Question # 1

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

If the Nominal GNP of an economy rose from Rs. 5000 to 5500 between 1985 and 1986 while the price index rose from 100 to 110 during the same period real GNP

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Fell by 10% from 1985 to 1986

Rose by 10% from 1985 to 1986

Remained constant from 1985 to 1986

Fell by 1% from 1985 to 1986

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

Two independent variables are not independent of each other in a multiple regression problem The analyst most likely will be confronted with.

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The problem of autocorrelation

A type 1 error

The problem of multicollinear rarity.

a type II error

When all markets in the economy are simultaneously in equilibrium we say.

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Markets are complete

Markets are perfect

There is disequilibrium

There is general equilibrium.

A situation in which expansionary in monetary policy has no effect on the economy is known as.

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Macro economic stabilization

A liquidity trap

A depression

Capital flight

Suppose your company is in equilibrium with its capital stock at the desired level A permanent decline in the expected real interest rate now has what effect on your desired capital stock

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Raises it because the future marginal productivity of capital is higher

Lowers it because the future marginal productivity of capital is lower

Raises it because the user cost of capital is now lower

Lowers it because the user cost of capital is now higher

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

In the long run an increase in government purchases of military equipment would cause output to _________ and the aggregate price level to

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Stay constant fall

fall ; fall

fall ; stay constant

stay constant ; rise

During inflation.

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Lenders lose borrowers gain.

Borrowers lose , lenders gain

The real interest rate rises

Borrowers and lenders both lose.

The three main components of the aggregate demand aggregate supply model include.

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AD, SRAS, LM

SRAS, LRAS, IS

AD, IS, LM

AD, SRAS, LRAS

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

If government spending of Rs. 10 and a lump sum tax of Rs.10 is added, the empirical equation for the new IS curve becomes.

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Y = 285 + 20 I

Y = 270 - 10 i

Y = 285 - 50 i

Y = 210 - o.5 i

When planned consumption equals Rs. 40 + 0.90 Yd and planned investment is Rs.50, the equilibrium level of income is.

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Rs.90

Rs.400

Rs.500

Rs.900

When planned saving equals Rs.40+0.20 Yd and planned investment is rs. 60, the equilibrium level of income in.

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Rs. 100

Rs. 400

Rs.500

Rs.1000

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

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

The key difference between classical and Keynesian macro economist is their differing beliefs about.

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The slope of the aggregate demand curve

The speed at which prices adjust

The natural rate of unemployment

The full employment level of output

The regression equation for consumption as a function of disposable income is C = -60 + 0.90Y .the standard error of Y is 30 and the standard error of estimate is 9.5 What is the 95% confidence interval for C when Y is Rs. 1000 billion.

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Rs.941 to Rs. 979

Rs.900 to Rs. 1,020

Rs.821 to Rs.859

Rs.780 to Rs.900

The Laffer curve depicts

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A trade off between tax rates and government receipts

Price levels and real income

government deficits and unemployment

Tax rates and infixation

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

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