DEJAZMACH WONDIRAD PREPARATORY SCHOOL (DWPS)

ECONOMICS DEPARTMENT

YEKA SUB CITY EDUCATION OFFICE (YSEO) ETHIOPIAN UNIVERSITY

ENTRANCE MODEL EXAMINATION (EUEEME) ECONOMICS, 2012 E.C. MAY 2020

BOOKLETCODE : 55

SUBJECT CODE :05

TIMEALLOWED, 2:30

GENERAL DIRECTIONS

THIS BOOK LET CONTAINS ECONOMICS EXAMINATION. THE CODE FOR THIS
EXAMINATION IS 05 AND THE CODE FOR THIS PARTICULAR BOOKLET IS 55.
PLEASE COPY THESE CODES ON YOUR ANSWER SHEET WHERE IT READS BOOKLET
CODE AND SUBJECT CODE. IN THIS EXAMINATIO, THERE ARE A TOTAL OF 80
MULTIPLE CHOICE QUESTIONS OUT OF WHICHSIGHTED (NON-VISUALLY
IMPAIRED) CANDIDATES ARE REQUIRED TO ATTEMPT QUESTIONS 1-75 WHERE AS
THE VISUAL IMPAIRED CANDIDATES ARE REQUIRED TO ATTEMPT QUESTIONS

1-70 & QUESTIONS 76-80. CAREFULLY SELECT THE BEST ANSWER AND BLANKEN
ONLY THE LETTER OF YOUR CHOICE ON THE SEPARETE ANSWER SHEET
PROVIDED.USE ONLY PENCIL TO MARK YOUR ANSWERS.YOUR ANSWER MARK
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FORM OF CHEATING OR AN ATTEMPT TO CHEAT IN THE EXAMINATION WILL
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DO NOT TURNTHIS PAGE UNTIL YOU ARE TOLD TO DO SO.

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 Directions: Each of the following questions is followed by four possible alternatives. Read
each question carefully and blacken the letter of your best choice on the separate answer
sheet provided.

1. Which of the following is NOT True about Economics?

A. Economics is both Art and Science
B. General Price policy is tool of macroeconomics
C. Economics is study of problems regarding of choice due to abundance of resource
D. Theory of income and employment is the concern macroeconomics
2. ______ allows so the developing countries including Ethiopia to have access to the use textile
market without tariffs and quota.

A, GTP C. AGOA
B. ADLI D. COMESA

3. Which economy system is wrongly defined?

A. Capitalism economy system is market oriented economic system.

B. Mixed economy system is capitalist and command economic together.
C. Command economy system is the socialist economic system
D. Free market economy system is the planning economic system
4. A full time span of a regular student considered as:
A, Employed C, Out of labor force
B, Unemployed D, Labor force
5. Which of the following is Not concern of macro economics?

A. It deals basic elements of demand, supply & elasticity.

B. It concerns the government policy instruments.

C. It deals about the national income& product accounts.

D. It concerns about the international trade & balance of payment

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6. Which one of the following is Ethiopia’s new Economic reform development strategy?

A, Growth and Transformation program two (GTP2)

B, sustainable Development and poverty Eradication (SDPE)

C, sustainable Development and poverty Reduction program (SDPRP)

D, plan for Accelerated and sustainable Development to End poverty (PASDEP)

7. Which of the following is/are example(s) of fixed cost?

A. Interest on borrowed funds C. Cost raw materials

B. Cost of labor D. Cost of fuel

8. The economic cost of unemployment is:..

A, Decreases in labor productivity
B, The amount of output that is foregone
C, Socio-political unrest of the unemployed labor force.
D, Cost associated with stress and illness of the unemployed.
9. The new economic policy reform is needed for Ethiopia because of the:
A, fast structural transformation
B, equitable distribution of income
C, high saving and investment rate
D, Poor economic performance due to corruption.
10. One of the following is false regarding price elasticity?
A, Salt is more price elastic than sugar.
B, Luxury goods are more price elastic than necessity goods.
C , Insulin is less elastic than coffee.
D, The longer time period is more elastic than short time period.

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11. Which one of the following Business cycle phases has correct order (one follow to the other)

A. Peak Trough Recession Recovery

B. Recovery Peak Recession Trough

C .Boom Expansion Depression Contraction

D. Trough peaks Recession Recovery

12. Which of the following statement is Not true? If it takes Ethiopia 100 and 50 Labor per hours to
produce a quintal of Teff and Maize, respectively while it takes Kenya 50 and 100 Labor per hours
to produce the same?

A, Ethiopia has an absolute advantage in Teff production

B, Kenya has an absolute advantage in Teff production

C, Ethiopia comparative advantage in Teff production

D, Kenya has a comparative advantage in Maize production

13. Which of the following is the mode of payment in international trade, which is an order written
from creditor to a debtor and signed by the creditor requiring the person to whom it is addressed to
pay in the future?
A, Banker’s transfer, C, Letter of credit
B, Bill of exchange D, Open market operation
14. Which of the following statement is TRUE about the contribution of Industrial sector to foreign
exchange in Ethiopian economy?
A, The value of export of textile is more than that of food & beverages.
B, The value of export of chemicals is more than leather & footwear.
C, The value of export of food& beverage is more than that of textile.
D, The value of export of paper & printing is more than that of metals
15. Which of the following can NOT be determinant of autonomous investment?
A, Income C, Technology
B, population D , Interest rate

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16. One of the following can be used to measure the performance of the industrial sector

EXCEPT

A, Gross Value of output (GVO) C. Value added at Current market price (VACMP)
B. Value added at factor cost (VAFC) D. Consumer price Index (CPI)

17. Which one of the following BEST explain the motives for setting trade restriction?
A, To limit the quantity of imports. C, To protect local economy from foreign competition
B, To generate government revenue D, To raise the price of imported goods.
18. Which of the following BEST summarizes of the Ethiopian economy?
A, Organizing the different political parties C, provision of Oil and Sugar
B, Provision of military services D, Promoting economic growth and welfare
19. Assume that all other factors remain constant , which of the following is most likely occurs
during the expansionary phase of business cycle?
A, Real GNP rises and unemployment falls. C, Real GNP declines and inflation rises
B, Inflation rises and employment falls D, The number of business failures rises
20. What type of exchange rate system our country Ethiopia currently followed?.

A. Floating exchange rate system

B. flexible exchange rate system

C. Managed Floating exchange rate system

D. fixed exchange rate system

21. What are the two major sources of revenue for the Ethiopian government?
A, Sales of bonds and shares C, Sales of agricultural and Industrial products
B, Export and Import of goods and services D, Taxes and Non tax revenues
22. Which of the following is an abundant economic resource in Ethiopia?

A. Skilled labor & capital C. Entrepreneurship & Capital

B. Unskilled labor & Virgin land D. Petroleum & water

23. Which of the following is True about production period?

A. Short run refer to a production period less than one year

B. In short run fixed inputs can be changed
C. In long run all inputs can be fixed
D. In the long run all inputs can be changed
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24 Which of the following is the dominant farming system in the Ethiopian agriculture sector?
A, The small holder farming system C, The commercial farming system
B, The pastoral farming system D, Both commercial and small holder farming system
25. Which of the following is a correct relation between marginal product (MP) and average
product(AP) ?
A, AP rises when MP is less than AP. C, AP rises when MP is greater than AP
B, AP rises when MP is equal to AP D, AP falls when MP is equal to AP
26. From the following alternatives which is concern of macro economics?
A. Determines the National Income. C. General Prices level (Inflation and deflation)
B, Economic growth and development D. Theory of production and cost

27. In the economics research methodology of reasoning start from a particular(facts) to general
(theories) is called

A. Positive economics C, Inductive reasoning

B. Normative economics D, Deductive reasoning

28. Duopoly is

A, A market structure where there are more than two sellers

B, A market structure where there are only two sellers

C, A market structure where there are only two buyers

D, A market structure where there are many buyers

29. Which of the following statement is wrong matched?

A. The reward for land is rent C. The reward for labor is wage / salary

B. The reward for capital is profit D. The reward for Entrepreneur ship is Interest

30. which one of the following is scarce resource

A, Time B, Sun light C, mountain stream D, Wind

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31 .which one is True about production possibility curve (PPC)?

A. Points lies outside the PPC is attainable and efficient

B. Points lies below the PPC is un attainable and in efficient

C. Points lies on the PPC is attainable and efficient

D. points lies outside the PPC is un attainable but efficient

32. Identify the fundamental facts for the foundation of the field of economics?

A. Maximizing profit and Minimizing expense

B. Globalization and economic integration

C. Expansion of political economy

D. Human wants are un limited while economy resources are scarce

33, which type of economic system is advantageous for the developed countries?

A. Command economics systems C. Traditional economic system

B. Mixed economic systems D. Free market economic system

34. Which of the following is Not a features of a capitalist economy?

A. Right to private property C. Freedom of enterprises

B. Maximum social welfare D. In equality of income

35. A production possibility curve is …

A. A horizontal straight line C. Adown ward sloping curve

B. An upward sloping curve D. Convex from the orgin

36. _____is the amount of other commodities that must be forgone in order to produce the first,

A. Choice C. Production possibility curve

B. Opportunity cost D. Efficiency

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37. A closed economy does not allow

A. Sale of goods to house hold C. Sale of goods to other countries

B. Sale of goods to government D. Sale of goods to domestics Firms

38. Adown ward sloping straight line production possibility curve implies

A, Zero opportunity cost C, Constant opportunity cost

B, Rising opportunity cost D, Only one good is produced

39. Which of the following is the best measure of inflation?

A, Producer price index C, Whole sale price index

B, Consumer price index D, Average price index

40. In economic analysis, we often distinguish between private cost and social cost

A, Social cost=Private cost + External cost. C, External cost= Social cost + Private cost
B, Private cost= Social cost +External cost. D, Social cost=Private cost –External cost.

41. ………is the dominant mode of transportation with in Ethiopia.

A, Road transport C, Sea transport

B, Air transport D, Rail ways transport

42. Which of the following is financial organization in Ethiopia?

A, The Ethiopian Investment Agency C, The National Bank of Ethiopia

B, The Ethiopian Air line D, The Ethiopian Telecommunication
43. Which of the following is TRUE about the difference between nominal GDP and real GDP?
A, Nominal GDP is based on the current price, while real GDP is based on the current
population.
B, Nominal GDP is computed on the basis of current price, while real GDP is computed on
the basis of constant price
C, Nominal GDP is based on constant price, while real GDP is based on constant
population
D, Nominal GDP is computed on the basis of constant price, while real GDP is computed
on the basis of current prices
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 44. Which of the following investment activity is NOT open to private sector investment in
Ethiopia?

A, Road Construction C, Postal and Military

B, Agro-business D, Building construction

45. Income policy refers to government……

A, Building of Houses C, Building of Dams

B, Control of wages D, Control of corruption

46. An investment which is made irrespective of income level is called

A, Total investment C, Induced investment

B, Autonomous investment D, Average investment

47. A temporary miss-match between job and job seeker is.

A. Cyclical un employment C. Disguised unemployment

B. Frictional unemployment D. Structural un employment

48. Which one of the following is correct Ascending order of market structure based on its
number of producers?

A, Pure monopoly Oligopoly Monopolistically competitive Perfectly competitive

B, Perfectly competitive Monopolistically competitive Oligopoly pure monopoly

C, Monopolistically competitive Pure monopoly Perfectly competitive Oligopoly

D, Oligopoly pure monopoly Monopolistically competitive Perfectly competitive

49. A market structure where a few sellers dominate the industry is.

A. perfectly competitive market C. Pure monopoly market

B. Monopolistically competitive market D. Oligopoly market

50. Which of the following types of tax helps to reduce harmful consumption of imported product.

A. Sur tax C. Excise tax

B. Withholding tax D. Inheritance tax

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51. In a resources market, a household is:-

A. Buyers of resources C. Seller of their resources

B. Sellers of goods and services D. Buyers of goods and services

52. Which of the following is the dominant sub sector in the Ethiopian Agricultural sector?
A, Fishery C, Animal husbandry
B, Forestry D, Crop production
53. All are the possible reasons for the existence of huge investment takes place in Addis Ababa
Except one.
A, Addis Ababa has more sophisticated infrastructure than other regions.
B, Addis Ababa has a better supply of skilled labor than other regions.
C, Addis Ababa is the capital city of Ethiopia, Africa and the home of AU.
D, Addis Ababa has a narrow market for privately produced goods and services.
54. Which one of the following policies reduces the spending level in economy by adopting a
stringent monetary policy?
A, Expenditure switching C, Institutional policy reform
B, Expenditure reducing D, Monetary policy
55. All of the following are the main focus areas of structural adjustment
program (SAP) EXCEPT…
A, Bringing macroeconomic balance.
B, Reducing inflation and government spending
C, Discouraging the development of private sectors.
D, Promoting the process of market oriented economic system.
56. The current Ethiopian income tax is……because it……with taxable income.

A. Progressive …Increases C .Regressive…Increases

B. Progressive…decreases D. Proportional…Decreases

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57. Which of the following events will increase the demand for Kitfo other things are remain
constant
A, The price of meat has increased.
B, Improved technology of production of Kitfo has decreased
C, The average income of the consumer of Kitfo has increased
D, Eating Doro Wette becomes more popular
58. When the price of good Y increases & demand curve for good X shifts to the left, as a result X
and Y are :
A, Substitute goods C, Complementary goods
B, Unrelated goods D, Luxury goods
59. All of the following cost curves have “U” shaped Except…
A, AVC C, AFC
B, ATC D, MC
60 . Which economic system is more likely to be highly exploitative?
A, Command economy C, Capitalist economy
B, Mixed economy D, Agricultural economy
61. A simplified representation of a complex reality is called
A, Economic law C, Positive economics
B, Economic model D, Normative economics
62. Which of the following is Normative economics?
A, The Ethiopian economy grew on average at an annual rate of 10% on the last 10 years
B, The salary of teachers are less than the salary of Commercial Bank of Ethiopia employees
C, The government should be minimize the macroeconomics problems in Ethiopia
D, The global price of food items are increasing from time to time
63. If 100% increases in price causes a 100% reduction in quantity demand, the demand is:-

A. Perfectly elastic C. Elastic

B. Inelastic D. Unit elastic

64. Which of the following is most widely accepted measurement of Inflation ?

A, Production consumption index (PCI) C, Simple price increment
B, Consumer price Index (CPI) D, Cost basket at the base year

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65. ……refers to the purchase and sales of government securities such as bonds.
A, Open Market Operation (OMO)
B, Treasury Bill (TB) & government Bond (GB).
C, Open Market purchase (OMP)
D. Open Market sale (OMS)
66. The total market value of all final goods and services produced during a year, by resources located
within a country is known as:
A, Gross National Product(GNP) C, Net National Product(NNP)
B, Gross Domestic Product( GDP) D, Net National Product( NNP)
67. All of the following items are the impacts of unemployment
A, Exploitation of economic resources. C, Increases poverty
B, Increasing productivity. D, Political instability
68. Which of the following is True about demand of the market structure?
A. AR = MR = Price line = DD curve in oligopoly market
B. AR = Price line = DD curve is monopoly market
C. AR = MR = Price line = DD curve in monopolistically competitive market
D. AR = MR = Price line = DD curve in perfectly competitive market

69. Which could be expansionary fiscal policy except

A. Increasing government expenditure C. Increment of tax rate

B. Reducing tax rate D. Discouraging government borrowing

70. Which Virus affects severely the World economy?

A. HIV/ VIRUS C. BIRD FILLU

B. CORONA VIRUS D. EBOLA

The following questions (71-75) are for Sighted Candidates Only

71. Individual demand and supply function for a commodity are given respectively as
Qd =10 - P and Qs = 4P-16. If there are 100 buyers and 50 sellers of the commodity, what are the
market equilibrium price and quantities respectively?
A. 400 and 6 C. 6 and 4
B. 6 and 400 D. 4 and 6

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  Suppose the production for a profit maximizing firm is given as Q=K0.7 L0.3,assuming
the price of capital and labor are 28 birr and10 birr respectively and the budget of the firm
is 4,000 birr.
72. The equilibrium combination of labor and capital respectively is…
A. 100 and 120 C, 10 and 28
B. 120 and 100 D, 28 and 10
73. Given the production function. Q = L 2 what is the average product of labor ( APL) for L= 4,
and the marginal product of labor (MPL) between L = 3 and L = 4

A, MP = 2 and AP = 2 C, MP = 1 and TP = 16

B, AP =4 and Mp = 7 D, AP = 7 and MP = 4

74. A firm has the following total cost function: TC = Q3 +Q2 –Q +200, What are the TFC,TVC
and MC respectively?

A, 9, 200 and 6 C, 6, 9 and 200

B, 200, 6 and 9 D, 200, 9 and 6

 The consumer buys 100 Kg of Teff and 20 liters of oil and 50 Kg of meat
per year and assume that the price of these basket of goods in the different years, which is
birr 20, birr 10 and birr 150 in 2010 E.C respectively and in 2011E.C the price becomes birr
25, birr10 and birr 200 respectively.
75. The Inflation rate between 2010 E.C and 2011E.C from the above given information is:
A, 100% C, 31%
B, 131% D, 50%
Item 76 to 80 are to be attempted by visually impaired candidates only
76. The main Objective of the export duty draw-back scheme was:

A. To boost domestic production

B. To encourage import substitution

C. To encourage investment in the production of exportable items

D. To encourage Export substitution

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77. One of the following is the government economic policy which deals with taxation,
expenditure, borrowing and management of public debt in the economy.
A. Interest rate policy C. Fiscal policy
B. Exchange rate policy D. Monetary policy
78. All are the main economic features of the least developed countries (LDCs) EXCEP
A. Low level of living & low productivity
B. Low level of physical & human capital
C. High level of inequality & absolute poverty
D. Low population growth rate & low rural-urban migration
79. After the assessment and analysis made by the experts the Great Renaissance Dam of Abay
(GRDA) will generates
A. 5,520 MW D . 2,000 MW
B. 10,000 MW C. 6,450 MW
80. Which one of the following is Soft currency?
A. Ethiopia-Birr C. British pound
B. US-dollar D. France-Franc

Prepared By: Fisseha G..

THE END

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