Question # 1

Injection into the circular flow are _________ and _______

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Consumption, investment, exports

Investment exports, transfer payments

Investment government expenditure, exports.

Taxes, exports, transfer payments.

The imposition of a tariff causes consumption to _______ and imports to.

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rise , rise

fall , rise

fall , fall

rise , fall

In the absence of international capital controls, central banks set ______ to provide the correct incentive for speculators

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Money supply targets

Income policy

Interest rates

Inflation targets

During periods of rising inflation and rising interest rates we expect the demand for real cash to.

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rise

fall

not change

fluctuate

In the short run, the supply of capital is _______ and in the long run iwll depend on.

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Variable technology

Fixed, expectations

Fixed, rental rate of capital

Variable, interest rates.

Under floating exchange rates, expectations of higher interest rates are likely to cause an __________ of the exchange rate.

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Depreciation

Appreciation

fall

Devaluation

Real business cycle theorists argue that ___________ can explain short and long term fluctuations in output.

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Imperfect labour markets

Rational expectations

Intertemporal decisions of households firms and government.

Sun spot cycles

a demand curve can shift because of changing.

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Incomes

Prices of related goods

Testes

All of the above

An advocate of the classical model of the economy would claim that unemployment a created when the ___________ is above its equilibrium level in the.

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Price level, agregate economy

Tax rate, government ebudget

Wage rate, labour market

Interest rate, market for loanable funds

The total multiplier for the economy will reflect.

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MPC and MPT

MPT and MPZ

MPC and MPZ

MPC, MPT and MPZ

Within circular flow of income, an increase in domestic income iwll lend to increase.

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Exports

Taxes

Inventories

Imports

An allocation is Pareto efficient if no reallocation of resources would make some people_______ whiteout making others

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Worse off, worse off

better off, better off

better off, worse off

equal , unequal

If your income during one year is L 10,000 ad the following year it is L,12,000 then it has grown by

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20%

2%

12%

15%

Real business cycle are cycles in

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Potential output

Actual output

Real output

International trade

Real GNP is a crude measure of national welfare because it excludes.

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Consumption

Investment

Export's

work in the home

A good example of a public good is.

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Public transport

National defense

The national health service

Rail transport

A tariff causes domestic firms to __________ and consumers to

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Overproduced, under consume

overproduce , overconsume

Underproduce, under consume

underproduce, overconsume

A monopoly may be self perpetuating because profits may be used for

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research

Cost saving

Technical advance

All of the above

Aggregate demand without a foreign sector is the sum of.

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c+1

C+G

1+G

C+!+G

If one country, with floating exchange states, has higher inflation than its competitors, we would expect its exchange rate to.

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Appreciate

Depreciate

Revalue

be in short supply

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