Question # 1

An IOU of the Federal Reserve Bank of Scan Francisco to Bank of America is called.

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Discourse

Federal funds

Reserves

Collateral

For a borrower an increase in the real interest rate will lead to.

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Higher current consumption and less borrowing

Higher current consumption and less saving

Lower current consumption and less borrowing

Lower current consumption and less saving

The long run foreign exchange rate between the U.S. and Japan is 200 Yen =Rs. 1 under a floating exchange rate Which of the following does 112 t occur if the Federal Reserve reduce the money supply in order to prevent the occurrence of inflation.

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Foreign capital flows to the U.S.

The U.S. dollar appreciates

Real net exports decline

American real GNP experience a slower rate of growth

When aggregate economic activity increasing the economy is said to be in.

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An expansion

A contraction

A peak

A turning point

Keynesian economists think general equilibrium is not attained quickly because.

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The real interest rate adjusts slowly

The level of output adjusts slowly

The real wage rate adjusts slowly

The price level adjusts quickly

Given the saving equation S = - 50 + 0, 20 Y, where s is saving and Y is income.

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The break even level of income is 240

Dissaving takes place if income is 300

Consumption expenditures and saving are equal at an income level of 500

The MPS is constant for all levels of income

The fac that the production function relating output to labor becomes flatter as wemove from left to right means that.

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The marginal product of labor is positive

The marginal product of capital is positive

There is diminishing marginal productivity of labor

There is diminishing marginal productivity of capital

The term household production refers to

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Output produced by forcing children to work

Output produced by workers who are telecommuting

Services provided directly to households such as lawn mowing by landscape companies.

Output produced at home

When the export function is Rs.100-0.2 Y , net exports are 0 when income is .

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Rs.300

Rs.400

Rs.500

Rs.600

The equation for the IS curve is.

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Y = 55 - 50 i

Y = 175 - 75 i

Y = 300 - 100 i

Y = 275 - 25 i

Which of the following in a graph with interest rates and income on the vertical and horizontal axes, does not shift the balance of payments curve to the right.

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Capital flow restrictions

Export quotas

Export subsidies

Import tariffs

The substitution effect of a decrease in real interest rates is to cause a consumer to.

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Increase future consumption and decrease current consumption

Decrease future consumption and increase current consumption

Increase current consumption and increase saving

Decrease current consumption and increase saving.

The estimated regression coefficient for good Y indicates

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Goods X and Y are independent goods

Good Y is relatively elastic

Good Y is a luxury good

Goods X and Y are complementary goods

An asset with zero carrying costs and a present value of Rs.50,000 will return continuous annual yield of Rs.5000 if the current and future rate of inters is.

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5%

8%

10%

3%

The IS curve shows the combinations of output and the real interest rate for which.

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The goods market is in equilibrium

The labor market is in equilibrium.

The financial assets market is in equilibrium

An increase in output will cause the market clearing interest rate to be bid up.

The use of micro economics policies to smooth or moderate the business cycle is known as.

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Aggregate demand management.

Aggregate supply management

Automatic stabilization

Discretionary policy

In a mixed economy the economic decisions of what to produce how to produce, and who will receive products are made by

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The government

Consumers and firms

Banks and stock markets

Firms, consumers, and government.

When the economy goes into are cession there's an increase in.

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Frictional unemployment

structural unemployment

Cyclical unemployment

Voluntary unemployment

If the demand for coffee decreases as income decreases, coffee is a

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Normal good

Inferior good

Substitute good

Complementary good

The value of a producer's output minus the value of the inputs if purchases from other producers is called the producer's

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Surplus

Profit

Gross product

Value added

Money must fulfill all of the following functions except.

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Be a medium of exchange

Be a store of value

Be generally accepted as a means of purchasing commodities

The above are all functions of money

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