NTS GAT Subject (Economics) FLP 2 Free Quiz

1. What is marginal utility?

A. Total utility B. Marginal utility C. Average utility D. Zero

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

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

3. What is the slope of the budget constraint?

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

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

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

5. What shape are typical indifference curves?

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

6. What is an inferior good?

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

7. What is a Giffen good?

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

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

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

9. What curve shows the relationship between income and quantity demanded?

A. Engel curve B. Demand curve C. Supply curve D. Cost curve

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

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

11. What is consumer surplus?

A. Consumer surplus B. Producer surplus C. Total surplus D. Deadweight loss

12. What does the rational consumer aim to do?

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

13. What does a monotonic utility function mean?

A. More is preferred to less B. Less is preferred C. Neutral D. Satiated

14. What does development economics study?

A. Economic growth and development in low-income countries B. Macroeconomics C. Microeconomics D. International economics

15. What is poverty?

A. Wealth B. Poverty C. Inequality D. Unemployment

16. What is absolute poverty?

A. Absolute poverty B. Relative poverty C. Severe poverty D. Moderate poverty

17. What is relative poverty?

A. Absolute B. Severe C. Relative D. Moderate

18. What is a graphical representation of income distribution?

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

19. What is foreign aid?

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

20. What are indicators of economic development?

A. Health improvements B. Income improvements C. Infrastructure improvements D. Industrialization

21. What replaced the Millennium Development Goals?

A. MDGs B. SDGs C. HDI D. Gini

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 is crucial for economic development?

A. Geography B. Culture C. Resources D. Institutions

24. What theory describes the coexistence of modern and traditional sectors?

A. Dual economy B. Single economy C. Market economy D. Command economy

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

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

26. What is the independent variable in a regression?

A. Independent B. Dependent C. Response D. Outcome

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

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

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

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

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

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

30. What is a property where mean and variance are constant over time?

A. Non-stationarity B. Seasonality C. Stationarity D. Trend

31. What captures the unexplained variation in the dependent variable?

A. Explained B. Error term C. Residual D. Coefficient

32. What test compares fixed effects and random effects models?

A. Breusch-Pagan B. White C. Durbin-Watson D. Hausman

33. What test detects heteroskedasticity?

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

34. What test detects autocorrelation?

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

35. What is comparative advantage?

A. Absolute advantage B. Competitive advantage C. Comparative advantage D. Strategic advantage

36. What is absolute advantage?

A. Comparative B. Competitive C. Strategic D. Absolute

37. What do gains from trade arise from?

A. Losses B. Gains C. Zero D. Negative

38. What is the balance of trade?

A. Balance of payments B. Balance of trade C. Current account D. Capital account

39. What is the balance of payments?

A. Balance of trade B. Current account C. Capital account D. Balance of payments

40. What organization promotes free trade and resolves trade disputes?

A. IMF B. WTO C. World Bank D. UN

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 is a free trade area?

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

43. What is dumping?

A. Tariff B. Quota C. Dumping D. Subsidy

44. What is inflation?

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

45. What is the money supply?

A. Fiscal B. Debt C. Money supply D. Deficit

46. What is the unemployment rate?

A. Inflation rate B. GDP growth C. Unemployment rate D. Interest rate

47. What type of unemployment is caused by changes in the economy's structure?

A. Frictional B. Cyclical C. Seasonal D. Structural

48. What is economic growth?

A. Inflation B. Unemployment C. Economic growth D. Recession

49. What is nominal GDP?

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

50. What is real GDP?

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

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

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

52. What does a monopoly have?

A. Barriers to entry B. Low barriers C. No barriers D. Free entry

53. What is a natural monopoly?

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

54. 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

55. What is the prisoner's dilemma?

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

56. What is a Nash equilibrium?

A. Nash equilibrium B. Dominated equilibrium C. Cooperative equilibrium D. Competitive equilibrium

57. What does the Herfindahl-Hirschman Index (HHI) measure?

A. Price B. Quantity C. Market concentration D. Elasticity

58. What does the Lerner index measure?

A. HHI B. Lerner index C. Elasticity D. Concentration

59. What is predatory pricing?

A. Predatory pricing B. Price discrimination C. Price fixing D. Price taking

60. What occurs when firms cooperate to limit competition?

A. Competition B. Monopoly C. Collusion D. Price taking

61. What occurs when resources are allocated to their highest valued use?

A. Efficiency B. Inefficiency C. Deadweight loss D. Market failure

62. What does microeconomics study?

A. Individual economic units B. Economy as a whole C. International trade D. Fiscal policy

63. What is the basic economic problem?

A. Inflation B. Unemployment C. Scarcity D. Inequality

64. What is opportunity cost?

A. Monetary cost B. Sunk cost C. Total cost D. Value of the next best alternative

65. When does market equilibrium occur?

A. Demand exceeds supply B. Supply exceeds demand C. Quantity demanded equals quantity supplied D. Price is zero

66. What does inelastic demand mean?

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

67. What does elastic demand mean?

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

68. What are complementary goods?

A. Complementary B. Substitute C. Unrelated D. Inferior

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 rate at which a consumer is willing to trade goods?

A. Price ratio B. Income ratio C. Quantity ratio D. Marginal rate of substitution

71. What are fixed costs?

A. Variable costs B. Total costs C. Fixed costs D. Marginal costs

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

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

73. What market has many sellers with differentiated products?

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

74. What institution controls the money supply?

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

75. What is the quantity theory of money?

A. MV = PY B. MV = PY C. MV = PY D. MV = PY

76. What is the velocity of money?

A. Money supply B. Money demand C. Price level D. Velocity

77. What suggests that unemployment cannot be permanently reduced by inflation?

A. Natural rate hypothesis B. Phillips curve C. Okun's law D. Laffer curve

78. What states nominal interest rates equal real rates plus expected inflation?

A. Phillips effect B. Laffer effect C. Fisher effect D. Okun effect

79. What is the monetary base?

A. Money supply B. Monetary base C. M1 D. M2

80. What is the speculative motive for holding money?

A. Speculative B. Transactions C. Precautionary D. Liquidity

81. What does an inverted yield curve often signal?

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

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

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

83. What shows combinations of inputs that cost the same amount?

A. Budget constraint B. Isoquant C. Isocost line D. Demand curve

84. What is marginal cost?

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

85. Where does the marginal cost curve intersect the average cost curve?

A. Maximum B. Average C. Zero D. Minimum

86. What is profit?

A. Revenue B. Profit C. Cost D. Investment

87. What is marginal revenue?

A. Total revenue B. Average revenue C. Marginal revenue D. Profit

88. How does a monopoly maximize profit?

A. MC = MR, P > MC B. P = MC C. P < MC D. P = ATC

89. What is a tax?

A. Subsidy B. Tax C. Transfer D. Expenditure

90. What type of tax takes a lower percentage from higher-income earners?

A. Progressive B. Proportional C. Regressive D. Flat

91. What type of tax takes the same percentage from all income groups?

A. Progressive B. Regressive C. Flat D. Proportional

92. When does a budget surplus occur?

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

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

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

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

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

95. What is tax incidence?

A. Tax rate B. Tax base C. Tax incidence D. Tax revenue

96. What is a subsidy?

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

97. What curve shows the relationship between tax rates and tax revenue?

A. Laffer curve B. Phillips curve C. Lorenz curve D. Engel curve

98. What is a sales tax?

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

99. What determines the incidence of a tax?

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

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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