SPSC 2011 Lecturer Economics BPS-17 (2011) Paper

Lecturer Economics BPS-17 (2011). Pre-interview written test · Monday 31 January 2011, 11:00 am to 12:00 noon · Total marks 100. 50 questions; each incorrect answer deducts half mark.

1. 1An Isoquant is convex to the origin because of:

   • A)Law of diminishing returns
   • B)Diminishing marginal rate of substitution between factors
   • C)Law of increasing returns

2. 2When a country imposes an import tariff, the effect on its offer curve is:

   • A)Nil
   • B)To shift it away from the export-commodity axis
   • C)To shift it away from the import-commodity axis

   Explanation: A tariff rotates the offer curve towards the import-commodity axis, i.e. away from the export-commodity axis. (The paper prints "important tariff".)

3. 3One of the following is included in Personal Income, but excluded from National Income, which one is that?

   • A)Dividends
   • B)Wages
   • C)Interest on Public Debt

   Explanation: Interest on public debt is a transfer payment.

4. 4By "warranted rate of growth" is meant:

   • A)The rate of growth warranted by the resources at the disposal of the community
   • B)The rate of growth planned by the planning authority of the country
   • C)The rate of growth which would make planned investment equal to realized investment

   Explanation: Harrod's warranted rate is the growth rate at which entrepreneurs' plans are fulfilled.

5. 5The assumption which makes the "Indifference Curve" convex to the origin is:

   • A)A diminishing Marginal Rate of substitution
   • B)Ordinality of utility
   • C)Cardinality of utility

6. 6For the Cobb-Douglas Production Function:

   • A)The law of diminishing returns to scale holds
   • B)The law of constant returns to scale holds
   • C)The law of increasing returns to scale holds

   Explanation: In the original Cobb-Douglas function the exponents add up to 1.

7. 7In Keynesian theory equality between saving and investment is brought about by changes in the:

   • A)Level of income
   • B)Rate of Interest
   • C)Supply of money

8. 8During inflation, a recipient of dividend income will, normally, enjoy a real income which is:

   • A)Less than before
   • B)More than before
   • C)Unaffected

   Explanation: As usually keyed: profits, and so dividends, tend to rise faster than prices during inflation.

9. 9Which one of the following tax systems will move in the direction of reduction of economic disparities?

   • A)Flat rate tax
   • B)Progressive tax
   • C)Regressive tax

10. 10"Backward Effect" of International Trade occurs:

    • A)Between two different countries only
    • B)Between two different areas of the same countries only
    • C)Both (a) and (b)

    Explanation: Myrdal's backwash effects operate between regions as well as between countries.

11. 11"Poverty line" is determined by:

    • A)Per capita calories intake
    • B)Income of the family
    • C)Housing and clothing facilities

12. 12Demand for money for transaction motive depends on current level of:

    • A)Profit
    • B)Income
    • C)Rate of interest

13. 13The direct exchange of goods and services for other goods and services is known as

    • A)Primitive trade
    • B)Barter
    • C)Non market trade

14. 14The crucial determinant of the size of the market is

    • A)Productivity
    • B)Savings
    • C)Monetary expansion

    Explanation: Nurkse: the size of the market is determined by the general level of productivity.

15. 15For money to serve as an efficient medium of exchange, it must have all but which of the following characteristics:

    • A)General acceptability
    • B)Convertibility into precious metals
    • C)High value relative to its weight
    • D)Divisibility

16. 16The doctrine of comparative advantages says that there are gains from international trade:

    • A)Only if both comparative and absolute advantages are present in both countries
    • B)If opportunity costs are the same in the countries involved
    • C)Only if there are economies of scale available
    • D)If countries specialize in the production of goods in which they are relatively more efficient

17. 17If the marginal social benefits of a good exceed its marginal social costs:

    • A)The government should subsidize its production
    • B)The Pareto-optimal quantity of the good exceeds the equilibrium quantity
    • C)An external diseconomy exists
    • D)Then its private benefits must also exceed its private costs

18. 18The inclusion of both external costs and external benefits will cause a good's equilibrium price to be:

    • A)Higher than it otherwise would have been
    • B)Lower than it otherwise would have been
    • C)The same, and its equilibrium quantity will be larger
    • D)None of the above

    Explanation: External costs push the price up and external benefits push it down, so the net effect is indeterminate.

19. 19The measure of change in buyer's demand as a result of price changes is called ____

    Answer: Price elasticity of demand.

20. 20IMF related drawing rights are known as ____

    Answer: Special Drawing Rights (SDRs).

21. 21Basket of main currencies is ____

    Answer: The SDR (Special Drawing Right), valued on a basket of major currencies.

22. 22The Largest sector, attracting a big chunk of total foreign direct investment in Pakistan is:

    • A)Trade, transport and Communication
    • B)Chemical and Pharmaceuticals
    • C)Oil and Gas and Power Sector
    • D)Electronics

    Explanation: Around 2010 oil & gas exploration and power drew the largest share of FDI.

23. 23Pakistan is pursuing:

    • A)Fixed exchange rate system
    • B)Flexible exchange rate system
    • C)Managed float through Bank
    • D)All of these

    Explanation: As usually keyed: officially a market-based (flexible) rate, managed by the State Bank.

24. 24The largest indirect Tax revenue collection is through:

    • A)Income tax
    • B)GST
    • C)Customs duty
    • D)Wealth tax
    • E)None of these

25. 25A demand curve shows the relationship between the quantity demanded for a commodity over a given time and:

    • A)The tastes of consumer
    • B)The money income of consumer
    • C)The price of related commodities
    • D)The price of the commodity

26. 26Which of the following would be the best measure of changes in the standard of living in an economy, expressed in a time series?

    • A)real GDP
    • B)Output per labour hour of output
    • C)real GDP per capita
    • D)nominal GDP per capita

27. 27For money to serve as an efficient medium of exchange, it must have all but which of the following characteristics?

    • A)general acceptability
    • B)convertibility into precious metals
    • C)high value relative to its weight
    • D)divisibility

    Explanation: Same as Q15.

28. 28Money can be a standard of deferred payments only if the value of money itself:

    • A)Remains stable
    • B)Increases
    • C)Decreases
    • D)None of these

29. 29Personal income is obtained by adding which items to national income:

    • A)Government transfer payments
    • B)Business transfer payments
    • C)Both a and b
    • D)None of these

    Explanation: Both government and business transfer payments are added (after subtracting undistributed profits, corporate taxes and social security contributions).

30. 30The impact and incidence of sales tax is:

    • A)On the consumer
    • B)On the seller
    • C)On the producer
    • D)None of these

    Explanation: As usually keyed: the impact falls on the seller, but the incidence (final burden) is usually shifted to the consumer.

31. 31Economic growth:

    • A)Is synonymous with economic development
    • B)Refers to qualitative change experienced by an economic system
    • C)When an economic system acquired greater productive capacity
    • D)Always result in increased real per capita output

32. 32When demand is elastic:

    • A)A fall in price is more than offset by an increase in quantity demanded, so that total revenue rises
    • B)The good is probably a necessity, so price has little effect on quantity demanded
    • C)A rise in price will increase total revenue, even though less is sold
    • D)buyers are not much influenced by prices of competing products

33. 33True or False: Old age pension payment is transfer payment.

    • A)True
    • B)False

34. 34True or False: A horizontal indifference curve represents some specific case.

    • A)True
    • B)False

    Explanation: It arises in a special case, when the good on the horizontal axis gives no utility (a neutral good).

35. 35True or False: Protectionism in the international trade stands for semi-restricted trade.

    • A)True
    • B)False

    Explanation: Protectionism means restricting imports through tariffs and quotas, not "semi-restricted" trade.

36. 36True or False: Sale of a new car by an automobile dealer will not affect National product.

    • A)True
    • B)False

    Explanation: A newly produced car is part of current output; only the sale of a used car does not count.

37. 37Reflex action in the body is controlled by

    • A)Sensory nerves
    • B)Motor nerves
    • C)Central nervous system
    • D)None of these

    Explanation: Reflexes are coordinated by the spinal cord, part of the central nervous system.

38. 38Ultra filtering unit of kidney is known as

    • A)Nephron
    • B)Glomerulus
    • C)Tubule
    • D)Venacava

    Explanation: Ultrafiltration takes place in the glomerulus; the nephron is the whole functional unit.

39. 39Allergy is caused due to:

    • A)Inflammation of upper respiratory tract
    • B)Antigen-antibody reaction
    • C)Introduction of external material into body
    • D)None of these

40. 40The largest cell in the human body is

    • A)Liver cell
    • B)Nerve cell
    • C)Muscle cell
    • D)Kidney cell

    Explanation: Of these, the nerve cell is the longest. (Overall the ovum is the largest human cell.)

41. 41Most soluble in water is

    • A)Sugar
    • B)Camphor
    • C)Sulphur
    • D)Common salt

    Explanation: About 2,000 g of sugar dissolves in a litre of water, against about 360 g of salt.

42. 42Permanent hardness of water can be removed by adding

    • A)Potassium
    • B)Washing soda
    • C)Chlorine
    • D)None of these

43. 43'Battle of Mutah' was fought between

    • A)Muslims and Jews
    • B)Muslims and Romans
    • C)Muslims and Quraysh
    • D)Muslims and false prophets

44. 44Hazrat Ibrahim's (AS) grave is found in:

    • A)Saudi Arabia
    • B)Iraq
    • C)Syria
    • D)Palestine

    Explanation: In Hebron (Al-Khalil).

45. 45The soap was made by ____ first of all

    • A)Hazrat Ishaq (AS)
    • B)Hazrat Salih (AS)
    • C)Hazrat Loot (AS)
    • D)Hazrat Yaqoob (AS)

    Explanation: As usually keyed, from tradition.

46. 46He is called as Najeebullah?

    • A)Hazrat Musa (AS)
    • B)Hazrat Issa (AS)
    • C)Hazrat Yahya (AS)
    • D)None of these

    Explanation: As usually keyed: the title "Najiullah" belongs to Hazrat Nuh (AS), who is not among the options.

47. 47Quit India Movement started after the failure of:

    • A)Cripps Mission
    • B)Simon Commission
    • C)Cabinet Mission
    • D)None of these

48. 48The provision for separate electorate for Hindus and Muslims was made in:

    • A)Minto-Morley Reforms
    • B)Mountbatten Plan
    • C)Government of India Act
    • D)Montague Chelmsford Reforms

49. 49In which year, the Siachen dispute originated between India and Pakistan?

    • A)1984
    • B)1986
    • C)1988
    • D)1990

50. 50Hamas is a militant Palestinian Organization which was founded in 1987. It won the elections in 2006. The Hamas leader who was elected the Prime Minister of Palestine Authority was:

    • A)Sheikh Ahmed Yasin
    • B)Mehmood Abbas
    • C)Khalid Meshal
    • D)Ismail Haniyah