Question # 1

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

Over a two year period your income has increased 10% At the same time the consumer price index has increased 205 Your real purchasing power is.

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92% of the original value

50% of its original value

Not affected by the price change

109% of its original value

In a model in which there is no government new investment capital replacement or international trade the market value of final output equals.

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Aggregate consumption

The sum of the receipts of economic resources

The sum of wages rent interest and profit

All of the above

A group of modern economists who believe that price and wage rigidities do not provide the only rationale for macroeconomic policy activism are called.

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New Keynesians

Keynesians

Monetarists

The Classical shool

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 the expected rate of inflation rose at the same time the natural rate of unemployment rose the Philips curve.

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would shift down

would shift up

Would not move

Might shift up or down or not move depending on which effect was larger.

A nation experiences internal balance if it acieves.

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Full employment

Price stability

Full employment and price stability

Unemployment and price instability

Using the Keynesian model , the effect of a decrease in the effective tax rate on capital would be to cause_____ in the real interest rate and __ in output in the long run.

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An increase ; no change

A decrease ; no change

An increase ; an increase

No change ; a decrease

The fac that the production function relating output to labor becomes flatter as wemove from left to right means that.

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The marginal product of labor is positive

The marginal product of capital is positive

There is diminishing marginal productivity of labor

There is diminishing marginal productivity of capital

The Ad, SRAS ,and LRAS curve each show a relationship between which two economic variables.

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The aggregate price level and output

The aggregate price level and the interest rate

Output and unemployment

Output and the interest rate.

An increase in the number of workers hired by a firm could result from

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a decrease in the marginal product of labor

a decrease in the marginal revenue product of labor

An increase in the real wage

A decrease in the real wage

The Keynesian theory is consistent with the business cycle fact that inflation is

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Procyclical and leading

Procyclical and lagging

Countercyclical and leading

All of these

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

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%

Whose opinions have revolutionized the scope of macro economics.

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Adam Smith

J.B. Say

J.M. Keynes

All of the above

Economics is the science of Wealth who gave this definition.

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J-x Mehta

Marshall

Adam Smith

Robbins

An expenditure reducing policy would consist of a decrease in

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The par value of a currency

Government expenditures

Import duties

Business or household taxes

From a Keynesian perspective business investment will de cline as a result of.

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A fall in the interest rate

A decrease in business taxes

A decline in business expectations

Acceleration of business depreciation

The appropriate expenditure switching policy to correct a balance of payment surplus is.

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Currency revaluation

Currency devaluation

Expansionary monetary policy

Contractionary fiscal 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

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

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