Question # 1

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

The two main characteristics of the production function are.

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It slopes downward from left to right and the slope become flatter as teh input increases

It slopes upward from left to the right the slope becomes steeper as the input increase

It slopes upward from left to right unput increases

It slopes downward from left to right and the slope becomes steeper ath the input increase

The multiplier which specifically refers to an equal increase in government spending and taxes, giving rise to that same equal increase in national income is called.

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the Keynesian multiplier

The balanced budget multiplier

the deficit multiplier

None of the above

The practice of using fiscal and monetary policy to stabilize the economy is known as.

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Fine turning of deamand

Monetarism

Laissez faire economics

Supply side economics

After a temporary beneficial supply shock hits the economy general equilibrium is restored by

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A shift down and to the left of the IS curve

A shift to the left of the FE line

A shift up and to the left to the LM curve

A shift down and to the right of the LM curve

The break even level of income where C = Y is

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200

300

500

400

The appropriate expenditure switching policy to correct a balance of payments deficit is.

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Contractionary monetary policy

expansionary fiscal policy

Currency devolution

Currency revaluation

Which of the following methods is used for internalizaing positive externalities

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Positive taxes

Government exchange of property rights

Effluent fees

Corrective substidies

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

Suppose there is full employment and a neoclassical aggregate supply schedule A 105 increases in the nominal money supply.

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Has no effect upon the price level

Increase the rate of interest

Increase the nominal wage 10%

Increase the real money supply 10%

An expenditure reducing policy would consist of a decrease in

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The par value of a currency

Government expenditures

Import duties

Business or household taxes

For a borrower an increase in the real interest rate will lead to.

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Higher current consumption and less borrowing

Higher current consumption and less saving

Lower current consumption and less borrowing

Lower current consumption and less saving

Which of the following will cause a monetary induced change versus a fiscal induced change in equilibrium income as determined.by IS - LM analysis.

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A shift in the consumption function

A shift in government expenditures

A change in liquidity preference

A change in a government expenditures

In which of the following situations will an increase in the money supply have no effect upon equilibrium iincome.

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LM is steeply sloped and IS is relatively that

LM is vertical and IS is stopped

LM is steeply sotped and IS is vertical

LM is relatively flat as is IS

Assuming that money is neutral an increase in the nominal money supply would causes.

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An excess supply for goods

an increase in the real money supply

A fall in the price level

A rise in nominal wages

The philippic curve is the relation between inflation and unemployment that hold for a given natural rate of unemployment. and a

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Given rate of inflation

Given expected rate on inflation

Given level of unemployment

Given expected level of unemployment

Full- employment output is the level of output that firms in the economy supply when

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Taxes are zero

Wages and prices have fully adjusted

The unemployment rate in zero

All capital is fully utilized

To avoid double counting when the GNP is estimated, economists

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Price all goods and services bought and sold in all markets

Use the GNP deflator

Price only intermediate goods

Calculate value added at each stage of production.

The MPS = 0.4 and government spending increases by 20 billion. The LM curve

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Shifts to the right by 20 billion

Shifts to the right by 50 billion

Does not shift

shifts to the left by 30 billion

The dynamic aggregate demand schedule shifts rightward when there is an increase in.

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The expected rate of inflation ceteris paribus

The growth rate of the nominal money supply ceteris paribus

The income tax rate ceteris paribus

the current inflation rate celeries paribus

The fraction of additional current income that a person consumes in the current period is known as the

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Consumption smoothing motive

Consumption deficit

Saving rate

marginal propensity to consume

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