Economics

Summer 2014
Q.1 What is demand-pull inflation? Explain any four possible causes for demand- pull inflation.
Q.2 A. The Balance of Payments (BoP) account is normally divided into two broad categories:
Current and Capital. Define each of them.
B. State the key items and components of a BoP statement.
Q.3 Foreign aid has often been a subject of controversy in terms of its impact on the recipient
countrys development and economists are divided on this issue. In case of Pakistan, the
effectiveness of this type of financing is sporadic and anecdotal. State 3 advantages and 2
disadvantages of aids from international lending institutions.
Q.4 A. Explain the composition of M1, M2 and M3 components of money.
B. Explain any 2 factors that can limit the size of deposits that the banking system can create.
Q.5 Gross Domestic Product (GDP) is the total market value of all final goods and services
produced in an economy in a given year. It is one of the indicators of economic performance of
a country.
Discuss the following questions:
A. Why does the GDP include only final goods produced?
B. Why is the GDP measured by summing up the market value of all the final goods produced?
C. Why does the GDP not include non-production transactions? Discuss using following
examples
a. Sale of used goods
b. Buying and selling of shares of Company A in stock market
Q.6 What are the 5 economic factors that in your opinion, are important to monitor the
progress of an emerging economy such as Pakistan?
Q.7 A. Define Monetary Policy.
B. List the main objectives of monetary policy.
C. List the tools of monetary policy used by the State bank of Pakistan.
D. Briefly discuss expansionary monetary policy.
E. What is the sequence of decisions that a Central Bank takes to encourage private investment
and economic growth through monetary policy?
Q.8 Economist almost, always makes use of extensive graphs to better illustrate economic
principles and trends. Choose the appropriate title from the given options to identify the 5
graphs.
a. Philips curve
d. Marginal cost curve

b. Inelastic supply
c. Inelastic demand

e. Cost push inflation

GRAPHS

TITLES

Q.9 A. What do you understand by financial deepening?

B. State the formula for measuring financial deepening?
C. List any 3 uses of the formula of financial deepening.