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PPSC Economics Chapter 1 Basic Economics MCQs With Answers
Question # 1
According to Keynes, the level of employment is determined by
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Interest rates
The level of prices
The level of aggregate supply in the economy
The level of aggregate demand for goods and services.
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Question # 2
An increase in costs will
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Shift aggregate demand
Shift aggregate supply
Reduce the natural rate of unemployment
Increases the productivity of employees
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Question # 3
The free market involves
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The free provision of products
The subsidizing of products by the government
Market forces of supply and demand
All trade via barter
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Question # 4
If there is a price floor there will be.
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Shortages
Surpluses
Equilibrium
All of these
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Question # 5
Compared to the case of perfect competition, a monopolist is more likely to
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Charge a higher price
Produce a lower quantity of the product
Make a greater amount of economic profit
All of the above
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Question # 6
In a Boom
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Surpluses are likely to occur
Prices are likely to fall
supply will increase immediately to match demand
Shortages may occur
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Question # 7
A significant increase in the government budget deficit is likely to.
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Reduce injections into the economy
Reduce national income
Move the economy away from full employment
Boost aggregate demand
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Question # 8
If product an inferior good.
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Demand is inversely related to income
Demand is inversely related to price
Demand is directly related to price
Demand is inversely related to the price of substitutes
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Question # 9
If demand is price inelastic.
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An increase in price must raise profits
An increase in price decreases revenue
An increase in price increase revenue
A decrease in price reduces sales.
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Question # 10
A welfare less occurs in monopoly where
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The price in greater than the marginal cost
The price is greater than the marginal benefit
The price is greater than the average revenue
Has the right to investigate monopolies and will assess each one on its own mertis
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Question # 11
Which of the following best defines price discrimination.
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Charging different prices on the basis of race
Charging different prices for goods with different costs of production
Charging different prices based on cost of service differences.
Selling a certain product of given quality and cost per unit at different prices to different buyers
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Question # 12
The goal of a pure market economy is to best meet the desires of.
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Consumers
Companies
Workers
The government
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Question # 13
If there is cyclical unemployment in the economy the government might.
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Increase interest rates
Encourage savings
Cut taxes
Reduce government spending
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Question # 14
If demand increase in a market this will usually lead to.
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A higher equilibrium price and output
a lower equilibrium price and higher output
A lower equilibrium price and output.
A higher equilibrium price and lower output
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Question # 15
When marginal revenue equals marginal cost
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Total revenue equal total cost
There is the biggest positive difference between total revenue and total cost
there is the biggest negative difference between total revenue and total cost.
Profits are zero
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Question # 16
The liquidity trap occurs when the demand for money
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Is perfectly interest elastic
Is perfectly interest inelastic
Means that an increase in money supply leads to a fall int he interest rate
Means that an increase in the money supply leads to an increase in the interest rate
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Question # 17
All currencies other than the domestic currency of a given country are referred to as.
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Reserve currencies
Neal monies
Foreign exchange
Hard currency
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Question # 18
Which kind economics deals with issues such as unemployment inflation, and economic growth.
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Macro economics
Micro economics
Growth economics
Political economics
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Question # 19
Price equal to.
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Total revenue -quantity
Total revenue/quantity sold
total quantity sold * quantity sold
Total revenue/total cost
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Question # 20
Finding a partner to work with abroad is called a.
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Takeover
Merger
Acquisition
Joint venture
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Question # 21
An increase in the wage rate.
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Will usually lead to more people employed
Will decrease total earnings if the demand for labour is wage elastic
Is illegal in a free market
Will cause a shift in the demand for labour
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