Which of the following is a flow variable?

• A) Gross Domestic Product.
• B) The balance in your savings account.
• C) Government debt.
• D) The value of the house in which you live.

Which of the following will cause a rightward shift in Philips curve?

• A) A decrease in the expected inflation rate
• B) A favorable supply shock
• C) An increase in the expected inflation rate
• D) A decrease in the natural rate of unemployment

If the values of real Gross Domestic Product (GDP) and GDP deflator in 2007 are Rs. 520,000 and 1.25 respectively, the nominal GDP in this year is:

• A) Rs. 416, 000.
• B) Rs. 580, 000.
• C) Rs. 450, 000.
• D) Rs. 650, 000.

The process of converting nominal GDP into real GDP is known as:

• A) Inflation
• B) Deflation
• C) Appreciation
• D) Depreciation

Which of the following equations represent the quantity theory of money?

• A) M=PQ
• B) MV = PQ
• C) MV=Q
• D) M/V = P/Q

If there is an excess demand for loanable funds in the financial markets then:

• A) Output will be stagnant.
• B) Real interest rate will decrease.
• C) Real interest rate will increase.
• D) Interest rate will be same.

If the US dollar is strengthening against Pakistani rupee, this means:

• A) The dollar is depreciated against rupee.
• B) The US trade balance with the Pakistan economy has improved.
• C) The dollar can now purchase more rupees.
• D) The rupee can now purchase more dollars.

The number of people employed plus the number of people unemployed is known as:

• A) Labor force.
• B) Unemployment rate.
• C) Total population of the country.
• D) Employment rate.

If marginal propensity to consume (MPC) increases, then the value of multiplier will:

• A) Become zero.
• B) Decrease.
• C) Remain unchanged.
• D) Increase.

In 1920, Germany suffered from:

• A) Inflation
• B) Pure inflation
• C) Hyperinflation
• D) Deflation

According to Keynesian economics, aggregate expenditures are the sum of desired or planned spending undertaken by:

• A) The household sector after taxes.
• B) All four sectors only when the economy is at full employment.
• C) The business and government sectors.
• D) All four sectors at a specific aggregate production level.

If the values of nominal Gross Domestic Product (GDP) and GDP deflator in 2019 are Rs. 700,000 and 1.75 respectively, the real GDP in this year is:

• A) Rs. 600,000
• B) Rs. 300,000
• C) Rs. 400,000
• D) Rs. 500,000

Central bank do deficit financing by

• A) Printing currency
• B) Selling assets
• C) Selling financial securities
• D) Selling gold

Which of the following is NOT an injection into the circular flow of income?

• A) Government spending
• B) Imports
• C) Investment
• D) Consumption

In 1971, Pakistan linked its currency, rupee to:

• A) Pound Sterling
• B) USA Dollar
• C) Japanese yen
• D) Kuwait Dinar

Keynesian demand management policies could not be successfully applied in a situation of:

• A) Stagflation.
• B) Cost push inflation.
• C) Hyper inflation.
• D) Demand pull inflation.

The labour force is made up of:

• A) The number of people employed minus the number of people unemployed.
• B) Just the number of people employed.
• C) The number of people employed plus the number of people unemployed.
• D) The whole population.

According to the model of aggregate supply and aggregate demand, in the long run, an increase in the money supply should cause prices to ________ and output to ___________.

• A) Fall; fall
• B) Rise; rise
• C) Rise; remain unchanged
• D) Fall; remain unchanged

The primary result of inflation is:

• A) A decline in prices.
• B) A decline in the value of money.
• C) A rise in personal wealth.
• D) A rise in wages.

The long run aggregate supply will shift to the right whenever:

• A) Expenditures (such as consumption and net exports) increase.
• B) The price level increases.
• C) The prices of inputs (such as wages and the price of oil) increase.
• D) Factors of production (such as labor and capital) increase.