Question # 1

Given fixed change rate assume Pakistan initiates expansionary monetary and fiscal polices to combat recession these policies will also.

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Increase both imports and exports

Increase exports and reduce import

Reduce a balance of payments surplus

Reduce a balance of payment deficit

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

In the efficiency wage model with the efficiency wage above the market clearing wage when employment is at its full employment level.

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Labor supply equals labor demand

There is an excess supply of labor

there is an excess demand for labor

There could be either an excess demand for or an excess supply of labor

The fact that the production function relating output to labor becomes flatter as we move from left to right means that.

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The marginal product of labor is positive

The marginal product of capital is positive

There is diminishing marginal productivity of labor

there is diminishing marginal productivity of capital

If X becomes more expansive i relation to Y, what happens to the budget line in the X - Y space, with Y on the vertical axis.

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It shifts to the right

It shifts to the left

The slope becomes flatter

The slope becomes steeper

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

The dynamic aggregate demand schedule shifts rightward when there is an increase in.

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The expected rate of inflation ceteris paribus

The growth rate of the nominal money supply ceteris paribus

The income tax rate ceteris paribus

the current inflation rate celeries paribus

Which of the following macroeconomic variables is procyclical and lags the business cycle.

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Business fixed investment

Empolyment

Stock prices

Nominal interest rates

Banks can create money

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Only by illegally printing additional dollar bills

By paying interest to their depositors

By making loans that result in additional deposits

By offering financial services, such as stick market brokerage

Which of the following is not a category of consumption spending in the national income accounts.

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Consumer durables

Non durable goods

Services

Housing Purchases

If investors expectations concerning the future are positive and thus increase investment at every interest rate the.

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IS curve would shift up

IS curve would shift down

LM curve would shift down

IS and LM curves will not shift

The normal interest rate minus the inflation rate is the

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Depreciation rate

Discount rate

Real interest rate

Forward rate

Which of the following macro economics variables is a cyclical.

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Real interest rates

Unemployment

Money supply

Consumption

Which of the following represents monetary policy geared to increases the supply of money.

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The purchase of bonds by the Federal Reserve Bank

The sale of bonds by the Central Bank

An increase in reserve requirement

A decrease in taxes

Friedman and phelps suggested that there should not be a stable relationship between inflation and unemployment, but here should be a stable relationship between

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Anticipated inflation and frictional unemployment

Anticipated inflation and cyclical unemployment

Unanticipated inflation and frictional unemployment.

Unanticipated inflation and cyclical unemployment

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

If government spending of Rs. 10 and a lump sum tax of Rs.10 is added, the empirical equation for the new IS curve becomes.

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Y = 285 + 20 I

Y = 270 - 10 i

Y = 285 - 50 i

Y = 210 - o.5 i

If government tax function is T = 80 + .6 Y and the marginal propensity to consume is a constant 8 and increase in GNP of Rs.50 would cause consumption to.

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Increase by Rs.16

Decrease by Rs.16

Increase by Rs.40

Decrease by Rs.30

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

When planned saving equals Rs.40+0.20 Yd and planned investment is rs. 60, the equilibrium level of income in.

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Rs. 100

Rs. 400

Rs.500

Rs.1000

Which of the following changes shifts the AD curve down and to the left.

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A temporary increase in government purchases.

A rise in the nominal money supply

A decrease in corporate taxes

A decrease in consumer confidence

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