THE EDUCARE ENGLISH ACADEMY Bure Wala , Distt.

Vehari 0301-7428429
Prof. Muhammad Yasin Shahid
Ph.D in English (Scholar)
M.Phil in Eng & M.Phil in Urdu
M.A (Eng,Eco,Edu,Urdu,TEFL)
Deptt of English, G.C.Bure Wala
Test#108 on Elasticity& Entrepreneurship
B. supply is price elastic A. the percentage change in the
Elasticity quantity demanded divided by the
C. supply is price inelastic percentage change in income.
1.If the income elasticity of D. demand is price elastic
demand for a good is negative it B. the percentage change in
must be ? income divided by the percentage
Answer: Option A change in the quantity demanded
A. an elastic good 5.If a supply curve for a good is
price elastic then ? C. the percentage change in the
B. an inferior good quantity demanded of a good divided
A. the quantity supplied is by the percentage change in the price
C. a normal good sensitive to changes in the price of that of that good
good
D. a luxury good D. none of these answers
B. That quantity demanded is
Answer: Option B insensitive to changes in the price of Answer: Option C
2.If there is excess capacity in a that good 9.If consumers think that there
production facility it is likely that are very few substitutes for a
the firm’s supply curve is ? C. the quantity demanded is
good, then ?
sensitive to changes in the price of that
A. price inelastic good A. Supply would tend to be price
elastic
B. none of these D. the quantity supplied is
incentive to changes in the price of B. none of these answers
C. unit price elastic that good
C. demand would tend to be price
D. price elastic E. None of these inelastic
Answer: Option D Answer: Option A D. demand would tend to be price
3.Technological improvements 6.The demand for which of the elastic
in agriculture that shift the following is likely to be the most Answer: Option C
supply of agricultural price inelastic ? 10.If demand is linear (a straight
commodities to the right tend to line) then price elasticity of
? A. transportation demand is ?
A. increase total revenue to B. taxi rides A. elastic in the upper portion and
farmers as a whole because the inelastic in the lower portion
demand for food is elastic C. bus tickets
D. airline tickets B. inelastic in the upper portion
B. increase total revenue to and elastic in the lower portion
farmers as whole because the demand
for food is inelastic Answer: Option A C. inelastic throughout
7. in general a flatter demand
C. reduce total revenue to farmers curve is more likely to be ? D. constant along the demand
as a whole because the demand for curve
food is elastic A. price elastic Answer: Option A
B. none of these answers 1.Suppose that at a price of Rs
D. reduce total revenue to farmers 30 per month there are 30000
as a whole because the demand for C. unit price elastic subscribers to cable television
food is inelastic in small Town. If small Town
D. price inelastic Cablevision raise its price to Rs
Answer: Option D 40 per month the number of
4.A decrease in supply (shift to Answer: Option D subscribers will fall to 20000 At
the left) will increase total 8.The price elasticity of demand which of the following price
revenue in that market if ? is defined as ? does small Town Cablevision
earn the greatest total revenue ?
A. demand is price inelastic
 Answer: Option C
A. Rs 0 per month A. all of these answers 1.The Keynesian remedy for
B. Rs 30 per month B. price inelastic unemployment is to ?

C. Rs 40 per month C. unit price elastic A. decrease aggregate demand

D. Either Rs 30 or Rs 40 per D. price elastic B. reduce tax rates or lower

interest rates
month because the price elasticity of
demand is 1.0 Answer: Option C C. decrease government spending
Answer: Option B! 6.If a fisher must sell all of his
2.Suppose that at a price of Rs daily catch before it spoils for D. decrease private consumption
30 per month there are 30000 whatever price he is offered and investment
subscribers to cable television once the fish are caught the Answer: Option D
in small Town. If small Town fisherman’s price elasticity of 2.Which of the following is not
Cablevision raises its price Rs40 supply for fresh fish is ? TRUE about rural urban
per month the number of migration ?
subscribers will fall to 20000 A. zero
Using the midpoint method for A. Migration to the cities is a
B. infinite larger contributor than natural
calculating the elasticity what is
the price elasticity of demand C. one population growth to urban labor
for cable TV in Small Town ? growth is sub Saharan Africa
D. unable to be determined form
A. 1.4 B. In Latin America natural
this information
population increase is the major
B. 0.66 source of urban growth
Answer: Option A
C. 0.75 7.If the cross-price elasticity C. From 1975 to 2000 the number
between two goods is negative of cities in LDC with populations over
D. 2.0 the two goods are likely to be ? 1 million increased from 20 to 50
Answer: Option A A. substitutes D. The urban share of total LDC
3.If supply is price inelastic the population grew from 27 percent in
B. complements
value of the price elasticity of 1975 and 35 percent in 1992 to 40
supply must be ? C. necessities percent in 2003
A. infinite D. luxuries Answer: Option B
B. Zero 3.The theoretical basis for zero
Answer: Option B marginal productivity of labor
C. less than 1 8.Which of the following would was the concept of ?
cause a demand curve for a
D. none of these good to be price inelastic ? A. marginal rate of substitution

E. greater than 1 A. The good is luxury B. labor force literacy

B. There are a great number of C. substitution of leisure and work

Answer: Option C
substitutes for the good among labor
4.If consumers always spend 15
percent of their income on food. D. limited technical sustainability
C. The good is a necessity
then the income elasticity of of factors
demand for food is ? D. The good is an inferior good
A. 1.50 Answer: Option D
Answer: Option C 4.The invisibly underemployed ?
B. 1.15 9.If a small percentage increase
in the price of a good greatly A. are workers who are compelled
C. none of these reduces the quantity demanded to work short hours
for that good, the demand for
D. 0.15 B. result from an inadequate use
that good is ?
of workers capacities
E. 1.00 A. income inelastic
C. are part-time workers who
Answer: Option E B. price inelastic voluntarily work short hours
5.If an increase in the price of a
good has no impact on the total C. price elastic D. None of the above is correct
revenue in that market demand
D. unit price elastic Answer: Option B
must be ?
5.Which of the following is not poverty and inequality in LCDs
TRUE about unemployed in IV- are associated with middle A. when marginal revenue
LDCs ? age rural uneducated males productivity of labor is zero

A. The unemployment rate for A. I and II only B. the same as seasonal

youths is twice that of people over 24 unemployment of LDC agricultural
B. III and IV only
B. Unemployment in rural areas is C. the rigid factor proportions in
twice that of urban areas C. I, II and III only LDC agriculture and industry

C. World-wide there are fewer D. I, II and IV only D. due to capital formation and
unemployed females than males, but the level of technology remaining
the rate is higher for women Answer: Option A constant.
10.Policies to reduce factor
D. The unemployed are relatively price distortion include? Answer: Option A
well educated I- Encouraging small-scale 4.During the Great Depression
industry workers in DCs who took
Answer: Option C II- Decreasing subsidies to inferior jobs as a result of being
6.The openly unemployed in capital investors laid off were known as ?
LDCs are usually from all of the III- Reducing social security
following except ? programs and payroll taxation A. disguised unemployed
IV- Setting market-clearing B. cyclical unemployed
A. persons 15 to 24 years old exchange rates
B. the educated C. seasonally unemployed
A. I and II only
C. residents of urban areas D. voluntarily unemployed
B. II and III only
D. from the poorest 1/5 of the C. I, II and III only Answer: Option A
population 5.The unemployment rate is the
D. I, II, III and IV ?
Answer: Option D
7.Which of the following is not Answer: Option D A. employed plus unemployed
capita good ? 1.The simplest explanation divided by labor force
based on Lewis’s model for B. total employment divided by
A. plant and equipment rural-urban migration is ? population
B. buildings A. That people migrate when
C. labor force divided by
urban wages exceed rural wages
C. inventories population
B. a higher expected income in
D. consumers goods D. unemployed divided by
urban areas employed
Answer: Option D C. better infrastructure in urban
8.Entrepreneurship is the ? areas Answer: Option A
6.Labor skills are a major
A. technique to manage raw D. the availability of labor- component of ?
materials efficiently intensive jobs in urban areas
A. fertility
B. residual of a production
function Answer: Option B B. population quality
2.According to Harris and
C. resource coordinating other Todaro, creating urban jobs by C. mortality
productive resources expanding industrial output ?
D. morbidity
D. blueprint on how to manage A. is insufficient for solving the
the labor force urban unemployment problem Answer: Option B
Answer: Option C! 7.In a production function Y =
B. will generate capital-intensive
9.Based on Nafziger and F(L, K,N,E,T) Y is ?
technologies
Auvinen’s study high
unemployment rates ? A. national product
C. will generate more government
I- represent a vast revenue through urban wages B. capital
underutilization of human
resources D. induces government to C. natural resources
II- are potential source of social increase minimum wages
unrest and political discontent Answer: Option B D. prevailing technology
III- are uncomerated with 3.Disguised unemployed is?
Answer: Option A
8.A production function ? C. Joseph Schumpeter D. I and IV only

A. shows the dependency output D. William Baumol Answer: Option B

of the working population 8.Monopoly advantage is
Answer: Option B usually the result of greater
B. depicts the relationship 4.The entrepreneur can be opportunities such as ?
between input and output viewed as the ? I- access to more economic
I- coordinator of other information than competitors
C. states the relationship between production resources
products and income distribution II- superior access to training
II- decision maker under and education
D. is a function of natural uncertainty III- a lower discount of future
resources in a country III- innovator earnings
IV- gap filler and input completer IV- larger firm size
Answer: Option B A. I and II only A. I and II only
Entrepreneurship, B. II and III only B. II and III only
Organization & Innovation C. I, II and only C. I, II and III only
1.Which of the following is D. I, II, III and IV D. I, II, III, and IV
TRUE about gender and
business world ? Answer: Option D Answer: Option A
5.Joseph Schumpeter is the 9.Capitalism is an economies
A. There are more women than exceptional economist who system ?
men in U.S business because of the links the entrepreneur to ?
aspirations of U.S girls A. based on government
A. oligopolistic capitalism intervention in the means of
B. There are relatively few production
women in U.S business partly because B. resource management
of female socialization B. that originated in the United
C. innovation
States in the 19th Century
C. LDC businesswomen have a
D. land and labor
better chance than men of getting C. Where private owners of
credit from bankers and suppliers capital make decisions based on profit
Answer: Option C
D. Businesswomen in India are 6.Which of the following is an D. that dominated developing
viewed as naturally stronger, less example of a Schumpeterian economies in the 19 Century
emotional more socially adept and innovation ?
more rational than businessmen Answer: Option C
A. An existing internet provider
provides competition to two other 10.According to William Baumol
Answer: Option B under oligopolistic competition
providers in Dayton Ohlio
2.According to Weber’s thesis ? among large, high tech business
B. The production and marketing firms. innovation has ?
A. Protestants disapproved of
of the Model T Ford in the 19-teens
accumulating wealth A. created stationary economies
C. The invention of the Stanley of scale
B. Protestants failed to restrict
steamer
extravagance and conspicuous B. maintained the relationship
consumption D. An American buying a stock in between firms and their clients
the Philippines stock market
C. Roman Catholicism expressed C. replaced price as the important
its asceticism in a secular vocation
Answer: Option B D. limited the expansion of firms
D. capitalism was most advanced 7.Which of the following was a
in Protestant countries socialist country ? Answer: Option C
I- Holland 1.Technical advance involves ?
Answer: Option D II- Soviet Union
3.The Protestant Ethic and the III- China A. the development of pure
Spirit of Capitalism was written IV- India science, invention innovation
by ? financing the innovation and the
A. I and II only innovation’s acceptance
A. Adam Smith
B. II and III only
B. Max Weber
C. III and IV only

B. introducing new products
modifying production functions
creating credit and making profits
C. innovation investment credit
creation and economies growth
D. patent management resource
gains mature innovation and
speculative gains
Answer: Option A
2.Which of the following is not
an assumption of Schumpeter’s
stationary state ?
A. Perfect competition
B. An economy below full
employment
C. No savings or technical change
D. No entrepreneurial function is
required
Answer: Option B
Exchange-Rate Determination
1.Assume that a Big Mac
hamburger cost $3 in the United
States 2 pesos in Mexico The
implied purchasing power parity
exchange rate between the peso
and the dollar is ?
A. 0.67 pesos = $1
B. 0.8 pesos = $1
C. 1.25 pesos = $1
D. 1.67 pesos = $1
Answer: Option A
2.Due to Japan’s high saving
rate, suppose that the Japanese
invest abroad. This investment
may result in a/an _______ of
the Japanese yen and therefore
a for Japan?
A. appreciation; trade surplus
B. appreciation; trade deficit
C. depreciation; trade surplus
D. depreciation; trade deficit
Answer: Option C
3.Assume identical interest
rates on comparable securities
in the United States and foreign
countries. Suppose investors
anticipate that in the future the
U.S dollar will depreciate
against foreign currencies.
investment funds would tend to
?
A. flow from the United States to
foreign countries
B. flow from foreign countries to
the United States
C. remain totally in foreign
countries
D. remain totally in the United
States
Answer: Option A!
4.Starting from a position where
the nation’s money demand
equals the money supply and its
balance of payments is in
equilibrium its balance of
payments would move into a
surplus position if there
occurred in the nation a (an) ?
A. decrease in the money supply
B. increase in the money supply
C. decrease in the money demand
D. None of the above
Answer: Option A
5.Which example of market
expectations causes the dollar
to appreciate against the yen–
expectations that the U.S
economy will have ?
A. faster economic growth than
Japan
B. higher future interest rates than
Japan
C. more rapid money supply
growth than japan
D. higher inflation rates than
japan
Answer: Option B
6.Given a system of floating
exchange rates falling income in
the United States would trigger
a (an) ?
A. increase in the demand for
imports and an increase in the demand
for foreign currency
B. increase in the demand for
imports and a decrease in the demand
for foreign currency
C. decrease in the demand for
imports and an increase in the demand
for foreign currency
D. decrease in the demand for
imports and a decrease in the demand
for foreign currency
Answer: Option D
7.For the United States suppose
the annual interest rate on
government securities equals 12
percent while the annual
inflation rate equals 8 percent
For Japan the annual interest
rate on government securities
equals 10 percent while the
annual inflation rate equals 5
percent the above variables
would cause investment funds
to flow from ?
A. The United States to Japan
causing the dollar to depreciate
B. The United States to Japan
causing the dollar to appreciate
C. The Japan to United States,
causing the dollar to depreciate
D. The Japan to United States,
causing the dollar to appreciate
Answer: Option A
8.If Japan runs current account
deficit and exchange rates are
floating?
A. Japanese exports become more
expensive to foreign buyers
B. Japanese exports become less
expensive for foreign buyers
C. Japanese imports become less
expensive for German buyers
D. Japanese imports become more
prestigious to German buyers
Answer: Option B
9.Suppose Canada and
Switzerland were the only two
countries in the world There
exists an excess supply of
Swiss francs on the foreign
exchange market This suggests
that ?

A. the Canadian current account
balance is in surplus
B. the Swiss current account
balance is in deficit
C. the Canadian current account
balance is in equilibrium
D. the Swiss current account
balance is in equilibrium
Answer: Option B
10.When the price of foreign
currency (the exchange rate) is
above the equilibrium level ?
A. an excess supply of that
currency exists in the foreign
exchange market
B. an excess demand for that
currency exists in the foreign
exchange market
C. the supply of foreign exchange
shifts outward to the right
D. the supply of foreign exchange
shifts backward to the left
Answer: Option A
1.The high foreign exchange
value of the U.S dollar in the
early 1980s can best be
explained by ?
A. additional investment funds
made available from overseas
B. lack of investor confidence in
U.S fiscal policy
C. market expectations of rising
inflation in the United States
3.Assume that the United States
faces a percent inflation rate
while no (zero) inflation exists in
Japan. According to the
purchasing power parity theory
over the long run the dollar
would be expected to ?
A. appreciate by 8 percent against
the yen
B. depreciate by 8 percent against
the yen
C. remain at its existing exchange
rate
D. None of the above
Answer: Option B
4.Relatively low real interest
rates in the United States tend
to ?
A. decrease the foreign demand
for dollars causing the dollar to
depreciate
B. decrease the foreign demand
for dollars causing the dollar to
appreciate
C. increase the foreign demand
for dollars causing the dollar to
depreciate
D. decrease the foreign demand
for dollars causing the dollar to
appreciate
Answer: Option A
5.If the exchange rate between
Swiss francs and British pounds
is 5 francs per pound, then the
number of pounds that can be
obtained for 200 francs equals ?
D. elasticities are smaller in the
short run than the long run
Answer: Option D
7.According to the asset market
approach increased investor
confidence in the Mexican
economy would cause the peso
to ?
A. appreciate because of an
increase supply of peso denominated
assets
B. depreciate because of an
increased supply of peso denominated
assets
C. appreciated because of an
increased demand for peso
denominated assets
D. depreciated because of an
increased demand for peso
denominated assets
Answer: Option C
8.The purchasing power parity
theory has limitations in
forecasting exchange rate
fluctuations for all of the
following reasons except ?
A. inflation effects exchange rates
B. international capital flows
affect exchange rates
C. governments sometimes
impose trade restrictions such as
tariffs and quotas
D. not all products are
internationally tradeable

D. American tourists overseas A. 20 pounds Answer: Option A

finding costs increasing 9.The asset market approach
B. 40 pounds views exchange rates as being
Answer: Option A C. 60 pounds determined mainly by ?
2.IF when cost $4 per bushel in
the United States and 2 pounds D. 80 pounds A. the use of import tariffs and
per bushel in Great Britain then quotas by governments
in the presence of purchasing Answer: Option B B. the current account balance of
power parity the exchange rate 6.Exchange rate overshooting each country
should be ? often occurs because ?
C. the relative growth rate of
A. $50 per pound A. domestic prices adjust slowly national output between countries
to shifts in demand
B. $1.00 per pound D. efforts of investors to balance
B. military spending during their portfolios among financial assets
C. $2.00 per pound military conflicts denominated in different currencies
D. $8.00 per pound C. elasticities are smaller in the
Answer: Option C long run than the short run Answer: Option D
10.The assets market approach
is most helpful in explaining ?
A. why exchange rates remain
quite stable
B. why governments change their
money supplies
C. long term exchange rate
movements
D. short term exchange rate
movements
Answer: Option D
1.Consulting firms that use
large-scale econometric models
to forecast exchange rate
movements are engaging in ?
A. judgmental analysis
B. fundamental analysis
C. technical analysis
D. nontechnical analysis
Answer: Option B
2.Suppose that the purchasing
power parity estimate of the
dollar/euro exchange rate is
$1.30 per euro, and the current
spot rate is $1.3 8 per euro.
Comparing these two exchange
rates from a long-run viewpoint
you would ?
A. anticipate the dollar to
depreciate against the euro
B. anticipate the dollar to
appreciate against the euro
C. anticipate the dollar’s
exchange rate against the euro to
remain constant
D. have no anticipation
concerning future movements in the
dollar/euro exchange rate
Answer: Option B!
3.Suppose that rising U.S
income leads to higher sales
and profits in the United States
This would likely result in ?
A. increasing portfolio investment
into the United States
B. decreasing portfolio investment
into the United States
C. increasing direct investment
into the United States
D. decreasing direct investment
into the United States
Answer: Option C!
4.Starting from a position where
the nation’s money demand
equals the money supply and its
balance of payments is in
equilibrium economic theory
suggests that the nation’s
balance of payments would
move into a surplus position if
there occurred in the nation a
(an) ?
A. increase in the money demand
B. decrease in the money demand
C. increase in the money demand
D. None of the above
Answer: Option A
5.Which example of market
expectations causes the dollar
to depreciate against the yen –
expectation that the U.S
economy will have ?
A. faster growth than Japan
B. higher future interest rates than
Japan
C. more rapid money supply
growth than Japan
D. lower inflation rates than Japan
Answer: Option A
6.Under a system of floating
exchange rates relatively high
productivity and low inflation
rates in the United States results
in a (an) ?
A. increase in the demand for
foreign currency a decrease in the
supply of foreign currency and a
depreciation in the dollar
B. increase in the demand for
foreign currency an increase in the
supply of foreign currency and a
appreciation in the dollar
C. decrease in the demand for
foreign currency a decrease in the
supply of foreign currency and a
depreciation in the dollar
D. decrease in the demand for
foreign currency an increase in the
supply of foreign currency and a
appreciation in the dollar
Answer: Option B
7.Under a system of floating
exchange rates relatively low
productivity and high inflation
rates in the United States results
in a (an) ?
A. increase in the demand for
foreign currency a decrease in the
supply of foreign currency and a
depreciation in the dollar
B. increase in the demand for
foreign currency an increase in the
supply of foreign currency and a
appreciation in the dollar
C. decrease in the demand for
foreign currency a decrease in the
supply of foreign currency and a
depreciation in the dollar
D. decrease in the demand for
foreign currency and increase in the
supply of foreign currency and a
appreciation in the dollar
Answer: Option A
8.Given a system of floating
exchange rates rising income in
the United States would trigger
a (an) ?
A. increasing in the demand for
imports and an increasing in the
demand for foreign currency
B. increase in the demand for
imports and decrease in the demand
for foreign currency
C. decrease in the demand for
imports and an increase in the demand
for foreign currency
D. decrease in the demand for
imports and a decrease in the demand
for foreign currency
Answer: Option A!
9.For the United States suppose
the annual interest rate on
government securities equals 8
percent while the annual
inflation rate equals 4 percent,
For Switzerland the annual
interest rate on government
securities equal 10 percent
while the annual inflation rate
equals 7 percent the above
variables would cause
investment funds to flow from ?
A. the United States to Answer: Option D C. increase the foreign demand
Switzerland causing the dollar to 3.When the price of foreign for dollars causing the dollar to
depreciate currency (i.e the exchange rate) depreciate
B. the United States to is below the equilibrium level ? D. increase the foreign demand
Switzerland causing the dollar to A. an excess demand for that for dollars causing the dollar to
appreciate currency exists in the foreign appreciate
exchange market Answer: Option D
C. Switzerland to the United 7.If a Big Mac hamburger sells
States causing the franc to depreciate B. an excess supply of the for the same dollar value in New
D. Switzerland to the United currency exists in the foreign York as in London then ?
States causing the franc to appreciate exchange market
A. the inflation rate in each
C. the demand for foreign country will necessarily equal zero
Answer: Option C exchange shifts outward to the right
10.The exchange value of the B. the inflation rate in each
U.S dollar is primarily D. the demand for foreign country will necessarily equal 1
determined by ? exchange shifts backward to the left percent
A. the rate of inflation in the Answer: Option A C. the exchange rates are said to
United States 4.A primary reason that explains be fixed pegged to each other
the appreciation in the value of
B. the number of dollars printed D. purchasing power parity holds
U.S dollar would be ?
by the U.S government Answer: Option D
A. large trade surpluses for the 8.The relationship between the
C. the international demand and exchange rate and the prices of
United States
supply for dollars tradable goods is known as the
D. the monetary value of gold B. high inflation rates in the ?
United States
held at Fort Knox, Kentucky A. purchasing power parity theory
C. lack of investor confidence in
Answer: Option C U.S money policy B. asset markets theory
1.If Canada runs a balance of
payments surplus and exchange D. high interest rates in the United C. monetary theory
rates are floating ? States D. balance of payments theory
A. the value of other currencies Answer: Option D
will rise relative to the dollar Answer: Option A
5.In the presences of
B. the dollar will depreciate purchasing power parity, if one-
dollar exchanges for 2 British
relative to other currencies
pounds and if a DVD player
C. the price of foreign goods will costs $400 in the United States
become cheaper to Canadians then in Britain the DVD player
should cost ?
D. the price of foreign goods will
rise for Canadians A. 200 pounds
B. 400 pounds
Answer: Option C
2.The appreciation in the value C. 600 pounds
of the dollar in the early 1980s is
explained by all of the following D. 800 pounds
except ?
Answer: Option D
A. the United States being 6.Relatively high real interest
considered a safe haven by foreign rates in the United States tend
investors to ?
B. relatively high real interest A. decrease the foreign demand
rates in the United States for dollars causing the dollar to
depreciate
C. confidence of foreign investors
in the U.S economy B. decrease the foreign demand
D. relatively high inflation rates in for dollars causing the dollar to
the United States appreciate