Question # 1

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

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

If an individual has a money income M of Rs. 999 , the price of X is rs.7.00 per unit and ithe price of Y is Rs. 300 per unit find the equation for the budget lines.

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Y = 333 - (7/3) x

Y = 142 - (7/3) x

Y = 142- (3/7) x

Y = 323 - (7/3) x

If equilibrium national income is less than the full employment the gap can be closed by.

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Raising taxes

Decreasing government expenditures

Raising taxes and decreasing government expenditures.

Increasing government expenditures.

An increase in wealth that doesn't affect labor supply would cause the IS curve to _________ and the FE line to ____________

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Shift down and to the left be unchanged

Shift down and to the left shift left

Shift up and to the right be unchanged

Shift up and to the right shift left

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 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

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.

The long run aggregate supply curve

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Is vertical

slopes upward

Is horizontal

Slopes downward

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

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

The practice of using fiscal and monetary policy to stabilize the economy is known as.

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Fine turning of deamand

Monetarism

Laissez faire economics

Supply side economics

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

"Economics is what economists do " It has been supported by.

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Richard jones

Comte

Gunnar Myrdal

All of the above

The monetary base in composed of.

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Gold and silver

Currency only

Currency and reserves

Currency and checkable deposits

In the Keynesian model in the long run a decrease in the money supply will cause ___ in the interest rate and _____ in the price level.

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An increase ; an increase

A decrease ; a decrees

No change ; an increase

No change ; a decrease

If the demand for coffee decreases as income decreases, coffee is a

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Normal good

Inferior good

Substitute good

Complementary good

When the economy goes into are cession there's an increase in.

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Frictional unemployment

structural unemployment

Cyclical unemployment

Voluntary unemployment

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

Appreciation of the U.S. dollar results in.

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U.S. tourists traveling abroad being worse off

U.S. imports increasing.

Foreign currency buying more U.S. goods and services.

No change iin foreign pucchases or sales.

The short run aggregate supply curve the absence of misperceptions.

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Is vertical

Slopes upward

Is horizontal

Slopes downward

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