FINAL TERM EXAMINATION
Sprin 2010
ECO401- Economics (Session - 4)
Time: 90 min
Marks: 69
Question No: 1 ( Marks: 1 ) - Please choose one
If pen and ink are complements, then an increase in the price of pen will cause: ► An increase in the price of ink.
► Less ink to be demanded at each price.
► A decrease in the demand for pen.
► A rihtward shift in the demand curve for ink.
Question No: 2 ( Marks: 1 ) - Please choose one
A demand curve is price inelastic when: ► Chanes in demand are proportionately smaller than chanes in price.
► Chanes in demand are proportionately reater than chanes in price.
► Chanes in demand are equal to chanes in price.
► None of the iven options.
Question No: 3 ( Marks: 1 ) - Please choose one
A demand curve is price elastic when: ► Chanes in demand are proportionately reater than chanes in price.
► Chanes in demand are equal to chanes in price.
► None of the iven options.
► Chanes in demand are proportionately smaller than chanes in price.
Question No: 4 ( Marks: 1 ) - Please choose one
A production function: ► Relates inputs with output.
► enerates a curve that is upward slopin.
► Shows diminishin marinal product of an input, since it ets flatter as output rises.
► All of the iven options.
Question No: 5 ( Marks: 1 ) - Please choose one
The market structure in which there is interdependence amon firms is: ► Monopolistic competition.
► Oliopoly.
► Perfect competition.
► Monopoly.
Question No: 6 ( Marks: 1 ) - Please choose one
Insurance companies operate under the principle of: ► Law of lare numbers.
► Law of small numbers.
► Law of zero numbers.
► All of the iven options.
Question No: 7 ( Marks: 1 ) - Please choose one
Who may start a price war in order to et a larer share of the market? ► Perfect competitor.
► Oliopolist.
► Monopolist.
► Economist.
Question No: 8 ( Marks: 1 ) - Please choose one
The lon run areate supply curve will shift to the riht if: ► The price level increases.
► Factors of production (such as labor and capital) increase.
► Expenditures (such as consumption and net exports) increase.
► The prices of inputs used to produce oods and services (such as waes and the price of oil) decrease.
Question No: 9 ( Marks: 1 ) - Please choose one
How many methods are there to measure ross Domestic Product? ► Three.
► Four.
► Five.
► Six.
Question No: 10 ( Marks: 1 ) - Please choose one
Suppose the overnment increases spendin. Which of the followin would be part of the crowdin out effect? ► Interest rate rises and investment falls.
► Interest rate rises and velocity of circulation also rises.
► Hiher interest rates encourae the central bank to increase the money supply.
► Interest rate falls and exports rise.
Question No: 11 ( Marks: 1 ) - Please choose one
ross National Product (NP) is: ► Net National Product (NNP) plus depreciation.
► National income discounted by the DP deflator.
► Income from forein investments.
► ross Domestic Product (DP) minus depreciation.
Question No: 12 ( Marks: 1 ) - Please choose one
Real ross National Product (NP) is best defined as: ► The pound value of all final oods and services produced in the economy durin a particular time period and measured in current prices.
► The pound value of all oods produced for final consumption by households in a particular year and measured in constant prices.
► The current pound value of all new and used oods produced and sold in the economy durin a particular time period.
► The market value of all final oods and services produced by the economy durin a iven time period, with prices held constant relative to some base period.
Question No: 13 ( Marks: 1 ) - Please choose one
In the complete Keynesian cross model, the areate expenditure line is specified as: ► AE = C + I.
► AE = C + I + X.
► AE = C + I + .
► AE = C + I + + (X - M).
Question No: 14 ( Marks: 1 ) - Please choose one
Under monopoly, when the demand curve is downward slopin, marinal revenue is: ► Equal to price.
► Equal to averae cost.
► Less than price.
► More than price.
Question No: 15 ( Marks: 1 ) - Please choose one
All of the followin conditions lead to the successful operation of a cartel EXCEPT: ► Market demand for the ood is relatively inelastic.
► The cartel supplies all of the world's output of the ood.
► Cartel members have substantial cost advantaes over non-member producers.
► The supply of non-cartel members is very price elastic.
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the followin best describes the ''Capital widenin''?
► More capital per unit of labour.
► More capital and more labour but with the same amount of capital per unit of labour.
► Increasin the usae of existin capital.
► Importin capital from the developed world.
Question No: 17 ( Marks: 1 ) - Please choose one
Which of the followin statements best describes the difference between endoenous rowth theory and the Solow rowth theory? ► Endoenous rowth theory is a monetary theory whereas the Solow theory is a real theory.
► Endoenous rowth theory assumes diminishin returns to capital and the Solow theory assumes constant returns.
► In endoenous rowth theory, economies with the same technoloy and savin rate need not convere to the same steady state as in the Solow model.
► All of the iven options are correct.
Question No: 18 ( Marks: 1 ) - Please choose one
Which of the followin is NOT to be included in national product? ► Wheat produced and consumed by a farmer.
► House built by the owner himself.
► Old house sold by its owner A to person B.
► Machines made by firm A.
Question No: 19 ( Marks: 1 ) - Please choose one
The demand curve for chicken is downward-slopin. Suddenly the price of chicken rises from Rs.130 per k to Rs.140 per k. This will cause: ► The demand curve for chicken to shift to the left.
► The demand curve for chicken to shift to the riht.
► Quantity demanded of chicken to increase.
► Quantity demanded of chicken to decrease.
Question No: 20 ( Marks: 1 ) - Please choose one
The overnment supports research in basic science because: ► It is a public ood.
► External costs are created.
► Internal benefits are created.
► Free markets would do so otherwise.
Question No: 21 ( Marks: 1 ) - Please choose one
National defense is a ood example of: ► Public ood.
► Inferior ood.
► iffen ood.
► Private ood.
Question No: 22 ( Marks: 1 ) - Please choose one
Refer to the above fiure, when disposable personal income is $1,200 billion, consumption is:
► $600 billion.
► $800 billion.
► $1,200 billion.
► $2,000 billion.
