Question # 1

International specialization takes place because of.

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Differences in technology

Differences in factor endowments

Scale economies

All of the above

The opportunity cost of a student is.

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Course fees and rent

A loan from the bank

What the student could have earned in the best job available by not studying.

What the student will earn after graduation.

A market can accuretaly be described as

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A place to buy things

a place to sell things

The process by which prices adjust to reconcile the allocation of resources

a place where buyers and sellers meet.

If the government increase spending and raises taxes by just enough to finance the increase it will.

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Leave output unchagned

Increase output

Reduce output

Increase the MPC

In the economy when a steel producer sells steel to car producer it is regarded as.

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A final good

An intermediate good

an injection

a leakage

Real business cycle theory suggests that __________ not important in explaining short term fluctuations around actual output.

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aggregate supply is

aggregate demand is

Potential output is

Real variables are

The AD schedule indicates that______ inflation is associated with______ output.

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higher , lower

Higher , higher

Lower , lower

zero ,zero

A competitive firms demand curve is.

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Horizontal

Vertical

Down ward sloping

Fairly elastic

We cannot say whether one allocation of resources is better than another allocation because.

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some people cant count

Some people may not be permanent residents

Not all economic activity is legal

We cant make value judgements to compare different people welfare.

A competitive firm produces a level of output at which.

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Price is greater than marginal cost

Price equals marginal cost

Price is less than marginal cost

None of the above

Market failure may arise because of.

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Imperfect competition

Taxation

Externalities

All of the above

Output fell sharply in the transition economies because.

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Banks were undoable to function

There was little corporate control

Vital infrastructure was missing

All of the above

Marginal revenue is the ________ when output is.

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Change in average revenue, inversed.

change in total revenue, increased by one unit

change in average revenue, increased by one unit

Change in total revenue, incresed.

When the level of income _______ there will be atendency for the trade balance to improve as imports.

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Increases, increase

falls, fall

Increase, fall

fall , increase

The equilibrium inflation rate is determine by the intersection of __________ and ___

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demand, supply

IS , LM

AD, AS

Labour demand, labour supply

M4 is a _________ measures of money and includes deposits at both _____________ and

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Narrow, banks, building societies

Wide, banks, insurance companies

narrow, banks, insurance companies

Wide, banks, building societies.

The impossibility of negative gross investment provides a______ to fluctuations in.

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Celling, stock building

Celling, capital prices

floor , output

floor , the capital output ratio

Fiscal policy is weak under floating exchange rates as fiscal expansion.

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Crowds out imports

Crowds out public consumption

Crowds out exports

Reduces the budget deficit

Within circular flow of income, an increase in domestic income iwll lend to increase.

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Exports

Taxes

Inventories

Imports

When investment is assumed to autonomous the slope of the AD schedule is determined by the.

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Marginal propensity to invest.

disposable income

Marginal propensity to consume

Average properisity to consume

The participation rate in the labour force is affected by

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Higher real wages

Lower fixed costs of working

Lower non labor income

All of the above

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