Economics Test 2

Total Questions: 25

1 - When bank prepare their balance sheets, they show the money lent in

A ) Liability
B ) Assets ✅
C ) Both assets and liabilities
D ) None

3 - When a commercial bank creates credit, its immediate effect is that it raises

A ) The exchange rate
B ) The interest rate
C ) The money supply ✅
D ) The real national income

4 - State Bank of Pakistan was established in

A ) 1948 ✅
B ) 1950
C ) 1952
D ) 1954

5 - 10- rupee note is issued by

A ) National Bank
B ) State Bank ✅
C ) Govt. Of Pakistan
D ) Governor State Bank

6 - Which is the most widely used tool of monetary policy?

A ) Clearing house
B ) Open-market operations ✅
C ) Discount rate
D ) Issuing of notes

7 - When the State Bank wants to decrease money supply in the country,it

A ) Buys govt securities in stock market
B ) Sells govt.securities ✅
C ) Lowers discount rate
D ) B and C of above

8 - Central Bank's rate of lending to commercial banks is called

A ) Interest rate
B ) Discount rate ✅
C ) Money rate
D ) Control rate

9 - Which is a monetary measure to increase employment?

A ) Increase in govt. expenditure
B ) Reduce govt. expenditure
C ) Increase in interest rate
D ) Reducing interest rate ✅

10 - Treasury bill is used for

A ) Getting short term loans ✅
B ) Getting long term loans
C ) Treasury bill is not credit instrument
D ) Treasury bill is a govt. tax bill

11 - Open Market Operations is

A ) Buying and selling bills of exchange
B ) Buying and selling govt. securities ✅
C ) Buying and selling shares of companies
D ) Buying and selling foreign exchange

12 - The bank established for loans to very small enterprises in Pakistan is called

A ) Khushhali Bank ✅
B ) Modarba Bank
C ) SME Bank
D ) FIRST MINI Bank

13 - Theory of comparative advantage was presented by:

A ) Adam Smith
B ) Ricardo ✅
C ) Hicks
D ) Arshad

14 - Trade between two countries can be useful if cost ratios of goods are

A ) Equal
B ) Different ✅
C ) Undetermined
D ) Decreasing

15 - Modern theory of International trade is based on the views of:

A ) Robbins and Ricardo
B ) Adam Smith and Marshall
C ) Heck Sher and Ohlin ✅
D ) Saleem and Kareem

16 - A tariff:

A ) Increas the volume of trade
B ) Reduces the volume of trade ✅
C ) Has no effect on volume of trade
D ) A and C of above

17 - Govt. Policy about exports and imports is called

A ) Monetary policy
B ) Fiscal policy
C ) Commercial policy ✅
D ) Finance policy

18 - Pakistan follows the policy of

A ) Fixed exchange rate
B ) Flexible exchange rate ✅
C ) Controlled exchange rate
D ) Increasing exchange rate

19 - What would cause a country's exchange rate to fall?

A ) An increased demand for its exports
B ) Increased demand for its imports ✅
C ) An increased inflow of capital
D ) None of these

20 - Which of the following must always balance

A ) Balance of visible trade
B ) Balance of invisible trade
C ) Balance on the current account
D ) Balance of payments ✅

21 - What will be expected result if the value of rupee falls against dollar?

A ) The price of Pakistani goods in USA will rise
B ) The price of Pakistani goods in Pakistan will fall
C ) The price of American goods in USA will fall
D ) The price of American goods in Pakistan will rise ✅

22 - If TOYOTA company established a factory in Pakistan, this will be recorded in balance of payments in the section,

A ) Capital account ✅
B ) Visible balance
C ) Invisible balance
D ) Official financing

24 - Commercial policy means

A ) Policy about markets
B ) Policy about money supply
C ) Policy about imports and exports ✅
D ) Policy of controlling of prices of goods