Question # 1

An increase in autonomous consumer expenditure causes the equilibrium levelof aggregate output to _______ at any given interest rate and shifts the ____ curve to the

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rise ; LM ;right

rise ; IS ; right

fall ; LM, Left

rise ; IS ; Left

In the ISLM frame work an expansionary fiscal policy causes aggregate output to _________ and the interest rate to.

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increases ; increase

increases ; decrease

decreases ; decreases

decreases ; increses

How much of the Rs. 5 billion dollar increase in the government expenditures will be financed by bond sales.

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Rs.3.5 billion

Rs.1.5 billion

Rs. 4.9 billion

Rs.2.8 billion

A decline in planned investment spending unrelated to the interest rate focuses the equilibrium level of aggregate output to ________ and shifts the _ curve to the _______

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rise; Lm ; RIGHT

RISE ; is; right

fall ; IS; Left

rise ; LM; left

A decrease in the legal reserve ratio from 25% to 20% will

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Result in light money

Be contractionary

Increases excess reserves and the potential money multiplier

Decrease excess reserves and the potential money multiplier

Short run contractionary Fiscal policy would result in.

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Aggregate demand moving to the right

Aggregate supply moving to the right

Aggregate demand moving to the left

Aggregate supply moving to the left

During period of inflation

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Those people who have fixed incomes benefit

Every one's real income falls

those people who enter long term wage agreements benefit

Those people whose real income rises faster than the general price level benefit

Given fixed exchange rates assume Pakistan initiates contractionary monetary ad fiscal policies to combat inflation. these policies will also.

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Reduce a balance of payments surplus

Reduce a balance of payments deficit

Increases both imports and exports

Decrease both imports and exports

Factors that cause the IS curve to shift include.

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Changes in autonomous consumer spending

Changes in government spending

Changes in investment spending related to business confidence

All of the above

Net taxes are.

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Government expenditures minus government revenues.

Taxes paid by firms and households to the government minus the transfer payments made to firms and household.

Taxes paid by firms and household to the government plus transfer payments made to firms and hose holds.

Taxes paid by firms and hose hold to the government minus the cost of collecting the taxes.

A decrease in the quantity of money supplied shifts the money supply curve to the________ and the equilibrium interest rate

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right ; fall

right ; rises

left ; falls

left ; rises

The quantity of money demanded varies

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Directly with both prices and output

Inversely with both prices and output

Directly with prices and inversely with output

Inversely with prices and directly with output

The negative effect on the economy that occurs when average tax rates increases because taxpayers have moved into higher income brackets during an expansion is.

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Fiscal drag

The Laffer curve

Bracket creep

Debt burden

Fiscal policy refers to the manipulation of government income and expenditure to.

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control the volume and price of money

Limit the rate of increaes in incomes

Effect the value of the dollar on world financial market.

Affect the level of total expenditure output and employment

A decline in the money__________ shifts the LM curve to the ____ causing the interest rate to rise and output to fall.

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Demand ; right

demand ; left

supply ; right

supply ; left

In the ISLM framework an expansionary monetary policy causes aggregate output to _____________ and the interest rate to

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increase ; increase

Increase ; decrease

decrease ; decrease

decrease ; increase

A reduction in government spending causes the equilibrium level of aggregate output to ___________ at any given interest rate and shifts the ________ curve to the.

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fall ;LM; right

fall ;IS; Left

fall ;LM; Left

rise ;LM; Rifht

If the original money supply is MSo and the original demand for money is MDo then

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The equilibrium interest rate and savings are 5% and 50

The money supply is 200 and equilibrium income is 500

The equilibrium interest rate and income are 5% and 600

The speculative demand is 25

As the interest sensitivity of investment spending increase.

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Monetary policy has a larger effect on output

Fiscal policy has a larger effect on output

The multiplier increases

All of the above

A decrease iin money demand other thing equal shifts the _____ curve to the

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IS ; right

Is ; Left

LM ; Left

LM ; Rfight

There are ______ methods of measuring GDP

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Three

Four

Five

None

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