Question # 1

A change that increases the real money supply relative to real money demand causes.

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The LM curve to shift down and to the right.

The LM curve to shift up and to the left

The IS curve to shift down and to the left

The IS curve to shift up and to the right.

An expenditure increasing policy would consist of an increase in

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Import tariffs

Import quotas

Governmental taxes

The money supply

The MPS = 0.4 and government spending increases by 20 billion. The LM curve

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Shifts to the right by 20 billion

Shifts to the right by 50 billion

Does not shift

shifts to the left by 30 billion

An increase in the expected future marginal product of capital would cause the IS curve to.

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Shift up and to the right

Shift down and to the left

Remain unchanged if firms face borrowing constraints otherwise shift down and to the left

Remain changed

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

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200

400

300

500

Peaks and trough of the business cycle are known collectively as.

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Volatility

Turning points

Equilibrium point

Real business cycle events

The multiplier that applies to changes in autonomous investment is identical to changes in.

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Autonomous government expenditures

Autonomous consumption expenditures

Autocoups exports

All of the responses above

The short run aggregate supply curve the absence of misperceptions.

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Is vertical

Slopes upward

Is horizontal

Slopes downward

GDP difference between GNP because.

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GDP = GNP - net factor payments from abroad

GNP = GDP -net factor payments from abroad

GDP = GNP -capital consumption allowances

GNP = GDP -capital consumption allowances.

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%

Which of the following events would lead to an increase in the marginal product lf labor for every equantity labor.

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An increase in the real wage

A decrease in the real wage

A favorable supply shock such as a fall in the price of oil

an adverse supply shock such as a reduced supply of raw materials.

The philippic curve is the relation between inflation and unemployment that hold for a given natural rate of unemployment. and a

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Given rate of inflation

Given expected rate on inflation

Given level of unemployment

Given expected level of unemployment

Which of the following methods is used for internalizaing positive externalities

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Positive taxes

Government exchange of property rights

Effluent fees

Corrective substidies

The efficiency wage model can be modified to allow real wages to vary over the business cycle by assuming that.

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Workers effort may depend on the unemployment rate and the real wage

During a recession labor supply will decrease reducing the efficiency wage

During a recession productivity wil fall causing a reduction in the efficiency wage

During a boom labor demand will increase, causing the efficiency wage to rise

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

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

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

What is the possible cause for a falling real GNP over a period of time.

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A general fall in the value of output though changes in quantities producted.

A general increase in prices

An increase in the value of output produced and a general increase in prices

A, B and C

The long run aggregate supply curve.

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Is vertical

Slopes upward

Is horizontal

Slopes downward

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

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SRAS

AD

LRAS

None of the above

Industries that are extremely sensitive to the business cycle are the.

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Durable goods and service sectors

Nondurable goods and service sectors.

Capital goods and nondurable goods sectors.

Capital goods and durable goods sectors.

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