Question # 1

When supply increases in an agricultural market famer's earnings might fall because.

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Supply is price elastic

Demand is price inelastic

the government buys up all the excess production

All output must be sold at a maximum price

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 profit per scale is a measure of.

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Profit

Profitability

Feasibility

Realism

In a recession a government.

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Is likely to want to increase demand in the economy

Is likely to want to decrease demand in the economy

Is likely to want to stabilize demand in the economy

Is likely to want to increase supply in the economy

In a market system sellers act in ___ interest, but this leads to behaviors in ___ interest.

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Self : self

Self ; society's

Society's ; society's

society's, self

An independent assessment of the impact of firm's activities on society is called a.

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Financial audit

Balance sheet

Profit and uses account

Social audit

Revealed preference theory was presented by.

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Samuelson

Hicks

Marshall

rICARDO

The liquidity trap occurs when the demand for money

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Is perfectly interest elastic

Is perfectly interest inelastic

Means that an increase in money supply leads to a fall int he interest rate

Means that an increase in the money supply leads to an increase in the interest rate

If an economy is productively efficient.

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Everyone is wealthy

Resources are unemployed

More of one product can only be produced if less of another product is produced.

The distribution of income is equal

Which of the following is necessary for a natural monopoly.

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Economies of scale

A high proportion of the total cost is the cost of capital goods

The market is very small

All of the above

An increase in price all other things unchanged leads to.

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A shift in supply out wards

A shift in supply in wards

A contraction of supply

An extension of supply

Investment is an out stable element of aggregate demand because is depends heavily on.

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Government policy

Expectations

National income

Historic trends

As the MPS increases, the multiplier will

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Increase

Either increase or decrease depending on the size of the change in investment

Remain constant

Decrease

All currencies other than the domestic currency of a given country are referred to as.

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Reserve currencies

Neal monies

Foreign exchange

Hard currency

Developing economics usually have

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Low GDP per captia

Low CPI

Large balance of payments surpluses

Large budget surpluses

Which of the following is a determinant of consumption.

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Expectations about future prices

Level of indebtedness of consumers

The price level

All of the above

Why is the law of diminishing marginal returns true.

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specialization and division of labor

Spreading the average fixed cost

Limited capital

All factors being variable in the long run

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

Which of the following is a policy instrument .as opposed to a government objective.

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Lower interest rates

A better balance of trade position

Faster economic growth

Lower un employment

Economic growth can be measured by

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The CPI

The CBI

GDP

MPC

Economists use the term marginal utility to mean.

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Additional satisfaction gained divided by additional cost of the last unit.

Additional satisfaction gained by the consumption of one more unit of a good

Total satisfaction gained when consuming a given number of units.

The process of comparing marginal units of all goods which could be purchased

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