Economics MCQs

Page No. 330

The Common Agricultural Policy of the European Union has ?


aincrease American farm exports to the EU

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b decrease American farm exports to the EU

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clowered the price of American farm exports to the EU

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dnot affected the price of American farm exports to the EU

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Which factor of production in the United States is most likely to be made worse off (its factor payment will decrease) because of the North American Free Trade Agreement ?


aCapital

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b land

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cskilled labor

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dunskilled labor

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View Answer unskilled labor

Which country is not a member of the European Union ?


aSpain

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bGermany

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cFrance

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dIceland

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View Answer Iceland

Members of the EU find that trade creation|| is fostered when their economies are ?


a highly competitive

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bhighly noncompetitive

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csmall in economic importance

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dgeographically distant

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View Answer highly competitive

Speculative bubbles may occur in the shares market ?


aduring periods of extreme pessimism because so many stocks become undervalued

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b only when people are irrational

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cwhen stocks are fairly valued

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dbecause rational people may buy an overvalued share if they think they can sell it to someone for even more at a later date

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Which of the following reduces risk in a portfolio the greatest ?


aIncreasing the number of shares from 10 to 20

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bAll of these answers provide the same amount of risk reduction

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cIncreasing the number of shares in the portfolio from 1 to 10

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d Increasing the number of shares from 20 to 30

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The study of a company’s accounting statements and future prospects to determine its value is known as ?


ainformation analysis

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b risk management

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c fundamental analysis

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d diversification

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Diversification of portfolio can ?


areduce aggregate risk

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b eliminate all risk

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cincrease the standard deviation of the portfolio’s return

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dreduce idiosyncratic risk

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Which of the following is an example of moral hazard ?


a After Gull buys fire insurance, he begins to smoke cigarettes in bed.

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b None of these answers demonstrate moral hazard

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cMahmood has been feeling poorly lately so he seeks health insurance

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dAll of these answers demonstrate moral hazard

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If people are risk averse, then ?


a. None of these answers are true

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bAll of these answers are true

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c They dislike bad things more than the like comparable good things

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dThe utility they would lose from losing a Rs50 bet would exceed the utility they would gain from winning a Rs 50 bet

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