Question # 1

When a British pound equals Rs. 1.60 and the French France equals Rs. 0.40 the ability to earn infinite profit if it were not the case, implies that the exchange rate would be.

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1 franc = 4 pounds

1 franc = 1 pound

5 franc = 1 pound

None of the above

A beneficial supply shock would cause.

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A movement up the short run Phillips

a movement down the short run Phillips curve

The short run Phillips curve to shift upward and to the rights

The short run Phillips curve to shift down ward and to the left

Which of the following is not a category of consumption spending in the national income accounts.

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Consumer durables

Non durable goods

Services

Housing Purchases

When the value of output exceeds planned spending .

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There is unsold output, and the level of income will fall

there is unsold output and the level of income will rise

There is unsold output, and the level of income does not change.

All of the above

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

Company X sells Rs.75 million dollars of 9.5% first mortgage bonds at par The company's marginal tax rate to 30% The after tax cost of debt is.

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2.85%

3.175

6.68%

7.55

Which of the following macro economics variables is a cyclical.

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Real interest rates

Unemployment

Money supply

Consumption

Where there is an equal increase in net tax revenue and government spending, ceteris paribus.

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(C+I+G) is shifting upward

(C+I+G) is shifting downward

(C+I+G) does not shift

All of these

If the demand for coffee decreases as income decreases, coffee is a

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Normal good

Inferior good

Substitute good

Complementary good

In a model in which there is no government new investment capital replacement or international trade the market value of final output equals.

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Aggregate consumption

The sum of the receipts of economic resources

The sum of wages rent interest and profit

All of the above

If a Canadian dollar costs 0.75 in terms of U.S. dollars, how much Canadian money would an American need to spend in Canada to get a dollar's worth of U.S. value.

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25$

99$

Rs.1.25

Rs.1.13

What adjusts to restore general equilibrium after a shock to the economy.

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The LM curve

The IS curve

The FE line

The labor supply curve

Which of the following assets is most liquid.

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Shares of stock in IBM

Land

Gold

Currency

A model in which individual producers act as price setters because there are only a few sellers and the product they sell is not standardized, is called.

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Imperfect competition

Perfect competition

Monopoly

Monopsony

Find the change in revenue to the industry due to the taxs.

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Rs. 40 billion

Rs. 34 million

Rs.25 million

Rs.36 Million.

When the supply of money increases.

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The LM curve will shift in

The LM curve will shit out

The demand for money will decrease

The demand for money will increase

A Rs.10 increase in autonomous investment spending shifts IS

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Rightward by Rs.10

Leftward Rs.10

Rightward by Ke (Rs.10)

Leftward by Ke (Rs.10)

Keynesian economists think general equilibrium is not attained quickly because.

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The real interest rate adjusts slowly

The level of output adjusts slowly

The real wage rate adjusts slowly

The price level adjusts quickly

In a simple Keynesian world assume the economy is opiating at a full employment noninflationary level worsening world conditions necessitate additional government spending of Rs.50 billion. What should be the direction of change in taxes and magnitude of change to maintain stable price and full employment equilibrium.

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Increase by Rs.50 billion

Increase by more than Rs. 50 billion

Increase by less than Rs.50 billion.

Decrease by more than Rs.50 billion.

Which of the following macroeconomic variables is procyclical and lags the business cycle.

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Business fixed investment

Empolyment

Stock prices

Nominal interest rates

If the Nominal GNP of an economy rose from Rs. 5000 to 5500 between 1985 and 1986 while the price index rose from 100 to 110 during the same period real GNP

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Fell by 10% from 1985 to 1986

Rose by 10% from 1985 to 1986

Remained constant from 1985 to 1986

Fell by 1% from 1985 to 1986

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