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Multiple Choice Question & Answer

YB WEB DESK. Dated: 8/8/2022 12:19:22 PM

Multiple Choice Questions (MCQ) on Economics 1­ The transmission mechanisms of the monetary policy specifies the channel through which (A) Interest rate affects national income (B) Investment affects economic activity (C) Money supply affects economic activity (D) Money supply affects interest rate 2­ Which of the following would NOT lead to a decrease in demand for residential house property: (A) Builders increasing the sale price due to rising cement prices (B) Withdrawal of tax incentives/exemptions on home loan interest and capital payments (C) Rising home loan rates (D) Consumer income falling 3­ Tie­in­sales (A) Increases consumer surplus (B) Reduce consumer choices (C) Best represents distribution strategy of companies (D) Increases consumer choices 4­ Under perfect competition: (A) Firm alone has infinitely elastic Supply Curves (B) Firm alone has infinitely elastic Demand Curves (C) Industry alone has infinitely elastic Demand Curve (D) Industry and Firm have infinitely elastic Demand Curves 5­ When a perfectly competitive industry is in long term equilibrium (A) Consumers will be obtaining the product at a price equal to the marginal costs of producing it (B) All firms in the industry will be operating at their lowest possible costs (C) No firms will be earning profits, only a normal return on their investments (D) All of the above 6­ In the short run, if the firm is experiencing constant returns to variable factor, then : (A) Average Variable Costs and Total Cost are falling (B) Marginal Costs and Average Cost are constant (C) Marginal Costs and Average Variable Cost are constant (D) Marginal Cost equals Average Cost 7­ The accelerator effect refers to the effects of (A) changes in economic activity from investment (B) wages on inflation (i.e. cost­push inflation) (C) interest rate on investment (D) the money supply on inflation 8­ Which of the following is not a case of equilibrium unemployment? (A) Unemployment due to introduction of labor­saving technology (B) Unemployment resulting from inflexible wages (C) Unemployment caused by seasonal fluctuation in demand for labor (D) Unemployment caused by change in the structure of the industry because of change in demand for a product 9­ The act of simultaneously buying a currency in one market and selling in another market is called (A) Spotting (B) Arbitrage (C) Speculation (D) Forwarding 10­ Perfectly Contestable Markets means that : (A) Lack of Collusive Oligopoly (B) Lack of Monopoly (C) Free and Cost less entry and exit (D) There are significant entry and exit costs ANSWERS: 1­(C), 2­(A), 3­(B), 4­(B), 5­(D), 6­(C), 7­(A), 8­(B), 9­(B), 10­(C)