Lecture 10 # Economy of Pakistan

Question 1

1. What are the causes of inflation in Pakistan?

Answer 1

1. Monetary factors
2. High demand
3. Supply-side issues
4. Exchange rate fluctuations
5. Global commodity prices
6. Structural issues
7. Fiscal policies
8. Political instability.

Question 2

4. What are the main functions of the State Bank of Pakistan (SBP)?

Answer 2

1. Formulating monetary policy
2. Issuing currency
3. Managing government accounts
4. Acting as a banker to commercial banks 5. Managing foreign exchange
5. Ensuring financial stability.

Question 2

2. What are the key features of Pakistan’s fiscal policy?

Answer 2

1. Government spending
2. Taxation
3. Budget deficit management
4. Subsidies
5. Debt management.

Question 3

3. What are the key features of Pakistan’s monetary policy?

Answer 3

1. Interest rates
2. Money supply control
3. Exchange rate policies
4. Inflation targeting
5. Credit conditions.

Question 4

5. How is the interest rate determined in Pakistan?

Answer 4

By central bank policy, inflation control, economic conditions (GDP growth, unemployment), external factors, and government debt.

Question 5

6. What factors influence interest rate trends in Pakistan?

Answer 5

1. Economic conditions
2. Inflation
3. Global factors
4. Decisions by the State Bank of Pakistan.

Question 6

8. What are trends in Pakistan’s balance of payments and trade?

Answer 6

1. Influenced by global conditions
2. Exchange rates
3. Oil prices
4. Government policies
5. Competitiveness of exports
6. Foreign direct investment.

Question 6

7. What is the Balance of Payments (BOP)?

Answer 6

A record of a country’s economic transactions with the world, including the current, capital, and financial accounts.

Question 7

9. What is Foreign Direct Investment (FDI)?

Answer 7

Investment by a foreign entity in another country’s business interests, signifying control or influence over the entity.

Question 8

10. What are five attractive sectors for FDI in Pakistan?

Answer 8

1. Energy
2. Infrastructure
3. IT
4. Manufacturing
5. Agriculture.

Question 9

11. What is on-site surveillance by the State Bank of Pakistan?

Answer 9

Direct inspections of banks and financial institutions to ensure compliance with regulations.

Question 10

12. What is off-site surveillance by the State Bank of Pakistan?

Answer 10

Remote monitoring and analysis of financial data to assess regulatory compliance and financial health without physical inspections.