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Stocks – MCQs
19 questions. Click to practice.
Show Answers
Correct options are highlighted when revealed.
1.
What is the effect of an increase in the budget surplus on the market for loanable funds?
Causes the supply of loanable funds to decrease, leading to a higher real interest rate.
Causes the supply of loanable funds to increase, resulting in a lower real interest rate.
Leads to an increase in the demand for loanable funds, pushing the real interest rate upward.
Leads to a decrease in the demand for loanable funds, causing the real interest rate to fall.
Has no impact on either supply or demand in the loanable funds market.
2.
What happens to real interest rates and investment if Pakistani citizens become less future-oriented and reduce their savings at every real interest rate?
Real interest rates increase while investment decreases
Real interest rates increase and investment also increases
Real interest rates decrease and investment goes up
Real interest rates decrease along with investment
3.
What effect does a rise in the budget deficit have on public savings?
An increase in government savings
A reduction in private savings
No impact on savings
A decline in public savings
4.
What is the effect of a larger budget deficit on the real interest rate and the demand for loanable funds used for investment?
It increases the real interest rate and reduces the amount of loanable funds sought for investment
It decreases the real interest rate and raises the demand for loanable funds for investment
It causes the real interest rate to rise and boosts the demand for loanable funds for investment
It lowers the real interest rate and diminishes the demand for loanable funds for investment
5.
Which combination of government policies is most effective in promoting economic growth?
Reduce taxes on savings returns, offer investment tax credits, and decrease the budget deficit
Raise taxes on savings returns, grant investment tax credits, and increase the budget deficit
Raise taxes on savings returns, grant investment tax credits, and reduce the budget deficit
Reduce taxes on savings returns, offer investment tax credits, and increase the budget deficit
6.
What does investment primarily refer to?
Buying consumer products and services
Acquiring capital assets and physical infrastructure
Depositing money into a savings account
Purchasing shares and debt securities
7.
If the public reduces consumption by Rs 100 billion while the government increases its spending by Rs 100 billion, assuming all other factors remain constant, which statement is correct?
Saving remains the same
Saving rises, leading to faster economic growth
Saving declines, resulting in slower economic growth
Insufficient data to conclude the impact on saving
None of the above
8.
What occurs when government expenditures surpass the revenue collected from taxes?
A budget deficit arises
No correct answer listed
A budget surplus is created
Private savings increase
9.
What does national saving represent in economic terms?
No correct answer listed
The sum of investment and consumer spending
The total of private saving plus government saving
Gross Domestic Product minus government expenditures
10.
What does credit risk indicate in relation to a bond?
Chance that the issuer will fail to repay
Ratio of price to earnings
Periodic payment to shareholders
Tax implications of the bond
11.
What is the expected effect on the real interest rate if the government simultaneously raises investment tax credits and lowers taxes on savings returns?
The real interest rate will decrease
The real interest rate will increase
The effect on the real interest rate cannot be determined
The real interest rate will remain unchanged
12.
When a rise in the budget deficit leads to a decline in both national saving and investment, which economic phenomenon is being illustrated?
financial intermediation
raising capital through equity
crowding out effect
impact on investment funds
none of the above
13.
When the supply curve for loanable funds is highly inelastic (steep), which policy is most effective at boosting both saving and investment?
Decreasing the government's budget deficit
Raising the government's budget deficit
Implementing a tax credit for investments
No policy would significantly affect saving or investment
14.
What happens to the supply of loanable funds when a government increases its borrowing due to a larger budget deficit?
The supply curve of loanable funds moves to the right
The demand curve for loanable funds shifts leftward
The demand for loanable funds shifts toward the right
The supply curve of loanable funds shifts to the left
No change occurs in the loanable funds market
15.
What is the likely effect on Pakistan's loanable funds market if its citizens increase their savings?
The supply curve of loanable funds will move rightward, causing a decrease in the real interest rate.
The demand curve for loanable funds will shift to the right, leading to an increase in the real interest rate.
The demand for loanable funds will rise, resulting in a lower real interest rate.
The supply of loanable funds will increase, pushing the real interest rate upward.
No change will occur in either the supply or demand of loanable funds.
16.
Which type of financial security is likely to offer the highest interest rate?
A bond issued by a newly established startup
A government bond from France
A bond from a well-established blue-chip corporation
An investment fund holding corporate bonds from blue-chip firms
17.
Given that GDP is Rs 1,000, consumption amounts to Rs 600, taxes are Rs 100, and government spending is Rs 200, what are the values of saving and investment?
Saving equals Rs 300 and investment equals Rs 300
Saving amounts to Rs 200 and investment amounts to Rs 100
Saving is Rs 100 and investment is Rs 200
Saving and investment both are Rs 0
18.
Who does a financial intermediary serve as a link between?
Consumers and merchants
Spouses in a marriage
Individuals seeking funds and those providing funds
Employee organizations and companies
None of the above
19.
Which option represents a form of equity financing?
Corporate debt securities
Stocks issued by a company
Every listed choice is equity finance
Sovereign debt instruments
None of the above
Stocks – MCQs | PakQuizHub