Question # 1

Firms are assumed to ____ costs and to _______ profit.

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Incur , desire

Pay ; make

Change ;earn

Minimize ; maximize

The price elasticity of demand measures

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The responsiveness of quantity demanded to a change in prie.

How far a demand curve shifts

A change in price

A change in quantity demanded

If I keep some money available in case I see a bargain this is an example of.

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Asset demand for money

Transactions demand for money

Token demand for money

Precautionary demand for money

The Philips curve shows the trade off between ________ and _____

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The inflation rate, interest rates

The inflation rate, the unemployment rate

interest rates, output

Output, employment

Economic growth may depend upon __________ and_________

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Population size , x -efficiency

Population age distribution, education

Population growth, education

Population growth, technical progress

Floating exchange rates are __ in the short run

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Stable

Volatile

Predictable

Depreciating

Real business cycle theorists argue that ___________ can explain short and long term fluctuations in output.

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Imperfect labour markets

Rational expectations

Intertemporal decisions of households firms and government.

Sun spot cycles

In the UK under a _________ of the labour force belong to a trade union.

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Quarter

Third

Half

Three quarters

Market failure may arise because of.

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Imperfect competition

Taxation

Externalities

All of the above

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

The growth rate of economics tend to converge because._________ is easier when capital per worker is low and because of_____

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capital widening, technical innovation

Capital widening, catch up in technology

Capital deepening, technical innovation

Capital deepening, catch up technology.

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

Polices to reduce unemployment by reducing union power tax cut reduction is unemployment benefit and investment. subsidies are examples of.

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Keynesian polices

Supply side policies

Monetarist policies

Classical policies

If demand is _______ then price cuts will ________ spending.

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Inelastic, increase

Elastic, increase

Elastic, decreases

None of the above

The business cycle describes fluctuations in output around the.

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Trend path of output

Boom

Recession

Short run fluctuations in output

In the event of an increase in the international price of oil that encouraged the central bank to accept lower real interest rates, inflation would most likely.

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Fall

Increases

Remain the same

Fluctuate

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

Real GNP measures income

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Including non market activities

Adjusted for inflation

Including externalities

Including tax evasion

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

If some body is prepared to work at the going wage rate but cannot find work than they are victims of.

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Voluntary unemployment

Classical unemployment

Frictional unemployment.

All of the above

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