McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Arts in Economics (BA Economics) .
| 101. |
In classical theory which of the following is found in the economy: |
| A. | Unemployment |
| B. | Involuntary unemployment |
| C. | Less than full employment |
| D. | Full employment |
| Answer» D. Full employment | |
| 102. |
In MV=PT, if M doubles and V and T remain constant, then P will: |
| A. | Double |
| B. | 1/2 |
| C. | 1 |
| D. | 4 |
| Answer» A. Double | |
| 103. |
Pigou’s version of Cambridge equation is: |
| A. | M = KP/Y |
| B. | P= KR/M |
| C. | MV = PT |
| D. | MV = MI VI |
| Answer» B. P= KR/M | |
| 104. |
The quantity theory of money was restated by: |
| A. | Alfred Marshall |
| B. | Milton Friedman |
| C. | Irving Fisher |
| D. | J.M. .Keynes |
| Answer» B. Milton Friedman | |
| 105. |
The law which states that supply creates its own demand and overproduction is impossible is known as: |
| A. | The law of supply |
| B. | Say’s law of market |
| C. | Law of demand |
| D. | Law of macro economics |
| Answer» B. Say’s law of market | |
| 106. |
Wages and prices do not adjust quickly to restore general equilibrium is a property of |
| A. | Classical economics |
| B. | Keynesian economics |
| C. | Monetary economics |
| D. | Supply side economics |
| Answer» B. Keynesian economics | |
| 107. |
Classicals treated money as a: |
| A. | Medium of exchange |
| B. | Store of value |
| C. | Both |
| D. | None |
| Answer» A. Medium of exchange | |
| 108. |
When there is an increase in the autonomous money supply, ceteris paribus, LM shifts: |
| A. | Leftward |
| B. | Rightward |
| C. | No shift |
| D. | None |
| Answer» B. Rightward | |
| 109. |
An Economic model is a statement of relationship among economic ------ |
| A. | Variables |
| B. | Phenomena |
| C. | Development |
| D. | None of these |
| Answer» A. Variables | |
| 110. |
LM curve shows the equilibrium condition in ---------- market |
| A. | Goods market |
| B. | Product market |
| C. | Money market |
| D. | None of these |
| Answer» C. Money market | |
| 111. |
Supply creates its own demand is the Basis of: |
| A. | Classical economics |
| B. | Keynesian economics |
| C. | Monetarism |
| D. | None of these |
| Answer» A. Classical economics | |
| 112. |
The simplest ISLM model consists of: |
| A. | Two markets |
| B. | Three markets |
| C. | Four markets |
| D. | Five markets |
| Answer» A. Two markets | |
| 113. |
The equilibrium in the product market is represented by which curve? |
| A. | IS |
| B. | LM |
| C. | Demand |
| D. | Supply curve |
| Answer» A. IS | |
| 114. |
The IS curve has a ------slope |
| A. | Positive |
| B. | Negative |
| C. | Zero |
| D. | None of these |
| Answer» B. Negative | |
| 115. |
The LM curve has a ----- slope |
| A. | Positive |
| B. | Negative |
| C. | Zero |
| D. | None of these |
| Answer» A. Positive | |
| 116. |
ISLM model was developed by: |
| A. | Hicks |
| B. | Keynes |
| C. | Friedman |
| D. | None of these |
| Answer» A. Hicks | |
| 117. |
The perfectly elastic segment of the LM curve is: |
| A. | Keynesian range |
| B. | Classical range |
| C. | Intermediate range |
| D. | None of these |
| Answer» A. Keynesian range | |
| 118. |
Which policy is effective in the Classical range? |
| A. | Monetary policy |
| B. | Fiscal policy |
| C. | Incomes policy |
| D. | None of these |
| Answer» A. Monetary policy | |
| 119. |
Which policy is effective in the Keynesian range? |
| A. | Monetary policy |
| B. | Fiscal policy |
| C. | Incomes policy |
| D. | None of these |
| Answer» B. Fiscal policy | |
| 120. |
Which policy is effective in the intermediate range? |
| A. | Monetary policy |
| B. | Fiscal policy |
| C. | Both policies |
| D. | None of these |
| Answer» C. Both policies | |
| 121. |
IS-LM model was developed by: |
| A. | Keynes |
| B. | Walras |
| C. | J.R.Hicks |
| D. | Don-Patinkin |
| Answer» C. J.R.Hicks | |
| 122. |
Frictional unemployment exists: |
| A. | When there is a decrease in real GDP |
| B. | Because it takes time to find a job when one is first entering the labour force |
| C. | As a result of technological change |
| D. | When an individual retires |
| Answer» B. Because it takes time to find a job when one is first entering the labour force | |
| 123. |
The natural rate of unemployment equals the sum of those who are: |
| A. | Frictionally and structurally unemployed |
| B. | Frictionally and cyclically unemployed |
| C. | Structurally and cyclically unemployed |
| D. | Frictionally structurally and cyclically unemployed |
| Answer» A. Frictionally and structurally unemployed | |
| 124. |
The marginal productivity of labour: |
| A. | Increases when the price of the good sold increases, ceteris paribus |
| B. | Decreases when there is an adverse supply shock, ceteris paribus |
| C. | Increase when more workers are hired, ceteris paribus |
| D. | Decreases when there is an increase in the quantity of capital, ceteris paribus |
| Answer» B. Decreases when there is an adverse supply shock, ceteris paribus | |
| 125. |
When saving is greater than investment in a two-sector model, |
| A. | Output should increase |
| B. | Output should decrease |
| C. | Output should not change |
| D. | None of these |
| Answer» B. Output should decrease | |
| 126. |
When output exceeds spending: |
| A. | There is unsold output, and level of output will fall |
| B. | There is unsold output, and level of output will rise |
| C. | There is unsold output, and level of spending will rise |
| D. | There is no unsold output since the level of spending will rise |
| Answer» A. There is unsold output, and level of output will fall | |
| 127. |
When investment is negatively related to the rate of interest, equilibrium output in the goods market: |
| A. | Is unrelated to the rate of interest |
| B. | Is inversely related to the rate of interest |
| C. | Is positively related to the rate of interest |
| D. | Falls as the rate of interest decreases |
| Answer» B. Is inversely related to the rate of interest | |
| 128. |
Simultaneous equilibrium in the money (LM) and goods (IS) market exists: |
| A. | At an unlimited number of output levels and rates of interest |
| B. | At only one output level and rate of interest |
| C. | At an unlimited number of output levels and only one rate of interest |
| D. | At only one output level and an unlimited number of rates of interest |
| Answer» B. At only one output level and rate of interest | |
| 129. |
In which of the following situations will an increase in the money supply have no effect upon output? |
| A. | LM is steeply sloped and IS is steeply sloped |
| B. | LM is vertical and IS is steeply sloped |
| C. | LM is steeply sloped and IS is vertical |
| D. | LM is relatively flat as is IS |
| Answer» C. LM is steeply sloped and IS is vertical | |
| 130. |
Policy Neutrality is the main proposition of: |
| A. | Supply Side Economics. |
| B. | Keynesian Economics |
| C. | Monetarism |
| D. | Rational expectations hypothesis |
| Answer» D. Rational expectations hypothesis | |
| 131. |
Who invented the General Equilibrium analysis? |
| A. | L. Walras. |
| B. | W. Leontief |
| C. | J.M.Keynes. |
| D. | None of these. |
| Answer» A. L. Walras. | |
| 132. |
Employment equilibrium in the Classical theory is achieved through: |
| A. | Wage-Price flexibility. |
| B. | Changes in aggregate demand |
| C. | Changes in aggregate supply |
| D. | None of these. |
| Answer» A. Wage-Price flexibility. | |
| 133. |
Market does not clear is a proposition of: |
| A. | Neoclassical theory. |
| B. | Keynesian Economics |
| C. | Monetarism |
| D. | Rational expectations |
| Answer» B. Keynesian Economics | |
| 134. |
The interest rate paid on bonds is known as: |
| A. | Call rate |
| B. | Coupon rate |
| C. | Repo rate |
| D. | Bank rate |
| Answer» B. Coupon rate | |
| 135. |
The monetary policy is completely ineffective when the LM curve is: |
| A. | Vertical . |
| B. | Horizontal. |
| C. | Upward sloping. |
| D. | Downward sloping |
| Answer» B. Horizontal. | |
| 136. |
Changes in the subjective or objective factors |
| A. | Never affect consumption function |
| B. | Always cause downward shift in consumption function |
| C. | Always cause upward shift in consumption function |
| D. | They cause upward or downward shifts in consumption function |
| Answer» D. They cause upward or downward shifts in consumption function | |
| 137. |
Saving is a function of |
| A. | Export |
| B. | Import |
| C. | Investment |
| D. | Income |
| Answer» D. Income | |
| 138. |
Entrepreneurs will have no tendency to expand or contract output and employment when |
| A. | AD>AS |
| B. | AD<AS |
| C. | AD=AS |
| D. | None of the above |
| Answer» C. AD=AS | |
| 139. |
The slope of the consumption function is called |
| A. | MPC |
| B. | MPS |
| C. | APC |
| D. | APS |
| Answer» A. MPC | |
| 140. |
The concept of effective demand is associated with the name of |
| A. | Marshall |
| B. | Keynes |
| C. | Krugman |
| D. | Say |
| Answer» B. Keynes | |
| 141. |
In a closed economy, the value of multiplier , when MPC is 0.90 |
| A. | 25 |
| B. | 90 |
| C. | 10 |
| D. | 9 |
| Answer» C. 10 | |
| 142. |
Income is a ------- variable |
| A. | Flow |
| B. | Discontinuous |
| C. | Stock |
| D. | None of the above |
| Answer» A. Flow | |
| 143. |
Ratio of consumption expenditure to any particular level of income |
| A. | MPS |
| B. | APS |
| C. | APC |
| D. | MPC |
| Answer» C. APC | |
| 144. |
Psychological law of consumption states that the value of MPC is lies between zero and |
| A. | 1 |
| B. | 2 |
| C. | 3 |
| D. | 4 |
| Answer» A. 1 | |
| 145. |
Net investment is also known as |
| A. | Depreciation |
| B. | Induced investment |
| C. | Autonomous investment |
| D. | Capital formation |
| Answer» D. Capital formation | |
| 146. |
In the saving function S = -a + (1-b)Y, the term ‘b’ denotes |
| A. | Saving |
| B. | MPC |
| C. | MPS |
| D. | APS |
| Answer» B. MPC | |
| 147. |
Who propounded Psychological law of consumption |
| A. | Adam Smith |
| B. | Ricardo |
| C. | Keynes |
| D. | Pigou |
| Answer» C. Keynes | |
| 148. |
When MPS = 0.2, MPC will be |
| A. | 0.8 |
| B. | 0.2 |
| C. | 1.2 |
| D. | 20 |
| Answer» A. 0.8 | |
| 149. |
In the linear consumption function C = a + bY, coefficient ‘a’ denotes |
| A. | MPC |
| B. | APC |
| C. | Autonomous consumption |
| D. | Induced consumption |
| Answer» C. Autonomous consumption | |
| 150. |
According to Keynes, rising aggregate income is always associated with |
| A. | Higher saving rate |
| B. | Higher import |
| C. | Lower export |
| D. | Low production |
| Answer» A. Higher saving rate | |
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