The situation in which economy is operating at below full employment indicates:

• A) Inflationary gap
• B) Deflationary gap
• C) Full employment
• D) None of the above

The relationship between market rate of interest and market prices of bonds is:

• A) None of these
• B) Negative
• C) Constant
• D) Positive

Which of the following policy is adopted by government?

• A) Fiscal policy
• B) Monetary policy
• C) Central bank policy
• D) Bank rate policy

Stagflation arises from:

• A) Subsidies
• B) Savings
• C) Cost-push inflation
• D) Demand pull inflation

When LM curve shifts rightward and IS curve remains same then rate of interest in general equilibrium will:

• A) None of these
• B) Remain same
• C) Fall
• D) Rise

The situation in which economy is operating at above full employment indicates:

• A) Deflationary gap
• B) Full employment
• C) Inflationary gap
• D) None of the above

Which of the following is the upturn phase of business cycle?

• A) Boom
• B) Recovery
• C) Recession
• D) Depression

Which school of thought holds that decreases in aggregate demand decrease real output but leave the price level largely unaffected?

• A) Real Business Cycle theory
• B) New Classical theory
• C) Keynesian
• D) Monetarism

Panasonic Corporation is a leading Japanese multinational electronics corporation. It maximizes its profit at a level of output where:

• A) Marginal Cost = Marginal Revenue.
• B) Marginal Cost = Average Revenue.
• C) Marginal Cost < Marginal Revenue.
• D) Marginal Cost > Marginal Revenue.

Which of the following is the characteristic of monopolistic competition?

• A) There is absence of entry barriers
• B) Firms face a horizontal demand curve
• C) Firms produce homogeneous products
• D) There are a small number of buyers and sellers

In monopolistic competition, there are:

• A) Many buyers and one seller
• B) Many sellers and many buyers
• C) One seller and one buyer
• D) Many sellers and one buyer

According to Keynes, what was the main reason of high unemployment in a period of great depression?

• A) High demand for labor
• B) Lower interest rate
• C) More investment
• D) Low wages

Which of the following is NOT a type of price discrimination?

• A) Uniform price discrimination
• B) Third-degree price discrimination
• C) Second-degree price discrimination
• D) First-degree price discrimination

Firms in monopolistic competition advertise their products to increase sales and thus the level of profits. From society’s point of view, which of the following is the advantage of advertising?

• A) It encourages price competition among firms.
• B) It uses economic resources.
• C) It increases human wants.
• D) It misleads consumers into buying a low quality product.

Which of the following can be thought of as a barrier to entry?

• A) Strategic actions by incumbent firms
• B) All of the given options are true
• C) Scale economies
• D) Patents

If the monopolist faces loss then government can regulate this situation through:

• A) Both taxes and subsidies
• B) Subsidies
• C) Taxes
• D) None of the given options is true

What may contribute to a monopolist's ability to retain its market share through brand loyalty?

• A) Product differentiation
• B) Perfect competition
• C) Cost leadership
• D) Diversification

Which market structure is characterized by a few major firms dominating the industry?

• A) Monopoly
• B) Perfect competition
• C) Monopolistic competition
• D) Oligopoly

If a departmental store offers 1 pack of Nido milk powder for Rs.1000 and two packs of milk powder for Rs.1800, it reflects that grocery store is engaging in:

• A) First degree price discrimination
• B) Third degree price discrimination
• C) Limit pricing
• D) Second degree price discrimination

In fruit market, all sellers charge different prices from different customers. They try to charge maximum price in order to maximize their profits. This is an example of:

• A) 3rd degree price discrimination.
• B) Monopoly.
• C) 2nd degree price discrimination.
• D) 1st degree price discrimination.