Question # 1

When the Central Bank initiates actions which will lead to an increase in the supply of money IS -LM models tell us to expect that.

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The interest rate will rise

The interest rate will decline

The price level will not change

Investment will decline

Which of the following is the most liquid.

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A savings account

A 6 months CD

A home

Water

An adverse supply shock that is permanent shifts which curve in addition to the curves shifted by.

One that is temporary.

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The LM curve

The IS curve

The FE line

The labor demand curve

According to Keynesians the primary source of business cycle fluctuation is.

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Aggregate demand shocks

Productivity shocks

Oil price shocks

Consumer confidence shocks

Which of the following macro economic variables is the most seasonally pro cyclical.

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Expenditure on services

The unemployment rate

Expenditure on durable goods

The real wage

According to the permanent income hypothesis all increases in .

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Permanent income are saved

Permanent income are consumed

transitory income are saved

Transitory income are consumed

A temporary adverse productivity shock would.

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Shift the labor supply curve upward

Decrease the level of employment

Decrease future income

Decrease the expected future marginal product of capital

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

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

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Richard jones

Comte

Gunnar Myrdal

All of the above

As the economy nears full capacity the short run aggregate supply curve

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Stagflation

Structural inflation

Demand side inflation

Supply side inflation

The long term demand for real money balance will rise when

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the income elasticity of the demand for money is less than unity.

There is a long term increase in the price level

There is a relative increase in the stock of government securities.

Long term market interest rates are falling.

Which of the following will cause a monetary induced change versus a fiscal induced change in equilibrium income as determined.by IS - LM analysis.

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A shift in the consumption function

A shift in government expenditures

A change in liquidity preference

A change in a government expenditures

If sales are forecasted using an adaptive expectations model where the coefficient of adjustment .2, the sales forecast for 1986 is.

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Rs.260

Rs.244.4

Rs.3.6

Rs.283.6

In which of the following situations will an increase in the money supply have no effect upon equilibrium income.

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LM is steeply sloped and IS is relatively flat

LM is vertical and IS si steeply sloped

LM is steeply sloped and IS is vertical

LM is relatively flat as is IS

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

When the supply of money increases.

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The LM curve will shift in

The LM curve will shit out

The demand for money will decrease

The demand for money will increase

An increase labor supply would cause the IS curve to.

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Shift up and to the right

Shift down and to the left

Remain unchanged

Shift up and to the right only if people face borrowing constraints

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

If nominal GNP were Rs.1000 ballooning 1976 and Rs.2200 billion in 1986, and the implicit GNP deflator was. 1.2 in 1976 and 1.6 in 1986 concluded that .

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Real GNP increased by approximately Rs. 542 billion from 1976 to 1986

The price level fell from 1976 to 1986

Real GNP increased by 35%

Nominal GNP increased by 80%

An increase in investment leads to an increase in income and consumer spending, which in turn leads to a further increase in investment spending This is example of.

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The expenditure multiplier

Explosive gowth

Hyperinflation

Interaction of multiplier and accelerator

Economic planning by enteral government agencies is primarily associated with

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command economies

Market economies

Laissez faire economies

Market faire economies

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