Question # 1

A temporary decrease in government purchases would cause.

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A rightward shift in the saving curve and a leftward shift in the investment curve

A rightward shift in the saving curve and a rightwards shift in the investment curve.

A right ward shift in the saving curve but no shift in the investment curve

No shift in the saving curve but a left ward shift in the investment curve.

In the long run an increase in government purchases of military equipment would cause output to _________ and the aggregate price level to

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Stay constant fall

fall ; fall

fall ; stay constant

stay constant ; rise

If the sampi is accepted as coming from a universe with a mean of Rs.500 or greater when if doesn't.

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A Type II error is made

A type I error is mad

The alternative hypothesis is correct.

A and C are correct

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

An asset with zero carrying costs and a present value of Rs.50,000 will return continuous annual yield of Rs.5000 if the current and future rate of inters is.

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5%

8%

10%

3%

Which of the following does not result in an increase in U.S. autonomous net exports.

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The U.S. dollar depreciated

Major trading partners stimulate their economy

Foreign currencies depreciate

Foreign trading partners lift tariff barriers

In market economics the incentive that draws entrepreneurs into industry is.

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Government bonuses for meeting production quotas

Profit

Government assumption of the risk of failure

Government assistance with making output and pricing decisions

Given the IS equation Y = Ke a - Ke Bn the IS slope decreases when

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Ke increase and b increases

Ke decreases and b increases

Ke increases and b decreases

Ke decreas4es and b decreases

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

Which of the following is the second law of gossen.

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Law of equal marginal utility.

Law of equi product

Theory of indifference curve

Law of diminishing marginal utility.

An increase in the marginal propensity to import.

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Has the some effect upon the multipliers as an increase in the MPC

Has no effect upon the multipliers

Increases the value of the multipliers

Decreases the value of the multipllers

The reason that only final sales are counted in GDP is

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To avoid double counting good that are sold so as to be resold

To not count production in other countries

Because the government can't get records on intermediate sales.

To simplify the computation and no other reason

If an individual has a money income M of Rs. 999 , the price of X is rs.7.00 per unit and ithe price of Y is Rs. 300 per unit find the equation for the budget lines.

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Y = 333 - (7/3) x

Y = 142 - (7/3) x

Y = 142- (3/7) x

Y = 323 - (7/3) x

If sales are forecasted using an adaptive expectations model where the coefficient of adjustment .2, the sales forecast for 1986 is.

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Rs.260

Rs.244.4

Rs.3.6

Rs.283.6

The econometric problem of errors in variables leads to

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Ballasted estimates of regression coefficients.

Autocorrelation

Unbiased estimates of regression coefficients but non minimum variance of estimated coefficients.

None of the above

Which of the following changes shifts the long run aggregate supply curve to the right.

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A demographic change that increases the labor supply

A decrease in the demand for labor

An increase in consumer confidence

A decrease in taxes

In the Keynesian model in the long run an increase in the money supply will raise

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The price level but not the level of output

The level of output but not the price level

Both the level of output and the price level

Neither the level of output nor the price level

A decrease in the effective tax rate on capital would cause the IS curve to.

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Shift up and to the right

shift down and to the left

Remain unchanged

Remain unchanged if taxes are fully deducible from income otherwise, shift up and to the right

The normal interest rate minus the inflation rate is the

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Depreciation rate

Discount rate

Real interest rate

Forward rate

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.

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

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