Real gross domestic product measures gross domestic product adjusted for:

• A) Taxes
• B) Unemployment
• C) Inflation
• D) Depreciation

Which of the following is NOT a reason why the aggregate demand curve slopes downward?

• A) The interest-rate effect
• B) The classical dichotomy/monetary neutrality
• C) The exchange-rate effect
• D) The wealth effect

There are commonly _________methods of measuring GDP.

• A) Three
• B) Five
• C) Four
• D) Two

In Keynesian economics, equilibrium can occur:

• A) Only at levels greater than full employment.
• B) Only at full employment.
• C) Only at levels less than full employment.
• D) At any level of aggregate output equal to aggregate expenditures.

If the values of real Gross Domestic Product (GDP) and GDP deflator in 2019 are Rs. 650,000 and 1.5 respectively, the nominal GDP in this year is:

• A) Rs. 975,000
• B) Rs. 875,000
• C) Rs. 675,000
• D) Rs. 775,000

If there would be an increase in interest rate then:

• A) Saving will first decrease,then start increasing.
• B) Saving will increase.
• C) Saving will decrease.
• D) Saving will remain unchanged.

Naima has just finished school and is waiting to report to his new job at the beginning of the month. Naima is considered to be:

• A) Frictionally unemployed.
• B) Employed.
• C) Cyclically unemployed.
• D) Structurally unemployed.

How higher savings leads to a lower national income is called

• A) Accelerator
• B) Paradox of thrift
• C) Multiplier effect
• D) Inelastic demand

Suppose government of Pakistan wishes to achieve a fall in unemployment, which of the following policies should it adopt?

• A) Reduce government spending on capital projects.
• B) Raise Value Added Tax (VAT).
• C) Start public job training programs.
• D) Reduce the real value of income tax free allowances.

If A firm spends Rs.1500 for making a product and sells its product for Rs.1800, then the valve added is equal to:

• A) Rs.300
• B) Rs.1000
• C) Rs.500
• D) Rs.800

According to Keynes,unemployment arises due to deficiency of

• A) Aggregate supply
• B) None of above
• C) Both
• D) Aggregate demand

The slope of the consumption function (or line) is the:

• A) Average propensity to save.
• B) Average propensity to consume.
• C) Marginal propensity to consume.
• D) Marginal propensity to save.

If Nominal GDP is divided by the GDP deflator, it is called:

• A) Gross National product (GNP).
• B) Net domestic product (NDP)
• C) Real Gross Domestic Product (GDP).
• D) Net national Product (NNP).

The total Gross Domestic Product of the economy divided by the number of people in the economy measures:

• A) Net National Product
• B) Gross National Product
• C) Real Gross Domestic Product
• D) Per Capita Gross Domestic Product

Which of the following summarizes all the international economics transactions for a country during a specific time period?

• A) Balance of trade
• B) Balance of payment
• C) Inflation rate
• D) Interest rate

Which of the following is an injection into the circular flow of income?

• A) Saving
• B) Taxes
• C) Exports
• D) Imports

If the prices of all goods and services in an economy are increasing at the same rate, it is called:

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

The most volatile component of aggregate demand is

• A) Consumption
• B) Government spending
• C) Investment
• D) Interest rate

The war in Iraq sent oil prices spiraling upwards, resulting in an increase in the overall price level. This is an example of which type of inflation?

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

According to classical economics, what is the primary driver of economic growth and stability?

• A) A free market, where prices and wages adjust based on supply and demand.
• B) Consumer spending and demand.
• C) Labor unions and collective bargaining.
• D) Government intervention and regulation.