Econ

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A necessary condition for a mixed economy is that there are-Public & private sector A good has a price elasticity of supply of 0.8 which of the following best describes the effect of rise in demand for this good?1,2,3&4 A train company acknowledges that externalities may reduce the welfare of its customers when it provides- Smoking and nonsmoking carriages As the process of globalization increases, typical business will- Be more & more affected by changes in exchange rates All of the following are characteristics of a recession except which one?-Increased inflationary pressure All of the following are typical characteristics of oligopoly except one?-The ability to conduct independent decision making All of the following would lead to fall in the circular flow of national income except which one- A rise in the average propensity to consume All of the following are features of an economic union except which one-A fixed exchange rate relative to non union currencies As a result of a period of rapid economic growth an economy is likely to experience all of the following except which one- an improving overseas trade balance A rise in interest rates in an economy would lead to all of the following except which one?-An increase in business investments An economy is usually described as a mixed economy if production is?-Determined partly by the market mechanism and partly by the state A consumption function has a constant average propensity to consume (APC) of 0.7.Which of the following statement is falsethe economy will be in micro economic equilibrium An inferior good can be distinguished from a normal good because an inferior good has- Negative income elasticity of demand All of the following statements about small firms are correct except one-incorrect- Small firms are common in industries which display increasing result to scale A Surplus on the current account of the balance of payment can be financed by- Lending abroad on the capital account A countries currency depreciate (fall) on the foreign exchange market.-except one- Business could keep the foreign exchange price of their export constant and expand their profit margin A country will have a comparative advantage in manufacturing goods if- It can produce manufactured good at a lower opportunity cost than other countries A firm may suffer from X-inefficiency because of organization slack.-except one- The number of rival firm increases All of the following are sources of finance for business except which one?-Certificate of deposit A production possibility curve can be used to show all of the following except?-The difference combinations of two goods that a household can purchase with available income All of the following item would appear as a credit on the current account of country’s balance of payments accounts except which one?-Outflow of capital Assume the demand for cheese is price elastic…………………..effect of a rise in demand for cheese?-High price, more sold, rise in revenue of cheese makers All of the following would result from a shift from direct to indirect tax except which one?-A more progressive taxation system All of the following will tend to increase the number of firms in any one industry except which one?-High transport cost A rise in the gross national product of a country will raise average living standards only if-I exceeds the rate of growth of population All of the following are appropriate policies to deal with the problem of industries which cause pollution except which one?Subsidies to the producers According to purchasing power parity theory, if a country’s inflation rate is 5% higher than the inflation………-The country’s exchange rate will fall 5% to restore the term of trade All of the following are examples of externalities except which one?-Some consumers being able to afford goods because price have been driven up the demand from other consumers A country has a trade deficit. The demand for its imports and exports are both price elastic…………………..except one?- An improvement in the country’s term of trade An advantage of command economy is that:-Social cost and benefits can be taken into account An example of forward vertical integration is-A car manufacturer taking over an engine factory A profit-maximizing firm in imperfect competition must cut the products price is-Marginal revenue is greater than marginal cost A country is an oil exporter and the price for its oil is inelastic. Which of the following is correct about a substantial increase in oil price?- Improves the countries balance of payments in the current account A supply and demand diagram, other things remaining the same, an increase in production costs will normally shift-The supply curve to the left All of the following statements relate to increase in government spending which is not accompanied by an increase. Which statement is not correct?-An expansionary monetary policy is being pursued A private enterprise system of economic organization can be criticized on the ground that-State own industries………………(X)-1,3&4 A cut in interest rates will result in?-Faster economic growth A currency is being depreciated which of the following would occur?-There will be an increased competitiveness of export An International mobility of factors will create all of the following except which one?-Decrease in international specialization of production All of the following may be true about floating exchange rate systems except which one?-The balance of payment will adjust without impacting the local economy Competition in oligopolistic market is characterized by all of the following except one-Price instability Central banks fulfill all of the following functions except which?-Chief advisor to government on taxation policy Central government funding operations will-Convert short-term debt to long-term debt Country Y and country Z both impose tariffs on goods imported from each other………………..-Real income would grow at a slower rate in both countries compared to a situation…

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Cross-elasticity of demand for goods which are complementary is-Negative During recession many governments borrow to give them funds to increase government expenditure on job scheme…………………………boom phase- Open market operations Economic Rent is- Income above the level required to induce a given quality of a factor to be supplied Economies of scale can result from all the following except one-A factory employing two shifts of workers rather than one shift per day Every year a household allows its bank account to become overdrawn for 3 months to pay for its annual holiday…-A short term of synchronization between payment and receipt For a good to be considered scare in the economic sense, it is only necessary for it to- Command price For a business, diseconomies of scale occur when?-Difficulties in managing a large firm to rising long run average costs Faced with falling prices and profits, affirm decided to leave one industry and move………………..-correct- there can be no barriers to entry and exit separating two industires Financial intermediation is the process by which-Net savers and net borrowers are brought together Government provides public goods, such as street light, because- It would be an unprofitable activity for private business because of the free-rider problem Goods A and B are complementary goods because the cross elasticity of demand for A with respect to B is- (-0.5) Government should encourage economic growth because it always lead to-Increased income generated within the economy If a country were to join a currency union, its businesses would experience all of the following except one- Reduce price transparency If a firm wishes to maximize market share without incurring a loss, it should set its price where?-Average revenue equals average cost If a firm reduces the price of its good from $10 to $8 and,…………………..- ( -0.5) If the demand curve for good A is negatively sloped, a fall in the price of a substitute good B result- A leftward shift in the demand curve for good A If a country has an absolute advantage in the production of all goods then- Trade will take place and all the participating countries will gain from it If a firm increases employment of all its factors by 50% and as a result output increases by 60% it has experienced- Increasing return to scale Identify the source of funds most appropriate for a growing company to use which wishes to borrow funds long-term to………..- A / ordinary shares In fiscal policy, the term automatic stabilizer refers to any factor that-The causes aggregate demand to rise in recession and fall in booms In a fully employed economy, which one of the following would lead to demand pull inflation?-A reduction in the rate of income tax In a market economy, price act as all of the following except which one?-Signal to consumer about cost Identify in the following list the statement that does not describe a function of a financial intermediary?-Transfer payment In a system freely floating exchange rates the central bank and government will?-Have less ability to control the money supply than in fixed exchange rate If a government, on ground of economic efficiency, were levy tax on an industry because of the pollution……..-The difference between private and social cost of production In a customs union member countries-Trade freely with each other and accept a common external tariff for trade with the rest of the world If a firm operating in an oligopolistic market believes that its demand curve is kinked-It will tend to avoid price charges It is necessary to include a balancing item in the BOP to-Compensate for mistake made when recording current and capital flow In a market economy, price act as all of the following except which one?-Signals to consumers about costs Identify which of the following features does not distinguish redeemable debt apart from equity:-It will never be traded on an investment market In national income accounting the adjustment to add exports and deduct imports has which of the followings effects?-Convert gross domestic expenditure to gross domestic income Inflation is undesirable for all of the following reasons except which one?-Inflation shift wealth from debtors to creditors in an arbitrary fashion If a consumer find that their total………..-Negative In a situation of rapid economic growth which of the following can occur?-A deterioration in the balance of payments Monetarist economists believe all of the following except which one?-In the long run only fiscal policy is effective in reducing unemployment Other things being equal and assuming that the UK is net oil exporter and that the demand fir UK……………………..- Improve the UK’s balance of payment on current account On an aggregate demand and aggregate supply diagram, cost-push inflation is shown by- A leftward shift of the short-run aggregate supply curve One of the result of scarcity is that- Economic choice involve opportunity costs Other things remaining equal, which of the following is likely to increase as a result of the sale by Bank of England of large quantity of gilt-edged stock-The liquids reserves of banks Other things remaining equal which of the following would encourage a speculative capital inflow into the UK economy?-Foreign firm setting up plants in the economy Production of goods public interest if?-Social benefits greater than social cost Regularly o ces have been established after the privatization of some nationalized industries because-Some industries retain significant monopoly power Real rates of interest are positive and rising, then-Lender are gaining at the expenses of borrowers Real price index is a measure of?- The average cost of living

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Real GDP per capita is affected by which of the following factors?- 1,2,3 (multiple answers) Select best definition of a regressive tax from the option bellow?- A tax on expenditure Some not-for profit organizations (NPOs) are required to show they are effective-Achieves the goals and objectives set for it Select the definition of marginal cost from the list below-The addition to total cost when output rises by one unit The real rate of interest- The nominal rate of interest adjusted for inflation The production possibility frontier (curve) for a country will shift outwards (to right) if- investment increase the capital stock The Eurocurrency market is- The market for bank deposits denominated in a currency other than that of the country where the bank is located The stock market fulfills all of the following functions except one?- the market for foreign exchange The burden of an indirect tax on a good will fall most heavily on the producer when?-the demand for the good is price elastic and the supply is price inelastic The economist’s view that ‘there is no such thing as a free lunch’ related to the application of- The concept of opportunity cost The market demand for a good has a price elasticity of demand of 0.4.Which of the following statement is correct?-Total quality sold will fall as price rises The existence of natural rate of unemployed means that-There is no trade-off between inflation and unemployment in the long-run The equilibrium level of national income in an economy is the level of income at which-Full employment occur The incentive for two countries to trade with each other would be reduced or removed by-Transport cost between……………./The industries in both countries suffering…..-3&4 The opportunity cost of society of building a fifth terminal at London Heathrow airport would be?-The other goods or services which could be produced if the terminal hadn’t built The law of diminishing marginal return assume that?-The quantity of at least one factor of production remains fixed The £ has risen against other currencies since August, defying forecasters who thought that the UK’s widening trade deficit……………………-UK interest rates must have increase The short-run shut down price for a firm in perfect competition occurs where price equals-Average variable cost The development of the Indian economy in recent years has led to it becoming well-known………………………………sort of economic development?-Growth is the tertiary sector To maximize utility, a consumer should spend more of his or her income so that the-Marginal utility obtained from each good is equalized The budget deficit of a government may increase to reduce?-Demand deficient unemployment The demand for a particular category of labour is shifting to left which of the following could be cause?-Decrease in the price of substitute factor The following are same statements about building societies which of them are correct?-They are mutually owed organizations The money national income for a country in 2001 is equal to-Real national income in 2001 adjusted for inflation The distinguish feature of a transnational(multinational) company is that-It has production facilities in more than one country The market mechanism can achieve all of the following except which one?-Ensuring socially fair distribution of good and services Under which of the following circumstances, will an increase in the PSBR lead to an increase in the money supply, other things being equal-The PSBR is financed by selling government debts to the banking system Which is the following is an example of fiscal policy- The creation of tax-exempt individual savings accounts (ISAs) Which of the following can be efficiently allocated between competing uses by the price mechanism- Private Good What is meant by the term ‘mezzanine finance’- Finance is neither pure nor equity Which theory of the firm is described by the following statement ‘the decisions of management are the result of political maneuvering…………………’- Satisfying Which of the following make effective control of the money supply difficult- Financial(X) 1, 2 & 4 Whenever demand for goods price elastic, an increase in price will- Decrease total consumer expenditure on the good Which of the following function is not performed by investment exchange as NASDAQ, the London ………………..- A lender of last resort to the banking system Which of the following are not classed as a non-bank financial intermediary?- Investment exchange Which of the following measures of national income would be most appropriate for assessing whether material standards of living have improved over the past 50 years?The rise in the national income per capital Which one of the following is not a source of economic growth?- Investment on stocks and shares Which one of the following would be an example of price discrimination?- British Telecom charging less for telephone calls made after 6.00 pm Which of the following is most likely to lead to rise in the exchange rate of the country’s currency and fall in the price of stock shares?- An increase in the rates of interest within the country When a tax is imposed upon a commodity which the producers must pay to the government, this will be cause the commodity’sEconomic welfare always increase When the government intervenes in the market economy to correct a market failure- The problem of government failure may result Which of the following is a positive economic statement-the distribution of income and wealth is unequal Which of the following will be characteristic of the stake holders most able to influence the management of an organization-High power, high interest Which of the following provides a definition of a free good-It is available at zero cost of production in unlimited qualities Which of the following statements about the difference between profit and Shareholder wealth is false?-Shareholder wealth influence share prices but profit does not Which of the following is a characteristic of imperfect competition but not of not of perfect competition-Product differentiation

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When faced with a recession, the appropriate combination of policies for a government in order to generate a recovery isMonetary expansion, Increase in public expenditure and application of the exchange rates Which of the following is a normative economic statement-If the government cut old age pension poetry will increase Which of the following most likely to accompany a fall in the market prices of fixed-interest government bond?-An increase in long-term interest rates Which of the following business would benefit most from an expansionary monetary policy?-Highly geared companies producing consumer durable goods Which of the following statements about societies In the UK are correct?-Since they are not………..(X)- 1 ,3 & 4 Which of the following statements about supply-side economics is correct?-Supply-side policies are used to improve the economy’s efficiency and competitiveness Which of the following sectors of the developed economies contributes most to their countries’ gross domestic product?-The service sector Which of the following events might cause the demand curve for chicken meat to shift to the right?-the publication of health report urging people to eat white rather than red meat Which of the following is not a characteristic of pure public good-It is always provided by the state or public sector Which of the following would lead to an increase in a firm’s share price?-Management announces that profit will be higher than had previously been forecast Which of the following is an example of regulation as a form of government intervention in the economy?-The government requiring that seat belts are fitted in all coaches and regularly tested Which of the following is not a reason for a firm to issue bonds rather than ordinary shares to raise additional finance?-Lower risk because bond holder cannot liquidate………… Which of the following is an example of a firm experiencing an increase in technical efficiency?-Increasing output and profit Which of the following is not suitable way for a manufacturing company to finance buying asset?-Commercial bonds Which of the following is not a consequence of a country suffering a high rate of inflation?-Excess aggregate demand for goods and services Which of the following economic condition is likely to lead to demand-pull inflation?-An increase in government spending and firms operating at full capacity Which of the following is not a method for measuring national income?-the transactions method Which one of the following will not decrease the transactions demand for money?-A fall in price level Which of the following is the best definition of the broad money stock?-All cash and bank deposits Which of the following would not be a reason for a government to impose a quota on imports?-To prevent completely the country’s citizens consuming an imported demerit good Which one of the following statements about production decision in the short run is false?-A firm will only increase out put if presently MC Which of the following industries would be expected to have the largest number of business operating within them?-Agriculture Which of the following best describes a project that has a negative Net Present Value?-A project that doesn’t make sufficient returns to fully compensate investors for the funds they invest in it Which of the following statements about the subject of economics are correct?-The main purpose of economic activity is to increase economic welfare/Economics studies the problem of allocating scare resources between competing uses-1&4 Which of the following assertions would be consistent with supply side economics?-Increasing aggregate demand will not affect national income or the price level Which of the following is most likely to increase rather than to reduce market imperfections?-Informative advertising giving way to persuasive advertising Which of the following is not a suitable way for manufacturing company to finance buying assets?-Certificate of deposits Which of the following statement about public goods us correct?-Public goods are characterized by the free-rider problem Which of the following statements must be true when a firm’s average total costs and average variable cost are identical?-Total EC=0 Which of the following statements describes the role of an agent-One who is responsible for the organization pursues the interest of owners Which of the following statements is always true for a merit good?-When consumed, the social benefits exceed the private benefits Which of the following will not lead to an appreciation of a countries currency?-A decrease in inflow capital Who will be affected by a currency depreciation?-Importers When the income of individual increase from 2000 to 2400 the demand for an item increases by 10%?-The product is a normal good Why cannot the private sector provide public goods such as street lighting?-Free rider problem Which of the following about inflation is not true?-It shift wealth from debtors to creditors Which of the following may not be an indicator that an economy is recovering from a recession?-An increase in unfilled vacancies Which of the following definition would fit monopolistic competition?-Many sellers of differentiated products Which of the following industries will achieve the largest fall in the sales, output and employment if an economy moves in to recession?-Automobile manufacture Which of the following do you think is the main aim of the government competition policy?-Restricting anti competitive behavior of firms What does the existence of natural rate of unemployment indicate?-Government cannot reduce employment below this level Which of the following is a normative statement?-If welfare payments are cut poverty will increase Which of the following might cause the demand for chicken meat to shift to the right-A health report favoring white meat What does the accelerator principle shows that the demand for investment spending?-Fluctuates wider than consumer spending

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Which of the following could be regarded as the increase in regulation by a government in an economy?-Government privatizing a state venture Which of the statements about a firms cost are not true?-Average variable cost are first increase and then decrease as output rises Which of the following could be regarded as criticisms of the market economy?-Ignores some of the costs and benefits with production and consumption of goods and services Which of the following is normal profit not?-A reward for risk taking Which of the following explain the structure of interest rate?-The existence of margins between borrowing and lending rates Which of the following does not appear to involve the principle of diminishing marginal utility?-The second cup of coffee tastes better than the first cup Whenever demand for a good is once elastic. An increase in price will-Decrease total consumer expenditure on the good Which of the following would not shift the production possibility frontier to the right?-Fall in unemployment Whenever a government provides health care services free of charge-Provision of merit goods by the state is taking place What is meant by a Eurobond?-A bond dominated in a currency that differs from the domestic currency of the country where the bond was issued. What is economy is in a recession, which of the following is least likely to reduce unemployment?-A regulation extending employment rights for newly-hired workers When the price of good increases, the total revenue received by the supplier decreases, then-The demand for the good must be price elastic Which of the following likely to cause the demand curve of margarine in shift to the left?-A successful advertising campaign by butter producer Which of the following would not be an argument for privatizing a state industry?-It is a natural monopoly Which of the following would not be supply side economy policy?-Imposing tariffs to protect domestic industries. Which of the following is an indication of allocative efficiency?-The price is set to marginal cost When will be the welfare from an activity be maximum?-MBB=MSC Why is government against horizontal mergers?-It will result in excessive concentration in industries Which of the following will not cause X inefficiency?-Competition increasing Which of the following statements about the market economy are not true?-Transaction can only take place at equilibrium prices in a market economy Which of the following would be a forward vertical integration?-IOC buying petrol station in Sri Lanka Which of the following may not be the role of a stock market?-Dealing in foreign currency Which of the following will make the demand for tea to shift to the left?-A successful worldwide campaign by Nestle to Nescafe Which of the following may not be a situation of economies of scale?-Greater opportunities for technical change Which of the following would not affect the supply curve of a good?-A change in the market price of a good Which of the following situation would a quota become irrelevant?-To plan the orderly decline of industries losing competitive advantage Which of the following statements clearly indicate that a firm is not operating under conditions of perfect competition?-The marginal revenue of the firm lies below the average function Which of the following would be claimed by supply side economist as an approach to reducing long term unemployment?-Income tax cut to promote labour market incentives Which of the following are true with regard to the governments provision of education in an economy?-The provision of merit good take place Which of the following may not cause the onset of a recession?-A significant appreciation of exchange rate Which of the following would occur at a firms technically efficient output level?-Marginal cost equals average total cost Which of the following are not correct when a government spends without increasing taxation?-Expansionary monetary policy is taking place Which of the following are implications on a local firm by the process of globalization?-It will be more and more affected by changes in exchange rates Which among the following will not reduce unemployment when there is recession in an economy?-A law is passed providing high level of job security for new workers