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Economics MCQs with Explanations

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401EconomicsMedium

Which of the following groups would not benefit from an EU imports quota on Japanese cars?

AEU farmers who export grain

BShareholders of German carmaker BMW

CEu consumers who buy electronics from Japan

Demployees of EU car manufacturers

Correct answer

A. EU farmers who export grain

Explanation

The correct answer is EU farmers who export grain.

402EconomicsMedium

Decrease returns to scale means that as ?

AShort run average cost rises, output rises

Blong run average cost rises, output rises

Clong run marginal cost rises, output rises

DShort run marginal cost rises, output rises

Correct answer

B. long run average cost rises, output rises

Explanation

The correct answer is long run average cost rises, output rises.

403EconomicsMedium

Suppose the government increases its purchases by Rs16 billion. If the multiplier effect exceeds the crowding out effect, then?

AThe aggregate supply curve shifts to the right by more than Rs 16 billion

BThe aggregate demand curve shifts to the left by more than Rs 16 billion

Cthe aggregate supply curve shifts to the left by more than Rs 16 billion

DThe aggregate demand curve shifts to the right by more than Rs 16 billion

Correct answer

D. The aggregate demand curve shifts to the right by more than Rs 16 billion

Explanation

The correct answer is The aggregate demand curve shifts to the right by more than Rs 16 billion.

404EconomicsMedium

Which of the following shifts the demand for watches to the right?

Aa decrease in the wage of workers employed to manufacture watches

Bnone of these answers

Can increase in the price of watches

Da decrease in consumer incomes if watches are a normal good

Ea decrease in the price of watch batteries if watch batteries and watches are complements

Correct answer

B. none of these answers

Explanation

The correct answer is none of these answers.

405EconomicsMedium

Even though explicit contracts may lead to layoffs during recessions explicit contracts may still be efficient because such contracts?

Aminimize unemployment effects

Bminimize negotiation costs

Cwill equitable spread the layoffs among junior and senior workers

Dguarantee that only the least productive workers will be laid off.

Correct answer

B. minimize negotiation costs

Explanation

The correct answer is minimize negotiation costs.

406EconomicsMedium

The divorce of owner ship and control causes a problem usually referred to by economists as?

Aprincipal-agent problem.

Bprofit myopia

Cmoral hazard

Dmerger mania.

Correct answer

A. principal-agent problem.

Explanation

The correct answer is principal-agent problem..

407EconomicsMedium

Admiration of power and intolerance of differences is linked to a________?

Aunprejudiced personality

BDemocratic personality

Cauthoritarian personality

Dtotalitarian personality

Correct answer

C. authoritarian personality

Explanation

The correct answer is authoritarian personality.

408EconomicsMedium

If the EU imposes a quota on the importing of clothing produced in China, so reducing UK imports of clothing Which of the following is true regarding the market for foreign currency exchange?

AThe demand for Pounds increases and the pound appreciates

BThe Supply of pounds decreases, and the pound appreciates

CThe Supply of pounds increases, and the pound depreciates

DThe demand for pounds decreases and the pound depreciates

Correct answer

A. The demand for Pounds increases and the pound appreciates

Explanation

The correct answer is The demand for Pounds increases and the pound appreciates.

409EconomicsMedium

A crisis of legitimacy indicates that________?

Athe public perceives that legitimate government has failed

Bbetter government propaganda is in order

Cgeneral apathy has overtaken the public

Dthe social order requires piecemeal reform

Correct answer

A. the public perceives that legitimate government has failed

Explanation

The correct answer is the public perceives that legitimate government has failed.

410EconomicsMedium

Scale for measuring the average share price and percentage change of 30 major US industrial companies is called?

ADow Jones Index

BNikki Index

CNASDAQ

DMajor Index

Correct answer

A. Dow Jones Index

Explanation

The correct answer is Dow Jones Index.

Decrease returns to scale means that ________ as ________?

AShort run average cost rises, output rises

Blong run average cost rises, output rises

Clong run marginal cost rises, output rises

DShort run marginal cost rises, output rises

Correct answer

B. long run average cost rises, output rises

Explanation

The correct answer is long run average cost rises, output rises.

Suppose the government increases its purchases by Rs16 billion. If the multiplier effect exceeds the crowding out effect, then?

AThe aggregate supply curve shifts to the right by more than Rs 16 billion

BThe aggregate demand curve shifts to the left by more than Rs 16 billion

Cthe aggregate supply curve shifts to the left by more than Rs 16 billion

DThe aggregate demand curve shifts to the right by more than Rs 16 billion

Correct answer

D. The aggregate demand curve shifts to the right by more than Rs 16 billion

Explanation

The correct answer is The aggregate demand curve shifts to the right by more than Rs 16 billion.

Which of the following shifts the demand for watches to the right?

Aa decrease in the wage of workers employed to manufacture watches

Bnone of these answers

Can increase in the price of watches

Da decrease in consumer incomes if watches are a normal good

Ea decrease in the price of watch batteries if watch batteries and watches are complements

Correct answer

B. none of these answers

Explanation

The correct answer is none of these answers.

If the EU imposes a quota on the importing of clothing produced in China, so reducing UK imports of clothing Which of the following is true regarding the market for foreign currency exchange?

AThe demand for Pounds increases and the pound appreciates

BThe Supply of pounds decreases, and the pound appreciates

CThe Supply of pounds increases, and the pound depreciates

DThe demand for pounds decreases and the pound depreciates

Correct answer

A. The demand for Pounds increases and the pound appreciates

Explanation

The correct answer is The demand for Pounds increases and the pound appreciates.

A crisis of legitimacy indicates that________?

Athe public perceives that legitimate government has failed

Bbetter government propaganda is in order

Cgeneral apathy has overtaken the public

Dthe social order requires piecemeal reform

Correct answer

A. the public perceives that legitimate government has failed

Explanation

The correct answer is the public perceives that legitimate government has failed.