Question # 1

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

A sale of bonds by the central bank should cause.

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A fall in the interest rate

An increase in the money supply

A decrease in the reserves of the commercial banks

An increase in the commercial banks loans to the public

The aggregate supply of labor is the

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Total amount of time a person works over his or her lifetime

Total amount of time a person spend in the labor force over his or her life time

Unemployment rate

Sum of the labor supplied by everyone in the economy

A primary reason why nations conduct international trade is because.

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some nations prefer to produce one thing while others produce another.

Resources are not equally distributed to all trading nations

Trade enhances opportunities to accumulate profits

Interest rates are not identical in all trading nations

Which provides the best explanation of the failure of many poor countries to experience economic growth as rapid as the rich countries..

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Classical growth theory

Neoclassical growth theory

New growth theory

Market failure

Using the Keynesian model , the effect of a decrease in the effective tax rate on capital would be to cause_____ in the real interest rate and __ in output in the long run.

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An increase ; no change

A decrease ; no change

An increase ; an increase

No change ; a decrease

The limit of an economy's total productive capacity at any given time is set by

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The amount of money in circulation

Business demand for goods and services

The level of government spending and taxation

the quantity and quality of its productive resources

Which of the following is an example of primary data.

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Book

Journal

News paper

group interview

The agricultural price support program is an example of.

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A price celling

A price floor

Equilibrium pricing

None of these

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

The function y = 2x + 1 and x = 1/2 y - 1/2 are said to be.

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Non linear functions

Inverse functions

Step functions

All the above

A rise in planned investment spending unrelated to the interest rate causes teh equilibrium level of aggregate output to __________ at shifts the _____ curve to the _______

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rise ; LM ;right

rise ; IS ; right

Fall ; LM ; left

rise ;IS; right

The money multiplier is 4, and the money creating potential of the banking system is Rs. 40,000,000. The legal reserve ratio and the excess reserves are.

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40 percent and Rs. 4,000,000

40 percent and Rs. 10,000,000

25 percent and Rs. 2.500,000

25 percent and Rs.10,000,000

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

According to Keynes, the level of employment is determined by

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Interest rates

The level of prices

The level of aggregate supply in the economy

The level of aggregate demand for goods and services.

If both supply and demand for a good increase at the same time which of the following must also increase

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The equilibrium price

The use of substitutes

The equilibrium quantity

All of the above

The overall Budget Deficit is financed from

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External borrowing

Non bank borrowing domestically

Bank borrowing plus the above two at a and b

None of the above

An increase in the real wage rate will cause

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The labor demand curve to shift to the right

The labor demand curve to shift to the left

The quantity of labor demanded to rise

A movement along the labor demand curve

According to the cost based definition of dumping occurs when a firm sells a product abroad at a price that is less than

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Average total cost

Average variable cost

Average fixed cost

Marginal cost

A natural monopoly has a declining ________ over a large range of output.

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Long run marginal cost

Short run marginal cost

Long run average cost

Long run marginal cost

A proposition which can be putto test to determine validity

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Hypothesis

Operational definition

Data collection tool

Research design

A profit maximizing firm will employ labour up to the point where.

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Marginal revenue = Marginal product

Margial cost = Marginal product

Marginal revenue product = Average cost of labour

Marginal revenue product = Marginal cost of labour

Which trade theory contends that a country that initially develops and exports a new product may eventually become an importer of it and may no lorger manufacture the product.

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Theory of factor endearments

Theory of overlapping demands

Economies of scale theory

Product life cycle theory.

Profit making is basic motive in.

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Socialism

Mixed economy

Communism

^Capitalism

Which of the following statements is true about hypothesis.

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It is an assumption about population value

There are different types of hypothesis

Hypothesis testing is a function of inferential statistics

All of the above

Real GNP measures income

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Including non market activities

Adjusted for inflation

Including externalities

Including tax evasion

A decrease in wealth 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 in poeple face borrowing constraints.

Headquarter of World Bank is located in.

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Geneva

Washington DC

London

New York

An increase in money _______ shifts the LM curve to the _____ causing the interest rate to fall and output to rise

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demand ; right

demand ; left

supply ; right

supply ; left

A diagonal matrix whose diagonal elements are equal is called.

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Unit matrix

Singular matrix

Scalar matrix

Non singular matrix

Two commodities are considered to be perfect substitutes for each other if the elasticity of substitution is

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Positive

Negative

Infinite

None of these

The effect of a tax to offset a negative eternality will be to ________ price and ____ quantity.

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Reduce, reduce

increase, increase

Increase , reduce

reduce, increase

A change in autonomous spending is represented by.

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A movement along a spending line

A shift of a spending line

A change in a behavioral coefficient.

None of these

The very word statistics refers to.

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State craft

Science of state

Political state

Political craft

Similar to import tariffs import quotas tend to result in.

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Higher prices ad reduced imports

Increased government revenue

Increases consumer surplus

Decreased producer surplus

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