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

Explanation

• Money performs important roles in an economy.
• It is used to buy and sell goods and services.
• It helps in measuring value of goods.
• It also helps in saving wealth over time.
• But barter is not a function of money; it is an old exchange system without money.

Last verified on 22-04-2026

Explanation

• Tax burden depends on elasticity of demand and supply.
• More inelastic side bears more tax burden.
• If demand is perfectly elastic, buyers avoid the tax burden.
• If supply is perfectly inelastic, sellers cannot reduce quantity easily.
• In that case, sellers bear the entire tax burden.

Last verified on 22-04-2026

Explanation

• R² (R-squared) is a statistical measure in regression analysis.
• It shows how well the regression line fits the observed data.
• It represents the proportion of variation explained by the model.
• A higher R² means a better fit.
• It is called the goodness of fit measure.

Last verified on 22-04-2026

Explanation

• Money Market Mutual Funds (MMMFs) invest in short-term, safe financial instruments.
• Their main goal is liquidity and capital preservation.
• They avoid risky or long-term investments.
• They focus on easily convertible assets.
• Therefore, they invest in highly liquid assets.

Last verified on 22-04-2026

Explanation

• Cost-push inflation happens when production costs increase.
• Firms raise prices to maintain profit margins.
• This leads to a general rise in price level.
• Key causes include higher wages and input costs.
• A major trigger is an increase in oil prices.

Last verified on 22-04-2026