Question # 1

Leakages from the circular flow are____ and _____

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Investment savings, government expenditure

Saving , taxes net of subsidies, imports

Consumption, investment , government expenditure.

Consumption, taxes, impports

One of the transmission mechanism of monetary policy is through consumer house hold wealth.___________ and consumption.

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rise, increases, increases

rise, falls, increases

rise, increases, falls

rise, falls, falls

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

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Interest rates

Competitiveness

Trade

Speculation

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

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

The multiplier tells us how much __________ chagnes after a shift in.

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Consumption, income

Investment , output

Savings, investment

output, aggregate demand

Efficiency wages are_______ that raise

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Low wages , employment

High wages, labor supply

High wages, productivity

High wages, employment

The business cycle is not transmitted from one country to another through.

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Private sector imports and exports

Economic policy

The duration of compulsory education

Labour supply changes

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

The most important source of wage differentiate are.

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Reginal variation

Unionization

Relative danger

Skills

The short run marginal cost curve cuts the short run total cost curve and short run average variable cost curve.

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At their lowest points

When they are declining

When they are increasing.

When marginal revenue is zero

If your income doubles and the prices of the goods you buy double, then your demand for these goods will likely

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Increase

Not change

Decrease

Shift

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

Except for taxes to offset ___ taxes are.

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Imperfect competition , popular

Extremality's, distortionary

Inequality, a first best option

Poor health, unnecessary

For given government spending and taxation the government budget deficit will grow in __________ and decline in _________

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booms, booms

recession, recession

booms, recessions

recessions, booms

The allocation of resources is not efficient it

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The marginal cost of production does not equal society marginal benefit

The distribution is inequitable

Economic growth is low

Unemployment is high

Government may contribute to inflationary pressure on account of building up large.

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Numbers of employees

Welfare plans

Budget deficits

Expenditure.

If a firm not operating at the output necessary to achieve al scale economies it has not achieved its.

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Efficient scale

Average efficient scale

Maximum efficient scale

Minimum efficient scale

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

The main cause of different relative costs between countries are.

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Relative factors competition

Relative factor mobility

Relative factor substitution

Relative factor endowments

An increase in consumer income will increase demand for a __________ for decrease demand for a.

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Substitute good interior good

Normal good, interior good

Interior good, normal good.

Normal good, complementary good.

When we refer to the hidden economy we mean unrecorded income owing to.

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Tax evasion

Poor statistics

The lags between statistical collection and publication .

Smuggling

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