Question 1

Above the BP curve BoP is:&#10;A)surplus&#10;B)Deficit&#10;C)Either Surplus or Deficit&#10;D)None.

Accepted Answer

Above the BP curve, the Balance of Payments (BoP) is in surplus because the economy is experiencing a net inflow of foreign currency, leading to an excess of exports over imports or capital inflows over outflows.

Question 2

When there is Zero or No capital mobility the BP curve is:&#10;A)Negative&#10;B)positive&#10;C)Vertical&#10;D)Horizontal

Accepted Answer

When there is zero or no capital mobility, the balance of payments (BP) curve is vertical. This is because, with no capital mobility, the balance of payments can only be adjusted through changes in the current account, which are influenced by changes in the exchange rate rather than by interest rate differentials.

Question 3

When there is High capital mobility the BP curve is:&#10;A)Negative&#10;B)positive&#10;C)Vertical&#10;D)Horizontal

Accepted Answer

With high capital mobility, the balance of payments (BP) curve is horizontal. This reflects the idea that any imbalance in the current account can be quickly offset by capital flows, making the balance of payments less sensitive to changes in the exchange rate.

Question 4

Which policy is recommended under flexible exchange rate system:&#10;A)No policy is needed&#10;B)Contractionary policy&#10;C)expansionary monetary policy&#10;D)Any policy.

Accepted Answer

Under a flexible exchange rate system, an expansionary monetary policy can be used to influence economic growth and stabilize the economy by affecting interest rates and exchange rates.

Question 5

Khan's multiplier is known as:&#10;A)investment multiplier&#10;B)employment multiplier&#10;C)Foreign trade multiplier&#10;D)Saving multiplier

Accepted Answer

Khan's multiplier is known as the employment multiplier, which describes the effect of an increase in investment on employment levels. Unlike the investment multiplier, which focuses on the impact on income or output, the employment multiplier specifically looks at how investment affects job creation.

Question 6

Keynes's multiplier is known as:&#10;A)investment multiplier&#10;B)employment multiplier&#10;C)Foreign trade multiplier&#10;D)Saving multiplier

Accepted Answer

Keynes's multiplier is primarily known as the investment multiplier, which describes the effect of an increase in investment on total income, suggesting that an initial increase in spending leads to an increase in income and consumption, further stimulating more economic activity.

Question 7

The foreign trade multiplier also known as the:&#10;A)Acceleration&#10;B)employment multiplier&#10;C)Income multiplier&#10;D)export multiplier .

Accepted Answer

The foreign trade multiplier is also known as the export multiplier, as it measures the effect of changes in exports on the overall national income.

Question 8

Investment Multiplier explains measures the change income as result of change in:&#10;A)Saving&#10;B)Wealth&#10;C)Employment&#10;D)Investment.

Accepted Answer

The answer of Investment Multiplier explains measures the change income...

Question 9

Under perfectly competitive market an individual seller is a&#10;A)Price taker&#10;B)Price maker&#10;C)Individual seller can influence the price&#10;D)None of the above

Accepted Answer

In a perfectly competitive market, an individual seller has no control over the market price and must accept the prevailing market price, making them a price taker.

Question 10

Uniform price is a feature of&#10;A)Perfect competition&#10;B)Monopoly&#10;C)Monopolistic competition&#10;D)Oligopoly

Accepted Answer

In perfect competition, all firms sell identical products at a single market price, which is determined by the overall supply and demand in the market. This uniform price is a key feature of perfect competition.

Question 11

Which of the following is not a feature of a perfectly competitive market&#10;A)Large number of buyers and sellers&#10;B)Homogeneous product&#10;C)Group behaviour&#10;D)Perfect competition

Accepted Answer

The answer of Which of the following is not a...

Question 12

A perfectly competitive firm gets only normal profit when&#10;A)MC = MR&#10;B)AC = AR&#10;C)AC < AR&#10;D)MC = AR

Accepted Answer

The answer of A perfectly competitive firm gets only normal...

Question 13

Which one of the following is a feature of a perfect competition&#10;A)Group behavior&#10;B)Selling cost&#10;C)Homogeneous product&#10;D)Differentiated product

Accepted Answer

The answer of Which one of the following is a...

Question 14

Average revenue curve under perfect competition is&#10;A)Upward sloping&#10;B)Downward sloping&#10;C)Horizontal straight line&#10;D)Vertical straight line

Accepted Answer

The answer of Average revenue curve under perfect competition is&#10;A)Upward...

Question 15

Marginal revenue curve under perfect competition is&#10;A)Upward sloping&#10;B)Downward sloping&#10;C)Horizontal straight line&#10;D)Vertical straight line

Accepted Answer

The answer of Marginal revenue curve under perfect competition is&#10;A)Upward...

Question 16

Average revenue curve under imperfect competition is&#10;A)Upward sloping&#10;B)Downward sloping&#10;C)Horizontal straight line&#10;D)Vertical straight line

Accepted Answer

The answer of Average revenue curve under imperfect competition is&#10;A)Upward...

Question 17

Marginal revenue curve under imperfect competition is&#10;A)Upward sloping&#10;B)Downward sloping&#10;C)Horizontal straight line&#10;D)Vertical straight line

Accepted Answer

The answer of Marginal revenue curve under imperfect competition is&#10;A)Upward...

Question 18

Perfect competition prevails when the demand for the output of each producer is&#10;A)Elastic&#10;B)Perfectly elastic&#10;C)Inelastic&#10;D)Perfectly inelastic

Accepted Answer

The answer of Perfect competition prevails when the demand for...

Question 19

Equilibrium price is determined under perfect competition by&#10;A)The market demand&#10;B)The market supply&#10;C)The interaction between market demand and market supply&#10;D)None of the above

Accepted Answer

The answer of Equilibrium price is determined under perfect competition...

Question 20

In the market period, market supply curve is&#10;A)Perfectly elastic&#10;B)Perfectly inelastic&#10;C)Elastic&#10;D)Inelastic

Accepted Answer

The answer of In the market period, market supply curve...

Question 21

Given the supply of a commodity, in the market period, the price of a commodity is determined by&#10;A)The market demand curve alone&#10;B)The market supply curve alone&#10;C)The market demand curve and the market supply curve&#10;D)None of the above

Accepted Answer

The answer of Given the supply of a commodity, in...

Question 22

Total profits are maximized where&#10;A)TR equals TC&#10;B)TR curve and TC curve are parallel&#10;C)TR curve and TC curves are parallel and TC exceeds TR&#10;D)TR curve and TC curves are parallel and TR exceeds TC

Accepted Answer

The answer of Total profits are maximized where&#10;A)TR equals TC&#10;B)TR...

Question 23

The equality between MC and MR is&#10;A)A necessary condition for equilibrium of the firm under perfect condition&#10;B)A sufficient condition for equilibrium of the firm under perfect competition&#10;C)A necessary but not sufficient condition for equilibrium of the firm under perfect condition&#10;D)A necessary and sufficient condition for equilibrium of the firm under perfect condition

Accepted Answer

The answer of The equality between MC and MR is&#10;A)A...

Question 24

In the short-run, a competitive firm can earn&#10;A)Normal profit&#10;B)Super normal profit&#10;C)Loss&#10;D)Either A or B or C depending

Accepted Answer

The answer of In the short-run, a competitive firm can...

Question 25

If price is equal to average cost, in the short-run, the competitive firm can earn&#10;A)Only normal profit&#10;B)Super normal profit&#10;C)Loss&#10;D)All of the above

Accepted Answer

The answer of If price is equal to average cost,...

Deck 12: Economics and Market Structures