Question # 1

A variable which is free to take any value we choose to assign to it is called.

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Dependent variable

Independent variable

Endogenous variable

Explained variable

Gross National product equals

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Net National Product adjusted for inflation

Gross domestic product adjusted for inflation

Gross Domestic product plus net property income from abroad

Net National product plus net property income from abroad

Normal profit occurs when

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Average revenue equals average variable cost

Marginal revenue equals marginal cost

Average revenue equals marginal cost

Average revenue equals average cost

For a competitive firm the demand curve

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A horizontal

Coincides with the marginal revenue curve

Coincides with the average revenue curve

All of the above

Which of the following is an example of a normative statement.

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Since this good is bad for you, you should not consume it.

this good is bad for you

If you consume this good you will get sick

People usually get sick after consuming this good

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

Application of Modern technology to increase the yield is due to

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Subsistence farming

Mechanization

Green revolution

None of these

If the nominal money supply doubles while real money demand is unchanged what happens to the price level.

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The price level increases by a factor of four

The price level doubles

The price level is unchanged

The price level falls by one half.

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

Which of the following represents monetary policy geared to increases the supply of money.

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The purchase of bonds by the Federal Reserve Bank

The sale of bonds by the Central Bank

An increase in reserve requirement

A decrease in taxes

Suppose that the domestic government allows a specific number of goods to be imported each year but it does not spicily from where the product is shipped or who is permitted to import such a trade barrier is known as

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an import tariff

A tariff rate quota

A selective quota

A global quota

If there is a price celling, there will be.

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Shortages

surpluses

Equilibrium

None of these

A Rs.10 increase in autonomous investment spending shifts is.

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Rightward by Rs. 10

Leftwards by Rs. 10

Rightward by Ke (Rs.10)

Leftward y Ke (Rs.10)

Japan's low interest rates in the mid 80's were due to.

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High rates of domestic savings.

A decrease in Japan's exports

Increases in the U.S. deficit

High rates of domestic spending in Japan

Similar to import tariffs, import quotas tend to result in.

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Higher prices and reduced imports

Increasesed government revenue

Increased consumer surplus

Decrease producer surplus

Prices that do not always adjust rapidly to maintain equality between quantity supplied and quantity demanded are.

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Market prices

Sticky prices

Fixed prices

Regulatory prices

Which of the following groups is most hurt by unexpected inflation.

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Workers with cost of living adjustments in their labor contracts

Home owners

People with large debts to pay for their homes and cars

People with large retirement savings held in savings accounts.

According to the Hackscher - Ohlin model the source of comparative advantage is a country's

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Technology

Advertising

Factor endowments

both a and c

Which of the following is true.

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If the marginal cost is greater than the average cost the average cost fallls.

If the marginal cost is greater than the average cost the average cost increases.

If the marginal cost is positive total costs are maximized

If the marginal cost is negatives total costs increase at a decreasing rate if output increases

Which of the following is a determinant of consumption.

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Expectations about future prices

Level of indebtedness of consumers

The price level

All of the above

The larger the required reserve ratio the.

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Smaller is the deposit multiplier

Larger is the deposit multitier

Larger is the amount of total deposits that can created from a new deposit

Larger is the amount of total money that can be created from a withdrawal

If the production function is Q = 8 KL the marginal rate of technical substitution of labor for capital is.

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8

K/L

L/K

B/KL

The function of money do not include.

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an exchange of purchasing power

A unit of account

A medium of exchange

A store of value

Which of the following is NOT characteristics of underdeveloped nations.

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Low per capita income

Low growth rate of GNP

General needs for substantive investment in the infrastructure

Low population growth rates

Gender is categorized as

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Nominal data

Ordinal data

Interval data

Ratio data

The short term interest rates on bonds over the next 5 years is 6% , 7%, 9% ,10% and 8% according to the expectations Hypothesis, the interest rates on bonds with 5 years to maturity will be.

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6%

8%

10%

9%

What tow factors should you equate in deciding how many workers to employ.

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The marginal product of labor and the marginal product of capital

The marginal product of labor and the real wage rate

The marginal product of labor and the real interest rate

The marginal product of capital and the real wage rate

The reduction of the inflation rate is called

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Deflation

Disinflation

Inflation

Reflation

Friedman and phelps suggested that there should not be a stable relationship between inflation and unemployment, but here should be a stable relationship between

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Anticipated inflation and frictional unemployment

Anticipated inflation and cyclical unemployment

Unanticipated inflation and frictional unemployment.

Unanticipated inflation and cyclical unemployment

Consider the five panels of the figure on the previous page in which panel would the simultaneous imposition of restrictive monetary policy and expansionary fiscal policy cause the largest increase in interest rates.

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Panel a

Panel b

Panel c

Panel d

During the last eight years the per capita income in Pakistan has been

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Increasing substantially because of decline in population growth

Decreasing

increasing only marginally

Constant

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