Class 2nd YEAR Federal Board 2009
Paper:Economic (Objective Type)                                      Time Allowed: Max.Marks:
Note:Use this paper to write the answers to the objective questions.No marks will be awarded for           cutting,over-writing or using a pencil.This paper must be tagged with the answer-book

1.       Insert correct option.                                          

(1)     Which of the following best defines real income ? 

          (a) Income in terms of its purchasing power         (b) Take-home pay.

          (c) Wages plus over time.                                   (d) Wages in money terms less taxes.

(2)     Which of the following must be a consequence of inflation ?

         (a) Interest rate will rise.                  (b) Unemployment will increase.

         (c) The value of money will fall.       (d) Exchange rates will rise.

(3)     Which of the following signifies a budget deficit ?

         (a) Where public spending is greater than the amount of revenue.

         (b) Where public spending is less than the amount of revenue.

         (c) Where public spending is equal to the amount of revenue spending.

         (d) Where public spending exceeds private spending.

(4)     What would be reduced as a result of a subsidy on a commodity ?

         (a) Its retail price.              (b) Its production.

         (c) Value of money.           (d) Consumer's spending.

(5)     Buying and selling of government security by whom is called ''open market operation ''?

         (a) Public corporation.                   (b) Central bank.

         (c) Foreign Banks.                         (d) Commercial banks.

(6)     Which of the folloe=wing restrictions on trade would involve restricting the amount of the commodity           imported to a specified amount ?

         (a) Custom duty                    (b) Subsidies

         (c) Exchange control             (d) Quota

(7)     How does a country deal with a surplus in its balance of payments ?

         (a) By adding to its reserves of foreign exchange.   (b) By borrowing from central bank.

         (c) By borrowing                                                   (d) By importing more from lMF.

(8)     A tax has been imposed on a product with perfectly inelastic demand. Who will finally pay the tax ?

         (a) The Government.             (b) The manufacturer

         (c) The purchaser                  (d) The producer and consumer equally.

(9)     To what does the phrase ''Terms of trade'' refer ?

         (a) The currency exchange rate.

         (b) The difference between the value of visible exports and invisible imports.

         (c) The difference between the value of visible exports and visible imports.

         (d) The rate at which exports are exchanged for imports

(10)   Why are weights used in constructing a price index ?

         (a) Price tend to fluctuate.              (b) Some families are bigger than others.

         (c) Some goods take a greater proportion of total spending than others.                                                  (d) Some goods are more expansive than others.

(11)   Which organization in a country implements monetary policy and regulates the exchange rates ?

         (a) The central bank.                   (b) Commercial banks.

         (c) insurance companies.             (d) Central Government

(12)   What function do central bank and commerical bank have in common ?

         (a) Acting as a banker's bank.                 (b) Dealing with foreign exchange.

         (c) Supervising the banking system           (d) Controlling the value of money.

(13)   What Percentage does the agricultural sector in pakistan contributes in GNP ?

         (a) 15              (b) 25                (c) 30               (d) 35

(14)   What does the SMEDA organization of pakistan deal with ?

         (a) Small size farms.                (b) Small and medium size industries.

         (c) Small industries.                 (d) lMport and export sector.

(15)   Which one is the legal tender money in Pakistan ?

         (a) ATM cards                (b) Currency notes

         (c) Cheques                     (d) Drafts

(16)   What is the main purpose of getting ''lSO'' certification ?

         (a) Increase the quantity of exports                  (b) Improve the quality of exports.

         (c) Remove the deficit in balance of payments. (d) Provide help to the developing countries.

(17)   A bank has a reserve ratio of 20% and cash reserve of 20 million.How much total deposits can the           bank create ?

         (a) 50 million                (b) 150 Million

         (c) 100 Million             (d) 200 Million.

(18)   Who developed the idea of socialism ?

         (a) Adam Smith               (b) Marshall

         (c) Karl Marx                  (d) Keynes

(19)   When does the financial year in pakistan start ?

         (a) 1st January              (b) 1st June

         (c) 1st July                    (d) 1st March

2.a)     Attempt any FIFTEEN parts. 

(1)       Calculate ''personal income'',given the following statistics:

           (a) National income:                                       100 billion

           (b) Social security and corporate taxes            10  billion                      

           (c) Transfer payment:                                      20  billion

(2)       What are the three motives that create demand for money ?Draw the curve showing demand for             money.

(3)       Under what circumstances is deficit financing policy adopted? What is its most harmful effect on the             economy ?

(4)       Distinguish between Money market and Capital market.

(5)       What is a bill of exchange ? Who has the power to discount and re-disacount the bill of exchange ?

(6)       Higlight the differences between:

           (a) A bearer cheque.               (b) An order cheque.

(7)       Why do goverments adopt the policy of protection ? Give three main reasons.

(8)       Is there any difference between depreciation and devaluation ? How are these applied ?

(9)       Which are three main sources of the Federal Government of pakistan ?

(10)     Islamic economic system is superior to other systems. Indicate three main reasons for its             superiority.

(11)     Define the terms Zakat and Usher

(12)     Given the following values find general price level M=Rs.100,        M1=Rs.100,        V=3,                    V1=2,        T=Rs.100

            Prove that demand for money equals supply of money.

(13)      Differentiate between public and private finance.

(14)      Following diagrams show Demand pull and Cost push inflation.Lable them accordingly. Give two              reasons for each type of inflation.

           

 

 

 

 

 

(15)       Name any three organizations which have been formed for the promotion of international trade.

(16)       Yield per acre in pakistan is low. Suggest three measures to increase it.

(17)       Identity three main difficulties in the computation of national income in pakistan.

(18)       List any three main exports of Pakistan. How much foregins exchange is earned by export of               these items ?

(19)       Why is economic planning necessary for economic development ?

(20)       What are three most important functions of money in your opinion ?

(21)       What qualities should a good money material have ?

(1)         Explain the circular flow of National income.

(2)         Describe briefly how a commercial bank creates credit money.

3.          Explain Ricardo's theory of international trade.

4.          Elaborate the role of State Bank of Pakistan in economic development.

5.          What are the characteristics of an economic system ?

6.          What are the problems of industrial sector in Pakistan ? Suggest measures to overcome these              problems.