Question # 1

Fiscal policy output to change demand for output is.

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Completely effective in region KL

Partially effective in region JK

Elasticity is infinite for region LT

Completely ineffective in region LT

Based on the data above , the increase in potential MI would be

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Rs.50 billion

Rs.300 billion

Rs.60 billion

Rs.100 billion

Total factor productivity growth is that part of economic growth due to.

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Capital growth plus labor growth

Capital growth less labor growth

Capital growth times labor growth

Neither capital growth nor labor growth

The long run foreign exchange rate between the U.S. and Japan is 200 Yen =Rs. 1 under a floating exchange rate Which of the following does 112 t occur if the Federal Reserve reduce the money supply in order to prevent the occurrence of inflation.

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Foreign capital flows to the U.S.

The U.S. dollar appreciates

Real net exports decline

American real GNP experience a slower rate of growth

Economic planning by enteral government agencies is primarily associated with

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command economies

Market economies

Laissez faire economies

Market faire economies

An increase in total production causes the demand for money to _____ and the interest rate to ______

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Increase ; increase

Increase ; decrease

decrease ; decrease

decrease,; increase

The nominal interest rate minus the inflation rate is the

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Depreciation rate

Discount rate

Forward rate

Real interest rate

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

A temporary adverse productivity shock would.

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Shift the labor supply curve upward

Decrease the level of employment

Decrease future income

Decrease the expected future marginal product of capital

If the expected inflation rate is unchanged a fall in the natural rate of unemployment would.

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shift the Phillips curve to the right

Not Shift the phillips curve

Shift the Phillips curve to the left

shift the Phillips curve to the left shift the long -run Philips curve to the right

Classical economics believe that in the short run.

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Money neutrality exists and prices adjust rapidly

Money neutrality does not exist and prices adjust rapidly

Money neutrality exists and prices do not adjust rapidly.

When plotted with the aggregate price level on the vertical axis and output on the horizontal axis, the long run aggregate supply curve.

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slopes upward

Sloped downward

Is vertical

Is horizontal

The equilibrium level of Y and I derived from the LM and IS equations above is.

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Y = 130 and I = 10%

Y = 200 and I = 30%

Y = 180 and I = 7%

Y = 250 and I = 2%

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.

Suppose there is full employment and a neoclassical aggregate supply schedule A 105 increases in the nominal money supply.

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Has no effect upon the price level

Increase the rate of interest

Increase the nominal wage 10%

Increase the real money supply 10%

Given the saving equation S = - 50 + 0, 20 Y, where s is saving and Y is income.

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The break even level of income is 240

Dissaving takes place if income is 300

Consumption expenditures and saving are equal at an income level of 500

The MPS is constant for all levels of income

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

In the long run a reduction in labor supply would cause output to _______ and the aggregate price level to.

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fall; rise

fall ; fall

rise ; fall

rise; rise

According to Keynesian macro economics price adjust _____ to shocks, so the government should.

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Slowly ; do little

Rapidly ; do little

Rapidly ; fight recessions

Slowly ; fight recessions

Monetary expansion can still be effective in getting out of liquidity trap if it's combined with.

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Restrictions on bank loans

Increased taxes

Contractionary fiscal policy

Expansionary fiscal policy

By definition, the marginal propensity to consumes.

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Equals OC/A Yd

Is the behavioral coefficient c in the equation C = C + cYd

Is the slops of the consumption function.

All of the above

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