Question # 1

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.

A Rs.10 increase in autonomous investment spending shifts is.

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Rightward by Rs. 10

Leftwards by Rs. 10

Rightward by Ke (Rs.10)

Leftward y Ke (Rs.10)

Which of the following results in an increase in the value of the dollar.

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Interest rates n the united states decrees, ceteris paribus

Interest rates in foreign countries increase, ceteris paribus

Price level in the United States increases, ceteris paribus

Productivity in the united states increases, ceteris paribus

If equilibrium national income is less than the full employment the gap can be closed by.

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Raising taxes

Decreasing government expenditures

Raising taxes and decreasing government expenditures.

Increasing government expenditures.

Classical economics think general equilibrium is attained relatively quickly because.

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The real interest rate adjusts quickly

The level of output adjusts quickly.

The real wage rate adjusts quickly

The price level adjusts quickly.

Company X sells Rs.75 million dollars of 9.5% first mortgage bonds at par The company's marginal tax rate to 30% The after tax cost of debt is.

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2.85%

3.175

6.68%

7.55

The fact that the long run Phillips curve is vertical implies that

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Monetary policy can't effect unemployment

Money is neutral in the long run

There is a natural rate of inflation

Money can't affect inflation in the long run

Using the Keynesian model the effect of a government imposed celling on interest rates paid on personal checking accounts that is lower than the current market interest rate would be to cause._ in the real interest rate and _ in input out in the short sun.

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A decrease ; a decrease

A decrease ; no change

A decrease ; an increase

An increase ; a decrease

An increase in the expected future marginal product of capital would cause the IS curve to.

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Shift up and to the right

Shift down and to the left

Remain unchanged if firms face borrowing constraints otherwise shift down and to the left

Remain changed

Friedman and phelps suggested that there should not be a stable relationship between inflation and unemployment, but here should be a stable relationship between

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Anticipated inflation and frictional unemployment

Anticipated inflation and cyclical unemployment

Unanticipated inflation and frictional unemployment.

Unanticipated inflation and cyclical unemployment

According to Keynesian macro economics price adjust _____ to shocks, so the government should.

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Slowly ; do little

Rapidly ; do little

Rapidly ; fight recessions

Slowly ; fight recessions

The long run aggregate supply curve

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Is vertical

slopes upward

Is horizontal

Slopes downward

In the efficiency wage model if the real wage is higher than the market clearing wage so that there in an excess supply of labor.

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Firms will hire new workers at lower wages

Firms will replace high paid workers with low paid formerly unemployed workers

Employers will not hire workers who are willing to work for a lower wage.

Firms will demand a higher level of effort from existing employees

An increase in investment leads to an increase in income and consumer spending, which in turn leads to a further increase in investment spending This is example of.

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The expenditure multiplier

Explosive gowth

Hyperinflation

Interaction of multiplier and accelerator

The multiplier which specifically refers to an equal increase in government spending and taxes, giving rise to that same equal increase in national income is called.

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the Keynesian multiplier

The balanced budget multiplier

the deficit multiplier

None of the above

The idea that the natural rate of unemployment rises when the acual rate of unemployment rise is known s.

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Stabilization

Insider outsider theory

Hysteresis

an efficiency wage model

To ensure that the fundamental identity of national income accounting holds changes in inventories are.

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Ignored

Counted as consumption

Treated as part of saving

Treated as part of expenditure

What tow factors should you equate in deciding how many workers to employ.

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The marginal product of labor and the marginal product of capital

The marginal product of labor and the real wage rate

The marginal product of labor and the real interest rate

The marginal product of capital and the real wage rate

A decrease in the effective tax rate on capital would cause the IS curve to.

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Shift up and to the right

shift down and to the left

Remain unchanged

Remain unchanged if taxes are fully deducible from income otherwise, shift up and to the right

Which of the following changes shifts the SRAS curve down.

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An increase in the labor force

An increase in the money supply

A decrease in government purchases

A decrease in firms costs

To avoid double counting when the GNP is estimated, economists

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Price all goods and services bought and sold in all markets

Use the GNP deflator

Price only intermediate goods

Calculate value added at each stage of production.

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