Question # 1

Economic transition involves high inflation because ______ and _____

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High monetary growth, high wages.

High budget deficits, devaluation

High monetary growth, devaluation

Prices surge from an artificially low level to their equilibrium level the inflation tax is required as source of government revenue.

By restricting labour supply a trade union can _________ and_______

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Increase the wage, increase employment

Maintain the wage, increase employment

Increase the wage lower employment

Maintain the wage, lower employment

A fixed exchange rate, plus perfect capital mobility _______ the scope for monetary policy.

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Enhances

Undermines

Encourages

Facilitates

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

If the MPC is 0.5 the multiplier is

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2

1/2

0.2

20

A good example of a public good is.

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Public transport

National defense

The national health service

Rail transport

A natural monopoly has a declining ________ over a large range of output.

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Long run marginal cost

Short run marginal cost

Long run average cost

Long run marginal cost

Perfect price discrimination means that every customer.

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Buys the same amount

Pays the same price

Pays what she thinks the product is worth

Contributes the same revenue.

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

The theory that explains business cycles by the dynamic interaction of consumption and investment demand is the.

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Sun spect theory

Multiplier accelerator model

Solow theory

New classical theory

Nominal GNP measures income

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At the present time

Corrected for tax changes

Corrected for changes in interest rates

At current prices

Real GNP measures income

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Including non market activities

Adjusted for inflation

Including externalities

Including tax evasion

GDP per head may be an imperfect measure of economic welfare because it excludes.

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The value of leisure

Externalities

Untraded goods

All of the above

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 increase in total cost when one more units is produced is known as.

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Marginal cost

Opportunity cost

Limited cost

Average cost

A rise in the real exchange rate will __ the competitiveness of the domestic economy.

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Increase

reduce

do nothing do

all of these

When the S/L exchange rate rises the pounds______ and whent he S/L rate falls the pounds.

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depreciates, appreciates

revalues, devalues

appreciates, deprecates

becomes more expensive, becomes cheaper

A dominant strategy is.

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A winning strategy

A losing strategy

A players best strategy when moving fist

a player's best strategy whatever the strategies adopted by rivals

A fall in investment demand can result from

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Higher interest rates

Lower expected future profits

More expensive capital goods

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

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