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?
13 How Inflation affects distribution of income?
14 The principle of profit and loss sharing is an element of
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
21 How commercial banks can create money?
22 What does demand deposit means?
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?
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?
28 Where short term loans can be obtained?
29 Where long term loans can be obtained?
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
36 Who controlled credit money?
37 Reducing interest rate is practiced to increase
38 In order to reduce consumer borrowing what is raised?
39 Treasury bill is used for what?
Getting short term loans
40 Banking system in most countries is controlled by the
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?
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?
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51 What is another name of Government 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?
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?
56 How equitable distribution of income can be brought to a country?
57 Which tax is easy and convenient to pay?
58 what is the main source of revenue for the local government bodies?
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?
67 What does government policy about exports and imports is called?
68 How the trade between two countries can be encouraged?
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
74 The final balance of payment of a country is always
75 Balance of payment of a country has how many parts?
76 Exchange rate for currencies is determined by supply and demand in
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?
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
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?