Question # 1

Which of the following is not included in gorses investment.

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Business and residential constrcution.

Expenditures on consumer goods

Additions to business inventory

Expenditures on machinery

The long run aggregate supply curve.

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Is vertical

Slopes upward

Is horizontal

Slopes downward

The equilibrium level of employment achieved after the complete adjustment of wages and prices, is known as the.

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Zero unemployment level of employment

Natural state

Invisible handshake

Full employment level of employment

The measured of GDP includes

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Non market goods such as home making and child rearing

The benefits of clean air and water

Estimated values of activity in the underground economy

Purchases and sales of goods produced in previous periods

Country A 's GNP is increasing by 3% a year in contrast to its population growth of 2.4% The rate of growth of per capita GNP is.

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3%

0.85

0.6%

2.4%

If the federal reserve whishes to increase the money supply, it should

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Raise the reserve requirement

Raise the discount rate

Buy Treasury securities in the open the market

All of the above

Ahmed uses dummy variables in order to determine the monthly seasonal effect in her regression model. The number of dummy variables used will be.

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5

11

12

1

When aggregate economic activity increasing the economy is said to be in.

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An expansion

A contraction

A peak

A turning point

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

An economy is in inflationary equilibrium A sustained increase in government appending shifts.

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DAD rightward for one period

DAD and DAS right ward permanently

DAD right ward and a new equilibrium

DAD right ward and a new equilibrium.

Net National product equals.

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Gross national product minus indirect business taxes

Gross national product minus depreciation

National income minus indirect business taxes

National income pluses depreciation

Which of the following in a graph with interest rates and income on the vertical and horizontal axes, does not shift the balance of payments curve to the right.

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Capital flow restrictions

Export quotas

Export subsidies

Import tariffs

All of the following are obstacles to international economic policy coordination except.

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Different national objectives are institutions

Different national political climates

Different phases in the business cycle

Different national currencies.

The normal interest rate minus the inflation rate is the

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Depreciation rate

Discount rate

Real interest rate

Forward rate

If the foreign interest rate is 12% while the domestic interest rate in 95 then the forward premium will be.

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1.3 %

12%

9%

3%

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

When the marginal propensity to consume is 0.75 the multiplier has a value of.

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4

5

3

2

The equation for the LM curve is.

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Y = 100 -50 i

Y = 50 + 50 i

Y = 50 - 80 i

Y = 80 + 50 i

An invention that speeds up the internet is an example of.

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An income effect

An increase in labor

A substitution effect

A supply shock

The valued of expenditure multiplier relates.

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The change in autonomous spending to the change in income

the change in consumption to change in income

The change in come to the change is consumption

The change in income to the change in autonomous spending.

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