of which mineral’s chief exporter is Mex-
removed all restrictions on trade among
ico?
themselves?
(A) Tin
(A) Close-Trade zone
(B) Free-trade zone (B) Silver
(C) Both of them (C) Aluminium
(D) None of them (D) Gold
115. A 116. D 117. D 118. C 119. B 120. A 121. C 122. B 123. B 124. D
167
124. Which kind of Tax is Federal subject? (C) International Drawing Right (IDR)
(A) Excise Tax (D) Sure Drawing Rights (SDR)
(B) Property Tax
130. Percentage of total industry sales that a
(C) Zakat particular company controls is called:
(D) General Sales Tax (A) Lion’s share
125. Which of the following is a valid cur- (B) Market share
rency? (C) Net share
(A) Promissory note (D) Holding share
(B) Currency note
131. During a given period how the economic
(C) Exchange rate activity of a nation is measured?
(D) Bank cheque (A) Gross Domestic Product (GOP)
126. What is called the sequence of economic (B) Gross National output (GNO)
activity which is typically characterized by (C) Gross National product (GNP)
recession, fiscal recovery, growth and fis- (D) Gross National Output
cal decline?
(A) Economic Cycle 132. Which economics doctrine opposes gov-
(B) Business Cycle ernment regulation or interference in com-
merce beyond the minimum necessary for
(C) Complete Cycle
a free enterprise system to operate accord-
(D) Cycle Business ing to its own economics laws and non-
interference in affairs of others?
127. What is called when a private company
first offers shares to the public market and (A) Free market economy
investors? (B) Laissez faire also Laisser faire
(A) Public offering (C) Open market economy
(B) Public floating (D) Liberal market economy
(C) going public
133. What do you understand by Laissez
(D) Coming public faire?
128. Mention a mutual fund that is invested (A) Active intervention
primarily in stocks with a history of and (B) Sound commercial affairs
future potential for capital gains? (C) Interference by the state in law and
(A) Common fund order
(B) Stock fund (D) None of these
(C) Growth fund
134. National Income is essentially composed
(D) Capital growth fund of:
129. Which of the following is a form of inter- (A) All wealth of a nation
national reserve assets, created by IMF in (B) Annual Income of the central govern-
1967 whose value is based on a portfolio ment
of widely used currencies? (C) All income of the people on a year
(A) Special Drawing Right (SDR) (D) Income derived from taxes by the cen-
(B) IMF Drawing Rights (SDR) tral government
125. B 126. B 127. C 128. C 129. A 130. B 131. C 132. B 133. C 134. C 135. D
135. Economic system in which the govern- (C) Corporation

ment owns and controls the means of pro- (D) Cooperative
duction to benefit all the people is called:
(A) Dictatorship 141. A company’s first sale of stock to the
public is called:
(B) Socialism
(A) Public Offering
(C) Capitalism
(B) First Public Offering
(D) Authoritarianism
(C) Initial Public Offering (IPO)
NARAYAN CHANGDER
136. What is called the tax that is levied on (D) Going Public
retail price of merchandise collected by re-
tailer? 142. The term ‘real wage’ means the money
(A) Sales Tax wage”
(B) General Tax (A) after tax
(C) Local Tax (B) allowing for change in prices.
(D) Gross Tax (C) Plus benefits in kind
(D) plus overtime payments.
137. Rules and Particles that govern the man-
agement of an organization are called: 143. There are certain products which are sold
(A) Internal laws without brand name or trademark What
(B) By laws these products are called?
(C) Character (A) Generic
(D) Memorandum of articles (B) Forged goods
(C) Contraband
138. Name the price at which the issuer of a (D) Clean goods
bond may retire part of the pond at a spec-
ified call date? 144. Deregulation is the reduction of govern-
(A) Call price ment’s role in controlling markets. Which
(B) Bid price of the following is result(s) of deregula-
tion?
(C) Term Price
(A) Lead to freer market
(D) Future Price
(B) Lead to a more efficient marketplace
139. A borrower gives to creditor a security (C) Both of them
to grantee repayment of a loan. What is (D) None of them
this security called?
(A) Pledge 145. Governmental non-interference in com-
(B) Assurance merce is called:
(C) Collateral (A) Free market economy
(D) Guaranty (B) Laissez faire also Laisser faire
(C) Open market economy
140. Term the enterprise or organization
(D) Liberal market economy
which is managed by those who use its fa-
cilities or services? 146. Government levy tax on imports and ex-
(A) Limited company ports What this tax is called?
(B) Society (A) Custom
136. A 137. B 138. A 139. C 140. D 141. C 142. B 143. A 144. C 145. B 146. C
169
(B) Exercise Duty (B) Contraband

(C) Tariff (C) Ban
(D) Freight (D) Restriction
147. Keynesian economics is an economic the- 152. The term “Dumping” means:
ory of British economist John Maynard. (A) The sale of the sub-standard commod-
What this theory states? ity
(A) A free market is necessary for eco- (B) Sale in a foreign market of a commod-
nomics growth and stability ity at a price below marginal cost
(B) Regulation is necessary for economic (C) Sale in a foreign market of a commod-
growth and stability ity just at marginal cost without too much
(C) Active government intervention is of profit
necessary to ensure economic growth and (D) Smuggling of goods without paying
stability any customs duty
(D) Government intervention is not neces-
153. What is called that debt obligation
sary to ensure economic growth and sta-
backed strictly by the borrower’s in-
bility
tegrity?
148. Trade name is: (A) Debenture
(A) Used to identify a commercial product (B) Securities
or service (C) Credit rating
(B) By which commodity service or pro- (D) None of them
cess is known to trade
(C) Under which a business firm operates 154. A payment is made in return for some
transference of privilege. What this pay-
ment is called?
(D) All of them
(A) Royalty
149. South Africa is the chief exporter of: (B) Rent
(A) Coffee (C) Share
(B) Copper (D) Intellectual royalty
(C) Diamond
155. What occurs when a firm’s business is
(D) Gold terminated? Assets are sold, proceeds are
150. Which statistical factor is used to convert used to pay creditors, and any leftovers
current currency purchasing power into in- are distributed to shareholders?
flation adjusted purchasing power? (A) Solvency
(A) Deflector (B) Crash
(B) Purchasing power parity (C) Bankruptcy
(C) Inflator (D) Liquidation
(D) Deflation 156. Bearer cheque is:
151. Restriction on import or export of speci- (A) Payable to anyone
fied or all goods with a foreign nation by (B) payable to person holding it
the Government is called: (C) payable through account only
(A) Embargo (D) payable after specific period
147. C 148. D 149. D 150. A 151. A 152. B 153. A 154. A 155. D 156. B
157. Exchange rate of which of the following 163. What is referred by the by economic the-
currencies falls because of persistent bal- ory “Liberalism”?
ance of payments deficit? (A) The free market
(A) Gold currency
(B) Gold standard
(B) Hard currency
(C) Silver currency (C) Laissez faire
(D) Soft currency (D) All of these
NARAYAN CHANGDER
158. What is called a group of countries that 164. By Which scale the value of all economic
have removed all tariffs, quotas, and activity produced by a nation during a
export subsidies on trade among them- given period is measured?
selves?
(A) Gross Domestic Product (GOP)
(A) Close-trade zone
(B) Free trade zone (B) Gross National output (GNO)
(C) Both of them (C) Gross National Product (GNP)
(D) None of them (D) Gross National output
159. The term prospectus refers to:
165. Term the central market for buying and
(A) Formal summary of proposed project selling all kind of securities?
(A) A big company
(B) Document describing chief features
of something for participants (B) Stock Exchange
(C) Both of them (C) Stock Exchange
(D) None of them (D) Joint stock
160. Which is the most widely used tool of (E) A multinational company
monetary policy?
(A) Clearing house 166. Name the method of inventory account-
(B) Open-market operations ing in which the oldest remaining items are
(C) Discount rate assumed to have been first sold?
(D) Issuing of notes (A) FIFO (first in first out)
161. What is called the overall study of as- (B) LAFO (last in first out)
pects and working of a national economy? (C) First come First serve
(A) Macroeconomics (D) None of these
(B) Gross economics
(C) Mega economics 167. Governments and corporations sell inter-
(D) Micro economics est bearing certificates to raise money for
expansion or trade. What is called these
162. The bank established for loans to very certificates?
small enterprises in Pakistan is called:
(A) Certificates
(A) Micro Finance Bank
(B) Sureties
(B) Moderba Bank
(C) SME- Bank (C) Security bonds
(D) First MINI Bank (D) Bond
157. D 158. C 159. C 160. B 161. A 162. A 163. D 164. C 165. C 166. A 167. D
168. C
171
168. Estimated value that is added to a prod- 173. There is an arrangement which allows a
uct or material to each stage, of its manu- firm to use research from another firm at
facture or distribution, is known as: no cost in exchange for executing all of its
(A) Value addition trades with the firm that provides the re-
search. What this arrangement is called?
(B) Excise
(A) Mutual arrangement
(C) Value added
(B) Quid Pro quo
(D) Tax on stage (C) Bilateral arrangement
169. Where ‘Nikkei Stock average’ applies? (D) common interest
(A) Mainly to Korean equities 174. Goods that satisfy human wants though
(B) Mainly to international equities their direct use or consumption are called:
(C) Mainly to Japanese equities (A) cash goods
(B) consumer items
(D) Mainly to US equities
(C) consumer goods
170. Which of the following is regarded as a (D) cash items
factor of production ?
175. What is called the manipulation of the
(A) Capital market by traders to create the illusion of
(B) Intereset active volume to attract investors?
(C) Profit (A) Daisy chain
(D) None of these (B) Illusion
(C) False market
171. What does mean by Franchise? (D) Manipulated market
(A) A privilege or right officially granted
by a person or group by a government 176. What is called a country’s total financial
obligations to the rest of the world?
(B) Authorization granted to someone to
(A) Total dept
sell or distribute a company’s goods or
service in certain area (B) Debt burden
(C) Territory or limits within which immu- (C) National liabilities
nity, privilege or right may be exercised (D) External debt
(D) All of the above 177. Interest payments and any principal re-
payments which are due on a country’s ex-
172. Mention an electronic quotation system ternal debt are known as:
in USA that provides price quotations to (A) Debt Payment
market participants about more actively
(B) Service Charges
traded common stock issues in OTC mar-
ket? (C) Debt Charges
(D) Debt service
(A) National Association of Securities
Dealers Automatic Quotation system 178. When stock market is falling it is
(Nasdaq) (A) Bearish
(B) New York Stock Exchange (B) Bullish
(C) Wall Street (C) Crash
(D) Nikkei Stock Average (D) Fall down
169. B 170. A 171. D 172. A 173. B 174. C 175. D 176. D 177. D 178. A
179. What is National debt or public debt? (A) End benefit

(A) State’s borrowing from its population (B) Trickle down
(C) Free market
(B) State’s borrowing from foreign gov- (D) Capitalism
ernment
(C) state’s borrowing from international 185. The French term Bourse refers to:
institution (A) A big company
(D) All of these (B) Stock market
NARAYAN CHANGDER
(C) Joint-stock
180. Gross Domestic Product (GDP) is:
(D) A multinational company
(A) Value of all economic activity with in
a nation’s border 186. Name a gold, silver, or platinum coin
(B) Economics output of a country than usually traded at slightly more than
(C) Economic activities of federal govern- its current bullion value?
ment (A) Hard Leaf
(D) None of these (B) Maple Leaf
(C) Green Leaf
181. A firm owns long-lived property that is
used by a firm in the Production of its in- (D) Gold Leaf
come. What this property is called?
187. Because of the decrease in the value of
(A) Unmovable asset money, there comes exaggerated increase
(B) Fixed property in incomes and prices. How is termed this
(C) Production line system?
(D) Fixed asset (A) Hyperinflation
(B) Ultra inflation
182. Mention the market for trading long-
term debt instruments? (C) A cute inflation
(A) Stock market (D) Super inflation
(B) Open market 188. Mention an agreement in which one
(C) Capital market party sells a security to another party and
(D) International market agrees to repurchase it on a specified date
for a specified price?
183. Which term is used for the value im- (A) Redemption
printed on a security?
(B) Gurantee
(A) Real value
(C) Repo
(B) Net value
(D) Repurchase arrangements
(C) Par value
(D) Gross value 189. Term the minimum income level below
which a person is considered to be living
184. Mention the name for economic theory in poverty ?
that the support of business that allows
(A) Poverty level
them to flourish will eventually benefit
middle and lower income people in the (B) Poverty line
form of increased economic activity and re- (C) Both of them
duced unemployment? (D) None of them
179. D 180. A 181. D 182. C 183. C 184. B 185. B 186. B 187. A 188. C 189. C
190. A
173
190. How is termed equal rights of trade of (B) Creditors

trade without giving monopolies or pref- (C) Business class
erences to an individual country?
(D) None of these
(A) Open door market
(B) Open door country 196. Which of the following is called a wholly
(C) Open sky market or partially owned company what is the
part of the large corporation?
(D) Free economy
(A) Baby company
191. Common market is an agreement be- (B) Child company
tween two or more countries. What this
agreement permits? (C) Small holding
(A) Free movement of capital and labour (D) Subsidiary
(B) Free movement of goods and services 197. In Western Europe in 9th C, originated
military and social system in which a no-
(C) Both of them bleman would grant the use of land to ser-
(D) None of them vant in return for service which is often
military, and duty, Name the system?
192. What is a Debenture?
(A) Military system
(A) Certificate issued by a company
(B) Land based system
promising the payment of a specified
amount at a fixed rate of interest after (C) Feudal system
a specified period (D) Rural system
(B) Certificate for the investment in
shares 198. What is called an additional levy added
to some charge?
(C) Certificate for the preference share
(A) Fine
(D) None of these
(B) Surcharge
193. What is called interest payments plus re- (C) Additional Charged
payments of principal to creditors?
(D) Extra charges
(A) Debt retirement
(B) Debt relief 199. Which country is the chief exporter of
(C) Debt service Tin?
(D) Payback (A) Malaysia
(B) China
194. What is called the trade of goods or ser-
vices without the exchange of money? (C) Russia
(A) Free exchange (D) USA
(B) Liberal Echange 200. Term the body of goods and monies from
(C) Barter which future income can be derived?
(D) Bilateral Trade (A) Net assets
195. Which of the following groups suffer the (B) Solid asset
most from inflation? (C) Holdings
(A) Debtors (D) Capital
191. C 192. A 193. C 194. C 195. B 196. B 197. C 198. D 199. A 200. D 201. C
201. Which of the following is known as for- 207. Which of the following is the Pakistan’s
eign exchange? central bank?
(A) Transaction of International mone- (A) State Bank
tary business (B) National Bank
(B) Negotiable bills drawn in one country (C) Both of them
to be paid in another country (D) None of them
(C) Both of them 208. What is measured by Gross domestic
(D) None of them
NARAYAN CHANGDER
product (GDP)?
(A) Value of all economic activity within
202. What is called amount of money to pur- nation’s border
chase the goods and services to maintain
(B) Economic output of a country
life?
(C) Economic activity of federal govern-
(A) Cost living ment
(B) Basic requirement ? (D) None of these
(C) Cost of life
209. Development means economics growth
(D) None of these plus:
203. LIFO (last in, first out) means: (A) Inflation
(A) to make queue (B) Deflation
(C) Social change
(B) items are removed in inverse order
(D) Price stability
(C) turn by turn
(D) make space for new production 210. An outside professional conducts an ex-
amination of company’s accounting records
204. What is called a Tax on imports, ex- in order to determine whether the com-
ports? pany is maintaining records according to
(A) Drawback the generally accepted accounting princi-
ples. What this examination is called?
(B) Duty
(A) Checking
(C) Custom (B) Audit
(D) Excise (C) Stock-taking
205. What is deflation? (D) Accounting
(A) Deficit Budget 211. What is price support?
(B) Reduction in taxation (A) To increase price artificially
(C) Increase in public expenditure (B) Maintenance of price through public
subsidy or government intervention
(D) Reverse of inflation
(C) To enhance price
206. From the sale of capital assets tax is (D) To maintain price at specific level
levied on profits. What this tax is called?
212. Central bank of Pakistan is:
(A) Profit tax (A) State Bank
(B) Capital gains tax (B) National Bank
(C) Excise duty (C) Both of them
(D) Capital tax (D) None of them
202. B 203. B 204. B 205. D 206. B 207. A 208. A 209. C 210. B 211. B 212. A
213. A
175
213. What is mortgage? (B) A licensing charge or a fee levied for

(A) Conveyance of property as security certain privileges
for debt (C) Both of them
(B) Conveyance of company security for (D) None of them
debt
219. What is called the rules of laws which
(C) Guarantee for debt governs the internal affairs of an organi-
(D) Assurance of debt repayment zation?
214. Term a tax or duty rebate on imported (A) Corporate Laws
goods that are exported at a later date? (B) Secondary Laws
(A) Duty (C) By laws
(B) Custom (D) Internal Laws
(C) Rebut 220. What is referred by interest?
(D) Drawback (A) Payment made for the use of another
person’s money
215. Amount of money needed to purchase
(B) payment made for the use of bank’s
the goods and services required to main-
money
tain a certain standards of living called:
(C) Share in profit
(A) Cost of living
(D) Devaluation in the currency
(B) Basic requirement
(C) Cost of life 221. China is the chief exporter of:
(D) None of the above (A) Rubber
(B) Manganeses
216. What is referred a group of companies
(C) Rice
that cooperate and share resources in or-
der to achieve a common objective? (D) Gold
(A) Consortium 222. Shareholders of a corporation elect indi-
(B) Pool viduals to carry out certain tasks that are
(C) Incorporation establishment in the charter. What these
individuals are called?
(D) Conglomerate
(A) Management
217. An exchange arrangement was formed in (B) Board of Governor
1979 that governs the currencies of Euro- (C) Top brass
pean union member countries. What this
(D) Board of Directors
arrangements called?
(A) European Currency System (ECS) 223. How is termed the government’s order
(B) European Monetary Mechanism to prevent the arrival or departure of mer-
(EMM) chant ships or to restrict import or export
of specified or all goods with a foreign na-
(C) Common Monetary System (CMS)
tion?
(D) European Monetary Fund (EMF)
(A) Embargo
218. What is meant by excise? (B) Contraband
(A) A tax levied on certain articles pro- (C) Ban
duced and consumed in a country (D) Restriction
214. D 215. A 216. A 217. C 218. C 219. C 220. A 221. C 222. D 223. A 224. A
224. Who is insolvent? (C) End price

(A) A firm that is unable to pay debts (D) Final price
(B) A firm that is liquidated
230. Which situation will a country face, if the
(C) A firm that is for sale
birth rate falls sharply, while the death
(D) A firm that has more liabilities than as- rate remains unchanged?
sets
(A) a fall in living standards
225. Devaluation of currency helps to pro- (B) a more youthful population
NARAYAN CHANGDER
mote: (C) an ageing population
(A) National income (D) an increase in population
(B) Saving
(C) Imports at lower cost 231. Interest that is calculated as a simple per-
centage of the original principal amount is
(D) Exports
called:
226. What could a government do to correct (A) Market interest
the current account deficit? (B) Easy interest
(A) Reduce the deficit on the balance of (C) Compound interest
trade
(D) Simple interest
(B) Reduce the repayment of loans
(C) Reduce the surplus on the capital ac- 232. The cause of inflation is:
count (A) Increase in money supply
(D) Reduce the volume of exports (B) Fall in production
227. Name the scale for measuring the aver- (C) Increase in money supply and fall in
age share price and percentage change of production
30 major US industrial companies ? (D) Decrease in money supply and fall in
(A) Nikki Index production
(B) NASDAQ 233. A bank deposit, that cannot be with-
(C) Dow Jones Index drawn before the date which is specified
(D) Major Index at the time of deposit, is called
(A) Bond deposit
228. Monoculture is:
(B) term deposit
(A) Farming practice of growing a single
crop (C) time deposit
(B) Homogeneous Nations (D) Fixed investment
(C) Homogeneous market 234. What is referred by the Working capi-
(D) Homogeneous business tal?
229. Which of the following is Price of the last (A) Assets of business that can be applied
transaction of a particular stock completed to its operation
during a day’s trading session on an ex- (B) Amount of current assets that ex-
change? ceeds current liabilities
(A) Night Price (C) Both of them
(B) Closing Price (D) None of them
225. D 226. A 227. C 228. A 229. B 230. C 231. D 232. C 233. C 234. C 235. B
177
235. Possibility of negative events or changes 240. With whom would you associate the fol-
in the business climate of country is lowing quote ” The business of business is
called: business”?
(A) Domestic risk (A) Milton Friedman
(B) Political risk (B) Adam smith
(C) National risk (C) Alfred Marshal
(D) Country risk (D) Karl Marx
236. What is more likely to be found in a free 241. Term the shared of profits of a joint stock
market economy than in a planned econ- company?
omy?
(A) Share
(A) an even distribution of income
(B) Profit-share
(B) an incentive to innovate
(C) Dividend
(C) a wide range of public goods
(D) Margin
(D) full employment of labour
242. What is inflation?
237. What is called that bank which regularly
accepts foreign currency-denominated (A) Increase in the amount of circulating
deposits and makes foreign currency- money
denominated deposits and makes foreign (B) Lowering of purchasing power
currency loans? (C) Decrease in the amount of circulation
(A) Eurobank money
(B) Foreign bank (D) None of these
(C) International Bank
243. Which branch of accounting provides in-
(D) Multinational Bank
formation to help the management of a
238. What is called the price that a potential firm evaluate production costs and effi-
buyer is willing to pay for a security? ciency?
(A) Bid (A) Efficient Account
(B) Offer price (B) Cost Accounting
(C) Quote price (C) Ultra-country economic risk
(D) None of these (D) Outcome risk
239. What is underwriter? 244. The exchange rate is the ratio at which
(A) To assume financial responsibility for the currency of one country is exchanged
grantee against failure for the currency of another. Which method
was developed by the World bank to ex-
(B) To sign so as to assume liability in change rates?
case of specified losses
(A) Breton Wood method
(C) To guarantee the purchase or to
agree to buy the unsold part of stock at (B) Free market exchange rate
fixed time and price (C) Atlas method of exchange rate
(D) All of them (D) Open market exchange rate
236. B 237. B 238. A 239. D 240. A 241. C 242. A 243. B 244. C 245. B
245. What is called a country’s decision to al- 251. Mention the name for that urban and ru-
low its currency value to change freely? ral region which is closely associated eco-
(A) Pegged exchange rate nomically with an adjoining town or city.
(B) Floating exchanged rate Term is also used to describe the area
that is serviced by a port or coastal set-
(C) Liberal exchanged rate
tlement?
(D) Open exchange rate
(A) Hinterland
246. The sole legal right to print or publish (B) Country land
NARAYAN CHANGDER
anything which belongs to the author or
(C) Dependent land
his assignees is called:
(A) Property right (D) Parasite land
(B) Sole right 252. Which of the following payment instru-
(C) Copyright ments introduced by the banks is known
(D) Right as plastic money?
247. A long-term asset, such as land or build- (A) Bearer cheques

ing is termed as: (B) Credit Caads
(A) capital asset (C) Demand Drafts
(B) solid asset (D) Gift Cheques
(C) solid capital
(D) Future asset 253. Of which item’s chief exporter is indone-
sia?
248. Which money is called Hot money? (A) Gold
(A) That moves across country borders in
(B) Silver
response to interest rate differences
(B) That moves away when the interest (C) Wheat
rate differential (D) Sugar
(C) Both of them
254. Government borrows in the form of
(D) None of them
promissory note to repay the bearer after
249. What is Remittance? some fixed days from the date of issue.
(A) Sending of money to someone at dis- How is called such borrowing?
tance (A) Bond
(B) The sum of money sent (B) Treasury bill
(C) Both of them (C) Term bound
(D) None of them (D) Securities
250. Term the covering of a short position by
255. Oil is measured in barrels. What is the
purchasing a long contract, usually result-
abbreviation for barrels?
ing from the short of a commodity?
(A) Short-positioning (A) Brl
(B) Buyback (B) Bel
(C) Drawback (C) Bbl
(D) None of them (D) Obl
246. C 247. A 248. C 249. C 250. B 251. A 252. B 253. D 254. B 255. C 256. A
179
256. By which process the holder of a mort- (B) British Gas

gage seizes the property of a homeowner (C) General Motors
who has not made interest and or princi-
(D) State Bank
pal payments on time as stipulated in the
mortgage contract?
262. An adjustment is made in wages that cor-
(A) Foreclosure responds with the change in the cost of liv-
(B) Default ing. What this adjustment is called?
(C) Bankrupt (A) Free adjustment
(D) None of these (B) Cost effective adjustment
257. Currency that is expected to drop in (C) Comparative adjustment
value relative to other currencies is called: (D) Cost of living adjustment
(A) Local currency
263. Unlike a black market, what is called a
(B) Cold currency
system of secretly selling or trading com-
(C) Lime currency modities which is not necessarily illegal?
(D) Soft currency (A) Grey market
258. Which country is the chief exporter of (B) White market
coffee? (C) Red market
(A) Mexico (D) Open market
(B) USA
(C) Brazil 264. What can a central bank increase in order
(D) Australia to reduce consumer borrowing?
(A) commercial bank deposits
259. What is called an internet strategy of
(B) government bank deposits
dealing directly with business rather than
consumer? (C) government spending
(A) B2B (D) interest rates
(B) Indirect contact (E) None of these
(C) Step by step
265. What is sales tax?
(D) Trickle down
(A) Levied on the retail price of merchan-
260. Which theory of economic management dise and collected by retailer
focuses on encouraging product through (B) Tax deducted at source
tax reduction?
(C) Tax on local produce
(A) Liberalism
(D) Tax on gross sale
(B) Free market economics
(C) Supply-side economics 266. Which of the following is referred by the
(D) Supervised market Debt retirement?
(A) To write-off debt
261. Which company holds the world record
for having the maximum number of share- (B) To reschedule debt
holders? (C) To repay debt in easy installments
(A) Reliance Industries Ltd. (D) The complete repayment of debt
257. D 258. C 259. A 260. C 261. A 262. D 263. A 264. D 265. A 266. D 267. C
267. Which of the following terms refers to (A) Four Dragons

income that is saved and not invested? (B) Little Tigers
(A) Capital (C) Four Tigers
(B) Deposit (D) All of these
(C) Hoarding
273. What is defined as the active manage-
(D) Profit
ment of resources to provide the greatest
268. Term a large payment to a senior em- present benefit without comprising the po-
NARAYAN CHANGDER
ployee who is forced into retirement or tential benefits to future generations?
fired as a result of takeover or similar de- (A) Prudent development
velopment? (B) Sustainable development
(A) Golden bonus (C) Managed economy
(B) Golden shake hand (D) None of these
(C) Friendly handshake
274. Which term is used for an engagement in
(D) Golden handshake
risky business with the idea of making a
269. Which of the following is a price that is large profit in short time?
equal to the face value of a security? (A) Idealism
(A) Balanced (B) Blind game
(B) At Equilibrium (C) Speculation
(C) At Par (D) Risk covering
(D) None of them
275. Which of the following is referred by the
270. Total number of adults currently em- phrase trade balance?
ployed or actively seeking work in all eco- (A) Income from export
nomic sectors is known as: (B) Difference between imports and ex-
(A) Labour force ports
(B) Labour potential (C) Income from imports
(C) Work force (D) All of them
(D) All of them
276. Find out the term for the purpose that a
271. What is Demand note? buyer must pay for the goods at the time
(A) Draft payable in lawful money upon of its delivery?
demand (A) Barter
(B) Cheque payable in lawful money upon (B) payment on Delivery
demand (C) Gives in take
(C) Security payable in lawful money upon (D) Cash on Delivery
demand
277. There is method by which one currency
(D) Term deposit payable in lawful money
is bought, sold or valued in terms of other
upon deman
currencies, gold or accounting units such as
272. How is termed the group which consists the Special Drawing Right of IMF. What is
of Singapore, Hong kong, Taiwan, and it called?
south Korea? (A) Currency exchange
268. D 269. C 270. A 271. A 272. C 273. B 274. C 275. B 276. D 277. D
181
(B) Currency value 283. Which measures. taken by a government

(C) Currency value would be intended to raise the price of im-
(D) Exchange rate ports?
(A) Embargoes
278. What is the meaning of the term stagfla- (B) Foreign exchange controls
tion? (C) Quotas
(A) Fall in prices due to less circulation of (D) Tariffs
currency
(B) Fall in employment due to declining 284. Which of the following are bonds that
production are not registered on the books of the is-
suer?
(C) High inflation rate combined with high
unemployment and unchanged consume (A) Open bond
demand (B) Blank bond
(D) None of these (C) Term bond
(D) Bearer bond
279. What is called the trade without restric-
tion of tariffs, quotas, or foreign exchange 285. Large payment to senior employee who
controls? is forced into retirement is called:
(A) Open trade (A) Golden bonus
(B) Free trade (B) Golden shake hand
(C) Open sky trade (C) Friendly handshake
(D) Easy trade (D) Golden handshake
280. What would reduce the role of central 286. Deregulation is the reduction of govern-
planning in a economy? ment’s role in
(A) Increasing government spending (A) Controlling Banks
(B) Controlling cooperation
(B) Increasing public ownership of firms
(C) Controlling markets
(C) Increasing the role of markets
(D) None of them
(D) Removing the profit motive
287. To what does the phrase terms of trade
281. The most industrialized country in Asia refer?
is:
(A) the currency exchange rate
(A) Japan
(B) the difference between the value of
(B) South Korea visible exports and visible imports
(C) Taiwan (C) The government’s policies to increase
(D) Malaysia exports
(D) the rate at which exports are ex-
282. How is termed the balance of investment
changed for imports
and return; in which investment and return
are exactly equal? 288. When the stock market is rising it is:
(A) Break even (A) Bearish
(B) Breakeven point (B) Bullish
(C) Both of them (C) Hottest
(D) None of them (D) Rising up
278. C 279. B 280. C 281. A 282. C 283. D 284. D 285. D 286. C 287. D 288. B
289. A
289. The system under which a country’s cur- (B) Corporation

rency is exchangeable for a fixed weight (C) Cooperative
of gold on demand at central bank is
(D) Limited Company
called:
(A) God standard system 295. Name a corporation that owns enough
(B) Gold based system voting stock in another firm to control man-
(C) Bullion standard system agement and operations by influencing of
electing its board of directors?
NARAYAN CHANGDER
(A) Mother company
290. What is Debt Service? (B) Father company
(A) Interest payments on external debts (C) Holding company
(B) repayments of external debt (D) joint company
(C) none of these
296. Scale for measuring the average share
(D) Both of them
price and percentage change of 30 major
291. Developments in a national economy can US industrial companies is called:
affect the outcome of an international fi- (A) Nikki Index
nancial transaction. What this process is (B) NASDAQ
called?
(C) Dow Jones Index
(A) International economic risk
(D) Major Index
(B) Country economic risk
(C) Ultra country economic risk 297. Goods and monies from which future in-
(D) Outcome risk come can be derived is called:
(A) Net assets
292. Mention the penalty by which a person
(B) Assets
loses title of his property, that is a result
of some illegal act? (C) Holdings
(A) Confiscation (D) Capital
(B) Bankruptcy 298. Investment funds are established for the
(C) Forfeiture supports of institutions such as hospitals
(D) Debenture investment is called?
(A) Charity funds
293. What is write-Off?
(B) Attached funds
(A) Charging an asset amount to expense
of loss (C) Endowment funds
(B) To forget (D) Investment fund
(C) To withdraw 299. How is termed a written promise to pay
(D) None of these back a specified sum of money at a stated
time or on demand?
294. Name the organization in which people
(A) Promissory Note (P/N)
are associated together for a common pur-
pose under a common name. This organi- (B) Note of hand
zation is recognized and created by law? (C) Both of them
(A) Company (D) None of them
290. D 291. B 292. C 293. A 294. B 295. C 296. C 297. D 298. C 299. C 300. A
183
300. Name the methodology by which mem- 306. Cost of production plus a fixed rate of
bers of the EMS maintain their currency ex- profit is called:
change rates within an agreed upon range (A) cost plus
with respect to other member countries
(B) Cost effective
(A) Exchange Rate Mechanism (ERM)
(B) Exchange Rate Equilibrium (C) End price
(C) Exchange Rate Balance (D) Consumer price
307. What meant by excise?
301. A tax on imports exports, or consump- (A) A tax levied on certain articles pro-
tion goods is called: duced and consumed in a country
(A) Drawback (B) A licensing charge or a fee levied for
(B) Duty certain privileges
(C) Custom (C) Both of these
(D) Excise
302. Which type of income is earned only the
actor of production enterprise? 308. Free port is:
(A) interest (A) Where no export duties are levied
(B) Profit (B) Where no import duties are levied
(C) rent (C) Where no expert or import duties are
(D) wages levied
303. ‘Forex’ stands for? (D) Where every thing can be import or
(A) For examine export
(B) Foreign exchange
309. What does mean by ‘Emerging Mar-
(C) Foreign exports kets?
(D) None of these
(A) Financial markets of developing
304. Name a market that is characterized by economies
a small number of producers who often act (B) Financial markets of East Europe’s
together to control the supply of a partic- economies
ular good and its market price? (C) Financial markets of Asian economies
(A) Oligopoly
(B) Monopoly (D) Financial markets of Latin America
(C) Oligopsony
(D) Grey market 310. what is called an evaluation of credit
quality of a company’s debt issued by
305. Which form of business organization Moody’s S&P and Fitch investors ser-
falls between a corporation and partner- vices?
ship?
(A) Credit worthiness
(A) joint company
(B) Joint stock company (B) Credit Worth
(C) Limited joint company (C) Credit line
(D) Limited Company (D) Ratings
301. B 302. B 303. B 304. A 305. B 306. A 307. C 308. C 309. A 310. D 311. A
311. Term the authorization whether writ- 317. The mark is imposed on goods or wrap-
ten or electronic, that shareholders’ votes pers to show that the articles bearing this
may be cast by others? mark belong to a particular trader. What
(A) Proxy vote is this mark called?
(B) Absentia vote (A) Insignia
(C) Remote vote (B) Patent mark
(D) Casting vote (C) Trade Mark
(D) Identification mark
NARAYAN CHANGDER
312. What does mean by Deed?
(A) legal instrument used to grand a right 318. The term Mark-up refers to:
(A) Rise in the price of an item for sale
(B) Something done (B) An amount added to cost price in cal-
culating selling price
(C) legal instrument
(C) Both of them
(D) All of them
313. A country’s fundamental system of
transportation, communications, and other 319. A share or an interest in an enterprise,
aspects of its physical capabilities are especially a financial share, is called:
called: (A) Share holding
(A) Infrastructure (B) Stake
(B) Basic structure (C) Partnership
(C) Fundamentals (D) None of these
(D) Basic infrastructure 320. Inflation means:
314. Malaysia is the chief exporter of: (A) Rise in budget deficit
(A) Jute (B) Rise in money supply
(B) Diamond (C) Rise in general price index
(D) Reflection
(C) Tin
(D) Rubber 321. The term technology refers to:
(A) Application of science to achieve a
315. What is called that executive who is
commercial or industrial objectives
brought in to turn a company around and
make it profitable? (B) Application of modern science in the
country
(A) Saviour
(C) Science based know low
(B) Company doctor
(D) All of these
(C) Super manager
(D) Manager doctor 322. Point out the term for producer goods
such as machinery that is used in produc-
316. What is Tariff? tion of commodities?
(A) tax that government levy on imports (A) Capital assets
(B) tax that government levy on exports (B) Running capital
(C) Both of them (C) Capital goods
(D) None of them (D) Hard capital
312. A 313. A 314. D 315. D 316. C 317. C 318. C 319. B 320. C 321. A 322. C
323. B
185
323. Which city in Germany has the distinc- 329. What is referred by cost push inflation?
tion of housing the first car manufacturing (A) Decreased production costs drive
plant in the world? prices up
(A) Frankfurt (B) Decreased production costs drive
(B) Bonn prices down
(C) Berlin (C) increased production costs drive
(D) Stuttgart prices down
(D) increased production costs drive
324. Which term is used for an addition to nor- prices up
mal payment by a company or extra pay-
ment of gratuity to workers? 330. Fiscal deficit in the budget means:
(A) Bonus (A) Revenue deficit plus the net borrow-
ings of the government
(B) Overtime
(B) Budgetary deficits plus the net bor-
(C) Prize rowings of the government
(D) Gift (C) Capital deficit plus revenue deficit
325. An act of altering of a written or printed (D) Primary deficit minus capital deficit
document with intentions of deceiving any- 331. What is comprised by public sector?
one is called: (A) Public corporations
(A) Fraud (B) Central and local government.
(B) Cheating (C) Nationalized industries
(C) Forgery (D) All of them
(D) Fraudulent
332. Market in which forces of demand and
326. What is called that market in which sup- supply are not in the control of govern-
ply overwhelms demand? ment is called:
(A) Deflated market (A) Market Economy
(B) Depressed market (B) Free Market
(C) Bearish market (C) Both of them
(D) Weak market (D) None of them
327. Asset that is easily and cheaply turned 333. What is called interest that is paid pre-
into cash-notably, cash itself and short viously earned interest as well as on the
term securities are known as: principal?
(A) Gross interest
(A) Liquid asset
(B) Simple interest
(B) Solid asset
(C) Total interest
(C) Hard asset
(D) Compound interest
(D) None of these
334. Name the organization that is managed
328. What is public sector? by those who use its facilities?
(A) Public corporations (A) Limited Company
(B) Central and local government (B) Society
(C) Nationalized Industries (C) Corporation
(D) All of them (D) Cooperative
324. A 325. C 326. B 327. A 328. D 329. D 330. B 331. D 332. C 333. B 334. D
335. A country can still gain from trading (C) Dealing in foreign exchange
certain goods even though its trading (D) Fixing the main interest rate
partners can produce those goods more
cheaply. How is known this principle ? 341. Portion of a company’s profit paid to
(A) Relative Advantage common and preferred shareholders is
(B) Complete Advantage called:
(C) Comparative Edge (A) Gross Profit
(D) Comparative Advantage (B) Profit share
NARAYAN CHANGDER
336. National income of a country is based (C) Dividend
on: (D) Right share
(A) The taxes earned by the State
342. Which term is used for fine that is
(B) The sum of all factors of income
payable for failing to clear goods from
(C) Personal incomes of all the citizens a storehouse with in a specific period of
(D) Surplus of exports over imports time?
337. Reduction in the circulation of money re- (A) Demurrage
sulting from fall of prices is known as: (B) Penalty
(A) deflation (C) Charges
(B) inflation (D) Fine
(C) cost effective
(D) cost 343. Which market is called Bear market?
(A) Market with upward and stock prices.
338. Name the money of county that is ex-
pected to drop in value relative to other
(B) Market with a prolonged period of
currencies?
falling stock prices
(A) Local currency
(C) A very big market
(B) Cold currency
(D) A very big industrial market
(C) Lime currency
(D) Soft currency 344. Quoted bid or highest price on inventor in
339. Mention the theory of inflation or price willing to pay to buy a security is called?
increase that results from so-called excess (A) Offer price
demand? (B) Bid price
(A) Demand curve theory (C) Quote price
(B) Cost-push inflation (D) Market price
(C) Demand-pull inflation
(D) Demand push inflation 345. What is called the reduction in the rate
of a currency?
340. Which function is performed by both com-
(A) Devolution
mercial banks and central banks?
(A) Acting as bankers to the government (B) Devaluation
(B) Advising the government on monetary (C) Price cap
policy (D) Cut-rate
335. D 336. B 337. A 338. D 339. C 340. C 341. C 342. A 343. B 344. B 345. B
346. D
187
346. What term is given to unemployment 351. Mention the term which is used for the
caused by a downturn in the business cy- large scale removal of individual and cor-
cle? porate investment capital and income from
(A) Underemployment a country?
(B) Disguised unemployment (A) Money flight
(C) Temporary unemployment (B) Capital drain
(D) Cyclical unemployment (C) Free flow
(D) Capital flight
347. An evaluation of an individual’s or com-
pany’s ability to obligations or its likeli- 352. Which of the following is an example of
hood of not defaulting is known as: government policy that could reduce infla-
(A) Credibility tion?
(B) Credit risk (A) increasing bank lending
(C) Credit credibility (B) increasing import duties
(D) Credit rating (C) reducing government expenditure
(D) None of these
348. A government program, social security
is: 353. The smallest unit of ownership of a com-
(A) Economics assistance provided by so- pany is:
cial security (A) A share
(B) Economic assistance to persons who (B) A debenture
faced unemployment, disability of aged- (C) Invest
ness, financed by assessment of employ-
(D) Capital
ers and employees
(C) Both a & b 354. Name the system in which the means of
(D) Nor a nor b production and distribution are privately
or corporate owned and development is
349. Different workers or group of workers proportionate to the accumulation and rein-
separate the production works and trade vestment of profits which are gained in a
into processes. What this separation is free market?
called? (A) Capitalism
(A) Divided Labour (B) Socialism
(B) Closed shop (C) Free market economy
(C) Division of Labour (D) Liberalism
(D) Open shop
355. A stock that sells at a high price because
350. Term a country’s decision to tie the value of public confidence in its long record of
of its currency to another country’s cur- steady earnings is called:
rency gold or a basket of currencies? (A) Blue chip
(A) Pagged exchanged rate (B) Blue Chipper
(B) Fixed exchanged rate (C) An extremely valuable asset or prop-
(C) Relative exchange rate erty
(D) Knotted exchange rate (D) All of these
347. B 348. C 349. C 350. B 351. D 352. C 353. A 354. A 355. D 356. B
356. What is called that company which make (C) consumer goods
loans to individuals, while not receiving (D) cash items
deposits like a bank?
(A) Cooperative company 362. What is called an arrangement of work-
ers machines, and equipment in which the
(B) Finance corporation
product being assembled passes consec-
(C) Limited company utively from operation to operation or
(D) Finance company the process in which finished products
are turned out in a mechanically efficient,
NARAYAN CHANGDER
357. The term liquidate refers to pay off a though impersonal, manner?
debt, a claim or an obligation or to settle
(A) Assembly line
the affairs by determining liabilities and
applying assets to their discharge. What (B) Production line
is also converted by the term? (C) Both of them
(A) To convert assets into cash (D) None of them
(B) Abolish 363. In the context of contracts, what refers
(C) Both of them to secret payments made to insure that the
(D) All of them contract goes to a specific firm?
(A) kickback
358. Term the exclusive right of one or more
persons to carry on some branch of trade (B) Commission
of manufacture? It is a sole power of deal- (C) Bribe
ing in something (D) Graft
(A) Encroachment
364. Name the Company that is listed with
(B) Monotomy the SEC after submission of a required
(C) Unipolarity statement and compliance with disclosure
(D) Monopoly requirement?
(A) Limited company
359. Crop grown for sale is called:
(B) Registered company
(A) Business Crop
(C) Public company
(B) Cash crop
(D) Public limited company
(C) Money Crop
(D) Earning Crop 365. A company or corporation which was
subsidiaries, investments or operation in
360. Which is the oldest stock exchange of the more than one country is known as:
world? (A) Multinational corporation
(A) New York stick exchange (B) Multinational company
(B) Tokyo stock exchange (C) Both of them
(C) London stock exchange (D) None of them
(D) None of them
366. An organization plans the use of its fund
361. What are called goods that satisfy hu- during a 12 month period. What is this
man wants through their direct use? period called?
(A) cash goods (A) Fiscal period
(B) consumer items (B) Calender year
357. C 358. D 359. B 360. C 361. C 362. C 363. A 364. B 365. C 366. D
189
(C) Year unit 370. What is Dumping ?

(D) Fiscal year (FY) (A) sale of goods in large quantities with
high quality
367. What is called the acquisition abroad of
(B) Scale of goods in large quantities with
physical assets with operating control that
low quality
resides in parent corporation?
(C) Scale of goods in large quantities and
(A) Fixed Direct Investment
at low price
(B) Foreign Direct Investment (FDI)
(D) Scale of goods in large quantities with
(C) Foreign Investment High price
(D) Remote Foreign Investment
371. Which mineral’s chief exporter is Rus-
368. What is artificial currency? sia?
(A) A currency substitute (A) Manganese
(B) Coins (B) Rubber
(C) De-valued currency (C) Gold
(D) Silver (D) Silver
369. What is called the difference in the 372. The branch banking system is in vogue
money value between exports and im- in most countries of the world. In which
ports during the specific period of time? country was it first developed?
(A) Balance of payment (A) South Africa
(B) Balance sheet (B) UK
(C) Terms of trade (C) Canada
(D) Balance of trade (D) Australia
367. B 368. A 369. D 370. C 371. A 372. B

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MOST POPULAR AROUND THE WORLD

DESIGNED FOR SURE SUCCESS

□NTA UGC NET 4

It is my deepest gratitude and warmest

To my mother JOYTSNA CHANGDER

who has been a constant source of Knowledge and in-

The aim of this publication is to sup-

2 Macro Economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

3 Aggregate Supply, Unemployment, Inflation . . . . . . . . . . . . 119

4 Agriculture & Irrigation System of Pakistan . . . . . . . . . . . . 125

5 Alternative Theories Of Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135

6 Think like an economist . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

7 Applied Microeconomics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141

8 Asymmetric Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145

9 Average and total Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149

10 Payments, Aid and Foreign Investment . . . . . . . . . . . . . . . . . . 151

12 Budget Deficits, Trade Balance . . . . . . . . . . . . . . . . . . . . . . . . . . 191

13 Capital Formation, Investment Choice . . . . . . . . . . . . . . . . . . . 195

17 Costs, Supply And Perfect Competition . . . . . . . . . . . . . . . . . 209

18 Development Planning and Policymaking: The State, And

19 Economic Development in Historical Perspective . . . . . . . 219

21 Education, Health, And Human Capital . . . . . . . . . . . . . . . . . 225

25 ExchangeRate Adjustments And The Balance of Payments

26 ExchangeRate Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 241

27 ExchangeRate Systems And Currency Crises . . . . . . . . . . . . 247

30 Foreign Exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 257

31 Foundations Of Modern Trade Theory . . . . . . . . . . . . . . . . . . 263

32 Global Economic Development . . . . . . . . . . . . . . . . . . . . . . . . . . . 269

34 Income Inequality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 277

35 Industrial Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 285

36 Inflation & Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 287

38 Introduction To economics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295

39 Labour Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303

40 Long Term Economic Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309

41 Macroeconomic Issues and Analysis . . . . . . . . . . . . . . . . . . . . . 313

42 Macroeconomic Policy Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321

43 Marketing In A Global Economy . . . . . . . . . . . . . . . . . . . . . . . . . 325

44 Markets, Eﬀiciency And The Public Interest . . . . . . . . . . . . 341

47 National Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 377

48 Equilibrium Of National Income . . . . . . . . . . . . . . . . . . . . . . . . . . 385

51 Central Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 397

52 Public Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 399

53 International and National Trade . . . . . . . . . . . . . . . . . . . . . . . . 407

54 Balance of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 413

55 Economy of Pakistan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 417

56 Pakistan National Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 419

57 Economic Development and Planning . . . . . . . . . . . . . . . . . . . 423

58 Transport Communication and Human Resources . . . . . . 427

60 Utility and Consumer Behavior . . . . . . . . . . . . . . . . . . . . . . . . . . . 433

62 International Economic Organisations . . . . . . . . . . . . . . . . . . . 439

64 Production and Production Function . . . . . . . . . . . . . . . . . . . . 451

65 Scale Of Production and Laws of Returns . . . . . . . . . . . . . . . 453

67 Wages Rent Interest and Profit . . . . . . . . . . . . . . . . . . . . . . . . . . 457

70 Business and Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 475

71 National Income Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 483

72 Economic Growth and Development . . . . . . . . . . . . . . . . . . . . . 491

75 Monetary Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 509

77 Money, Interest Rates And Output . . . . . . . . . . . . . . . . . . . . . . 517

78 Monopoly & Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 525