ECO401 Quiz 3 by VU Sparky

Q1. Which of the following is NOT a reason why the aggregate demand curve slopes downward?

1. The exchange-rate effect
2. The interest-rate effect
3. The wealth effect
4. The classical dichotomy/monetary neutrality

Q2. Which of the following is an example of a public good?

1. Private healthcare
2. Cable television subscription
3. Fast food restaurant
4. National defense

Q3. Suppose government of Pakistan wishes to achieve a fall in unemployment, which of the following policies should it adopt?

1. Raise Value Added Tax (VAT).
2. Reduce the real value of income tax free allowances.
3. Start public job training programs.
4. Reduce government spending on capital projects.

Q4. The concept of "Say's Law" in classical economics suggests:

1. That supply creates its own demand.
2. That saving is more important than spending.
3. That government intervention is necessary for economic stability.
4. That demand creates its own supply.

Q5. Productive efficiency is achieved when firms produce at the:

1. Highest point of marginal cost curve
2. Lowest point of average cost curve
3. Lowest point of marginal cost curve
4. Highest point of average cost curve

Q6. If Competitive markets do not achieve equitable outcomes, then it is called:

1. Non-rational consumers.
2. Market failure.
3. Imperfect market structure.
4. Limit pricing.

Q7. In Keynesian economics, a deflationary gap occurs when aggregate expenditures are:

1. Greater than aggregate production.
2. Equal to aggregate production.
3. Undetermined.
4. Less than aggregate production.

Q8. Which efficiency is concerned with producing goods in the most cost-efficient manner?

1. Technical efficiency
2. Productive efficiency
3. Allocative efficiency
4. Economic efficiency

Q9. In monopolist market, a new entrant firm should produce where:

1. Marginal Cost = Average Revenue.
2. Marginal Cost = Marginal Revenue.
3. Marginal Cost > Marginal Revenue.
4. Marginal Cost < Marginal Revenue.

Q10. There are commonly _________methods of measuring GDP.

1. Two
2. Five
3. Three
4. Four

Q1. ------------- is an accounting record of a country’s transactions with rest of the world.

1. Balance of payment
2. Balance of trade
3. Rate of inflation
4. Trade liberalization

Q2. The labour force is made up of:

1. The number of people employed plus the number of people unemployed.
2. The number of people employed minus the number of people unemployed.
3. Just the number of people employed.
4. The whole population.

Q3. What measures the rate of increase of average wage in the economy?

1. Consumer Inflation Index
2. Wage inflation
3. Wage deflation
4. Producer Inflation Index

Q4. A growth rate for lower income countries (LIC’s) is considered healthy if it is:

1. Below 2%
2. Above 8%
3. Between 5% to 7%
4. Exactly 3%