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 →
Baumol-Tobin Model of Cash Management analyzes transaction demand for money based on:
APrecautionary health risks
BLong-term speculative asset bubbles
CExogenous central bank directives
DTrade-off between interest foregone and transaction costs (brokerage fees)
The Solow Residual in neoclassical growth accounting measures the contribution to economic growth from:
ATotal Factor Productivity (TFP) / Technological Progress
BPhysical capital accumulation only
CLabor population growth only
DRaw material extractions
According to the Capital-Output Ratio concept, a lower capital-output ratio implies that capital is:
ALess efficient
BMore efficient (less capital needed to produce one unit of output)
CCompletely unutilized
DExperiencing hyper-depreciation
In an open economy, the Marshall-Lerner Condition assumes that supply elasticities of exports and imports are:
AZero (perfectly inelastic)
BEqual to one
CInfinitely elastic
DNegative
The Trade Passthrough refers to the extent to which exchange rate changes affect:
AForeign aid allocations
BCentral bank interest rate targets
CDomestic wage rates directly
DDomestic prices of imported and exported goods
The J-Curve effect occurs because in the short run after currency devaluation:
AExport and import quantities are relatively inelastic due to pre-existing contracts
BDomestic inflation falls to zero
CImport prices drop instantly
DExport demand shrinks to zero
The Triffin Dilemma highlights the inherent instability of an international monetary system reliant on:
AGold reserves backing all paper currencies
BA single national currency as the global reserve currency
CFloating exchange rate regimes
DMultilateral trade agreements
The Recardian Equivalence Hypothesis asserts that government deficit spending funded by borrowing:
ASignificantly increases current aggregate demand
BPermanently lowers interest rates
CHas no net impact on aggregate demand because taxpayers anticipate future tax increases to pay off debt
DEliminates national debt completely
Gross National Disposable Income (GNDI) is calculated as National Income plus Net Factor Income from Abroad plus:
AGross Domestic Fixed Capital Formation
BGovernment Subsidies
CDepreciation allowance
DNet Current Transfers from the Rest of the World
The Real GDP formula in terms of Nominal GDP and GDP Deflator is:
A(Nominal GDP / GDP Deflator) × 100
B(Nominal GDP × GDP Deflator) / 100
C(GDP Deflator / Nominal GDP) × 100
D(Nominal GDP - Inflation) × 100