0% Economics Full Book 2nd TestAdvertisements 1 / 50 1. Advertisements Which one is the best definition of opportunity cost? a) All sacrificing cost b) To obtain one more unit c) The cost of next best alternative that forgone d) All of the above Advertisements Advertisements 2 / 50 2. Laissez faire means: a) Government can influence b) Government cannot influence “Hands off” c) All of the above Advertisements Advertisements 3 / 50 3. Which of the following is not a feature of market economy (SELECT TWO) a) Government determined prices b) Freedom of enterprise c) Environment of competition d) Social security 4 / 50 4. Advertisements Government regulation in a mixed economic system may _______________ the cost of doing a) Decrease b) Increase c) Not change d) None 5 / 50 5. If demand is perfectly inelastic then curve is: (Select TWO) a) Vertical b) parallel to x-axis c) Horizontal d) parallel to y-axis 6 / 50 6. When aggregate demand increases, then unemployment ______________ and rate of inflation______________. (Selection of 2) a) fall b) Rise c) remain same d) none of these 7 / 50 7. Which of the following is regarded as ‘Fiat money’? a) Credit card b) Gold standard c) Gold d) US dollar 8 / 50 8. Which of the following is NOT typical in an Islamic economic system? a) Prohibition of interest (Riba) b) Hoarding cash as an asset c) Redistribution of wealth through Zakat d) Man as the steward of resources 9 / 50 9. Which of the following is NOT typical in an Islamic economic system? a) Prohibition of interest (Riba) b) Hoarding cash as an asset c) Redistribution of wealth through Zakat d) Man as the steward of resources 10 / 50 10. In a mixed economy, decisions about the allocation of resources are: a) Made solely by the government b) Made solely by market forces c) Made by both the government and market forces d) Made based on historical practices 11 / 50 11. When there is an increase in the price of good X, leading to an increase in demand for good Y, these goods are: a) Complements b) Substitutes c) Inferior goods d) Giffen goods 12 / 50 12. An increase in the price of a substitute in production causes a(n): a) Increase in supply of the other good b) Decrease in supply of the other good c) Same level of supply for the other good d) None of the above 13 / 50 13. At a price ceiling, which of the following outcomes are likely? (Select 2) a) Increase in consumer surplus b) Decrease in producer surplus c) Decrease in consumer surplus d) Increase in producer surplus 14 / 50 14. When demand is inelastic, an increase in price leads to a(n): a) Decrease in total revenue b) Increase in total revenue c) Constant total revenue d) Decrease in producer surplus 15 / 50 15. If the income elasticity of demand for a good is positive and less than 1, the good is likely a: a) Luxury b) Necessity c) Inferior good d) Substitute 16 / 50 16. In perfect competition, when marginal revenue equals marginal cost, the firm will: a) Increase its output to maximize profit b) Decrease its output to maximize profit c) Earn zero economic profit in the long run d) Earn supernormal profit in the long run 17 / 50 17. Which of the following is NOT a feature of perfect competition? a) Free entry and exit of firms b) Price-setting by individual firms c) Large number of buyers and sellers d) Homogeneous products 18 / 50 18. Which market structure allows for long-run supernormal profits? a) Perfect competition b) Monopolistic competition c) Monopoly d) Oligopoly 19 / 50 19. The GDP deflator measures the: a) Rate of unemployment b) Rate of inflation c) Total exports and imports d) Net foreign assets 20 / 50 20. If national income is 200,000 billion and population is 250 million, then GDP per capita is: a) 800,000 b) 700,000 c) 600,000 d) 900,000 21 / 50 21. Which of the following is NOT included in calculating GDP by the value-added approach? a) Final goods and services b) Personal consumption c) Net exports d) Intermediate goods and services 22 / 50 22. The difference between potential GDP and actual GDP is known as the: a) Inflationary gap b) Deflationary gap c) Output gap d) Productivity gap 23 / 50 23. Which of the following factors can shift the short-run aggregate supply curve to the left? a) A decrease in productivity b) An increase in technology c) A reduction in indirect taxes d) An increase in production costs 24 / 50 24. Autonomous consumption refers to the consumption level that a) Changes with income b) Occurs even when income is zero c) Varies with savings d) Depends on national output 25 / 50 25. If APS (Average Propensity to Save) is 0.3 and income is 5 billion, consumption is: a) 1.5 billion b) 4 billion c) 3.5 billion d) 2.5 billion 26 / 50 26. The Marginal Efficiency of Capital (MEC) curve can shift due to: a) Changes in technology b) Decreases in national income c) Changes in tax policy d) Changes in population 27 / 50 27. The value of the multiplier is generally: a) Less than 1 b) Greater than 1 c) Equal to 1 d) None of the above 28 / 50 28. A limitation of the multiplier effect is when: a) Full employment is reached b) Savings increase c) Prices remain constant d) Taxes decrease 29 / 50 29. In a progressive tax system, as income increases: a) The tax rate also increases b) The tax rate decreases c) The tax rate remains the same d) Taxes are only applied to indirect income 30 / 50 30. According to the accelerator principle, a rise in demand for consumer goods leads to: a) Increased government spending b) Increased demand for capital goods c) Decreased interest rates d) Lower savings 31 / 50 31. Cost-push inflation can be caused by: (Select 2) a) An increase in wage costs b) An increase in indirect taxes c) A decrease in government spending d) A decrease in wages 32 / 50 32. Which of the following is NOT a principle of taxation (canon of taxation)? a) Convenience b) Profitability c) Equity d) Certainty 33 / 50 33. Liquidity trap is typically characterized by: a) High interest rates and high savings b) Low interest rates and high savings c) High interest rates and low savings d) Low interest rates and low savings 34 / 50 34. Stagflation refers to a period where: a) Inflation is low and GDP growth is high b) Inflation is high and unemployment is high c) Inflation is low and unemployment is low d) None of the above 35 / 50 35. Broad money (M3) includes: a) M0 and M1 b) M0, M1, and M2 c) Only M0 d) Only M2 36 / 50 36. The Phillips Curve suggests that when unemployment decreases, inflation: a) Increases b) Decreases c) Remains stable d) Shows no predictable change 37 / 50 37. Which of the following would cause a shift in the short-run Phillips Curve? a) Increase in real GDP b) Change in inflation expectations c) Increase in supply of money d) Decrease in unemployment 38 / 50 38. Which factor does NOT directly impact aggregate demand? a) Government spending b) Money supply c) Consumer spending d) Investment 39 / 50 39. A fall in the price level would typically result in a(n): a) Leftward shift in aggregate demand b) Rightward shift in aggregate supply c) Movement along the aggregate demand curve d) Movement along the short-run aggregate supply curve 40 / 50 40. In a recession, fiscal policy is usually aimed at: a) Increasing government spending b) Raising taxes c) Decreasing government spending d) Increasing interest rates 41 / 50 41. If total revenue falls as a result of a price increase, the demand is: a) Inelastic b) Elastic c) Perfectly inelastic d) Unitary 42 / 50 42. Which of the following does NOT affect price elasticity of demand? a) Availability of substitutes b) Time period considered c) Quantity of the product sold d) Necessity of the product 43 / 50 43. Under perfect competition, a firm maximizes profit when: a) Marginal cost equals marginal revenue b) Average cost equals marginal revenue c) Total revenue equals total cost d) Marginal revenue equals average revenue 44 / 50 44. An increase in aggregate demand with a constant short-run aggregate supply will likely lead to: a) Higher inflation b) Lower inflation c) Decreased output d) Increased unemployment 45 / 50 45. If the Marginal Propensity to Consume (MPC) is 0.75, the multiplier effect is: a) 2 b) 4 c) 0.75 d) 1.33 46 / 50 46. When MPC is high, the value of the multiplier will: a) Increase b) Decrease c) Remain constant d) Be zero 47 / 50 47. The accelerator principle suggests that investment is highly sensitive to: a) Changes in the rate of economic growth b) The level of interest rates c) The level of consumer confidence d) Savings rates 48 / 50 48. Indirect taxes are generally considered to be: a) Regressive b) Progressive c) Neutral d) Proportional 49 / 50 49. The demand for money for speculative purposes is inversely related to: a) The interest rate b) The level of income c) The quantity of money d) The inflation rate 50 / 50 50. When the central bank buys securities in the open market, the money supply: a) Increases b) Decreases c) Remains constant d) Only affects foreign currency reserves Your score isThe average score is 61% 0% Restart quiz Advertisements
