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

The key difference between classical and Keynesian macro economist is their differing beliefs about.

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The slope of the aggregate demand curve

The speed at which prices adjust

The natural rate of unemployment

The full employment level of output

The equilibrium level of income of the open economic model is.

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200

400

300

500

A decline expected future output would cause the IS curve to.

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Shift up and to the right

Shift down and to the left

Remain unchanged

shift up and to the right only if people face borrowing constratints.

The gift exchange motive suggests that

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Workers value benefits like health insurance more than job security

Workers prefer a nice work environment even if they must accept lower wages.

Workers who feel well treated will work harder and more efficiently

Workers will shirk if they are paid a low wage

An expansionary supply side shock results in.

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An increased real national income

The aggregate supply curve shifting to the left

The aggregate demand curve shifting to the right

The aggregate demand curve shifting to the left

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%

Suppose there is full employment and positively sloped aggregate supply schedule A decrees in taxes increases.

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The price level and real output

the prie level but has no effect on real output

Real output but has no effect on the price level

The nominal and real wage

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

An efficient economy is an economy

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In which output is steady or growing and there is low inflation

That produces what consumers demand and does so at the least possible cost.

that distributes output equally among all consumers

In which there is a fair distribution of wealth.

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

The Laffer curve depicts

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A trade off between tax rates and government receipts

Price levels and real income

government deficits and unemployment

Tax rates and infixation

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

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

For a borrower an increase in the real interest rate will lead to.

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Higher current consumption and less borrowing

Higher current consumption and less saving

Lower current consumption and less borrowing

Lower current consumption and less saving

When the marginal propensity to consume is 0.75 the multiplier has a value of.

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4

5

3

2

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

The multiplier which specifically refers to an equal increase in government spending and taxes, giving rise to that same equal increase in national income is called.

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the Keynesian multiplier

The balanced budget multiplier

the deficit multiplier

None of the above

When total utility becomes maximum then marginal utility will be.

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Minimum

Average

Zero

Negative

Which of the following is a NOT component of M-2.

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Small time deposited

Money market mutual funds

Stocks

Checkable deposits

A mathematical expression relating the amount of output produced to quantities of capital and labor utilized is the.

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Real interest rate

Productivity relation

Production function

Marginal product

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