Question # 1

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

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%

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

In market economics the incentive that draws entrepreneurs into industry is.

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Government bonuses for meeting production quotas

Profit

Government assumption of the risk of failure

Government assistance with making output and pricing decisions

Which of the following is the second law of gossen.

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Law of equal marginal utility.

Law of equi product

Theory of indifference curve

Law of diminishing marginal utility.

You are gold the level of savings in the economy is Rs.25 billion of equilibrium Using the consumption function C =20 + .9 Y, find equilibrium income .

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250

900

450

350

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

According to classical economists unemployment rises in recessions due to an increase in ______ unemployment , not in _______ unemployment.

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Cyclical ; frictional and structural

Frictional and cyclical , structural

Structural , frictional and cyclical

Frictional and structural ; cyclical

The value of a producer's output minus the value of the inputs if purchases from other producers is called the producer's

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Surplus

Profit

Gross product

Value added

In the Keynesian model in the long run a decrease in the money supply will cause ___ in the interest rate and _____ in the price level.

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An increase ; an increase

A decrease ; a decrees

No change ; an increase

No change ; a decrease

The major source of revenue for the government is.

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the collection of property taxes

The collection of the corporates income tax

The collection of excise taxes on gasoline cigarettes and tires

The collection of import and export duties in the conduct of foreign trade

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

Which of the following solutions does the economist suggest to cost inflation in higher education.

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Cutting professor salaries

Make students live at home

Reduce college from four to three years

B and C

In the long run an increase in consumer spending would cause output to ________ and the price level to.___________

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rise;rise

rise; stay; constant

stay constant ; stay constant

Stay constant ; rise

Deflation occurs only when

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Some prices fall but average prices still rise

All prices for all goods fall

The average price level falls

The average price level increases bat at a slower rate than before

A model in which individual producers act as price setters because there are only a few sellers and the product they sell is not standardized, is called.

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Imperfect competition

Perfect competition

Monopoly

Monopsony

Which of the following macro economic variables doesn't vary much ove the seasons.

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The nominal money stock

The unemployment rate

The real wage

Average labor productivity

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

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

When plotted with the aggregate price level on the vertical axis and output on the horizontal axis which of the following curves is vertical.

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SRAS

AD

LRAS

None of the above

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