ECO401-Solved Papers

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Virtual University of Pakistan
ECO401 Current Papers 2011 (unsolved)
SOME CURRENT PAPERS COLLECTION OF ECO 401  from 2011

PAPER: 01:
MCQs = 56 Quest ions= 8
Q1: Dif ferentiate between Mo,  M1 and M2 components of  money supply.  (3 marks)
Q2:Difference between Real  Exchange Rate and Nominal Exchange Rate. (3 marks)
Q3:When Real wage unemployment Occur? Discuss.  (3 marks)
Q4:What are  the sources of borrowing ,By which Govt.  can remove  the f iscal
deficit? (3 marks)
Q5:Different iate between 2nd degree price discriminat ion and 3rd degree price
discrimination.  (5 marks)
Q6:Different iate between fr ict ional  unemployment and structural unemployment.
(5 marks)
Q7:Why could world on the whole not  have current account  def icit? discuss( 5
marks)
Q8: Why there  is Always uncertainty  in consumer behavior?? Discuss (5 marks)


PAPER: 02:

short Qs
equi l ibrium point nakal k quant ity demanded n quantity supppl ied nikalni  thi

wat is BOP??

MM calculate krna tha. . . .

diffrence b/w demand pul l and cost  pul l  inf lat ion??

on wat basis countr ies gain from trade??

aik Q tha GNP n NNP  f ind krna tha. . .

isocost and budget  l ine. . . . ..

aik aur tha. . . . . . .  


PAPER: 03:
Q1=Difference between cyclical unemployment and technological unemployment. 3 marks
Q2= Explain the slope of money supply with help of daigram. 5 marks
Q3 Differece btw cardinal and ordinal approach of utility? 3 marks
Q4=Explain Engal curve for normal commodity with the help of daigram. 5 marks
Q5=Explain the growth through trade strategy.why it is fail 5 marks
Q6=1 table diya hua tha jis ma gdp find krna tha.5 marks
all are mcq's which are not 4rm past paper.so plz prepare whole buk as wel as the past paper
too.


ECO401 Current Papers 2011 (unsolved)
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PAPER: 04:

totol quest ion 64
objective 56
what is current account and how  to reduce deficit
what is LP curve and make the diagram
what is equi l ibrium reasons  in the compitation
& monopl ists
define marginal  curve in the monobi l ists
what countries are poor and what are  the causes
of pooreness
remainning 2 quest ion of also from  last chpters
and majority of mcqs from  last chpter and marginal
consumption


PAPER: 05:

Total questions = 64
Total mcq’s = 56
Short questions of 3 marks;
  Define the relationship between monopoly and price elasticity of demand?
  Explain concept of accelerator in your own words?
  Differentiate actual and potential GDP?
  Define money supply curve with the help of diagram?
Long questions of 5 marks;
  Define Philips curve with the help of diagram.
  Balance sheet of UBL bank and calculation of money multiplier.
  Price of margarine is increase, what would be the effect of demand and supply curve on
the butter, explain with the help of diagram.
  Calculation question in which NNP and GNP was required

PAPER: 06:

total 64 questions....

56 mcqs.... just 3 r 4  from old papers......
1.  assumptions of exogenous theory?  (3)
2.  steady trade growth?  (3)
3.  money demand curve?  (3)
4.  numerical of mps?  (5)


ECO401 Current Papers 2011 (unsolved)
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5.  cerrent account deficit?  (5)
6.  question about inferior n normal goods?  (3)
7.  vertical and horizontal demand curve?   (5)
8.  mean and median find kerna tha?  (5)
PAPER: 07:
total question:64
MCQs: 56/64
kch kch from Past pprs

short Qs
equilibrium point nakal k quantity demanded n quantity suppplied nikalni thi

wat is BOP??

MM calculate krna tha....

diffrence b/w demand pull and cost pull inflation??

on wat basis countries gain from trade??

aik Q tha GNP n NNP find krna tha...

isocost and budget line......
PAPER: 08:
Q1=Difference between cyclical unemployment and technological unemployment. 3 marks
Q2= Explain the slope of money supply with help of daigram. 5 marks
Q3Differece btw cardinal and ordinal approach of utility? 3 marks
Q4=Explain Engal curve for normal commodity with the help of daigram. 5 marks
Q5=Explain the growth through trade strategy.why it is fail 5 marks
Q6=1 table diya hua tha jis ma gdp find krna tha.5 marks
all are mcq's which are not 4rm past paper.so plz prepare whole buk as wel as the past
paper too.
PAPER: 09:

1. Differentiate between ignorance and irrationality with respect to rational decision
making.
2. Differentiate between real GDP and nominal GDP.
3. At what point the equilibrium occurs in the foreign exchange market?
4. By how many ways a government can finance it’s fiscal deficit?
5. Briefly discuss different types of taxes which a government can impose.
6. Why could the world as a whole could not experience a problem of a current account
balance of payment deficit?



ECO401 Current Papers 2011 (unsolved)

There were two more five marks questions, one about Injections calculation and other was
about revenues.

PAPER: 10:
•• •• equilibrium point nakal k quantity demanded n quantity suppplied nikalni thi

wat is BOP??

MM calculate krna tha....

diffrence b/w demand pull and cost pull inflation??

on wat basis countries gain from trade??

aik Q tha GNP n NNP find krna tha...

isocost and budget line...... •• ••

•• •• Q1=Difference between cyclical unemployment and technological unemployment. 3 marks
Q2= Explain the slope of money supply with help of daigram. 5 marks
Q3Differece btw cardinal and ordinal approach of utility? 3 marks
Q4=Explain Engal curve for normal commodity with the help of daigram. 5 marks
Q5=Explain the growth through trade strategy.why it is fail 5 marks
Q6=1 table diya hua tha jis ma gdp find krna tha.5 marks
all are mcq's which are not 4rm past paper.so plz prepare whole buk as wel as the past paper
too.

PAPER: 11:
Q #1 what happens to airline industry’s market supply curve as a result of the following
events? Also give REASONS.
a)      There is an increase in the price of oil.
b)      Airline workers receive a 20% increase in their wages
Marks (2.5+2.5)
Q#2 Defines pure inflation? How inflation can be measured? Marks = 5
Q#3 What will be impact of the following factors on marginal propensity to consume?
a)      A fall in the rate of income tax.
b)      People anticipate that the rate of inflation is about to rise.
c)      The government redistributes income from the rich to the poor.
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d)      The government gives the subsidies.
e)      If the assets of people increases.
Marks 5
Q#4 Defined different types of taxes impose by government? Marks 3
Q#5 Discusses basic function of money? Marks 3
Q#6 Define exchange rate? Also give an example of exchange rate? Marks3
Q#7 What does the concept of purchasing power parity illustrate with reference to GDP?
Marks 3
Q#8  Ali wants buy a tickets flowing table show the name .cost and satisfaction of items
which are available with movie tickets. Answer these question marks 3
Will he buy the ticket or not? Why? What will be the opportunity cost of buying the movie
ticket?
PAPER: 12:
MCQs = 56 Questions= 8
Q1: Differentiate between Mo, M1 and M2 components of money supply. (3 marks)
Q2:Difference between Real Exchange Rate and Nominal Exchange Rate. ( 3 marks)
Q3:When Real wage unemployment Occur? Discuss. (3 marks)
Q4:What are the sources of borrowing ,By which Govt. can remove the fiscal deficit? (3
marks)
Q5:Differentiate between 2nd degree price discrimination and 3rd degree price
discrimination. (5 marks)
Q6:Differentiate between frictional unemployment and structural unemployment. (5
marks)
Q7:Why could world on the whole not have current account deficit? discuss( 5 marks)
Q8: Why there is Always uncertainty in consumer behavior?? Discuss (5 marks)





ECO401 Current Papers 2011 (unsolved)
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PAPER: 13:
Q#1 Some economists suggest “growth through trade strategy” to tackle the problem of
poverty of under developed countries.
a)      What is the basic theme of this strategy
b)     B) why this strategy is not so much successful
c)      C) what is the purposed solution presented to table the drawback of this strategy
Marks=5

Q#2 Following figure shows the circular flow of goods and income in a two sector
economy. Interpret all the points in this figure that how the household sector and business
sector work in an economy to produce goods and services (marks 5)
Q#3 Explain the difference between endogenous growth model and exogenous growth
model? Marks=5
Q#4 Name the situations where users do not face diminishing marginal utility? Marks=3
Q#5 On what basis countries gain from trade? Marks=3
Q#6 It is said that growth is an important macroeconomic issue why discuss? Marks=3
Q#7 Differentiate between the personal income and disposable personal income? Marks=3

PAPER: 14:
Total MCQs 56
4 Qs havng 3, 3 maks each
4 Qs havng 5,5 maks each...
Q1 . effect expansonary fiscal policy on debt country.
Q2. difference b/w fixed exchange rate & floating exchange rate
Q3. find median & mode
Q4 .Crticism on Hecsher-ohlin theory..
Q5 . define consumption and consumption function

mcqs new & confusing

PAPER: 15:


ECO401 Current Papers 2011 (unsolved)
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Total 64 questions....

56 mcqs.... just 3 r 4  from old papers......
1.      assumptions of exogenous theory?  (3)
2.      steady trade growth?  (3)
3.      money demand curve?  (3)
4.      numerical of mps?  (5)
5.      cerrent account deficit?  (5)
6.      question about inferior n normal goods?  (3)
7.      vertical and horizontal demand curve?   (5)
8.      mean and median find kerna tha?  (5)

PAPER: 16:
Total MCQs 56
4 Qs havng 3, 3 maks each
4 Qs havng 5,5 maks each...
Q1 . effect expansonary fiscal policy  on debt country.
Q2. difference b/w fixed exchange rate & floating exchange rate
Q3. find median & mode
Q4 .Crticism on Hecsher-ohlin theory..
Q5 . define consumption and consumption function

PAPER: 17:
July 15, 2011 at 7:47am
Total Question:64
Four Q of 5Marks N three Q of 3Marks
Mcq’s mostly from past papers
Subjective Part
Q: Define  current account deficit ??? hw to reduce current account defict? 5Marks
CURRENT ACCOUNT DEFICIT
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Current account is very much important in order to maintain the long term sustainability of
the balance of payment.
Recall the equilibrium condition of the economy is where withdrawals equal the injections.
W = J
S + T + M = I + G + X
M – X = I – S + G – T
Current account deficit = Private sector resource deficit + Government budget deficit Japan
and Korean economy remained in high current account deficit due to high private sector
resource deficit. This deficit arises when firms want to invest more and debts that are
taken to finance the current account deficit go for the investment of the firms. Government
spending and household consumption was not being financed. African and Latin American
economies were also remained in high current account deficit. But this deficit was due to
the higher consumption expenditures by the households and consumers. This caused
worsen the debt problems of these countries.
HOW TO REDUCE CURRENT ACCOUNT DEFICIT?
Devaluation can help in this regard. Devaluation causes an increase in exports and
decrease in imports leading to reduction in current account deficit. But this policy also not
successful empirically due to several reasons in many countries.

Q:Explain the shape of money demand curve with the help of diagram.?5Marks
Answer:
Money demand Md increases with income levels.
Money demand Md falls with interest rates.
In this concept we are talking about real income and real interest rate not the nominal
income and nominal interest rate.
So this implies to the demand of real money.
Whether nominal and real money supply is equal or not depends much on the assumption
regarding prices. If prices are assumed fixed, then the two are equal, otherwise not.
As you can see from the diagram where money demand in on the x-axis and income is on
the y-axis, and there are various level showns like L1,L2,L3.
Diagram u can see on 192
Q: Discuss the assests and liabilities sides of central bank?5Marks
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Balance sheet of a central bank
Assets Side:
Loans to Govt
Forex reserves
Loans to private sector
Liabilities side:
Notes, coins & currency in circulation
Govt & commercial bank deposits
Liquidity paper issued
Q: Drive the equation of Money Multiplier with the help of income and consumption
equation? 5Marks
Y = C + I + G + NX
C = a + bY

Answer:
By Putting the value of ‘C’
Y = a + bY + I + G + NX
Y – bY = a + I + G + NX
Y = a + I + G + NX /1 -b= 1/1 -b (a + I + G + NX)
k =     1/1- b

Q: Difference between Personal income and deposable personal income? 3Marks
Answer:
Personal income of an individual is the total amount of income s/he receives form
deploying all the different factors of production s/he owns. Aggregate personal income is
just the above definition aggregated for the whole of the economy. The total income
received by the members of the domestic household sector, which may or may not be
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earned from productive activities during a given period of time, usually one year. The
primary use of personal income is to measure the income actually paid out to the
household sector. After adjusting for income taxes, personal income forms the basis for
consumption expenditures on gross domestic product.
Disposable income is obtained by subtracting the amount of direct taxes from the personal
income of the person. Aggregate holds as above as well. The total income that can be used
by the household sector for either consumption or saving during a given period of time,
usually one year. This is the income left over after income taxes and social security taxes
are removed and government transfer payments, like welfare, social security benefits, or
unemployment compensation are added.

Q: What is the Exogenous growth model? 3Marks
EXOGENOUS GROWTH THEORY
The Exogenous growth model, also known as the Neo-classical growth model or Solow
growth model is a term used to sum up the contributions of various authors to a model of
long-run economic growth within the framework of neoclassical economics. The most
important contribution was probably the work done by Robert Solow; Solow received the
1987 Nobel Prize in Economics for his work on the model. The key assumption of the
neoclassical growth
Model is that capital is subject to diminishing returns. Given a fixed stock of labor, the
impact on output of the last unit of capital accumulated will always be less than the one
before. Assuming for simplicity no technological progress or labor force
growth, diminishing returns implies that at some point the amount of new capital produced
is only just enough to make up for the amount of existing capital lost due to depreciation.
At this point, because of the assumptions of no technological progress or labor force
growth, the economy ceases to grow.

Q: Monopolistic competition ki aik diagrame thi usko describe kerna tha?3Marks