Question # 1

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

When plotted with the aggregate price level on the vertical axis and output on the horizontal axis, the long run aggregate supply curve.

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slopes upward

Sloped downward

Is vertical

Is horizontal

Over a two year period your income has increased 10% At the same time the consumer price index has increased 205 Your real purchasing power is.

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92% of the original value

50% of its original value

Not affected by the price change

109% of its original value

Given the data above, the empirical equation for the IS curve is.

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Y = 275 + 10 i

Y = 225 + 50 i

Y = 250 - 10 i

Y = 275 - 501

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

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

Company X sells Rs.75 million dollars of 9.5% first mortgage bonds at par The company's marginal tax rate to 30% The after tax cost of debt is.

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2.85%

3.175

6.68%

7.55

An import function is 100+0.1 Y and exports are exogenous. If income (Y) is 500, and there is a trade deficit of 50, then exports are.

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0

25

75

100

Keynesian economists think general equilibrium is not attained quickly because.

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The real interest rate adjusts slowly

The level of output adjusts slowly

The real wage rate adjusts slowly

The price level adjusts quickly

The reason that only final sales are counted in GDP is

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To avoid double counting good that are sold so as to be resold

To not count production in other countries

Because the government can't get records on intermediate sales.

To simplify the computation and no other reason

A temporary decrease in government purchases would cause.

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A rightward shift in the saving curve and a leftward shift in the investment curve

A rightward shift in the saving curve and a rightwards shift in the investment curve.

A right ward shift in the saving curve but no shift in the investment curve

No shift in the saving curve but a left ward shift in the investment curve.

Which theory is generally included under micro economics.

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Price theory

Income theory

Employment theory

None of the above

Utility means.

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Power to satisfy a want

Usefulness

Willingness of a person

Hamfulness

Which of the following is incorrect with respect to the consumption diagram.

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the interest rate is a premium

MRS = (i +r)

The consumer will be lender in time zero

The consumer lends 700

Which of the following does not result in an increase in U.S. autonomous net exports.

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The U.S. dollar depreciated

Major trading partners stimulate their economy

Foreign currencies depreciate

Foreign trading partners lift tariff barriers

According to the life cycle hypothesis consumption is related to.

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Current income

Past peak income

Expected lifetime income

Price expectations over one's life time

The data indicates that country A in billions of rupees is experiencing a

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A deficit of Rs.60

A surplus of Rs. 300

Deficit of Rs.900

A deficit of Rs. 500

The philippic curve is the relation between inflation and unemployment that hold for a given natural rate of unemployment. and a

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Given rate of inflation

Given expected rate on inflation

Given level of unemployment

Given expected level of unemployment

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

The substitution effect of a decrease in real interest rates is to cause a consumer to.

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Increase future consumption and decrease current consumption

Decrease future consumption and increase current consumption

Increase current consumption and increase saving

Decrease current consumption and increase saving.

In the short run an increase in export sales would cause output to ______ and the price level to.

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Rise, rise

Rise,; stay; constant

Fall; rise

fall; stay; constant

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