| Q.1 |
Please write the alphabet of selected answer
column: (30) |
i |
Lead to a decrease in aggregate demand by:
A) An increase in government spending
B) A
decrease in labor productivity
C) An increase in personal income
taxes D) An
increase in society’s total wealth
E) None of the above |
ii |
An example of structural unemployment is
A) A computer programmer who quits
his job to move to a warmer climate
B) A construction worker who loses
his job in the winter
C) An autoworker who loses her job during
a recession
D) A steelworker who is replaced by a robot
E)
None of the above |
iii |
If the rate of growth in an economy is 2 percent, inflation is
3 percent, and the nominal rate of interest is 10 percent, the real
rate of interest is _____ percent.
A) 5
B) 7
C) 8
D) 12 E)
None of the above |
iv |
If a nation's depreciation exceeds its gross investment, we
can say that:
A) net investment
is positive
B) the nation’s stock
of capital is growing
C) the nation’s
stock of capital is declining D)
the nation’s GDP will
rise
E) None of the above |
v |
Expand aggregate demand according to Keynesians (demand-side
economists), but stimulate aggregate supply according to supply-siders
by:
A) Increasing
government purchases of goods and services
B) Increasing
transfer payments
C) Decreasing the
money supply
D) Increasing the
general level of interest rates
E) None of the above |
vi |
According to Keynesian theory, a combination of __________ policies
below is consistent (that is, the policies would tend to reinforce
instead of offset each other).
A) Decrease taxes; increase
government spending; increase the money supply
B) Decrease taxes; decrease
government spending; increase the money supply
C) Decrease taxes; increase
government spending; decrease the money supply
D) Increase taxes; increase
government spending; increase the money supply
E) None of the above |
vii |
The discount rate is the interest rate at which
A) the SBP lends to commercial banks
B)
commercial banks lend to each
other
C) the public lends to the federal
government D) the
SBP lends to the Government of Pakistan
E) None of the above |
viii |
An economy is experiencing low rates of unemployment with high
inflation. An appropriate mix of government policies might be to
A) increase taxes; decrease government
spending; increase interest rates
B) decrease taxes; increase government
spending; decrease interest rates
C) decrease taxes; decrease government spending;
decrease interest rates
D) increase taxes; decrease government spending;
decrease interest rates
E) none of the above |
ix |
Fiscal policy refers to the control of
A) interest rates by the SBP
B) business policies to increase
competition
C) the government budget to
influence total spending
D) government spending in order
to balance the budget
E) none of the above |
x |
Contractionary economic policy?
A) The selling of securities by the
SBP B)
Increases in the size of the federal budget deficit
C) Reductions in interest rates D)
Increased rate of growth of the money supply
E) None of the above |
xi |
Which one of the following could lead to an increase in the underlying
rate of inflation?
A) A fall in the exchange rate B)
A fall in the balance of payments
surplus
C) A fall in the government budget
deficit D) A
fall in consumer spending
E) None of the above |
xii |
The table below shows the rate of inflation for a country over
a four year period.
Year 1997
1998 1999
2000
Rate of Inflation 5%
7% 8%
2%
Which of the following statements is correct?
A) The
price level was at its lowest at the start of the period
B) The
price level was at its lowest at the end of the period
C) The
rate of inflation was at its highest in the year 2000
D) The
price level fluctuated over the period
E)
None of the above |
xiii |
The primary result of inflation is
A) a decline in prices
B) a
rise in personal wealth
C) a rise in wages D)
a decline in the value of money
E) None of the above |
xiv |
The following figures are taken from the index of retail prices
for three countries
Country Year2
Year3
A) 100
110
B) 115
130
C)
112 118
D)
None None
(Year 1 = 100)
The table shows that between Year 2 and Year 3
A) Country A had the highest rate
of economic growth
B) Country C had the lowest rate of
inflation
C) Country C had the highest national
income per head of population
D) Country B had the lowest rate of
inflation
E) None of the above |
xv |
Inflation is defined as
A) The increase in average
prices in the retail sector
B) The percentage expansion
of the economy over the last year
C) The rise in labour costs
over the last year
D) The percent change in the
price level over the preceding twelve months
E) None of the above |
xvi |
Price stability occurs when
A) The general price level
in the economy increases at a steady and low rate
B) There is no change in the
exchange rate against other currencies
C) All prices in the economy are constant
D) The rate of inflation is zero
E) None of the above |
xvii |
Between April 2005 and July 2006, State Bank of Pakistan increased
interest rates by 2.0% to try to curb inflationary pressures. An
increase in interest rates might be expected to help reduce inflation
because a rise in interest rates is likely to
A) Reduce
consumer spending B)
Increase investment spending
C) Reduce
the value of the Pak Rupee D)
Lead to an increase in the money
supply
E) None of
the above |
xviii |
Which one of the following is not a major macroeconomic objective
of the government.
A) low inflation B)
sustained economic growth
C) high level of employment
D)
fall in the crude oil prices
E) None of the above |
xix |
The money value of goods and services produced in a year within
geographical boundaries of a country is known as
A) Gross national product
B) Gross domestic
product
C) Balance of payments
D)
Per capita income
E) None of the above |
xx |
In the commonly accepted definition of recession, the level of
level of national output
A) rises at faster rate B)
rises at a slower
rate
C) rises lower than inflation
rate D) falls
E) None of the above
|
xxi |
Which one of the following would best indicate economic growth,
an index of
A) Share prices
B)
Company profile
C) Consumer spending D)
Gross domestic product
E) None of the above |
xxii |
Which one of the following is a direct tax
A) Car insurance tax B)
Value added tax
C) Excise duty on petrol D)
Income tax E)
None of the
above |
xxiii |
A decision by the government to introduce an expansionary fiscal
policy would be less likely to succeed in reducing unemployment
if a country had
A) A
high level of cyclical unemployment and spare capacity
B) A
fixes exchange rate
C) A
low level of business and consumer confidence
D)
A high marginal propensity to import |
xxiv |
All other things being same, a government is undertaking a contractionary
fiscal policy if it reduced
A) Exchange rate B)
Tax
rate
C) Government expenditures
D)
Interest
rate E)
None of the above
|
xxv |
Mr. A earns Rs.2 million per year and pays Rs.0.4 million in
income tax. Mr. B earns Rs.3 million and pays Rs.0.8 million in
income tax. Mr. C earns Rs.1 million and pays Rs.0.1 million in
income tax. The income tax system is
A) Proportional B)
Progressive C)
Regressive
D) Flat rate E)
None of the above |
xxvi |
In national income accounting which one of the following is treated
as a transfer payment
A) Interest
paid to holders of government debt
B) Expenditure
on the government's armed forces operating in other countries
C) Government spending
on research and development spending in the defense sector
D) Salaries paid
to civil servants E)
None
of the above |
xxvii |
Which of the following is the most accurate indicator of a nation's
standard of living?
A) Gross domestic product B)
Real national income per
capita
C) Gross national product D)
Real national income E)
None of the above |
xxviii |
A government may seek to improve the current account of the balance
of payments by introducing either expenditure-reducing or expenditure-switching
policies. Which of the following is an expenditure-reducing policy?
A) Devaluation
of the currency B)
A rise in income tax
C) The
introduction of an import tariff
D) The
introduction of an export subsidy E)
None of the above |
xxix |
A foreign firm builds a subsidiary factory in Pakistan to produce
goods solely for the Pakistan market. Assuming that this subsidiary
is profitable, the impact on Pakistan’s balance of payments
is likely to be
A) A capital credit item
following by a stream of current account debit items
B) A capital credit item
following by a stream of capital account debit items
C) A current account credit
item following by a stream of capital account debit items
D) A current account credit
item following by a stream of current account debit items
E) None of the above |
xxx |
If the aggregate supply curve is drawn as perfectly inelastic,
an increase in aggregate demand will lead to an increase in
A) The price level
B)
Economic growth C)
Real national output
D) Employment E)
None of the above |