Question # 1

The interest rate parity is the basic identity that relates which of the following?

Interest rates and exchange rates

Interest rates and inflation rate

Exchange rates and inflation rate

Discount rate and inflation rate

Which of the following is true about supply curve under monopoly?

It is same as the competitive market supply curve

It is the portion of marginal cost curve where marginal costs exceed the minimum value of average variable costs

It is the result of market power and production costs

None of the given statements is true

Under the kinked demand curve model, an increase in marginal cost will lead to:

An increase in output level and a decrease in price.

A decrease in output level and an increase in price.

A decrease in output level and no change in price.

Neither a change in output level our a change in price.

The economy gets maximum prosperity during:

Recession

Recovery

Boom

Depression

To find the profit maximizing level of output, a firm finds the output level where:

Price equals marginal cost

Marginal revenue and average total cost

Price equals marginal revenue

None of the given options

What is the interest rate effect that explains why the aggregate demand curve slopes downward?

It refers to the effect of changes in the price level on quantity of investment demanded which in turn affects interest rates

It refers to the effect of interest rates on borrowing which in turn affects consumption spending.

It refers to the effect of changes in the price level on interest rates which in turn affects the quantity of investment demanded

It refers to the shifts in aggregate demand when interest rates change

NAT II Management Science Economy MCQs With Answers