FINAL TERM EXAMINATION
Spring 2010
ECO401- Economics (Session - 3)
Time: 90 min
Marks: 69
Question No: 26 ( Marks: 1 ) - Please choose one
Refer to the above figure, if the real GDP is $7,000 billion and the implicit price deflator is 1.16, what is the value of nominal GDP?
► $6,034 billion.
► $8,120 billion.
► $9,120 billion.
► Cannot be determined from the given information.
Question No: 27 ( Marks: 1 ) - Please choose one
Let L equal the size of the labor force, E the number of employed workers, and U the number of unemployed workers. The unemployment rate is equal to:
► (L + E)/L.
► U/L.
► 1 + (E/L).
► All of the given options.
Question No: 28 ( Marks: 1 ) - Please choose one
The natural rate of unemployment is likely to fall if:
► Unemployment benefits increase.
► Income tax increases.
► More training is available for the unemployed.
► Geographical immobility increases.
Question No: 29 ( Marks: 1 ) - Please choose one
Which of the following is NOT a determinant of net exports?
► Domestic and foreign incomes.
► Relative price levels.
► Domestic and foreign trade policies.
► Producers’ expectations about future prices.
Question No: 30 ( Marks: 1 ) - Please choose one
Which of the following can happen in a boom period?
► Unemployment is likely to fall.
► Prices are likely to fall.
► Demand is likely to fall.
► Imports are likely to grow.
Question No: 31 ( Marks: 1 ) - Please choose one
The taxes on alcohol, tobacco, and gasoline are categorized as:
► Sales tax.
► Excise tax.
► Corporate income tax.
► Personal income tax.
Question No: 32 ( Marks: 1 ) - Please choose one
The item which serves as a medium of exchange is known as:
► Gold.
► Capital.
► Silver.
► Money.
Question No: 33 ( Marks: 1 ) - Please choose one
A country has a comparative advantage:
► If it can produce a good at a higher opportunity cost than other nations.
► If it can produce a good at a lower opportunity cost than other nations.
► If it can produce a good by using less resources than other nations.
► If it can produce a good that lies outside its production possibilities curve.
Question No: 34 ( Marks: 1 ) - Please choose one
A tariff is defined as:
► A restriction on exports.
► A tax placed on an imported product.
► A limit on the amount of a good or service that can be exported.
► A limit on the amount of a good or service that can be imported.
Question No: 35 ( Marks: 1 ) - Please choose one
Countries that are not among the high income nations of the world are categorized as:
► Developed countries.
► Progressed countries.
► Developing countries.
► High income countries.
Question No: 36 ( Marks: 1 ) - Please choose one
Which of the following is (are) the characteristic(s) of high income countries as compared to low income countries?
I. Lower rates of population growth.
II. Greater income inequality.
III. A large proportion of the labor force in agriculture.
IV. Higher rates of investment.
► I only.
► I and II.
► II and IV.
► I and IV.
Question No: 37 ( Marks: 1 ) - Please choose one
In which of the following conditions, a welfare loss occurs in monopoly?
► Where the price is greater than the marginal cost.
► Where the price is greater than the marginal benefit.
► Where the price is greater than the average revenue.
► Where the price is greater than the marginal revenue.
Question No: 38 ( Marks: 1 ) - Please choose one
If average physical product (APP) is decreasing then which of the following must be true?
► Marginal physical product is more than the average physical product.
► Marginal physical product is less than the average physical product.
► Marginal physical product is decreasing.
► Marginal physical product is increasing.
Question No: 39 ( Marks: 1 ) - Please choose one
When different prices are charged to customers who purchase different quantities, this is an example of
► Second-degree price discrimination.
► First-degree price discrimination.
► Monopoly.
► Perfect competition.
Question No: 40 ( Marks: 1 ) - Please choose one
Which of the following may cause a decrease in national income?
► Increase imports.
► Decrease unemployment.
► Decreasing exports.
► None of the given options.
Question No: 41 ( Marks: 1 ) - Please choose one
The relationship between interest rate and consumption is:
► Positive.
► Negative.
► Zero.
► Indeterminate.
Question No: 42 ( Marks: 1 ) - Please choose one
The principle which states that a change in income causes a magnified change in investment is termed as the:
► None of the given.
► Paradox of thrift.
► Multiplier effect.
► Accelerator effect.
Question No: 43 ( Marks: 1 ) - Please choose one
Hysteresis refers to the permanent effects of a:
► Temporary change.
► Structural change.
► Cyclical change.
► Political change.
Question No: 44 ( Marks: 1 ) - Please choose one
Factor income from abroad like worker remittances, dividends and interest has positive impact on:
► Current account balance.
► Capital account balance.
► Trade balance.
► Unemployment.
Question No: 45 ( Marks: 1 ) - Please choose one
The growth rate of any country’s real GDP can be:
► Negative or positive.
► positive or zero.
► Negative or zero.
► Negative or positive or zero.
Question No: 46 ( Marks: 1 ) - Please choose one
Endogenous growth theory is also known as:
► Neo-classical growth theory.
► New growth theory.
► Classical growth model.
► Keynesian growth model.
Question No: 47 ( Marks: 1 ) - Please choose one
Which of the following is not the World Bank’s structural reform policy?
► FDI liberalization.
► Trade liberalization.
► Financial liberalization.
► Same monetary policy for all countries.
Question No: 48 ( Marks: 1 ) - Please choose one
The common characteristics of a developing country is:
► High growth rate.
► High literacy rate.
► Skilled labor.
► High unemployment rate.
Question No: 49 ( Marks: 3 )
At what point, the equilibrium occurs in the foreign exchange market?
Question No: 50 ( Marks: 3 )
What are the reasons that poor countries remained poor?
Question No: 51 ( Marks: 5 )
If the government increase it’s spending e.g. increases the wages of the government servant, how it will affect on consumption, production and hiring of new employees?
Question No: 52 ( Marks: 5 )
Explain the difference between appreciation and depreciation of currency.
Question No: 53 ( Marks: 5 )
Differentiate among M0, M1 and M2 components of money supply.
