NTS GAT Subject (Economics) FLP 3 Free Quiz

1. What is utility?

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

2. What is marginal utility?

A. Total utility B. Marginal utility C. Average utility 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 the income effect?

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

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

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

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

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

11. What does a monotonic utility function mean?

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

12. What does economic development include?

A. Only income growth B. Only GDP growth C. Improvements in living standards and welfare D. Only industrial growth

13. What is absolute poverty?

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

14. What is relative poverty?

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

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

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

16. What theory suggests development follows a linear path?

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

17. What refers to a set of neoliberal economic policies?

A. Washington Consensus B. Beijing Consensus C. Santiago Consensus D. Delhi Consensus

18. What curve suggests environmental degradation increases with income until a turning point?

A. Environmental Kuznets Curve B. Laffer curve C. Phillips curve D. Kuznets curve

19. What investment is critical for economic development?

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

20. What can provide employment and income in developing countries?

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

21. What is crucial for economic development?

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

22. What tests the significance of regression coefficients?

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

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

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

24. What occurs when independent variables are highly correlated?

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

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

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

26. What type of data is collected at a single point in time?

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

27. What estimation technique uses moment conditions?

A. OLS B. MLE C. GMM D. IV

28. What test detects heteroskedasticity?

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

29. What test detects autocorrelation?

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

30. What is used to detect multicollinearity?

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

31. What is the balance of trade?

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

32. What is the balance of payments?

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

33. What is a floating exchange rate?

A. Floating B. Fixed C. Pegged D. Managed

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

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

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

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

36. 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

37. What involves purchasing foreign financial assets?

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

38. What is deflation?

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

39. What is unemployment?

A. Employment B. Underemployment C. Unemployment D. Labor force participation

40. What is the labor force?

A. Population B. Working-age population C. Employed only D. Employed and actively seeking work

41. What is the interest rate?

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

42. How many phases are in the business cycle?

A. Two phases B. Four phases C. Three phases D. Five phases

43. What is a recession?

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

44. What is the unemployment rate?

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

45. What is aggregate demand?

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

46. What is aggregate supply?

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

47. What is the multiplier effect?

A. Negative B. Zero C. Multiplier effect D. Neutral

48. What are firms in perfect competition?

A. Price makers B. Monopolists C. Oligopolists D. Price takers

49. What market structure has a single seller?

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

50. What control do firms have in monopolistic competition?

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

51. What is price discrimination?

A. Price taking B. Uniform pricing C. Cost pricing D. Price discrimination

52. 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

53. What does the Lerner index measure?

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

54. What does a higher Lerner index indicate?

A. Greater B. Lower C. Zero D. Negative

55. What is deadweight loss?

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

56. What are sunk costs?

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

57. What does the law of demand state about quantity demanded as price increases?

A. Increases B. Decreases C. Unchanged D. Unpredictable

58. What does elastic demand mean?

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

59. What is a normal good?

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

60. What are substitute goods?

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

61. What are complementary goods?

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

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

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

63. What is total revenue?

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

64. What does monetary economics study?

A. Money, banking, and central banks B. Fiscal policy C. Trade policy D. Industrial policy

65. 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

66. What is the discount rate?

A. Federal funds rate B. Prime rate C. Discount rate D. Deposit rate

67. What is the reserve requirement?

A. Discount rate B. Federal funds rate C. Prime rate D. Reserve requirement

68. What is M2?

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

69. What is the quantity theory of money?

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

70. What guideline sets interest rates based on inflation and output gaps?

A. Friedman rule B. McCallum rule C. Bernanke rule D. Taylor rule

71. What is the money multiplier?

A. Monetary base B. Money supply C. Reserve ratio D. Money multiplier

72. 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

73. What is the precautionary motive for holding money?

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

74. What is the transactions motive for holding money?

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

75. What is a firm?

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

76. What shows the relationship between inputs and outputs?

A. Cost function B. Revenue function C. Profit function D. Production function

77. What is the short run in production?

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

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

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

79. What does increasing returns to scale mean?

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

80. What does constant returns to scale mean?

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

81. What is profit?

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

82. What is marginal revenue?

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

83. What is a perfectly competitive firm?

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

84. Where is profit maximized in perfect competition?

A. MC > MR B. MC = MR C. MC < MR D. MC = 0

85. How does a monopoly maximize profit?

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

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 are public goods?

A. Private goods B. Club goods C. Public goods D. Common goods

90. What is a tax?

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

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

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

92. What does government expenditure include?

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

93. When does a budget surplus occur?

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

94. What is fiscal policy?

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

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

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

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

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

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 determines the incidence of a tax?

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

99. What is a sin tax?

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

100. What are costs or benefits that affect third parties?

A. Taxes B. Subsidies C. Externalities D. Transfers

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