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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

Speculative bubbles may occur in the shares market ?
A during periods of extreme pessimism because so many stocks become undervalued
B only when people are irrational
C when stocks are fairly valued
D because rational people may buy an overvalued share if they think they can sell it to someone for even more at a later date
Correct Answer: when stocks are fairly valued
Which of the following reduces risk in a portfolio the greatest ?
A Increasing the number of shares from 10 to 20
B All of these answers provide the same amount of risk reduction
C Increasing the number of shares in the portfolio from 1 to 10
D Increasing the number of shares from 20 to 30
Correct Answer: Increasing the number of shares in the portfolio from 1 to 10
The study of a company’s accounting statements and future prospects to determine its value is known as ?
A information analysis
B risk management
C fundamental analysis
D diversification
Correct Answer: fundamental analysis
Diversification of portfolio can ?
A reduce aggregate risk
B eliminate all risk
C increase the standard deviation of the portfolio’s return
D reduce idiosyncratic risk
Correct Answer: reduce idiosyncratic risk
Which of the following is an example of moral hazard ?
A After Gull buys fire insurance, he begins to smoke cigarettes in bed.
B None of these answers demonstrate moral hazard
C Mahmood has been feeling poorly lately so he seeks health insurance
D All of these answers demonstrate moral hazard
Correct Answer: After Gull buys fire insurance, he begins to smoke cigarettes in bed.
If people are risk averse, then ?
A None of these answers are true
B All of these answers are true
C They dislike bad things more than the like comparable good things
D The utility they would lose from losing a Rs50 bet would exceed the utility they would gain from winning a Rs 50 bet
Correct Answer: All of these answers are true
An increase in the prevailing interest rate ?
A increases the present value of future returns from investment and increases investment
B decreases the present value of future return from investment and decreases investment
C decreases the present value of future returns from investment and increase investment
D increases the present value of future returns from investment and decreases investment
Correct Answer: decreases the present value of future return from investment and decreases investment
If a depositor puts Rs100 in a bank amount that earns 4 percent interest compounded annually, how much will be in the account after five years ?
A Rs400.00
B Rs 104.00
C Rs 121.67
D Rs 123.98
Correct Answer: Rs 121.67
It is difficult for an actively managed investment fund to outperform an index fund because ?
A stock markets tend to be inefficient
B all of these answers
C index funds are able to buy undervalued stocks
D actively managed funds trade more often and charge fees for their alleged expertise
Correct Answer: actively managed funds trade more often and charge fees for their alleged expertise
Share prices will follow a random walk if ?
A shares are overvalued
B people behave irrationally when choosing shares
C markets reflect all available information in a rational way
D shares are undervalued
Correct Answer: markets reflect all available information in a rational way
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