MCQOPTIONS

Explore topic-wise MCQs in Master of Arts in Economics (MA Economics).

This section includes 15 Mcqs, each offering curated multiple-choice questions to sharpen your Master of Arts in Economics (MA Economics) knowledge and support exam preparation. Choose a topic below to get started.

1.	The permanent increment to future consumption expressed as a fraction of the initial consumption forgone is.....
A.	rate of return
B.	perpetual rate of return
C.	expected return
D.	all the above
Answer» C. expected return

2.	Several combination of commodities x and y that the economy can produce by fully utilizing all of the fixed amounts of labour and capital with the best technology available is depicted by I. production possibility frontier II. transformation curve III. production possibility curve
A.	both i & ii
B.	both ii & iii
C.	both i & iii
D.	all the above
Answer» E.

3.	Who argued that welfare is improved when the greatest good (is secured) for the greatest number
A.	walras
B.	adamsmith
C.	bentham
D.	pareto
Answer» D. pareto

4.	The marginal conditions must be satisfied for the attainment of a Pareto-efficient situation in an economy :
A.	efficiency in exchange
B.	efficiency of production
C.	efficiency in the product-mix, or composition of output
D.	all the above
Answer» E.

5.	An important mechanism through which sellers and buyers deal with the problem of asymmetric information is
A.	market signalling
B.	insurance markets
C.	moral hazard
D.	principal-agent problem
Answer» B. insurance markets

6.	The risk premium for a capital investment by comparing the expected return on that investment with the expected return on the entire stock market is measured by
A.	diversifiable risk
B.	non diversifiable risk
C.	capital asset pricing model
D.	none of the above
Answer» D. none of the above

7.	The quantity of present goods that must be forgone to increase future consumption by 1 unit is called
A.	the relative price of future goods
B.	indifference curve
C.	production possibility curve
D.	contract curve
Answer» B. indifference curve

8.	The government can address by providing universal health insurance coverage and charging uniform premiums.
A.	expected utility
B.	asymmetric information
C.	commodity egalitarianism
D.	adverse selection
Answer» E.

9.	A market participant who obeys the principles of rational expectations will base his or her expectations of market price on
A.	all possible information about supply and demand curves.
B.	all possible information about the history of price movements.
C.	rational behaviour by other market participants.
D.	rational behaviour by government regulators.
Answer» B. all possible information about the history of price movements.

10.	If, for John s current intertemporal consumption pattern (satisfying his intertemporal budget constraint), his marginal rate of intertemporal substitution is 1 and the real rate of interest is positive, then...
A.	the interest rate will fall to zero.
B.	john could increase his lifetime utility by consuming more today.
C.	john could increase his lifetime utility by consuming less today.
D.	john is necessarily a borrower.
Answer» D. john is necessarily a borrower.

11.	Externalities between two firms can be internalized if: I. The two firms merge. II. Bargaining costs are zero. III. The externalities affect each firm equally. IV. Marginal costs for both firms are constant. Which statement(s) correctly complete(s) the sentence?
A.	only ii.
B.	all except iii.
C.	i and ii, but not iii and iv.
D.	i and iv, but not ii and iii.
Answer» D. i and iv, but not ii and iii.

12.	There are strong theoretical reasons to expect that changes in wealth are responsible for changes in consumption. Nonetheless, one reason that we observe a tight link between consumption and disposable income is...
A.	credit rationing which changes the intertemporal budget constraint for borrowers.
B.	households attempt to smooth their consumption.
C.	household saving provides a buffer between income and expenditure.
D.	ricardian equivalence.
Answer» B. households attempt to smooth their consumption.

13.	Which of the following statements is NOT true? In the free market changes in the price of a product:
A.	can act as a signal to producers
B.	can provide an incentive to reallocate resources
C.	can act as a rationing device
D.	are set by the government
Answer» E.

14.	According to a required reading from the 2003 Economist, the biggest problem facing Indonesia s economy is
A.	terrorism
B.	an organic approach to public policy questions
C.	inadequate rule of law
D.	geographical (e) hobbits
Answer» D. geographical (e) hobbits

15.	According to a required reading by P.J. O Rourke, which of the following statements is false?
A.	the pesticide ddt may have done more good than harm in some countries before it was banned
B.	despite their other problems, eastern european countries did a good job protecting the environment during the communist era
C.	the costs of environmental regulation exceed their benefits
D.	recycling is an economically inefficient way of reducing the human impact on the environment
Answer» C. the costs of environmental regulation exceed their benefits