Question # 1

In the Keynesian model short run equilibrium occurs where

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The IS and LM curves interest

The IS curve LM curve and FE lines intersect

the IS curve intersects the FE line

The LM curve intersects the FE line

When investment spending is negatively related to the rate of interest, equilibrium income in the goods market.

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Is unrelated to the rate of interest

Is positively related to the rate or interest

Inversely related to the rate of interest

Falls as the rate of interest decreases

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.

For interior commodities income effect is.

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Zero

Negative

Infinite

Positive

Two independent variables are not independent of each other in a multiple regression problem The analyst most likely will be confronted with.

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The problem of autocorrelation

A type 1 error

The problem of multicollinear rarity.

a type II error

According to classical economists unemployment rises in recessions due to an increase in ______ unemployment , not in _______ unemployment.

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Cyclical ; frictional and structural

Frictional and cyclical , structural

Structural , frictional and cyclical

Frictional and structural ; cyclical

When the value of output exceeds planned spending .

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There is unsold output, and the level of income will fall

there is unsold output and the level of income will rise

There is unsold output, and the level of income does not change.

All of the above

Assuming that money is neutral an increase in the nominal money supply would causes.

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An excess supply for goods

an increase in the real money supply

A fall in the price level

A rise in nominal wages

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

Deflation occurs only when

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Some prices fall but average prices still rise

All prices for all goods fall

The average price level falls

The average price level increases bat at a slower rate than before

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.

The nominal interest rate minus the inflation rate is the

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Depreciation rate

Discount rate

Forward rate

Real interest rate

The aggregate demand curve shows the combinations of output and the price level that put the economy on.

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The FE line and the IS curve

The FE line The IS curve and the LM curve

The IS curve

The IS curve and the LM curve

An economics variable that moves in the same direction as aggregate economic activity is called.

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Countercyclical

Procyclical

A cyclical

A leading variable

The two main characteristics of the production function are.

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It slopes downward from left to right and the slope become flatter as teh input increases

It slopes upward from left to the right the slope becomes steeper as the input increase

It slopes upward from left to right unput increases

It slopes downward from left to right and the slope becomes steeper ath the input increase

According to classical economists the economy.

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Requires fine tuning to reach full employment

Should not be left to market forces

Will never be at full employment

Is self correction

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

A rise in the price of bond causes the yield of the bond to.

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Rise

Fall

Remain unchanged

Rise uf ut's a short term bond, fall if it's a long term bond

Wars new inventions, harvest failures, and change sin government policy are examples of.

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The business cycle

Economics models

Shocks

Opportunity costs

In the Keynesian model in the long run an increase in the money supply will raise

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The price level but not the level of output

The level of output but not the price level

Both the level of output and the price level

Neither the level of output nor the price level

During inflation.

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Lenders lose borrowers gain.

Borrowers lose , lenders gain

The real interest rate rises

Borrowers and lenders both lose.

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