Question # 1

Using the Keynesian model , the effect of a decrease in the effective tax rate on capital would be to cause_____ in the real interest rate and __ in output in the long run.

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An increase ; no change

A decrease ; no change

An increase ; an increase

No change ; a decrease

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

Ineven A occurs the payoff will be Rs.5,670.00 . the probability of event A occurring is .87 What is the expected payoff of event A.

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Rs.5,670.00 9d)

Rs.4,832.10

Rs. 4,932.90

Rs.5000.00

Assuming that money is neutral an increase in the nominal money supply would causes.

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An excess supply for goods

an increase in the real money supply

A fall in the price level

A rise in nominal wages

When the Central Bank initiates actions which will lead to an increase in the supply of money IS -LM models tell us to expect that.

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The interest rate will rise

The interest rate will decline

The price level will not change

Investment will decline

The fact that the Production function relating output to capital becomes flatter as we move 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

A variable whose value is determined witching an economic theory or model is.

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Exogenous

Independent

Deterministic

Endogenous

What is the possible cause for a falling real GNP over a period of time.

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A general fall in the value of output though changes in quantities producted.

A general increase in prices

An increase in the value of output produced and a general increase in prices

A, B and C

An economy is in inflationary equilibrium A sustained increase in government appending shifts.

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DAD rightward for one period

DAD and DAS right ward permanently

DAD right ward and a new equilibrium

DAD right ward and a new equilibrium.

The fact that the production function relating output to labor becomes flatter as we move 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

An expenditure increasing policy would consist of an increase in

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Import tariffs

Import quotas

Governmental taxes

The money supply

As the economy nears full capacity the short run aggregate supply curve

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Stagflation

Structural inflation

Demand side inflation

Supply side inflation

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

In the product market of the circular flow model.

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Firms buy finished products from households.

Consumers buy factors of production from firms

Firms Sell factors of production to the government

Consumers buy finished products from firms

If the price level for an economy was 100 in 1984 , 115 in 1985 and 125 in 1986 the rate of inflation between 1985 and 1986 was.

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105

8%

8.7%

17.5%

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

The origin of the idea of a trae off between inflation and unemployment was a 1958 article by

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A.W Philips

Edmund phelps

Milton Friedman

Robert Gordon

Based on the data above , the increase in potential MI would be

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Rs.50 billion

Rs.300 billion

Rs.60 billion

Rs.100 billion

A beneficial supply shock would cause.

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A movement up the short run Phillips

a movement down the short run Phillips curve

The short run Phillips curve to shift upward and to the rights

The short run Phillips curve to shift down ward and to the left

The short run aggregate supply curve the absence of misperceptions.

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Is vertical

Slopes upward

Is horizontal

Slopes downward

In the monetary base is increased by $1,000 and the reserve requirement is 10% by how much will the money supply be increased.

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$100

$1,000

$5,000

$10,000

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