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Economics Mcqs 4423 MCQs [All-Courses]

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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.

All Topics  4423

The J-curve effect refers to the observation that ?
A GDP usually decreases before it increases after a currency depreciation
B the trade balance usually gets worse before it improves after a currency depreciation
C the trade balance usually gets better before it gets worse after a currency appreciation
D GDP usually decreases before it increases after a currency appreciation
Correct Answer: the trade balance usually gets worse before it improves after a currency depreciation
If a nation’s interest rates are relatively low compared to those of other countries then the exchange value of its currency will tend to ?
A depreciate under a system of fixed exchange rates
B depreciate under a system of floating exchange rates
C appreciate under a system of floating exchange rates
D appreciate under a system of floating fixed rates
Correct Answer: depreciate under a system of floating exchange rates
The theory of international exchange that holds that exchange rates adjust to offset differences in countries inflation rates in the ?
A price feedback theory
B trade feedback theory
C J-curve theory
D purchasing power parity theory
Correct Answer: purchasing power parity theory
The fall in value of one currency relative to another is ?
A a depreciation of a currency
B a strengthening of a currency
C a floating of a currency
D an appreciation of a currency
Correct Answer: a depreciation of a currency
Expansionary monetary policy ?
A tends to lead to an appreciation of a nation’s currency
B tends to lead to a depreciation of a nation’s currency
C usually has no effect on a currency’s exchange value
D tends to lead to a depreciation of the currencies of other nations
Correct Answer: tends to lead to a depreciation of a nation’s currency
If the Bank of England reduces the money supply to reduce inflation a floating exchange rate will aid the Bank of England in fighting inflation because ?
A as the money supply is decreased the interest rate will increase and the price of UK exports will rise and the Price of UK imports will fall
B as the money supply is decreased the interest rate will increase, and the price of UK exports will fall and the price of UK imports will rise
C as the money supply is decreased the interest rate will increase and the price of UK exports and UK imports will fall.
D as the money supply is decreased the interest rate will increase and the price of both UK exports and UK imports will rise
Correct Answer: as the money supply is decreased the interest rate will increase and the price of UK exports and UK imports will fall.
In 1971, most countries ?
A adopted a new system of fixed exchange rates
B gave up trying to fix exchange rates formally and began allowing them to be determined essentially by supply and demand
C adopted single internationally accepted currency whose use is limited to international transactions
D returned to the gold standard
Correct Answer: gave up trying to fix exchange rates formally and began allowing them to be determined essentially by supply and demand
All currencies other than the domestic currency of a given country are referred to as ?
A hard currency
B foreign exchange
C reserve currencies
D near monies
Correct Answer: foreign exchange
Speculators in foreign exchange markets do all of the following except ?
A attempt to profit by trading on expectations about future currency prices
B bear risk as they attempt to ____ beat the market||
C attempt to buy currency at a low price and later resell that currency at a higher price
D Simultaneously buy a currency at a low price and sell that currency at a higher price, making a riskless profit
Correct Answer: Simultaneously buy a currency at a low price and sell that currency at a higher price, making a riskless profit
The real effective exchange rate for the U.S dollar ?
A reflects only the influences of merchandise or real trade on the dollar’s exchange value
B reflects only transactions in the currency futures market
C is the weighted average of the dollar exchange rate relative to the currencies of important U.S trading partners adjusted for inflation?
D is the weighted average of the dollar exchange rate relative to the currencies of important U.S trading partners unadjusted for inflation?
Correct Answer: is the weighted average of the dollar exchange rate relative to the currencies of important U.S trading partners adjusted for inflation?
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