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Economics Mcqs 4423 MCQs [All-Courses]

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Economics MCQs cover fundamental concepts of microeconomics and macroeconomics, including demand and supply, inflation, national income, and economic policies.
This section is designed to strengthen analytical skills and conceptual understanding for competitive examinations.
Highly useful for PPSC, FPSC, NTS, OTS, KPPSC, and other testing services preparation.

All Topics  4423

When firms enter a monopolistically competitive market and the business-stealing externality is larger than the product-variety externality then ?
A there are too many firms in the market and market efficiency could be increased if firms exited the market
B the number of firms in the market is optimal and the market is efficient
C There are too few firms in the market and market efficiency could be be increased with additional entry
D The only way to improve efficiency in this market is for the government to regulate it like a natural monopoly.
Correct Answer: there are too many firms in the market and market efficiency could be increased if firms exited the market
Which of the following is true with regard to monopolistically competitive firms scale of production and pricing decisions Monopolistically competitive firms produce ?
A at the efficient scale and charge a price equal to marginal cost
B at the efficient scale and charge a price above marginal cost
C With excess capacity and charge a price above marginal cost
D With excess capacity and charge a price equal to marginal cost
Correct Answer: With excess capacity and charge a price above marginal cost
Which of the following is true regarding the production and pricing decisions of monopolistically competitive firms? Monopolistically competitive firms choose the quantity at which marginal cost equals ?
A marginal revenue and then use the demand curve to determine the price consistent with this quantity
B average total cost and then use the supply curve to determine the price consistent with this quantity
C marginal revenue and then use the supply curve to determine the price consistent with this quantity
D average total cost and then use the demand curve to determine the price consistent with this quantity
Correct Answer: marginal revenue and then use the demand curve to determine the price consistent with this quantity
Which of the following is true regarding the similarities and differences in monopolistic competition and monopoly ?
A the monopolist faces a downward-sloping demand curve while the monopolistic competitor faces an elastic demand curve
B the monopolist charges a price above marginal cost while the monopolistic competitor charges a price equal to marginal cost
C The monopolist makes economic profits in the long run while the monopolistic competitor makes zero economic profits in the long run
D Both the monopolist and the monopolistic competitor operate at the efficient scale
Correct Answer: The monopolist makes economic profits in the long run while the monopolistic competitor makes zero economic profits in the long run
Which of the following is not a characteristic of a monopolistically competitive market ?
A free entry and exit
B long run economic profits
C many sellers
D differentiated products
Correct Answer: long run economic profits
Which of the following is included in broad money, but not included in narrow money ?
A savings accounts
B Travelers checks
C Currency held outside banks
D Automatic-transfer savings accounts
Correct Answer: savings accounts
An item designated as money that is intrinsically worthless is ?
A precious metals
B commodity money
C fiat money
D barter items
Correct Answer: fiat money
Government Securities with terms of more than one year are called ?
A bills of exchanges
B government bonds
C Treasury bills
D Capital bills
Correct Answer: government bonds
The three main tools of monetary policy are ?
A fiat, commodity and deposit money
B Open-market operations reserve requirements and the refinancing rate
C The money supply, government purchases and taxation
D Government expenditures taxation and reserve requirements
Correct Answer: Open-market operations reserve requirements and the refinancing rate
Suppose the State Bank purchases a Rs 1,000 government bond from you. If you deposit the entire Rs 1,000 in you bank what is the total potential change in the money supply as a result of the State Bank’s action if the your bank’s reserve ratio is 20 percent ?
A Rs 4,000
B Rs 5,000
C Rs 1,000
D Rs 0
Correct Answer: Rs 5,000
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