Basic of Economics MCQs

1.Which of the following best describes deflation?

A budget with a deficitLowering of tax ratesRise in government spendingThe opposite of inflation

2.Under what condition can two nations benefit from engaging in international trade?

When their production cost ratios differWhen their tariff levels varyWhen their price ratios are not the sameBoth differing cost ratios and price ratiosNone of the above

3.Which of the following represents a legitimate form of currency?

4.Which political ideology is best summarized by the phrase, "From each according to his ability, to each according to his needs"?

5.Which type of currency experiences a decline in its exchange rate due to a continuous balance of payments deficit?

6.What is the standard abbreviation used to denote barrels when measuring oil?

BrlBelBblObl

7.What does the term 'commercial policy' refer to?

Regulations related to marketplacesStrategies concerning the circulation of moneyGuidelines governing the import and export of goodsMeasures for regulating product prices

8.Which German city is recognized for hosting the world's very first automobile factory?

9.What components are included in a country's balance of payments?

10.Which one of the following activities is not typically performed by a commercial bank?

Receiving deposits from the publicProviding loans and credit facilitiesPerforming agency-related servicesActing as the government's banker

11.What is the name of the bank in Pakistan that provides loans specifically to very small businesses?

12.What is the primary purpose of a Treasury bill?

Obtaining short-term financingSecuring long-term borrowingTreasury bills are not considered credit instrumentsA government-issued tax certificate

13.How does the State Bank reduce the amount of money circulating in the economy?

Purchases government bonds from the open marketSells government bonds to the publicDecreases the discount rateBoth B and C

14.What is the direct impact on the economy when a commercial bank issues new credit?

An increase in currency exchange valuesA rise in borrowing costsAn expansion of the money supplyGrowth in the actual national income

15.At what level of interest rates does a Liquidity Trap typically occur?

16.Which factors influence a bank's ability to generate credit?

The mandatory cash reserve ratioThe quantity of cash on handThe total number of bank branchesBoth the mandatory cash reserve ratio and available cashNone of the above

17.When does Pakistan's fiscal year commence?

September 1stJanuary 1stApril 1stJuly 1st

18.What impact does a tariff have on the amount of trade?

It boosts the quantity of tradeIt decreases the quantity of tradeIt does not influence the quantity of tradeBoth A and C are correct

19.What does the velocity of money circulation refer to?

How often a single unit of currency is exchanged each dayThe frequency a unit of money is transferred every monthThe number of times a unit of currency is used in transactions over a yearThe rate at which the value of money fluctuates

20.On what basis does the Government of Pakistan issue its currency?

The amount of gold reserves held by the countryThe quantity of foreign currency, such as dollars, available domesticallyThe public's requirement and demand for money within the countryThe total revenue collected through taxesThe country's overall export earnings