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The Balassa-Samuelson Effect explains why price levels and service costs are systematically higher in:
APoorer, agrarian economies
BRicher, highly productive economies
CHigh-tariff protectionist nations
DLandlocked countries
Purchasing Power Parity (PPP) theory states that exchange rates between currencies are in equilibrium when their purchasing power is equalized based on:
AGold standard reserve backing
BCentral bank interest rate differentials
CA relative basket of goods in both countries
DForeign debt balances
The Marshall-Lerner Condition states that currency devaluation will improve the trade balance if the sum of price elasticities of demand for exports and imports is:
ALess than one (|Ex + Em| < 1)
BEqual to zero
CEqual to infinity
DGreater than one (|Ex + Em| > 1)
The Basel Accords (Basel I, II, III) established by the Bank for International Settlements primarily set global standards for:
ABank capital adequacy and risk management
BExchange rate pegs
CForeign aid allocation
DGovernment tax rates
The Marginal Cost of Funds based Lending Rate (MCLR) is used by banks to determine:
AMaximum savings deposit yields
BMinimum internal benchmark interest rates for loans
CCentral bank reserve requirements
DForeign currency conversion fees
The High-powered money expansion multiplier (Money Multiplier) is calculated as:
AReserve Requirement / Total Deposits
BVelocity × Price Level
C1 / Reserve Requirement Ratio (r)
D1 - Marginal Propensity to Consume
Command economy (socialist economic system) is primarily characterized by:
AUnregulated free market forces
BPrivate corporate monopolies
CFeudal landlord dominance
DCentral state planning and government ownership of means of production
The Human Poverty Index (HPI) and Multidimensional Poverty Index (MPI) were developed to measure poverty beyond:
AIncome levels alone by incorporating health, education, and living standards
BForeign aid debt levels
CGovernment budget deficits
DTax evasion rates
In Islamic Economics, the prohibition of ‘Riba’ strictly forbids:
ACommercial trade profits
BUnearned interest or usury on loans
CAgricultural production
DPublic infrastructure investments
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