FEDERAL PUBLIC SERVICE COMMISSION COMPETITIVE EXAMINATION FOR RECRUITMENT TO POSTS IN BPS – 17 UNDER THE FEDERAL GOVERNMENT, 2003.
ECONOMICS, PAPER – I
TIME ALLOWED: THREE HOURS MAXIMUM MARKS:100
NOTE: Attempt FIVE questions in all, including question No. 8 which is COMPULSORY. All questions carry EQUAL marks.
1. Discuss which of the three approaches explain better consumer behavior and why?
2. Show and explain the conditions of output maximization and cost minimization?
3. Explain how the modern theory of interest (IS-LM) model came into being and how is it different than the other theories?
4. Explain stagflation and give a viable strategy to overcome this phenomenon.
5. It is desirable to have a larger proportion of direct taxes in the taxation structure. Explain why in a developing country like Pakistan, efforts to raise the share of direct taxes have not met with success.
6. Critically examine the theory of comparative cost.
7. Write notes on the followings:-
(i) Role of IMF and its impact on developing economies
(ii) Government expenditure and economic development
COMPULSORY QUESTION
8. Write only the correct answer in the Answer Book. Do not reproduce the questions.
(1) Total revenue receipts are maximum at that point on a demand curve where price elasticity is:
(a) Increasing
(b) Decreasing
(c) Unitary
(d) None of these
(2) Which of the following products will have an elastic demand?
(a) Flour
(b) Cloth
(c) Honda city
(d) None of these
(3) Price controls are:
(a) Necessary for consumer’s welfare
(b) A must to check inflation
(c) Doomed to fail
(d) None of these
(4) Increase in minimum wage:
(a) Helps in controlling unemployment
(b) Increases unemployment
(c) Reduces wage bill
(d) None of these
(5) An indifference curve gives:
(a) The actual combination of goods that consumer chooses
(b) The minimum choice of the consumer
(c) The highest level of satisfaction
(d) None of these
(6) MRSxy being 6 means:
(a) Consumer is willing to give up 6 units of x for one of y
(b) Preference for y is 6 times that of x
(c) Both of the above
(d) None of these
(7) Consider cardinal measure of utility, increase in consumption will:
(a) Increase marginal utility
(b) Will not average utility
(c) Both (a) and (b)
(d) None of these
(8) In pure competition
(a) Strong rivalries exist
(b) Cartels are formed
(c) Both (a) and (b)
(d) None of these
(9) National incomes include:
(a) Undistributed corporate profits
(b) Fringe benefits
(c) Both (a) and (b)
(d) None of these
(10) Personal income is obtained by adding which item(s) to national income:
(a) Govt. transfer payments
(b) Business transfer payments
(c) Both (a) and (b)
(d) None of these
(11) Which of the following is a stock variable?
(a) Gross private domestic investment
(b) Personal savings
(c) Both (a) and (b)
(d) None of these
(12) Find out the true statement(s):
(a) When aggregate supply exceeds aggregate demand, output rises.
(b) If intended investment exceeds savings, output falls
(c) Both (a) and (b)
(d) None of these
(13) When un-intended investment is positive:
(a) Output tends to rise
(b) Output tends to fail
(c) Output is in equilibrium
(d) None of these
(14) With no government and foreign trade sectors, savings always equals:
(a) Intended investment
(b) Realized investment
(c) Both (a) and (b)
(d) None of these
(15) If MPC = 2/3, the investment multiplier is:
(a) 2/3
(b) 1/3
(c) 3/2
(d) None of these
(16) Find out the true statement(s):
(a) When consumption function is linear, the mpc=apc
(b) The short run consumption function has a steeper slope that that of the LR
(c) Both (a) and (b)
(d) None of these
(17) If Union Bank has demand deposits of Rs. 25 million, no time deposits and required reserves of Rs. 7.5 million, the legal reserve requirement ration must be:
(a) 3.3 %
(b) 33.3 %
(c) 40 %
(d) None of these
(18) Which of the following is likely to be longer for monetary policy that for fiscal policy?
(a) The implementation lag
(b) The recognition lag
(c) Both (a) and (b)
(d) None of these
(19) The number of income tax payers in Pakistan is:
(a) 2 million
(b) 0.7 million
(c) 1 million
(d) None of these
(20) The impact and incidence of sales tax is:
(a) On the consumer
(b) On the seller
(c) On the producer
(d) None of these