PAPER 2008
Part I (MCQs)
Question No.1 Select the best option /answer and fill in the appropriate box on the answer sheet.

1. in the theory of the firm, profit maximization is always synonymous with:
(a) profitability
(b) economic profit making
(c) maximization of the sales revenue
(d) both (a) and (c)
(e) none of these

2. the law of demand is valid when price elasticity of demand is:
(a) inelastic
(b) perfectly elastic
(c) unitary elastic
(d) both (a) and (c)
(e) none of these

3. at the breakeven point a producer covering entire opportunity cost of production happens to produce under a market structure characterized as:
(a) perfectly competitive
(b) monopoly
(c) oligopoly
(d) monopolistic competition
(e) all of these

4. in the short run, the decreasing returns to scale are caused by the existence of:
(a) internal diseconomies
(b) external economies
(c) technical inefficiency
(d) allocative inefficiency
(e) both (b) and (d)

5. the left hand side variable of the saving function is always:
(a) endogenous
(b) exogenous
(c) insignificant
(d) significant
(e) both (b) and (d)

6. the macro management model of the classical function economist assigns the supreme role to the:
(a) fiscal policy
(b) monetary policy
(c) commercial policy
(d) market
(e) both (b) and (c)

7. while determining the national income equilibrium of an open economy, exports are considered to be:
(a) exogenous
(b) endogenous
(c) autonomous
(d) both (a) and (c)
(e) both (b) and (c)

8. counterpart of the intercept of consumption function is the intercept of:
(a) import function
(b) exports
(c) saving function
(d) X-M
(e) None of these

9. price stability in an economy is indicative of:
(a) presence of sound money
(b) rising output
(c) rising employment
(d) both (a) and (c)
(e) none of these

10. the Central Bank of a country plays a significant role in her macroeconomics performance by regulating the:
(a) money supply
(b) supply credit
(c) interest rate
(d) money market
(e) all of these

11. the relationship depicted by the Phillips curve is not valid if the change in general price level is :
(a) positively related with output
(b) negatively related with output
(c) positively related with employment
(d) negatively related with employment
(e) all of these

12. with each successive stage of its operation, the marginal cost of a firm in the banking sector:
(a) increase
(b) decrease
(c) remains constant
(d) remains unpredictable
(e) none of these

13. the theory of comparative advantage from international trade considers the difference between the trading countries’ factor prices arising from the different in:
(a) factor productivity
(b) factor intensity
(c) factor availability
(d) both (a) and (c)
(e) all of these

14. Marshell-lerner condition for stability of a foreign exchange market enquires that the sum total of the elasticity of demand for exports and demand for imports is:
(a) cross elasticity of demand
(b) income elasticity of demand
(c) price elasticity of demand
(d) both (b) and (c)
(e) none of these

15. expenditure switching policies for adjusting the balance of disequilibrium include:
(a) commercial policy
(b) fiscal policy
(c) monetary policy
(d) both (b) and (c)
(e) all of these

16. deadweight loss of a trade tariff is higher if the demand and supply functions of importable are:
(a) inelastic
(b) elastic
(c) completely inelastic
(d) both (a) and (c)
(e) none of these

17. An increasingly higher marginal income tax is:
(a) progressive
(b) regressive
(c) proportional
(d) both (b) and (c)
(e) none of these

18.the reallocative role of public economies indicates the existence of:
(a) Production externalities
(b) Inefficiency in resource utilization
(c) Consumption externalities
(d) Both (a) and (c)
(e) None of these

19.a price control interferes with the market by:
(a) causing market imperfection
(b) disallowing the market to work
(c) introducing price floor or ceiling
(d) both (b) and (c)
(e) all of these

20. in the presence of elastic supply and demand conditions, sales tax on a product interferes with the market by causing:
(a) welfare loss
(b) efficiency loss
(c) deadweight loss
(d) both (a) and (b)
(e) all of these