Question # 1

If the central bank buys financial securities in the open market to increase the monetary base, this is an example of.

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Lender of last resort

Financial intermediation

Open market operations

Financial regulation.

Short run equilibrium output means that aggregate demand _ actual output

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is less than

equals

is greater than

fluctuates around

Holding all factors constant except one and increasing a variable factor is expected to lead to steadily decreasing marginal product of the factor this is an example of.

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Decreasing returns to scale

The law of diminishing returns

Constant returns to scale

an inefficient production technique

Real GNP is a crude measure of national welfare because it excludes.

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Consumption

Investment

Export's

work in the home

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

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

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

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Consumption, income

Investment , output

Savings, investment

output, aggregate demand

Real business cycle are cycles in

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Potential output

Actual output

Real output

International trade

If a country has a burden of debt it cannot sustain it can.

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Reschedule debt

Get a loan from an international organization

Default on the loan

Any of the above

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

Moral Hazard means that the act of insuring __________ that the desired outcome will occur.

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Reduces the likelihood

Increase the likelihood

Guarantees

None of the above

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

All of the following are parts of the business cycle except.

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Boom

slump

Recovery

Acceleration

A competitive equilibrium is Pareto efficient because.

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Producers are price takers

Consumers and producer's face the same prices

Marginal costs and benefits are equal

All of the above

If demand is _______ then price cuts will ________ spending.

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Inelastic, increase

Elastic, increase

Elastic, decreases

None of the above

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

Extremality's arise because there is a divergence between ____ and _

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Private costs, private benefits

Private costs, social costs of benefits

Social cost, social benefit

Insiders, outsiders

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

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

An allocation is Pareto efficient if no reallocation of resources would make some people_______ whiteout making others

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Worse off, worse off

better off, better off

better off, worse off

equal , unequal

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