Assuming leisure is a normal good, what will a wage rise do if the income effect is greater than the substitution effect?
Correct answer A. It will decrease labour supply
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Economics MCQs
Page 86 of Economics multiple-choice questions with answers. Tap an option to check yourself.
Page 86 of 131
- Miscellaneous Economics 737
- Basic of Economics 430
- Markets, Efficiency And The Public Interest 167
- Agriculture & Irrigation System of Pakistan 126
- Market 87
- Macroeconomic Issues and Analysis 75
- Money, Interest Rates And Output 73
- Introduction To Economics 70
- Population And Development 62
- Profit Maximizing Under Perfect Competition And Monopoly 56
- Income Inequality 52
- Non-Tariff Trade Barriers 48
- Aggregate Supply, Unemployment And Inflation 45
- Natural Resources and the Environment Toward Sustainable Development 44
- Costs , Supply And Perfect Competition 44
- Human Capital 42
- Labour Market 39
- Monopoly 35
- Long Term Economic Growth 30
- Inflation & Productivity 30
- Regional Trading Arrangements 29
- Characteristics and Institutions of Developing Countries 24
- Oligopoly 23
- Consumer Theory vs. Real Consumers 20
- Applied Microeconomics 20
- Alternative Theories Of The Firm 20
- Public Goods 20
- Balance of Payments, Aid and Foreign Investment 19
- Prices, Wages & Taxes 19
- Comparative GDP 19
- Budget Deficits And The Trade Balance 18
- Macroeconomic Policy Tools 18
- Asymmetric Information 17
- Application of Economics 16
- Production Factors 16
- Monopoly & Competition 15
- Capital Formation, Investment Choice, Information Technology, And Technical Progress 15
- Monetary, Fiscal And Incomes Policy, And Inflation 15
- Average And Total Cost 14
- Poverty, Malnutrition, And Income Inequality 12
- Monetary Union 10
Assuming leisure is a normal good, what does a backward-bending individual labour supply curve imply?
Correct answer C. The income effect outweighs the substitution effect
What happens to the opportunity cost of leisure as the hourly wage rate rises?
Correct answer C. It increases, since the cost of giving up one hour of work increases
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Inflation can be measured by all of the following EXCEPT which one?
Correct answer D. Finished goods price index
Computer spreadsheets have raised the productivity of accountants. What effect will this have?
Correct answer C. The demand curve for accountants will shift to the right, since the productivity of accountants has increased
Which of the following would probably make Pakistan’s CPI rise by more than its GDP deflator?
Correct answer B. An increase in the price of BMWs produced in Germany and sold in Pakistan
What is the marginal revenue product of labour?
Correct answer A. The additional revenue a firm earns by employing one additional unit of labour
A rise in the price of apples leads consumers to buy fewer kilograms of apples and more kilograms of oranges. Which bias will this create in the CPI?
Correct answer C. Substitution bias
If the output price stays constant, the marginal revenue product of labour curve will have the same shape as which curve?
Correct answer D. Marginal product of labour curve
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Your income rises from Rs19,000 to Rs31,000 while the CPI rises from 122 to 169. What has most likely happened to your standard of living?
Correct answer B. It has risen
Why may unemployment benefits raise the unemployment rate?
Correct answer D. They reduce the cost of job search
A coal miner earns more than someone with a similar background and skills who works in a safer job. What does this show?
Correct answer D. We have observed a compensating differential
If inflation is 8 percent and the real interest rate is 3 percent, what must the nominal interest rate be?
Correct answer A. 11 percent
What is the stock of knowledge, skills and talents that people possess called?
Correct answer B. Human capital
Which of the following does NOT form part of a worker’s human capital?
Correct answer D. Effort
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In which of these situations would you rather be the borrower?
Correct answer D. The nominal rate of interest is 20 percent and the inflation rate is 25 percent
What is the supply of land for a particular use like?
Correct answer B. It will be upward sloping because as land becomes more valuable in one use, the amount of land made available for that use will increase
Workers and firms agree a pay rise based on expected inflation, but inflation turns out higher than expected. What happens?
Correct answer B. Firms gain at the expense of workers
What does a Gini coefficient of zero indicate?
Correct answer C. Income is equally distributed
Which of the following would NOT tend to raise a worker’s wage?
Correct answer B. Doing a job that is fun