Question # 1

When the price level increases 25% starting from a price level equal to 100, a Rs. 1000 bond will have a real value of .

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Rs. 800

Rs.1250

Rs.750

Rs.666

The fraction of additional current income that a person consumes in the current period is known as the

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Consumption smoothing motive

Consumption deficit

Saving rate

marginal propensity to consume

Which of the following macro economics variables is a cyclical.

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Real interest rates

Unemployment

Money supply

Consumption

in the keynesian model in the short run the amount of employment is determined by the effective labor demand curve and the level of.

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Prices

Output

The real interest rate

The supply of labor

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%

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

When the export function is Rs.100-0.2 Y , net exports are 0 when income is .

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Rs.300

Rs.400

Rs.500

Rs.600

The costs of disinflation would be low if

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Expected inflation falls as inflation falls

Wages and price controls were used

The Phillips curve were nearly horizontal

The Phillips curve adjusted slowly to changes in inflation

If personal income equals Rs.570 white personal income takes equal Rs.90 consumption is Rs.430. interest payments total Rs. 10 and personal saving is Rs. 40, disposable income equals.

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Rs. 500

Rs.480

Rs. 470

Rs.400

A decrease in the marginal propensity to import will lead to.

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An increase in GNP

Lower the multiplier

An increase in imports

A decrease in imports

When GNP is Rs.500 billion and consumption expenditures are Rs.300 billion.

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the MPC is 6

The MPS is 4

The Multiplier is 2.5

None of the above

The reduction of the inflation rate is called

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Deflation

Disinflation

Inflation

Reflation

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

The use of micro economics policies to smooth or moderate the business cycle is known as.

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Aggregate demand management.

Aggregate supply management

Automatic stabilization

Discretionary policy

A change in autonomous spending is represented by.

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A movement along a spending line

A shift of a spending line

A change in a behavioral coefficient.

None of these

Which of the following factors will cause the demand curve for labor to shift to the right.

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The demand for the product produced by labor declines.

The prices of substitute imputes falls

The productivity of labor increases

None of the above

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 impact of contractionary fiscal policy, according to new classical theory is that.

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Real interest rates do not change

Aggregate demand increase

Current real output substantially decreases

The price level substantially increases.

The natural rate of unemployed is generally thought of as the.

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Ratio of the frictional unemployment rate to the cyclical unemployment rate

sum of structural unemployment and cyclical unemployment

sum of frictional unemployment and cyclical unemployment

sum of frictional unemployment and structural unemployment.

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

The risk free rate of interest would not be affected by.

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Changes in real output

Change in the money supply

Term to maturity

None of the above

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