Question # 1

To avoid double counting when the GNP is estimated, economists

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Price all goods and services bought and sold in all markets

Use the GNP deflator

Price only intermediate goods

Calculate value added at each stage of production.

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

A rise in the exchange rate value of the rupee will most likely cause.

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A dollar to be worth less in learns of other currencies.

Imports to decrease

Exports to increase

The balance of payments curve to shift to the left

When the price level increases 25% starting from a price level equal to 100, a Rs. 1000 bond will have a real value of .

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Rs. 800

Rs.1250

Rs.750

Rs.666

A variable whose value is determined witching an economic theory or model is.

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Exogenous

Independent

Deterministic

Endogenous

According to the life cycle hypothesis consumption is related to.

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Current income

Past peak income

Expected lifetime income

Price expectations over one's life time

"Economics is a science " the basis of this statement is.

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Relation between causes and effect

Use of deductive method and inductive method for the formations of laws

experiments

All of the above

What is the level of savings for disposable income = Rs.5,000 if dissaving's of 50 occur at a disposable income of Rs.0 and a marginal propensity to save equal to 0.257

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Rs. 1.25

Rs.1.125

Rs.1,200

Rs.1,100

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

After a temporary beneficial supply shock hits the economy general equilibrium is restored by

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A shift down and to the left of the IS curve

A shift to the left of the FE line

A shift up and to the left to the LM curve

A shift down and to the right of the LM curve

in the keynesian model in the short run the amount of employment is determined by the effective labor demand curve and the level of.

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Prices

Output

The real interest rate

The supply of labor

If personal income equals Rs.570 white personal income takes equal Rs.90 consumption is Rs.430. interest payments total Rs. 10 and personal saving is Rs. 40, disposable income equals.

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Rs. 500

Rs.480

Rs. 470

Rs.400

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

Hyperinflation occurs when

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The inflation rate rises

The inflation Tate declines

The inflation rate is extremely high

The inflation rate is extremely low

Most industrial construes generally considered _______ as the most important economic goal

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External balance

Internal balance

Maximum efficiency for business

Maximum efficiency for labor

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

Find the revenue the government collects as a result of the tax

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Rs.10 million

Rs.40 million

Rs.16 million

Rs.30 million

Classical economics think general equilibrium is attained relatively quickly because.

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The real interest rate adjusts quickly

The level of output adjusts quickly.

The real wage rate adjusts quickly

The price level adjusts quickly.

Which of the following assets is most liquid.

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Shares of stock in IBM

Land

Gold

Currency

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%

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