Question # 1

The efficiency wage model can be modified to allow real wages to vary over the business cycle by assuming that.

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Workers effort may depend on the unemployment rate and the real wage

During a recession labor supply will decrease reducing the efficiency wage

During a recession productivity wil fall causing a reduction in the efficiency wage

During a boom labor demand will increase, causing the efficiency wage to rise

The Ad, SRAS ,and LRAS curve each show a relationship between which two economic variables.

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The aggregate price level and output

The aggregate price level and the interest rate

Output and unemployment

Output and the interest rate.

"Human Welfare is the subject of Economics" Y. This statement is associated with the name of which of the economists.

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Marshall

Pigou

Pension

All of the above

A nation experience external balance if it achieves.

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No net changes in its international gold stocks

Productivity levels equal to those of its trading partners

An increases in its money supply equal to increases overseas

Equilibrium in its balance of payments

A temporary adverse productivity shock would.

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Shift the labor supply curve upward

Decrease the level of employment

Decrease future income

Decrease the expected future marginal product of capital

When the marginal propensity to consume is 0.75 the multiplier has a value of.

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4

5

3

2

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

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

When planned saving is greater than planned investment.

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Output should increase

Output should decrease

Output should not change

All of the above

The equilibrium level of income of the open economic model is.

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200

400

300

500

Money must fulfill all of the following functions except.

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Be a medium of exchange

Be a store of value

Be generally accepted as a means of purchasing commodities

The above are all functions of money

If the foreign interest rate is 12% while the domestic interest rate in 95 then the forward premium will be.

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1.3 %

12%

9%

3%

In the monetary base is increased by $1,000 and the reserve requirement is 10% by how much will the money supply be increased.

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$100

$1,000

$5,000

$10,000

The short run aggregate supply curve the absence of misperceptions.

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Is vertical

Slopes upward

Is horizontal

Slopes downward

Which of the following solutions does the economist suggest to cost inflation in higher education.

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Cutting professor salaries

Make students live at home

Reduce college from four to three years

B and C

GDP difference between GNP because.

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GDP = GNP - net factor payments from abroad

GNP = GDP -net factor payments from abroad

GDP = GNP -capital consumption allowances

GNP = GDP -capital consumption allowances.

If the expected inflation rate is unchanged a fall in the natural rate of unemployment would.

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shift the Phillips curve to the right

Not Shift the phillips curve

Shift the Phillips curve to the left

shift the Phillips curve to the left shift the long -run Philips curve to the right

A technological improvement will

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Increases the desired capital stock

Decrease the desired capital stock

Have no effect on the desired capital stock

Have the same effect on the desired capital stock as an increase in corporate taxes.

Banks can create money

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Only by illegally printing additional dollar bills

By paying interest to their depositors

By making loans that result in additional deposits

By offering financial services, such as stick market brokerage

The multiplier that applies to changes in autonomous investment is identical to changes in.

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Autonomous government expenditures

Autonomous consumption expenditures

Autocoups exports

All of the responses above

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