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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

Which of the following is an example of moral hazard ?
A After Gull buys fire insurance, he begins to smoke cigarettes in bed.
B None of these answers demonstrate moral hazard
C Mahmood has been feeling poorly lately so he seeks health insurance
D All of these answers demonstrate moral hazard
Correct Answer: After Gull buys fire insurance, he begins to smoke cigarettes in bed.
If people are risk averse, then ?
A None of these answers are true
B All of these answers are true
C They dislike bad things more than the like comparable good things
D The utility they would lose from losing a Rs50 bet would exceed the utility they would gain from winning a Rs 50 bet
Correct Answer: All of these answers are true
An increase in the prevailing interest rate ?
A increases the present value of future returns from investment and increases investment
B decreases the present value of future return from investment and decreases investment
C decreases the present value of future returns from investment and increase investment
D increases the present value of future returns from investment and decreases investment
Correct Answer: decreases the present value of future return from investment and decreases investment
If a depositor puts Rs100 in a bank amount that earns 4 percent interest compounded annually, how much will be in the account after five years ?
A Rs400.00
B Rs 104.00
C Rs 121.67
D Rs 123.98
Correct Answer: Rs 121.67
It is difficult for an actively managed investment fund to outperform an index fund because ?
A stock markets tend to be inefficient
B all of these answers
C index funds are able to buy undervalued stocks
D actively managed funds trade more often and charge fees for their alleged expertise
Correct Answer: actively managed funds trade more often and charge fees for their alleged expertise
Share prices will follow a random walk if ?
A shares are overvalued
B people behave irrationally when choosing shares
C markets reflect all available information in a rational way
D shares are undervalued
Correct Answer: markets reflect all available information in a rational way
If the efficient markets hypothesis is true, then ?
A shares tend to be overvalued
B the stock market is informationally efficient so share prices should follow a random walk
C All of these answers
D fundamental analysis is a valuable tool for increasing one’s returns from investing in shares
Correct Answer: the stock market is informationally efficient so share prices should follow a random walk
Compared to a portfolio composed entirely of shares a portfolio that is 50 percent government bonds and 50 percent shares will have a ?
A lower return and a lower level or risk
B lower return and a higher level of risk
C higher return and a lower level or risk
D higher return and a higher level of risk
Correct Answer: lower return and a lower level or risk
Idiosyncratic risk is the ?
A uncertainty associated with the entire economy
B uncertainty associated with specific companies
C risk associated with adverse selection
D risk associated with moral hazard
Correct Answer: uncertainty associated with specific companies
Which of the following does not help reduce the risk that people face ?
A increasing the rate of return within their portfolio
B diversifying their portfolio
C All of these answers help reduce risk
D buying insurance
Correct Answer: increasing the rate of return within their portfolio
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