All Free Economics MCQs with Answers

• A. State Bank of Pakistan
• B. Ministry of Finance
• C. National Bank of Pakistan
• D. Securities and Exchange Commission

Explanation: The State Bank of Pakistan is responsible for issuing and managing Pakistan's currency notes under the law governing the central bank.

• A. National income or the tax base
• B. Government borrowing from banks
• C. Imports of capital goods
• D. The central bank's foreign reserves

Explanation: Tax buoyancy measures how responsive tax revenue is to changes in national income or the relevant tax base, including the effects of…

• A. Reliable irrigation water
• B. Higher import tariffs
• C. Urban population growth
• D. A larger services sector

Explanation: Irrigation supplies water when rainfall is insufficient or irregular, making crop production more reliable.

• A. Raise their domestic price and protect local producers
• B. Lower their domestic price and reduce import costs
• C. Increase foreign competition for domestic producers
• D. Eliminate the need for foreign exchange reserves

Explanation: A tariff raises the domestic price of the imported product, giving competing local producers some protection.

• A. Commercial banking
• B. Cement manufacturing
• C. Cotton spinning
• D. Fertilizer production

Explanation: Commercial banking provides financial services and is therefore part of the services sector.

• A. Borrowed mainly from lenders within the country
• B. Always denominated in foreign currency
• C. Borrowed only from international institutions
• D. Excluded from the government's debt servicing costs

Explanation: Domestic public debt is raised mainly from residents and institutions within Pakistan, commonly in Pakistani rupees.

• A. Reviewing economic conditions and formulating development plans
• B. Collecting federal income tax from individuals
• C. Regulating commercial banks' daily branch operations
• D. Issuing Pakistan's currency notes

Explanation: The National Economic Council reviews the country's economic condition and advises on plans for economic, social and financial…

• A. Highly volatile food and energy prices
• B. Prices of all domestically produced goods
• C. Prices of all imported capital goods
• D. Prices of services supplied by government offices

Explanation: Core inflation removes items such as food and energy whose prices often fluctuate sharply in the short term.

• A. Lower production costs for those factories
• B. Raise the cost of the imported raw material
• C. Reduce the supply of the raw material immediately
• D. Guarantee a rise in the government's tariff revenue

Explanation: A lower tariff reduces the tax-inclusive price of the imported input, which can lower production costs for firms using it.

• A. Agriculture and livestock
• B. Manufacturing and mining
• C. Wholesale and retail trade
• D. Transport and communications

Explanation: Agriculture and livestock have traditionally provided the largest share of employment in Pakistan, especially in rural areas.

• A. Total population
• B. Working population
• C. Labour force
• D. Number of households

Explanation: Per capita income is national income divided by the total population. Dividing by the labour force or working population would produce a…

• A. Wider use of improved seeds and irrigation
• B. Higher dependence on seasonal rainfall
• C. Greater use of subsistence farming methods
• D. Reduced access to agricultural research

Explanation: Improved seeds and reliable irrigation can raise output per hectare and reduce dependence on uncertain rainfall.

• A. Quantity of goods imported
• B. Tax rate on domestic income
• C. Price of exported goods
• D. Value of domestic production

Explanation: An import quota restricts the physical quantity of a good that may enter a country.

• A. Current account balance
• B. Consumer price index
• C. Agricultural yield
• D. Labour force participation rate

Explanation: A persistent current account deficit often requires financing through borrowing, investment inflows or reductions in foreign exchange…

• A. Provincial revenue authorities
• B. The State Bank of Pakistan
• C. The National Highway Authority
• D. The Election Commission of Pakistan

Explanation: After constitutional changes, provincial revenue authorities generally administer sales tax on services within their respective provinces.

• A. A skilled engineer working only a few hours in an unrelated job
• B. A graduate actively seeking work with no job
• C. A worker changing jobs after leaving a previous employer
• D. A person outside the labour force who is not seeking work

Explanation: Underemployment occurs when a person works below his or her desired hours or skill level.

• A. Lower borrowing costs and higher private investment
• B. Higher borrowing costs and lower private investment
• C. Lower exports and higher import duties
• D. Higher tax revenue without economic growth

Explanation: A lower policy rate can reduce market lending rates, encouraging firms and households to borrow and spend more.

• A. Attract investment through concentrated infrastructure and incentives
• B. Replace the central bank's monetary policy committee
• C. Set national agricultural support prices
• D. Eliminate the need for domestic tax collection

Explanation: Special economic zones provide infrastructure, regulatory facilities and selected incentives to attract domestic and foreign investment.

• A. Improved transport links connecting less-developed districts to markets
• B. A rise in the national inflation rate
• C. A fall in the currency's foreign exchange value
• D. An increase in the central bank's reserve requirement

Explanation: Better transport links can connect remote districts with suppliers, consumers, jobs and investment, helping spread economic activity…

• A. Wages paid to factory workers
• B. Rent received by a landlord
• C. Pension paid by the government
• D. Profit earned by a business

Explanation: A government pension is a transfer payment, so it redistributes income rather than rewarding current production.