Question # 1

If the income tax rate changes from 30% to 40% on incomes over L 30,000 and a person's income is l 31,000 then her marginal tax rate is.

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30%

10%

70%

40%

In Nash equilibrium each player chooses the best strategy.

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Assuming other players move first.

Dominated by the other players

Given the strategies of other players

That is a credible threat

Firms are assumed to ____ costs and to _______ profit.

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Incur , desire

Pay ; make

Change ;earn

Minimize ; maximize

For a competitive firm its short run supply curve is ________ and its long run supply curve is.

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SMC , LMC

SMC above SAVC, LMC above LAC

SMC below SAVC, LMC above LAC

SMC Below SAVC, LMC below LAC

When we know the quantity of a product that buyers wish to purchases at each possible price we know.

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Demand

Supply

excess demand

Excess supply

When real income increases, other things equal we fan expect the demand for real money holdings to.

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Fall

Not change

Increase

Decrease

International difference in opportunity costs lead to countries acquiring.

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Comparative advantage

High exchange rates

Trade exchange rates

Trade barriers

In an open economy leakages to imports ______ the value of the multiplier.

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Reduce

Increase

do not change

None of these

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

Short run equilibrium output means that aggregate demand _ actual output

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is less than

equals

is greater than

fluctuates around

The firms long run output decision will be where.

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Long run average cost a lowest

Marginal revenue equals output

Marginal revenue equals long run marginal cost

Marginal cost equals output

International specialization takes place because of.

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Differences in technology

Differences in factor endowments

Scale economies

All 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

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

All of the following are benefits of the single market except.

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It allows countries to exploit their comparative advantage, more fully

Firms could more readily exploit economies of scale

It intensified competition

It is easier book holidays in member countries.

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

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Consumption, income

Investment , output

Savings, investment

output, aggregate demand

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

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

An upward shift in marginal cost ___________ output and an upward shift in _____ marginal revenue __ output.

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Reduce , reduce

Reduce , increase

Increased, increased

Increases, reduces

Real business cycle are cycles in

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Potential output

Actual output

Real output

International trade

Short run average total costs are equal to the sum of _______ and______

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Short run opportunity costs, profit

Short run average variable costs, profit

short run average variable costs, profit.

Short run average variable costs short run average fixed costs

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