Explanation

Firm hires until: Price × MP of labor = Wage  

10 × (1/L) = 1  

10/L = 1  

L = 10  

So the firm will hire 10 units of labour.

Last verified on 22-04-2026

Explanation

• GDP ↑ → Income ↑
• Imports (M) ↑ due to higher consumption
• Exports (X): not dependent on domestic GDP directly
• Government spending (G): policy decision
• Model: C + I + G + (X − M)

Last verified on 22-04-2026

Explanation

• The actual budget deficit is the total government deficit in a given year.
• It has two main parts: structural and cyclical deficits.
• Structural deficit exists even at full employment.
• Cyclical deficit changes with the business cycle.
• Therefore, actual deficit = structural + cyclical deficit.

Last verified on 22-04-2026

Explanation

• In a perfectly competitive resource (labour) market, firms are price takers.
• The Marginal Revenue Product (MRP) depends on MPL × price of output.
• As more labour is employed, marginal productivity typically falls.
• This makes MRP decline as employment increases.
• Therefore, the MRP curve is downward sloping.

Last verified on 22-04-2026

Explanation

• Governments and central banks control money markets using different tools.
• These include reserve requirements, monetary base control, and interest rate policies.
• Since financial reforms in the 1980s, Pakistan shifted toward market-based policies.
• Direct interest rate control (fixed/administered rates) was largely discontinued.

Last verified on 22-04-2026