Category: World Economy MCQs

Which of the following is not a function of State Bank of Pakistan?

A. Lending to Commercial Banks
B. Regulating Money Supply
C. Preparing the Annual Federal Budget
D. Controlling Interest Rules

Answer

Correct Answer: C. Preparing the Annual Federal Budget

Detail about MCQs

Preparing the Annual Federal Budget is not a function of the State Bank of Pakistan. The State Bank of Pakistan primarily focuses on monetary policy, regulating money supply, controlling interest rates, and acting as a lender to commercial banks. The preparation of the annual federal budget is typically the responsibility of the government’s finance ministry or treasury department.

Value added Tax (VAT) is ___?

A. Again tax will be imposed on the cloth Equal to the value Addition from Yarn to Cloth
B. Thus under VAT tax is imposed on value Addition in Each and Every stage of Production
C. On each stage the tax is imposed only to the Amount of Value Added
D. All of these

Answer

Correct Answer: C. On each stage the tax is imposed only to the Amount of Value Added

Detail about MCQs

Value Added Tax (VAT) is a type of consumption tax that is imposed at each stage of the production and distribution chain. It is applied to the value added by each economic agent in the production and distribution process. This is in contrast to traditional sales taxes that are applied only at the final sale to the end consumer. Option C correctly describes how VAT operates.

The total demand for goods and services in an economy is known as ___?

A. National Demand
B. Aggregate Demand
C. Gross National Product
D. Economy Wide Demand

Answer

Correct Answer: B. Aggregate Demand

Detail about MCQs

The total demand for goods and services in an economy is known as Aggregate Demand (Option B). Aggregate Demand represents the total quantity of goods and services that all sectors of an economy (consumers, businesses, government, and foreign buyers) are willing to buy at a given overall price level and in a given period.

It is usually expressed as the sum of four components:

  1. Consumption (C): The total spending by households on goods and services.
  2. Investment (I): The spending on capital goods and structures by businesses and the purchase of new homes.
  3. Government Spending (G): The total spending by the government on goods and services.
  4. Net Exports (Exports – Imports): The value of a country’s exports minus its imports.

Mathematically, Aggregate Demand is represented as:

where:

  • is consumption,
  • is investment,
  • is government spending,
  • is exports, and
  • is imports.

Understanding Aggregate Demand is crucial in macroeconomics as it helps analyze the overall economic activity and guides policymakers in making decisions related to monetary and fiscal policies to achieve macroeconomic goals like price stability, full employment, and economic growth.

1 2 3 … 5