Question # 1

Expansionary fiscal policy in the classical model will cause aggregate demand to ______ potential output.

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Exceed

Fall below

Fluclaute around

Remain equal to.

All of the following are type of monetary policy except

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A nominal money stock target

A balances budget

An inflation target

The pursuit of a target real interest rate

If desired spending in the economy exceeds income we would expect.

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House hold to save more

Firm to produce less

Firms is produce more

the MPC to change

In a competitive industry each buyer and seller.

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Is a price taker

Produce different products

Believes that can influence price

Prevents the entry of competitors

When real income increases, other things equal we fan expect the demand for real money holdings to.

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Fall

Not change

Increase

Decrease

If the diagram of a line shows that lower values on the vertical scale are associated with higher values on the horizontal scale this is an example of.

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a nonlinear relationship

A positive linear relationship

A scatter diagram

A negative linear relationship

A monopoly may be self perpetuating because profits may be used for

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research

Cost saving

Technical advance

All of the above

In the neoclassical theory of growth a higher saving rate leads to.

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A higher growth rate

A fluctuating growth rate

A lower growth rate

No change in the growth rate

The total multiplier for the economy will reflect.

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MPC and MPT

MPT and MPZ

MPC and MPZ

MPC, MPT and MPZ

When a market is contestable , incumbent firms must.________ to avoid the entry of new competitors.

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Behave like competitive firms

Agree to act together

Differentiate their products

Practice price discrimination

Market some times fall to exist because of.

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Externalities

the free rider problem

Poor transport

a an b

The quantity theory of money says that changes in ______ lead to equivalent changes in ______ but have no effect on.

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Prices, wages, output and employment.

Output, prices, employment

Nominal money, the price level output and employment.

Nominal money output prices

All of the following are benefits of the single market except.

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It allows countries to exploit their comparative advantage, more fully

Firms could more readily exploit economies of scale

It intensified competition

It is easier book holidays in member countries.

If banks and the private sector decide to hold less cash the money multiplier will be.

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Unchanged

Larger

Smaller

unstable

Comparing a monopoly and a competitive firm the monopolist will.

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Produce less at a lower price

Produce more at a lower price

Produce less at a higher price

Produce less at a lower price

In the short run the level of floating exchange rates is determined mainly by.

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Interest rates

Competitiveness

Trade

Speculation

Skilled labour is relatively scarce because.

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There are too few teachers

Too few student places in higher education

It is costly to acquire human capital

Teachers salaries are too low

When we know the quantity of a product that buyers wish to purchases at each possible price we know.

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Demand

Supply

excess demand

Excess supply

The neoclassical theory of growth identities the steady state rate of growth as the _________ just sufficient to keep _______ constant while labour grows.

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Saving investment

Capital per person productivity

Labour growth , output

Investment capital per person

The single European Act committed_ governments to a ___ in 1992

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European union, single market

Western European, single currency area

European union, single currency area

Western European, single market

The firms long run output decision will be where.

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Long run average cost a lowest

Marginal revenue equals output

Marginal revenue equals long run marginal cost

Marginal cost equals output

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