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Economics Mcqs 4423 MCQs [All-Courses]

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.

According to the Phillips curve, in the short run, if policy makers choose an expansionary policy to lower the rate of unemployment ?

A The economy will experience an increase in inflation

B The economy will experience a decrease in inflation

C Inflation will be unaffected if price expectations are unchanging

D None of these answers

Review Detailed Answer

Correct Answer: The economy will experience an increase in inflation

Along a short-run Phillips curve, ?

A a higher rate of inflation is associated with a lower unemployment rate

B a higher rate of growth in output is associated with a lower unemployment rate

C a higher rate of inflation is associated with a higher unemployment rate

D a higher rate of growth in output is associated with a higher unemployment rate.

Review Detailed Answer

Correct Answer: a higher rate of inflation is associated with a lower unemployment rate

The original Phillips curve illustrates ?

A the trade-off between inflation and unemployment

B The trade-off between output and unemployment

C The positive relationship between output and unemployment

D The positive relationship between inflation and unemployment

Review Detailed Answer

Correct Answer: the trade-off between inflation and unemployment

If a country’s policy makers were to continuously use expansionary monetary policy in an attempt to hold unemployment below the natural rate the long-run result would be ?

A an increase in the level of output

B a decrease in the unemployment rate

C an increase in the rate of inflation

D All of these answers

Review Detailed Answer

Correct Answer: an increase in the rate of inflation

If the sacrifice ratio is five, a reduction in inflation from 7 percent to 3 percent would require ?

A a reduction in output of 20 percent

B a reduction in output of 5percent

C a reduction in output of 15 percent

D a reduction in output of 35 percent

Review Detailed Answer

Correct Answer: a reduction in output of 20 percent

Refer to Exhibit 6. Suppose the economy is operating at point (D) As people revise their price expectations ?

A The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 3 percent inflation

B The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 9 per cent inflation

C The short-run Phillips curve will shift in the direction of the short-run Phillips curve associated with an expectation of 6 percent inflation

D The long-run Phillips curve will shift to the left

Review Detailed Answer

Correct Answer: The long-run Phillips curve will shift to the left

Refer to Exhibit 6. Suppose the economy is Operating in long-run equilibrium at point E. In the long run a monetary contraction will move the economy in the direction of point ?

A F

B a

C H

D I

Review Detailed Answer

Correct Answer: H

Refer to Exhibit 6.If People in the economy expect inflation to be 6 percent but inflation turn out to be 3 percent the economy is operating at point ?

A H

B c

C d

D F

Review Detailed Answer

Correct Answer: F

The natural rate hypothesis argues that ?

A in the long run the unemployment rate returns to the natural rate, regardless of inflation

B Unemployment is always below the natural rate

C Unemployment is always above the natural rate

D Unemployment is always equal to the natural rate

Review Detailed Answer

Correct Answer: in the long run the unemployment rate returns to the natural rate, regardless of inflation

When actual inflation exceeds expected inflation ?

A Unemployment is equal to the natural rate of unemployment

B People will reduce their expectations of inflation in the future

C Unemployment is greater than the natural rate of unemployment

D Unemployment is less than the natural rate of unemployment

Review Detailed Answer

Correct Answer: Unemployment is less than the natural rate of unemployment

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Economics Mcqs 4423 MCQs [All-Courses]

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All Topics 4423

According to the Phillips curve, in the short run, if policy makers choose an expansionary policy to lower the rate of unemployment ?

Along a short-run Phillips curve, ?

The original Phillips curve illustrates ?

If a country’s policy makers were to continuously use expansionary monetary policy in an attempt to hold unemployment below the natural rate the long-run result would be ?

If the sacrifice ratio is five, a reduction in inflation from 7 percent to 3 percent would require ?

Refer to Exhibit 6. Suppose the economy is operating at point (D) As people revise their price expectations ?

Refer to Exhibit 6. Suppose the economy is Operating in long-run equilibrium at point E. In the long run a monetary contraction will move the economy in the direction of point ?

Refer to Exhibit 6.If People in the economy expect inflation to be 6 percent but inflation turn out to be 3 percent the economy is operating at point ?

The natural rate hypothesis argues that ?

When actual inflation exceeds expected inflation ?