Question # 1

What lies is at the heart of the allocation of goods and services in a free market economy.

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Concerns of equity or equal distribution among individuals.

The order or command of the ruling government or dictator

The wishes of consumers in the market

The price mechanism

If there is cyclical unemployment in the economy the government might.

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Increase interest rates

Encourage savings

Cut taxes

Reduce government spending

Which of the following would increase aggregate demand.

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Increasing saving

Increasing import spending

Increasing taxation revenue

increased investment

An expansionist fiscal policy could include

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Lower interest rates

Increased lending by the banks

An increase in corporation tax

An increase in discretionary government spending

If demand increase in a market this will usually lead to.

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A higher equilibrium price and output

a lower equilibrium price and higher output

A lower equilibrium price and output.

A higher equilibrium price and lower output

In pure monopoly what is the relation between the price and teh marginal revenue.

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The price is greater than the marginal revenue

The price is les than the marginal revenue

There is no relation

They are equal

The socially optimal rate of growth is

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Zero

Negative

Where the marginal social benefit the marginal social cost

total social costs are minimized

Assuming a downward sloping demand curve and upward sloping supply curve a higher equilibrium price may be caused by.

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An fall in demand

An increase in supply

Improvements in production technology

An increase in demand

An increase in aggregate demand if aggregate supply is totally inelastic will.

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Increase price but not output

Increase output but not price

Increase out put and price

Decrease output and price

The public sector includes.

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Investors owning companies

Government ownership of assets

Market forces of supply and demand

All trade via barter

A demand switching policy could be.

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Higher interest rates

Higher income tax

Traiffs

Reduced government spending

The marginal propensity to consume is equal to.

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Total spending /total consumption

total consumption/total income

Change in consumption/change in income

Change in consumption/change in savings

Effective branding will tend to make

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Demand mover price inelastic

Supply more price inelastic

Demand more income elastic

Supply more income elastic

An increase in aggregate demand will have most effect on prices if.

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Aggregate supply is price inelastic

Aggregate supply is price elastic

Aggregate supply has a unitary price elasticity

Aggregate demand is price inelastic

Which of the following can the government not use directly to control the economy.

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Pay rates within the privates sector

Pay rates in the public sector

Investment in education

Benefits available for the un employed and sick

An increase in costs will

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Shift aggregate demand

Shift aggregate supply

Reduce the natural rate of unemployment

Increases the productivity of employees

Demand pull inflation may be caused by

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An increase in costs

A reduction in interest rate

A reduction in government spending

An outward shift in aggregate supply

A multinational busniess

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Sells products abroad

Produces in more than one country

Imports from abroad

Sells only domestically

A scarce good.

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Does not exist

Is a good that can only be purchased with money

Is a good that can never be purchased with money

Is a good that is available in limited quantities, but is desired in greater quantities.

According to schumpater

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Monopolies are inefficient

Monopoly profits act as an incentive for innovation

Monopolies are allocatively efficient

Monopolies are productively efficient

Which of the following is an injection into the economy.

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Investment

Saving

Taxation

Import spending

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