1.The fundamental concept of Economics about resources is that the resources are
(A) equally distributed
(B) unequally distributed
(C) scarce
(D) unlimited

2.Consider a world without scarcity of resources. Then what would be the consequences?
(A) All prices would be zero
(B) Markets would be unnecessary
(C) Economics would no longer be a useful subject
(D) All of the above

3.Who is considered the founder of Microeconomics?
(A) Adam Smith
(B) John Keynes
(C) Friedrich Hayek
(D) Milton Friedman

4.Who is considered the founder of modern Macroeconomics?
(A) Adam Smith
(B) John Keynes
(C) Friedrich Hayek
(D) Milton Friedman

5.When analyzing the impact of a variable on the economic system, the other things
(A) must be kept constant
(B) must also be analyzed
(C) must not be taken into consideration
(D) none of these

6.Inputs are combined with technology to produce outputs. The fundamental inputs (also called factors of production) are
(A) land and capital
(B) land and labor
(C) land, labor, and capital
(D) land, labor, capital, and investment

7.Goods produced to produce yet other goods is called
(A) final goods
(B) capital
(C) investment
(D) resources

8.Which economic term is used to represent inequality in income distribution?
(A) GDP
(B) GNP
(C) Gini
(D) HDI

9.The value of the good or service forgone by choosing another investment is called
(A) opportunity cost
(B) purchasing power parity
(C) disposable income
(D) consumer price index

10.The central role of markets is to determine the
(A) quality of goods
(B) quantity of goods
(C) level of income
(D) price of goods

11.The branch of economics concerned with overall performance of the economy is known as
(A) Microeconomics
(B) Macroeconomics
(C) Econometrics
(D) Keynesian Economics

12.The branch of economics concerned with the use of statistical methods to obtain empirical results for economic relations is known as
(A) Microeconomics
(B) Macroeconomics
(C) Econometrics
(D) Keynesian Economics

13.The branch of economics concerned with the behavior of markets, firms, and households is known as
(A) Microeconomics
(B) Macroeconomics
(C) Econometrics
(D) Bayesian Economics

14.An economy is producing efficiently when no individual’s economic welfare can be improved unless
(A) supply is increased
(B) demand is increased
(C) someone else is improved
(D) someone else is made worse off

15.Taxes are used to discourage __ of a commodity.
(A) consumption
(B) production
(C) saving
(D) inflation

16.Subsidies are used to encourage __ of a commodity.
(A) consumption
(B) production
(C) saving
(D) inflation

17.Which from the following economic resources cannot be converted into commodity?
(A) Land
(B) Labour
(C) Capital
(D) All of these can be converted into commodity

18.Which from the following are features of a modern economy?
(A) Specialization
(B) Division of Labor
(C) Financial Markets
(D) All of the above

19.When no firm or consumer is large enough to affect the market price, the market is assumed to have
(A) perfect competition
(B) imperfect competition
(C) no competition
(D) none of these

20.Which from the following are the results of imperfect competition in the markets?
(A) Monopolies
(B) Externalities
(C) Public goods
(D) All of the above

21.When one event occurred before another event, the fallacy in economic reasoning that the first event caused the second event is called
(A) the post hoc fallacy
(B) failure to hold other things constant
(C) the fallacy of composition
(D) normative fallacy

22.When we assume that what is true for the part is also true for the whole, we are committing
(A) the post hoc fallacy
(B) failure to hold other things constant
(C) the fallacy of composition
(D) normative fallacy

23.The three fundamental economic problems every human society must confront and resolve are
(A) what, how and when
(B) what, where and when
(C) what, how, and for whom
(D) how, where, and for whom

24.The three fundamental economic problems of what, how, and for whom are solved by
(A) supply
(B) demand
(C) consumption
(D) markets

25.Fiscal policy consists of government’s
(A) revenue and taxation
(B) taxation and credit control
(C) expenditure and investment
(D) expenditure and taxation

26.The maximum quantity of goods that can be efficiently produced by an economy using its scarce resources and available technology is called
(A) the supply curve
(B) the demand curve
(C) production-possibility frontier
(D) the supply-demand equilibrium

27.Which economic term is used to measure the overall performance of an economy?
(A) GDP
(B) GNP
(C) Gini
(D) HDI

28.Productive efficiency occurs when an economy cannot produce _ of one good without producing _ of another good.
(A) more, more
(B) more, less
(C) less, less
(D) none of these

29.The concept of invisible hand in the organization of supply and demand in a well-functioning market mechanism refers to the
(A) self-regulating economy
(B) government-controlled economy
(C) command economy
(D) socialism

30.The increase in economic integration among nations is termed as
(A) specialization
(B) market economy
(C) globalization
(D) equilibrium condition

31.The price elasticity of demand is the percentage change in _ demanded divided by the percentage change in _.
(A) supply, price
(B) quantity, price
(C) price, supply
(D) price, quantity

32.When price of a commodity increased by 3%, the quantity demanded decreased by 5%. The quantity is said to have
(A) price-elastic demand
(B) price-elastic supply
(C) price-inelastic demand
(D) price-inelastic supply

33.When price of a commodity increased by 5%, the quantity demanded decreased by 3%. The quantity is said to have
(A) price-elastic demand
(B) price-elastic supply
(C) price-inelastic demand
(D) price-inelastic supply

34.When price of a commodity decreased by 4%, the quantity demanded increased by 4%. The quantity is said to have
(A) unit-elastic demand
(B) unit-elastic supply
(C) price equilibrium
(D) supply-demand equilibrium

35.The term recession refers to the
(A) high employment
(B) high unemployment
(C) high supply and demand
(D) low supply and demand

36.What from the following measures a government can take to reduce inequality in the distribution of income?
(A) Progressive taxation
(B) Transfer payments
(C) Subsidize consumption of low-income groups
(D) All of the above

37.Capital is one of the three fundamental inputs called factors of production, which is a produced and durable input and is itself an output of the economy. Which from the following is NOT among capital?
(A) clothing
(B) Machines
(C) highways
(D) buildings

38.The economic term used to rank countries according to human development is
(A) GDP Per Capita
(B) GNP
(C) Gini
(D) HDI

39.The ultimate goal of economic science is to
(A) improve the living standard of people
(B) obtain the highest possible GDP
(C) minimize the unemployment
(D) obtain equilibrium between inflation and employment

40.In which from the following questions, we can only examine the likely consequences of alternative policies, and the answer can be resolved only by discussions?
(A) Do higher interest rates slow the economy?
(B) Do higher interest rates lower inflation?
(C) Should a country lower tariff on imports?
(D) Does higher employment raise the inflation?

41.Income elasticity of demand for an inferior good is:
(a)Positive
(b)Zero
(c)Both
(a) & (b)
(d)None of these

42.Convexity means averages are ____ than extremes:
(a) Worse
(b) Positive
(c) Better
(d)None of these

43.In case of imperfect competition the MRPLis the:
(a) Supply of labour curve
(b) Demand for labour curve
(c) Both of these
(d) None of these

44.During the Liquidity Trap, LM curve is:
(a)Less elastic
(b)Positive
(c)Perfectly elastic
(d)None of these

45.The dominant factor of production is:
(a)Energy
(b)Labour
(c)Technology
(d)None of these

46.GDP deflator is a ratio between:
(a)Input prices
(b)Output prices
(c)Both (a) & (b)
(d)None of these

47.During monopoly, the equilibrium condition is:
(a)MC=P
(b)MC>MR
(c)MC=MR
(c)Both (a) & (b)
(d)None of these

48.Roy’s identity is applied on:
(a)Food
(b)Bread
(c)Utility
(d)None of these

49.The following is the narrowest measure of supply of money:
(a)M2
(b)M3
(c)M1
(d)None of these

50.A positive externality in which a consumer wishesto possess a good in part because others do:
(a)Supply
(b)Concavity
(c)Money demand
(d)None of these

51.The profit function is of:
(a)Homogeneous of degree = 1
(b)Homogeneous of degree = 2
(c)Homogeneous of degree = 0
(d)None of these

52.The derivative of cost function withrespect to output price provides:
(a) Input supply function
(b)Output supply function
(c)Both (a) & (b)
(d)None of these

53.A strategy that is optimal, no matter what an opponent does:
(a)Dominant firm
(b)Duopoly
(c)Dominant strategy
(d)None of these

54.A devaluation of a currency takes place under
(a)Flexible exchange rate
(b)Fixed exchange rate
(c)Clean floating system
(d)None of these

55.Nominal interest rate is:
(a)Inflation minus Tax
(b)Tax plus Indirect Tax
(c)Real interest rate minus Inflation
(d)None of these

56.An un-anticipated increase in money supply is neutral during:
(a)Short run period
(b)Medium run period
(c)Both (a) & (b)
(d)None of these

57.A rise in general price level shifts the LM curve:
(a)Down and to the right
(b)Up and to the left
(c)Positively sloped
(d)None of these

58.Decrease in tax shiftsthe IS curve:
(a)Down and to the left
(b)Negatively sloped
(c)Up and to the right
(d)None of these

59.Gross National Product is:
(a)GDP – NNP
(b)NFA – GNI
(c)GDP – NX
(d)None of these

60.Foreign aid comprises of:
(a)Grants
(b)Loans
(c)Both (a) and (b)
(d)None of these

61.Per capita income of Pakistan during the fiscal year 2011-12 was:
(a)$ 1258
(b)$1372
(c)$1025
(d)$ 1050

62.The GINI coefficient is measure of:
(a)Inequality
(b)Poverty
(c)Growth
(d)Development

63.During the last decade income inequality in rural areas of Pakistan has:
(a)Increased
(b)Decreased
(c)Remained unchanged
(d)None of these

64.The share of agriculture in GDP is:
(a)21%
(b)10%
(c)12%
(d)17%

65.During 1970’s the planning was concerned to:
(a)Industrial planning
(b)Export promotion
(c)Import substitution
(d)Structural planning

66.National Savings as a percent of GDP during 2011-2013 was:
(a)10.7
(b)13.1
(c)9.5
(d)8.8

67.The growth rate of manufacture sector during 2011-12 was:
(a)1.7%
(b)4.1%
(c)5.2%
(d)3.6%

68.The best measure of economic development among following is:
(a)NNP
(b)HDI
(c)GDP
(d)All of these

69.The main objective of Monetary or fiscal policy is:
(a)Economic stablization
(b)Efficiency
(c)Both (a) and (b)
(d)None of these

70.Direct taxes during 2011-12 were around of total tax revenue.
(a)37%
(b)63%
(c)15%
(d)None of these

71.Public debt as a percent of GDP for 2011-12 was:
(a)58%
(b)65%
(c)50%
(d)45%

72.Govt. of Pakistan borrows from:
(a)Internal sources
(b)External sources
(c)Pakistani banks
(d)All of these

73.Growth rate of agriculture sector during 2011-12 was:
(a)3.1%
(b)5.4%
(c)2.9%
(d)2.1%

74.Nationalization of industries took place during the regime of:
(a)ZA Bhutto
(b)Zia ul Haq
(c)Ayub Khan
(d)None of these

75.Development economics is concerned with:
(a)Efficient allocation of scarce resources
(b)Economic, social and political institutions.
(c)Imperfect resource and commodity markets.
(d)(a) and (b) only

76.The last land reforms in Pakistan were introduced in:
(a)1972
(b)1977
(c)1981
(d)1958

77.IMF advances loan for:
(a)Construction
(b)Balance of payment
(c)Travelling
(d)None of these

78.Sixth five year plancovers the period:
(a)1965-70
(b)1960-65
(c)1988-93
(d)1983-88

79.The firm is in equilibrium when:
(a) Slope of TC = Slope of TR
(b) Slope of TC is less than slope of TR
(c) Slope of TC is more than slope of TR
(d) None of these

80.Demand curve in case of Giffen good is:
(a) Negatively sloped
(b) Vertical
(c) Positively sloped
(d) None of these

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