Question # 1

A disadvantage of the barter system is that

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No trade occurs

People must produce all their own food clothing and shelter

The opportunity to specialize is greatly reduced.

Gold is the only unit of account

Company X sells Rs.75 million dollars of 9.5% first mortgage bonds at par The company's marginal tax rate to 30% The after tax cost of debt is.

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2.85%

3.175

6.68%

7.55

Which of the following is the second law of gossen.

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Law of equal marginal utility.

Law of equi product

Theory of indifference curve

Law of diminishing marginal utility.

A Rs.10 increase in autonomous investment spending shifts is.

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Rightward by Rs. 10

Leftwards by Rs. 10

Rightward by Ke (Rs.10)

Leftward y Ke (Rs.10)

An increase in wealth that doesn't affect labor supply would cause the IS curve to _________ and the FE line to ____________

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Shift down and to the left be unchanged

Shift down and to the left shift left

Shift up and to the right be unchanged

Shift up and to the right shift left

Which of the following methods is used for internalizaing positive externalities

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Positive taxes

Government exchange of property rights

Effluent fees

Corrective substidies

According to the permanent income hypothesis all increases in .

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Permanent income are saved

Permanent income are consumed

transitory income are saved

Transitory income are consumed

In closed economic model aggregate demand is not sensitive to.

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Interest rates

Exchange rates

Price level

Tax policy

To ensure that the fundamental identity of national income accounting holds changes in inventories are.

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Ignored

Counted as consumption

Treated as part of saving

Treated as part of expenditure

Which of the following procedures is included in the process that produces a value for disposable personal income

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subtracting excies and sales taxes

Subtracting nonbusiness interest

Subtracting transfer payment from government.

subtracting income taxes

A decrease in the effective tax rate on capital would cause the IS curve to.

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Shift up and to the right

shift down and to the left

Remain unchanged

Remain unchanged if taxes are fully deducible from income otherwise, shift up and to the right

The hypothesis would the tested with

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A two tailed test

A one tailed test with the rejection region in the left tail

a one tailed test with the rejection region on the right tail

The normal distiribution

In a simple Keynesian world assume the economy is opiating at a full employment noninflationary level worsening world conditions necessitate additional government spending of Rs.50 billion. What should be the direction of change in taxes and magnitude of change to maintain stable price and full employment equilibrium.

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Increase by Rs.50 billion

Increase by more than Rs. 50 billion

Increase by less than Rs.50 billion.

Decrease by more than Rs.50 billion.

A rise in the exchange rate value of the rupee will most likely cause.

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A dollar to be worth less in learns of other currencies.

Imports to decrease

Exports to increase

The balance of payments curve to shift to the left

If the price level for an economy was 100 in 1984 , 115 in 1985 and 125 in 1986 the rate of inflation between 1985 and 1986 was.

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105

8%

8.7%

17.5%

The impact of contractionary fiscal policy, according to new classical theory is that.

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Real interest rates do not change

Aggregate demand increase

Current real output substantially decreases

The price level substantially increases.

In the product market of the circular flow model.

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Firms buy finished products from households.

Consumers buy factors of production from firms

Firms Sell factors of production to the government

Consumers buy finished products from firms

Quality controlleers at the LMN corporation formulate the null hypothesis that the proportion of defective items in the production line is 10% they reject this hypothesis when they find 12 defective items in 100. If the defective rate is really 10% What type of error did they make.

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Standard error of the mean

A type II error

A type I error

The error probability

The marginal product of labor

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Is measured by the slope of the production function relating capital of employment

Is larger when the labor supply is relatively larger

Is smaller when the labor supply is relatively smaller

Decreases as the number of workers already employed increases

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

Which policy is an expenditure switching policy.

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Increase in the money supply

Decrease in government expensitures

Increase in business and household taxes

Decrease in import tariffs

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