NTS GAT Subject (Economics) FLP 1 Free Quiz

1. What is utility?

A. Price B. Cost C. Utility D. Value

2. What does the law of diminishing marginal utility state?

A. Decreases B. Increases C. Constant D. Zero

3. What shows the combinations of goods a consumer can afford?

A. Indifference curve B. Demand curve C. Budget constraint D. Supply curve

4. What is the slope of the budget constraint?

A. Income ratio B. Utility ratio C. Quantity ratio D. -Px/Py

5. What shape are typical indifference curves?

A. Convex B. Concave C. Straight lines D. Vertical

6. What is the marginal rate of substitution (MRS)?

A. Price ratio B. Income ratio C. MRS D. Quantity ratio

7. What is an inferior good?

A. Normal good B. Inferior good C. Luxury good D. Necessity

8. What is a Giffen good?

A. Giffen good B. Veblen good C. Normal good D. Luxury good

9. What is the income effect?

A. Substitution effect B. Price effect C. Income effect D. Quantity effect

10. What is the substitution effect?

A. Income effect B. Price effect C. Quantity effect D. Substitution effect

11. What type of good has a positive income effect?

A. Inferior B. Normal C. Giffen D. Veblen

12. What does a perfectly elastic demand curve look like?

A. Vertical B. Upward sloping C. Horizontal D. Downward sloping

13. What does the rational consumer aim to do?

A. Minimize cost B. Maximize profit C. Maximize utility D. Minimize utility

14. What theory uses observed choices to infer preferences?

A. Stated preference B. Contingent valuation C. Hedonic pricing D. Revealed preference

15. What is a graphical representation of income distribution?

A. Gini coefficient B. Lorenz curve C. Poverty line D. HDI

16. What theory suggests developing countries are dependent on developed countries?

A. Dependency theory B. Modernization theory C. Neoclassical theory D. Institutional theory

17. What is foreign aid?

A. FDI B. Foreign aid C. Trade D. Investment

18. What provides small loans to low-income individuals?

A. Macrofinance B. Commercial banking C. Microfinance D. Investment banking

19. What meets present needs without compromising future generations?

A. Economic growth B. Sustainable development C. Industrialization D. Modernization

20. What is a significant part of developing countries' employment?

A. Formal B. Public C. Informal D. Private

21. What investment is critical for economic development?

A. Education B. Health C. Agriculture D. Infrastructure

22. What can contribute to economic development by bringing capital and technology?

A. Foreign aid B. Portfolio investment C. FDI D. Foreign trade

23. What theory suggests large-scale investment is needed to break the cycle of poverty?

A. Gradual development B. Big push C. Trickle-down D. Balanced growth

24. What includes small-scale, unregulated enterprises and self-employment?

A. Formal B. Public C. Informal D. Private

25. What is a fundamental tool in econometrics?

A. Correlation B. Causation C. Linear regression D. Variance

26. What is the most common method for estimating regression coefficients?

A. Maximum likelihood B. Generalized method of moments C. Instrumental variables D. OLS

27. What measures the proportion of variance explained by the regression?

A. Correlation B. Standard error C. R-squared D. T-statistic

28. What tests the overall significance of a regression model?

A. T-statistic B. R-squared C. P-value D. F-statistic

29. What occurs when the variance of errors is not constant?

A. Heteroskedasticity B. Multicollinearity C. Autocorrelation D. Endogeneity

30. What is used to address endogeneity?

A. Control variables B. Dependent variables C. Independent variables D. Instrumental variables

31. What is a binary variable that takes values 0 or 1?

A. Continuous B. Dummy variable C. Ordinal D. Interval

32. What type of data consists of observations collected over time?

A. Cross-sectional B. Panel C. Time series D. Pooled

33. What type of data combines cross-sectional and time series dimensions?

A. Cross-sectional B. Panel C. Time series D. Pooled

34. What test is used to test for unit roots?

A. Dickey-Fuller B. Augmented Dickey-Fuller C. Phillips-Perron D. KPSS

35. What test detects autocorrelation?

A. Autocorrelation B. Heteroskedasticity C. Multicollinearity D. Endogeneity

36. What is a tariff?

A. Tax on imports B. Quota C. Subsidy D. Regulation

37. What is protectionism?

A. Free trade B. Laissez-faire C. Deregulation D. Protectionism

38. What is the exchange rate?

A. Interest rate B. Exchange rate C. Inflation rate D. Growth rate

39. What theory suggests countries export goods using abundant factors?

A. Comparative advantage B. Absolute advantage C. Strategic trade D. Heckscher-Ohlin theory

40. What does currency depreciation do to exports and imports?

A. Appreciation B. Revaluation C. Devaluation D. Depreciation

41. What curve describes the trade balance worsening before improving after currency depreciation?

A. L-curve B. J-curve C. V-curve D. U-curve

42. What condition states that currency depreciation improves the trade balance?

A. Sum of elasticities > 1 B. Sum of elasticities = 1 C. Sum of elasticities < 1 D. Sum of elasticities = 0

43. What is foreign direct investment?

A. Portfolio investment B. Foreign aid C. FDI D. Foreign trade

44. What is the increasing integration of economies?

A. Isolation B. Globalization C. Protectionism D. Regionalism

45. What is a customs union?

A. Free trade area B. Common market C. Economic union D. Customs union

46. What model predicts trade flows based on economic size and distance?

A. Gravity model B. Comparative advantage C. Absolute advantage D. Heckscher-Ohlin

47. What is inflation?

A. Deflation B. Inflation C. Disinflation D. Stagflation

48. What is deflation?

A. Deflation B. Inflation C. Disinflation D. Stagflation

49. What is fiscal policy?

A. Monetary policy B. Fiscal policy C. Trade policy D. Industrial policy

50. What is the interest rate?

A. Inflation B. Deflation C. GDP D. Interest rate

51. What relationship does the Phillips curve show between inflation and unemployment?

A. Positive B. Direct C. No relationship D. Inverse

52. What is aggregate demand?

A. Aggregate supply B. Aggregate demand C. Total income D. Total output

53. What is the marginal propensity to consume (MPC)?

A. MPS B. Savings C. Investment D. MPC

54. What is the marginal propensity to save (MPS)?

A. MPC B. MPS C. Investment D. Consumption

55. What is real GDP?

A. Nominal GDP B. GDP deflator C. Real GDP D. Potential GDP

56. What does market structure refer to?

A. Characteristics influencing behavior B. Consumer behavior C. Producer behavior D. Government regulation

57. What market structure has many buyers and sellers, identical products, and free entry?

A. Monopoly B. Oligopoly C. Perfect competition D. Monopolistic competition

58. What market structure has a few large sellers?

A. Perfect competition B. Monopoly C. Oligopoly D. Monopolistic competition

59. What control do firms have in monopolistic competition?

A. Some control over price B. Price takers C. No control D. Complete control

60. What is a natural monopoly?

A. Legal monopoly B. Technological monopoly C. Natural monopoly D. Resource monopoly

61. What type of price discrimination charges each consumer the maximum they are willing to pay?

A. Second-degree B. First-degree C. Third-degree D. Uniform

62. What is the prisoner's dilemma?

A. Perfect competition B. Prisoner's dilemma C. Monopoly D. Price discrimination

63. What does a high HHI indicate?

A. Competitive B. Low concentration C. Perfect competition D. Highly concentrated

64. What market has low barriers to entry?

A. Monopoly B. Oligopoly C. Perfect competition D. Contestable market

65. What occurs when the market fails to allocate resources efficiently?

A. Market success B. Efficiency C. Market failure D. Equilibrium

66. What does inelastic demand mean?

A. More B. Less C. Equal D. Zero

67. What is an inferior good?

A. Normal good B. Luxury good C. Necessity D. Inferior good

68. What is utility?

A. Price B. Cost C. Utility D. Value

69. What shows combinations of goods with the same satisfaction?

A. Budget line B. Demand curve C. Indifference curve D. Supply curve

70. What is the long run in production?

A. Long run B. Short run C. Market period D. Very long run

71. What market has a few large sellers?

A. Perfect competition B. Oligopoly C. Monopoly D. Monopolistic competition

72. What are the functions of money?

A. Medium of exchange only B. Store of value only C. Medium of exchange, store of value, unit of account D. Unit of account only

73. What institution controls the money supply?

A. Commercial bank B. Central bank C. Investment bank D. Development bank

74. What is M1?

A. M2 B. M1 C. M3 D. M4

75. What is M2?

A. M2 B. M1 C. M3 D. M4

76. What occurs when interest rates are near zero and monetary policy is ineffective?

A. Inflation trap B. Debt trap C. Liquidity trap D. Growth trap

77. What does an inverted yield curve often signal?

A. Expansion B. Growth C. Recession D. Recovery

78. What is a firm?

A. Market B. Consumer C. Firm D. Government

79. What is the short run in production?

A. Long run B. Short run C. Very long run D. Market period

80. What does the law of diminishing marginal returns state?

A. Increases B. Constant C. Zero D. Decreases

81. What is the marginal rate of technical substitution (MRTS)?

A. MRTS B. MRS C. MR D. MC

82. What is marginal cost?

A. Average cost B. Total cost C. Marginal cost D. Fixed cost

83. What does increasing returns to scale mean?

A. Less B. More C. Equal D. Zero

84. What does constant returns to scale mean?

A. Less B. More C. Equal D. Zero

85. What is a perfectly competitive firm?

A. Price maker B. Monopolist C. Oligopolist D. Price taker

86. What does accounting profit include?

A. Economic profit B. Normal profit C. Gross profit D. Accounting profit

87. What is the shutdown point in the short run?

A. ATC B. AVC C. AFC D. MC

88. What is the supply curve of a perfectly competitive firm?

A. ATC B. AVC C. MC above AVC D. AFC

89. What does public finance study?

A. Government revenue, expenditure, and debt B. Private finance C. Corporate finance D. International finance

90. What is an indirect tax?

A. Indirect B. Direct C. Progressive D. Regressive

91. What does government expenditure include?

A. Revenue B. Debt C. Expenditure D. Tax

92. When does a budget surplus occur?

A. Surplus B. Deficit C. Balanced D. Zero

93. What is fiscal policy?

A. Monetary policy B. Trade policy C. Industrial policy D. Fiscal policy

94. What fiscal policy involves increasing spending or decreasing taxes?

A. Contractionary B. Expansionary C. Neutral D. Tight

95. What is a subsidy?

A. Tax B. Subsidy C. Loan D. Grant

96. What is a value-added tax (VAT)?

A. Sales tax B. Income tax C. Property tax D. VAT

97. What is a sales tax?

A. VAT B. Sales tax C. Income tax D. Property tax

98. What determines the incidence of a tax?

A. Elasticity of supply and demand B. Tax rate C. Tax base D. Tax revenue

99. What is Pareto efficiency?

A. Optimal B. Pareto efficiency C. Equitable D. Efficient

100. What occurs when the market does not allocate resources efficiently?

A. Market failure B. Market equilibrium C. Market efficiency D. Market success

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