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

Ineven A occurs the payoff will be Rs.5,670.00 . the probability of event A occurring is .87 What is the expected payoff of event A.

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Rs.5,670.00 9d)

Rs.4,832.10

Rs. 4,932.90

Rs.5000.00

The equilibrium level of Y and I derived from the LM and IS equations above is.

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Y = 130 and I = 10%

Y = 200 and I = 30%

Y = 180 and I = 7%

Y = 250 and I = 2%

"An Enquiry into the Nature and causes of wealth of Nations" is thebook of economist.

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Adam smith

Marshall

Robbins

None of above

Appreciation of the U.S. dollar results in.

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U.S. tourists traveling abroad being worse off

U.S. imports increasing.

Foreign currency buying more U.S. goods and services.

No change iin foreign pucchases or sales.

Equilibrium occurs in a two sector model when

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Saving equals investment.

Consumption plys investment equals the value of putput

Planned saving equals planned investment.

Aggregate spending equals the revenues of the business sector

Utility means.

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Power to satisfy a want

Usefulness

Willingness of a person

Hamfulness

If nominal GNP were Rs.1000 ballooning 1976 and Rs.2200 billion in 1986, and the implicit GNP deflator was. 1.2 in 1976 and 1.6 in 1986 concluded that .

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Real GNP increased by approximately Rs. 542 billion from 1976 to 1986

The price level fell from 1976 to 1986

Real GNP increased by 35%

Nominal GNP increased by 80%

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

Real business cycle theorists think that most business cycle fluctuations are caused by shocks to.

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The production function

The size of the labor force

The real quantity of government purchases

The spending and saving decisions of consumers

An increase in autonomous net exports

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Shifts IS rightward by k, ox

shifts IS left eard by k, AX

Increase the slope of IS

Decreases the slope of IS

Using the Keynesian model , the effect of a decrease in the effective tax rate on capital would be to cause_____ in the real interest rate and __ in output in the long run.

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An increase ; no change

A decrease ; no change

An increase ; an increase

No change ; a decrease

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)

Which of the following macro economic variables is the most seasonally pro cyclical.

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Expenditure on services

The unemployment rate

Expenditure on durable goods

The real wage

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

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

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

The key difference between classical and Keynesian macro economist is their differing beliefs about.

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The slope of the aggregate demand curve

The speed at which prices adjust

The natural rate of unemployment

The full employment level of output

An invention that speeds up the internet is an example of.

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An income effect

An increase in labor

A substitution effect

A supply shock

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

The aggregate demand curve

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Is vertical

Slopes upward

Is horizontal

Slopes downward

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