ECO401 Solved Final Term Past Papers 2021

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ECO401 Final Term Paper 2021

Question No 1:

Which of the following will result if there is a increase in aggregate demand?

• Inflation Correct
• Deflation
• Increase in unemployment
• Decrease in consumer price index

Question No 2:

What will happen if exchange rate decreases from $1=Rs.84 to $1=Rs.70?

• It will decease exports of Pakistan Correct
• It will decrease imports of Pakistan
• Its imports and exports will remain unchanged
• It will increase imports and exports of Pakistan

Question No 3:

Shape of long run average cost curve is downward slopping when firm experiences:

• Economics of scale Correct
• Diseconomies of scale
• External diseconomies of scale
• Returns to scale

Question No 4:

For price, making firm demand curve is ______

• Downward slopping
• Horizontal line Correct
• Vertical line
• Upward slopping

Question No 5:

Which of the followings best describes the third degree price discrimination?

• Charging different prices for different blocks of the same good or service
• Charging different prices of a product in different markets
• Charging minimum price that a customer willing to pay
• None of the given option is true Correct

Question No 6:

Which of the following is the basic difference between oligopoly and monopolistic competition?

• Products are differentiated in oligopoly
• There are no barriers to entry in oligopoly
• An oligopoly includes downward slopping demand curves facing the firm Correct

Question No 7:

Consumption spending, investment, expenditures government expenditures and net exports are the components of:

• Household income Correct
• Aggregate supply
• Aggregate demand
• Government revenue

Question No 8:

Which of the following best describes the total market value of all final goods and services produced within the boundary of a country in a year?

• Gross domestic product Correct
• Net national product
• Net national income
• Disposable personal income

Question No 9:

All of the following are transfer payments except?

• Unemployment compensation
• Pension to retired employees
• Social security contributions Correct
• Payment to a domestic servant

Question No 10:

Which of the following formulas is used to calculate gross national product?

• GNP = GDP – Net income from abroad
• GNP = GDP + Net income from abroad Correct
• GNP = NNP – Net income from abroad
• GNP = NNP + Net income from abroad

Question No 11:

Which of the following factors would shift the demand for dollar curves is rightward?

• Higher demand for US imports
• Lower demand for US imports Correct
• An increase in foreign investment from US
• An increased demand for Pakistan exports to US

Question No 12:

The decrease in the price of one country’s currency in terms of other currencies due to the market forces of demand and supply is known as:

• Revaluation
• Devaluation Correct
• Appreciation
• Depreciation

Question No 13:

The unemployment rate is equal to:

• (Number of employed / Labor force) x 100 Correct
• (Number of unemployed / Number of employed) x 100
• (Number of unemployed / Labor force) x 100
• (Number of employed + Number of unemployed / Number of employed) x 100

Question No 14:

When agents base their decisions on their expectations about inflation it is known as:

• Quantity theory of money
• Money illusion Correct
• Demand-pull inflation
• Cost-push inflation

Question No 15:

Which of the following best illustrate the potential growth?

• The growth of the fastest world in the economy
• The fastest growth an economy have ever achieved Correct
• The present rate of growth of an economy
• The rate of growth that could be achieved if resources were fully employed

Question No 16:

Price discrimination, which includes a bargaining aspect, where the consumer attempts to negotiate a lower price, is known as:

• First-degree price discrimination
• Second-degree price discrimination
• Third degree price discrimination
• Monopolistic Competition

Question No 17:

Which of the following options is true for marginal revenue in case of perfect completion?

• MR=AR=P Correct
• MR=AR>P
• MR<AR<P
• MR=MC>P

Question No 18:

Which of the following is an assumption of Classical Economics?

• Investment and saving are not equal in equilibrium
• Self-correction takes a long time
• Demand creates its own supply
• Prices and wages are flexible Correct

Question No 19:

Following table shows the data of output (Q), total revenue (TR) and total cost (TC). What will be the total profit of the firm at third output level?

Q Units	TR (Rupees)	TC (Rupees)
1	3000	2000

• Rs. 1000 Correct
• Rs. 3000
• Rs. 4000
• Rs. 5000

Question No 20:

The similarity between perfect competition and oligopoly is,

• Differentiated products
• Competition Not sure
• Barriers to Entry
• No barriers to Entry

Question No 21:

The situation when the general level of price falls is called:

• Inflation
• Deflation Correct
• Corruption
• Production

Question No 22:

Which of the following causes perfectly competitive firms to get normal profits in the long run?

• Small number of firms
• Unrestricted entry and exit of firms in the market Correct
• Availability of perfect information
• Homogeneous products produced by all time

Question No 23:

According to the Keynesian economists, macroeconomics, equilibrium will occur in an economy if:

• Aggregate demand = Aggregate supply
• Aggregate expenditures = Aggregate output
• Withdrawals = Injections
• All of the given conditions hold

Question No 24:

Which of the following is true for marginal propensity to save?

• Marginal propensity to save = 1- Marginal propensity to consume Correct
• Marginal propensity to save = 1+ Marginal propensity to consume
• Marginal propensity to save = 1/ Marginal propensity to consume
• Marginal propensity to save = 1x Marginal propensity to consume

Question No 25:

Suppose marginal propensity to consume (b) is 0.8 and government expenditures increase by Rs.1000. The multiple e in this case is _______

• 1/ (1 + 0.8) Correct
• 1/ (1 - 0.8)
• 1 – 0.8
• 1 + 0.8

Question No 26:

The investment demand curve explain relationship between quantity of investment demand and:

• Savings
• Interest Rate Correct
• Consumption of final goods
• Technology

Question No 27:

What will happen to aggregate demand curve when level of autonomous investment increases?

• Aggregate demand curve will shift upward Correct
• Aggregate demand curve will not change
• Aggregate demand curve will shift downward
• Aggregate demand will become horizontal

Question No 28:

Suppose increase in government spending by Rs. 100,000 causes Rs. 15, 00,000 increase in output. The gives statement explains:

• Accelerator effect Correct
• Price effect
• Substitution effect
• Multiplier effect

Question No 29:

The discount rate is the rate at which the ______ incomes are discounted.

• Past
• Present Correct
• Future
• Current

Question No 30:

The data that is adjusted for changes in prices is called:

• Real data Correct
• Nominal data
• Time series data
• Cross sectional data

Question No 31:

Peoples who are laid off from the jobs are searching for better jobs. These peoples are:

• Structurally unemployed
• Frictionally unemployed
• Underemployed
• Seasonally unemployed

Question No 32:

Differentiate between the term Flow and stock?

Answer:

A variable that is defined for a period. A flow can only be measured over a period. For Example, GDP is the flow of production during a given year. Income is another flow measures to the study of economics.

A variable that is defined for an instant in time. A stock can only be measured at a specific point in time. For example, money is the stock of production that exists right now. Other important stock measures are population, employment, capital and business inventories.

Question No 33:

Define devaluation? Why government usually adopt the policy of devaluation?

Answer:

This is the act of reducing the prices of one nation's currency in terms of other currencies. This is usually done by a Government to lower the price of the country's exports and raise the price of foreign imports, which ultimately results in greater domestic production. A Government devalues its currency by actively selling it and buying foreign currencies through the foreign exchange market.

Question No 34:

From the information given in the following table, calculate the injection at each level of output?

Output (Y)	Gross Investment (i)	Gross Exports (X)	Govt. Expenditures (G)	Injections
650	104	97	116	?
700	119	97	116	?
750	130	97	116	?

Question No 35:

Following table shows the data of output, prices, total revenue and total cost. Calculate total profit from this information.

Output (Q)	Price (P)	Total Revenue	Total Cost	Profit
10	8	80	50	?
20	7	140	120	?
30	6	180	180`	?
40	4	160	160	?
50	3	150	170	?

Answer:

Output (Q)	Price (P)	Total Revenue	Total Cost	Profit
10	8	80	50	30
20	7	140	120	20
30	6	180	180`	0
40	4	160	160	-30
50	3	150	170	-20

Question No 36:

Differentiate between demand-pull inflation and cost pull-inflation?

Answer:

Cost-Push inflations is the decrease in the aggregate supply of goods and services stemming from an increase in the cost of production Demand-pull inflation can be caused by an expanding economy, increased government spending, or overseas growth.

Question No 37:

Under which of the following statement falls under the category of first degree, second degree and third degree price discrimination.

Statements	Price discrimination
An electric power company uses block pricing for electricity sales	Visit our Website
Different prices for different blocks of the same good o service	raiseforsuccess.blogspot.com
Tennis pro charges Rs. 15 per hour for tennis lessons for children and Rs. 30 pe hour for tennis lessons for adults.
A nation sells a commodity abroad at lower price than in its home market.
Doctor charges higher fee from rich people than poor people.

 Answer:

Statements	Price discrimination
An electric power company uses block pricing for electricity sales	First Degree (Raise For Success)
Different prices for different blocks of the same good o service	Second Degree
Tennis pro charges Rs. 15 per hour for tennis lessons for children and Rs. 30 pe hour for tennis lessons for adults.	Third Degree (Raise For Success) For Final Term Papers help call us
A nation sells a commodity abroad at lower price than in its home market.	Second Degree
Doctor charges higher fee from rich people than poor people.	Third Degree

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