Economics
Economics MCQs with Answers and Explanations
Economics MCQs with answers and detailed explanations for CSS, PMS, lecturer and GAT tests. Micro, macro and Pakistan economy questions fully explained. Take a scored quiz instead →
The Samuelson Condition for the optimal provision of public goods requires that the sum of individual marginal rates of substitution (MRS) equals:
AThe average cost of production
BTotal consumer surplus
CThe Marginal Rate of Transformation (MRT)
DZero
The Crowding-In effect occurs when public investment in infrastructure:
ADisplaces private sector borrowing
BRaises interest rates steeply
CDecreases national GDP
DStimulates and increases private sector investment
The Fiscal Deficit of a government is equal to Total Expenditure minus:
ATotal Revenue excluding Borrowing
BTotal Revenue including Borrowing
CTax Revenue only
DRevenue Expenditure
Zero-Based Budgeting (ZBB) requires that every budget line item be:
AIncreased by a fixed percentage over last year
BRe-justified from scratch (zero base) for each new budget cycle
CAdjusted solely for national inflation
DMatched by foreign aid grants
The Solow-Swan Neoclassical Growth Model identifies the long-run rate of growth of per capita output as depending on:
AThe rate of domestic savings
BGovernment spending deficits
CExogenous technological progress
DTariff structures
The endogenous growth theory (e.g., Romer Model) differs from Solow by asserting that long-run growth is driven by:
AExogenous population explosions
BForeign capital inflows
CDecreasing returns to scale
DEndogenous factors like investment in human capital, R&D, and innovation
The Lewis-Ranis-Fei Model elaborates on the Lewis dual-sector model by emphasizing the development of:
AAgricultural productivity to generate commercial food surplus for the industrial sector
BForeign exchange reserves
CHeavy military industries
DMining raw material exports
The Harris-Todaro model explains rural-to-urban migration as a rational decision based on:
AGuaranteed employment in city factories
BExpected urban-rural real wage differentials rather than actual current wages
CGovernment rural expulsion orders
DUniform wage structures
The Stolper-Samuelson Theorem states that an increase in the relative price of a good increases the real return to:
AThe scarce factor of the nation
BCapital owners exclusively
CThe factor used intensively in the production of that good
DLaborers exclusively regardless of sector
The Rybczynski Theorem asserts that an increase in the endowment of one factor of production, holding prices constant, leads to:
AAn equal percentage growth in both sectors
BA fall in national GDP
CAn immediate deterioration of terms of trade
DAn absolute increase in output of the sector using that factor intensively and a decrease in output of the other sector