Question # 1

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

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

The long run aggregate supply curve

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Is vertical

slopes upward

Is horizontal

Slopes downward

The two main characteristics of the production function are.

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It slopes downward from left to right and the slope become flatter as teh input increases

It slopes upward from left to the right the slope becomes steeper as the input increase

It slopes upward from left to right unput increases

It slopes downward from left to right and the slope becomes steeper ath the input increase

The costs of disinflation would be low if

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Expected inflation falls as inflation falls

Wages and price controls were used

The Phillips curve were nearly horizontal

The Phillips curve adjusted slowly to changes in inflation

The practice of using fiscal and monetary policy to stabilize the economy is known as.

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Fine turning of deamand

Monetarism

Laissez faire economics

Supply side economics

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

Which of the following results in an increase in the value of the dollar.

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Interest rates n the united states decrees, ceteris paribus

Interest rates in foreign countries increase, ceteris paribus

Price level in the United States increases, ceteris paribus

Productivity in the united states increases, ceteris paribus

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

Full- employment output is the level of output that firms in the economy supply when

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Taxes are zero

Wages and prices have fully adjusted

The unemployment rate in zero

All capital is fully utilized

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

Desired national saving would increase unambiguously if there were

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An increase in current output and expected future output

An increase in expected future output and government purchases

An increase in expected future output and the expected real interest rate

A fall in both government purchases and expected future output

If sales are forecasted using an adaptive expectations model where the coefficient of adjustment .2, the sales forecast for 1986 is.

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Rs.260

Rs.244.4

Rs.3.6

Rs.283.6

Which of the following is an economic activity.

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Teaching of a teacher in the school.

To teach son at home

To serve her child by mother

to play foot ball by a student

When GNP is Rs.500 billion and consumption expenditures are Rs.300 billion.

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the MPC is 6

The MPS is 4

The Multiplier is 2.5

None of the above

In the short run an increase in export sales would cause output to ______ and the price level to.

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Rise, rise

Rise,; stay; constant

Fall; rise

fall; stay; constant

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

When plotted with the aggregate price level on the vertical axis and output on the horizontal axis, the long run aggregate supply curve.

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slopes upward

Sloped downward

Is vertical

Is horizontal

Deflation occurs only when

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Some prices fall but average prices still rise

All prices for all goods fall

The average price level falls

The average price level increases bat at a slower rate than before

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

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LM is steeply sloped and IS is relatively that

LM is vertical and IS is stopped

LM is steeply sotped and IS is vertical

LM is relatively flat as is IS

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