Economics MCQs For Lectureship CSS PMS And NTS Part V

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Economics MCQs For Lectureship CSS PMS And NTS Part V

1 How inflation can be controlled?

Through Monetary and Fiscal policies

2 What is inflation?

General price level rises continuously

3 What is the velocity of money in a country in normal circumstances?

Less than 10

4 What is it that banks discount it and advance loans

Bill of exchange

5 Why paper money is called fiat money?

It is issued with the authority of government

6 The demand for money according to Keynes is affected by income and

Rate of interest

7 What happens during inflation?

Lenders lose and borrowers gain

8 As the interest rate falls the quantity demanded of money


9 If the quantity of money rises by 100%, other things remaining the same, how much the value of money changes?

Decreases by 100%

10 What does value of money means?

General purchasing power of money

11 How value of money and supply of money are related?


12 For the economy, how prices are beneficial?

Rising slowly

13 How Inflation affects distribution of income?

Unequal distribution

14 The principle of profit and loss sharing is an element of

Islamic system

15 Which banks accept deposits and provide loans?


16 When banks prepared their Balance Sheet?


17 We all know that the balance Sheet of a bank has two parts. Can you name them?

Assets and Liabilities

18 What are demand deposits?


19 An asset is called liquid only it is in

Money or can be easily converted into money

20 A loan is not a bank’s



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21 How commercial banks can create money?

Making loans

22 What does demand deposit means?

Chequeable deposits

23 Demand deposits are money because they can be used to make


24 Which type of cheque is the more secure form of transfer of money?

Cross cheque

25 Discount rate is always less than

Market rate of interest

26 What is the most important source of income for commercial banks?

Interest charged on loans

27 What the rate charged by a central bank on loans is called?

Discount rate

28 Where short term loans can be obtained?

Money market

29 Where long term loans can be obtained?

Capital market

30 What are the functions of commercial banks?

Accept deposits, create deposits money and provide loans

31 How bond prices and bond yields are related?


32 The most widely used tool of monetary policy is

Open market operations

33 How a State Bank decreases money supply in the country?

Sells govt securities

34 What monetary policy changes?

Total money supply

35 Discount rate is the Central bank’s rate of lending to

Commercial banks

36 Who controlled credit money?

Central bank

37 Reducing interest rate is practiced to increase


38 In order to reduce consumer borrowing what is raised?

Interest rate

39 Treasury bill is used for what?

Getting short term loans

40  Banking system in most countries is controlled by the

Central Bank

41 What are open market operations?

Buying and selling government securities

42 Which objective Monetary policy has?

Decreasing the inflation rate

43 What the legal tender includes?

Currency notes and coins

44 What the State Bank policy of regulating interest rate is called?

Monetary policy

45 Why are taxes levied?

Provide general benefits for the people

46 Taxes on commodities is which type of taxation?


47 Governments all over the world prepare its budget


48 Income tax is which kind of taxation?


49 What is the most important source of income for a government?


50 What is called government taxing and spending policy?

Fiscal policy


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51 What is another name of Government Finance?

Public finance

52 What is a direct tax?

Tax paid by a person on whom it is levied

53 Which type of tax better conforms to the principles of equality?

Progressive tax

54 What is a net tax?

Total taxes minus government transfer payments

55 In which type of tax a tax payer can shift the burden of tax to someone else?

Indirect tax

56 How equitable distribution of income can be brought to a country?


57 Which tax is easy and convenient to pay?

Direct tax

58 what is the main source of revenue for the local government bodies?

Property tax

59 Who presented the Theory of comparative advantage?


60 When trade between two countries is useful?

Cost ratio of goods are different

61 On whose views the Modern theory of international trade is based?

Heckcsher and Ohlin

62 What is the effect of a tariff?

Reduces the volume of trade

63 What does dumping means?

Sale of goods abroad at a low price, below their cost and price in home market

64 The two countries can gain more from foreign trade if cost ratios and

Price ratios are different

65 What does term of trade of a country shows?

Ratio of prices of exports and imports

66 In a free trade world in which no trade restrictions exist, where international trade will lead us to?

Increased efficiency

67 What does government policy about exports and imports is called?

Commercial policy

68 How the trade between two countries can be encouraged?

Reduced tariff

69 Terms of trade between two countries refers to the ratio of

Export prices to import prices

70 What does protection policy means in foreign trade?

Restrictions on imports

71 The comparative advantage theory explaining the trade between

The two countries

72 The theory explaining the cost of trade between the two countries is also called

Comparative cost theory

73 The Policy of protection in trade protects

Local producers

74 The final balance of payment of a country is always


75 Balance of payment of a country has how many parts?

Three parts

76 Exchange rate for currencies is determined by supply and demand in

Flexible system

77 Which institution helps countries to meet deficit in balance of payments?


78 What does the balance of payment of a country means?

The annual account of foreign trade

79 What advantages does flexible exchange rate system has?

Automatic adjustment of balance of payments

80 Some of the advantages of Fixed exchange rate system has includes; increased government control over foreign trade and discourage unnecessary predictions about

Future trade deals

81 Export of goods is called

Trade in visible goods

82 The Export of services is also called

Trade in non-visible goods

83 If the balance of payment of a country is in deficit then current account will be in deficit and the country can

Borrow from abroad

84 What does the balance of payments account of a country includes?

Official transfer of foreign exchange and loans and aid

85 How foreign exchange reserves can be increased?

Exports increases and imports remain the same

86 Why IMF gives loans?

Fill gap in balance of payments

87 Who is called the Father of political economy?

Adam Smith

88 Economics was described as a science of material welfare by


89 All Economics laws are


90 Economic laws are also


91 Economics is which type of science?


92 Why Economic problems arises?


93 Economics is both a social and a

Normative science

94 What does Ceteris Paribus means?

Other things remaining the same

95 In Economics what is the role of assumptions?

Enables economists to simplify reality

96 What does Normative Economics involve?

Opinions and interpretations

97 Basic economic problem is


98 What are the three basic economic problems?

What, how and for whom

99 What does Economic law shows?

Economic behavior of people

100 Who was Adam Smith?

Classical economist



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