Question # 1

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 value of real GDP in the current year equals.

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The value of current year output in prices of the base year

The value of current year output in pries of the current year

The value of base year output in prices of the base year

The value of base year output in prices of the current year

Dynamic multipliers occur when

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the assumption of ceteris paribus is dropped

The economy is not in equilibrium

Consumption is unrelated to disposable income

there is lagged response between consumption and disposable income

During inflation.

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Lenders lose borrowers gain.

Borrowers lose , lenders gain

The real interest rate rises

Borrowers and lenders both lose.

If X becomes more expansive i relation to Y, what happens to the budget line in the X - Y space, with Y on the vertical axis.

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It shifts to the right

It shifts to the left

The slope becomes flatter

The slope becomes steeper

Which market adjusts the quickest in response to shocks to the economy.

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The asset market

The labor market

The goods market

In the macro economy

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

If government spending of Rs. 10 and a lump sum tax of Rs.10 is added, the empirical equation for the new IS curve becomes.

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Y = 285 + 20 I

Y = 270 - 10 i

Y = 285 - 50 i

Y = 210 - o.5 i

Which of the following is an economic activity.

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Teaching of a teacher in the school.

To teach son at home

To serve her child by mother

to play foot ball by a student

A nation experience external balance if it achieves.

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No net changes in its international gold stocks

Productivity levels equal to those of its trading partners

An increases in its money supply equal to increases overseas

Equilibrium in its balance of payments

The risk free rate of interest would not be affected by.

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Changes in real output

Change in the money supply

Term to maturity

None of the above

If the quantity of money demands is less than the quantity of money supplied then the interest rate will.

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Either increases or decrease, depending on the amount of excess demand.

Increase

Decrease

not change

When the price level increases 25% starting from a price level equal to 100, a Rs. 1000 bond will have a real value of .

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Rs. 800

Rs.1250

Rs.750

Rs.666

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

When a British pound equals Rs. 1.60 and the French France equals Rs. 0.40 the ability to earn infinite profit if it were not the case, implies that the exchange rate would be.

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1 franc = 4 pounds

1 franc = 1 pound

5 franc = 1 pound

None of the above

Which of the following is incorrect with respect to the consumption diagram.

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the interest rate is a premium

MRS = (i +r)

The consumer will be lender in time zero

The consumer lends 700

The long run aggregate supply curve.

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Is vertical

Slopes upward

Is horizontal

Slopes downward

Characteristics of economic laws are

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Mere statement of economic tenduencies

Less certain

Hypothetical

All of the above

An adverse supply shock that is permanent shifts which curve in addition to the curves shifted by.

One that is temporary.

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The LM curve

The IS curve

The FE line

The labor demand curve

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

Utility means.

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Power to satisfy a want

Usefulness

Willingness of a person

Hamfulness

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