Question # 1

In the Keynesian model in the long run an increase in the money supply will raise

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The price level but not the level of output

The level of output but not the price level

Both the level of output and the price level

Neither the level of output nor the price level

In a mixed economy the economic decisions of what to produce how to produce, and who will receive products are made by

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The government

Consumers and firms

Banks and stock markets

Firms, consumers, and government.

A technological improvement will

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Increases the desired capital stock

Decrease the desired capital stock

Have no effect on the desired capital stock

Have the same effect on the desired capital stock as an increase in corporate taxes.

Which of the following macro economic variables is the most seasonally pro cyclical.

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Expenditure on services

The unemployment rate

Expenditure on durable goods

The real wage

Which of the following is not a category of consumption spending in the national income accounts.

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Consumer durables

Non durable goods

Services

Housing Purchases

If government tax function is T = 80 + .6 Y and the marginal propensity to consume is a constant 8 and increase in GNP of Rs.50 would cause consumption to.

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Increase by Rs.16

Decrease by Rs.16

Increase by Rs.40

Decrease by Rs.30

The negative relation ship between unemployment and inflation is know as the

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Aggregate supply curve

Aggregate demand curve

Philipps curve

Efficiency wage line

According to classical economists the economy.

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Requires fine tuning to reach full employment

Should not be left to market forces

Will never be at full employment

Is self correction

The value of real GDP in the current year equals.

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The value of current year output in prices of the base year

The value of current year output in pries of the current year

The value of base year output in prices of the base year

The value of base year output in prices of the current year

According to Okun's law an increase in the unemployment rate will cause_______ in the level of empolyment and __ in the level of output.

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An increase ; an increase

An increase; a decrease

A decrease ; an increase

a decrease ; a decrease

An IOU of the Federal Reserve Bank of Scan Francisco to Bank of America is called.

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Discourse

Federal funds

Reserves

Collateral

Which of the following macro economic variables is procyclical and coincident with the business cycle.

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Residential investment

Nominal interest rates

Industrial production

Unempolyment

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.

If the intercept of the consumption function is 75, and MPS is 0.10 the value of consumption expenditures at Yd = Rs. 5,000 is

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Rs.4,500

Rs. 575

Rs.500

Rs. 4,575

The ratio of the change in the equilibrium level of income to a change in some automats increase in spending is the

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Elasticity coefficient

Multiplier

Automatic stabilizer

Marginal propensity of the autonomous variable

Which of the following changes shifts the SRAS curve down.

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An increase in the labor force

An increase in the money supply

A decrease in government purchases

A decrease in firms costs

The aggregate supply of labor is the

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Total amount of time a person works over his or her lifetime

Total amount of time a person spend in the labor force over his or her life time

Unemployment rate

Sum of the labor supplied by everyone in the economy

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 productivity would cause output to _________ and the aggregate price level to

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fall ; rise

fall ; fall

rise ; fall

rise ; rise

Appreciation of the U.S. dollar results in.

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U.S. tourists traveling abroad being worse off

U.S. imports increasing.

Foreign currency buying more U.S. goods and services.

No change iin foreign pucchases or sales.

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

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