Question # 1

A change that increase real money demand relative to the real money supply causes.

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The LM curve to shift down and to the right

The LM curve to shift up and to the left

The IS curve to shift down and to the left

The IS curve to shift up and to the right

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

Utility means.

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Power to satisfy a want

Usefulness

Willingness of a person

Hamfulness

A temporary decline in productivity would cause the IS curve to.

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Shift up and to the right

Shift down and to the left

Remain unchanged

Shift up and to right only if people face borrowing constraints

The efficiency wage model can be modified to allow real wages to vary over the business cycle by assuming that.

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Workers effort may depend on the unemployment rate and the real wage

During a recession labor supply will decrease reducing the efficiency wage

During a recession productivity wil fall causing a reduction in the efficiency wage

During a boom labor demand will increase, causing the efficiency wage to rise

When the supply of money increases.

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The LM curve will shift in

The LM curve will shit out

The demand for money will decrease

The demand for money will increase

An import function is 100+0.1 Y and exports are exogenous. If income (Y) is 500, and there is a trade deficit of 50, then exports are.

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0

25

75

100

The reason that only final sales are counted in GDP is

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To avoid double counting good that are sold so as to be resold

To not count production in other countries

Because the government can't get records on intermediate sales.

To simplify the computation and no other reason

In the Keynesian model which curve is vertical.

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LRAS

SRAS

AD

NS

A beneficial supply shock would cause.

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A movement up the short run Phillips

a movement down the short run Phillips curve

The short run Phillips curve to shift upward and to the rights

The short run Phillips curve to shift down ward and to the left

What tow factors should you equate in deciding how many workers to employ.

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The marginal product of labor and the marginal product of capital

The marginal product of labor and the real wage rate

The marginal product of labor and the real interest rate

The marginal product of capital and the real wage rate

If nominal GNP were Rs.1000 ballooning 1976 and Rs.2200 billion in 1986, and the implicit GNP deflator was. 1.2 in 1976 and 1.6 in 1986 concluded that .

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Real GNP increased by approximately Rs. 542 billion from 1976 to 1986

The price level fell from 1976 to 1986

Real GNP increased by 35%

Nominal GNP increased by 80%

Which of the following will cause a monetary induced change versus a fiscal induced change in equilibrium income as determined.by IS - LM analysis.

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A shift in the consumption function

A shift in government expenditures

A change in liquidity preference

A change in a government expenditures

After a temporary beneficial supply shock hits the economy general equilibrium is restored by

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A shift down and to the left of the IS curve

A shift to the left of the FE line

A shift up and to the left to the LM curve

A shift down and to the right of the LM curve

In which of the following situations will an increase in the money supply have no effect upon equilibrium income.

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LM is steeply sloped and IS is relatively flat

LM is vertical and IS si steeply sloped

LM is steeply sloped and IS is vertical

LM is relatively flat as is IS

An increase in autonomous net exports

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Shifts IS rightward by k, ox

shifts IS left eard by k, AX

Increase the slope of IS

Decreases the slope of IS

Which of the following will not result in an increase in the level of income.

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An increase in autonomous spending

A decrease in autonomous taxes

An increase in autonomous transfers

an increased in net tax revenues

A Rs.10 increase in autonomous investment spending shifts IS

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Rightward by Rs.10

Leftward Rs.10

Rightward by Ke (Rs.10)

Leftward by Ke (Rs.10)

The term household production refers to

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Output produced by forcing children to work

Output produced by workers who are telecommuting

Services provided directly to households such as lawn mowing by landscape companies.

Output produced at home

The origin of the idea of a trae off between inflation and unemployment was a 1958 article by

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A.W Philips

Edmund phelps

Milton Friedman

Robert Gordon

Assuming that money is neutral an increase in the nominal money supply would causes.

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An excess supply for goods

an increase in the real money supply

A fall in the price level

A rise in nominal wages

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