Question # 1

According to Okun's law an increase in the unemployment rate will cause_______ in the level of empolyment and __ in the level of output.

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An increase ; an increase

An increase; a decrease

A decrease ; an increase

a decrease ; a decrease

The aggregate demand curve shows the combinations of output and the price level that put the economy on.

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The FE line and the IS curve

The FE line The IS curve and the LM curve

The IS curve

The IS curve and the LM curve

Expansionary monetary policy

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Tends to lead to an appreciation of nation's currency

Usually has no effect on a currency's exchange value

Tends to lea dto a depreciation of the currencies of other nations

Tends to lead to a depreciation of a nation's currency.

A mathematical expression relating the amount of output produced to quantities of capital and labor utilized is the.

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Real interest rate

Productivity relation

Production function

Marginal product

The substitution effect of a decrease in real interest rates is to cause a consumer to.

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Increase future consumption and decrease current consumption

Decrease future consumption and increase current consumption

Increase current consumption and increase saving

Decrease current consumption and increase saving.

While resources and products flow in one direction of the circular flow model what flow the other direction.

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Services

Public goods

Money

Imported goods

Under law of demand.

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Price of commodity is an independent variable

Quantity demanded is a dependent variable

Reciprocal relationship is found between price and quantity demandded

All of the above

When plotted with the aggregate price level on the vertical axis and output on the horizontal axis, which of the following curves slopes downward.

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SRAS

AD

LRAS

None of the above

Find the revenue the government collects as a result of the tax

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Rs.10 million

Rs.40 million

Rs.16 million

Rs.30 million

The sign of the simple correlation coefficient is determined by

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The intercept of the least squares equation.

The slope of the least squares equation

The appropriate economic theory.

The researcher

The fact that the long run Phillips curve is vertical implies that

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Monetary policy can't effect unemployment

Money is neutral in the long run

There is a natural rate of inflation

Money can't affect inflation in the long run

Economic planning by enteral government agencies is primarily associated with

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command economies

Market economies

Laissez faire economies

Market faire economies

To avoid double counting when the GNP is estimated, economists

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Price all goods and services bought and sold in all markets

Use the GNP deflator

Price only intermediate goods

Calculate value added at each stage of production.

Given the Is -LM construction of the figure above an unexpected increase in the price level, in the absence of any policy adjustment will.

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Increase both interest rates and GNP

Reduce both interest rates and GNP

Increase GNP but cause interest rates to tall

Increase interest but cause GNP to fall.

Over a two year period your income has increased 10% At the same time the consumer price index has increased 205 Your real purchasing power is.

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92% of the original value

50% of its original value

Not affected by the price change

109% of its original value

The MPS = 0.4 and government spending increases by 20 billion. The LM curve

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Shifts to the right by 20 billion

Shifts to the right by 50 billion

Does not shift

shifts to the left by 30 billion

A decrease in the marginal propensity to import will lead to.

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An increase in GNP

Lower the multiplier

An increase in imports

A decrease in imports

According to classical economists the economy.

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Requires fine tuning to reach full employment

Should not be left to market forces

Will never be at full employment

Is self correction

The fact that the production function relating output to labor becomes flatter as we move from left to right means that.

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The marginal product of labor is positive

The marginal product of capital is positive

There is diminishing marginal productivity of labor

there is diminishing marginal productivity of capital

In the efficiency wage model if the real wage is higher than the market clearing wage so that there in an excess supply of labor.

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Firms will hire new workers at lower wages

Firms will replace high paid workers with low paid formerly unemployed workers

Employers will not hire workers who are willing to work for a lower wage.

Firms will demand a higher level of effort from existing employees

When equilibrium in the money and goods markets occurs at a rate of interest below the BP schedule internal and external equilibrium for the United States can he achieved by.

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Expanding the U.S. money supply

Increasing government spending

Increasing taxes

Lowering interest rates in the united states.

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