Question # 1

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

Fractional unemployment arises when

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Unskilled or low skilled workers find it difficult to obtain desirable long term jobs

Labor must be reallocated from industries that are shrinking to areas that are growing.

Workers must search for suitable jobs and firms must search for suitable workers.

Output and employment are below full employment levels

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

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

"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

The gift exchange motive suggests that

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Workers value benefits like health insurance more than job security

Workers prefer a nice work environment even if they must accept lower wages.

Workers who feel well treated will work harder and more efficiently

Workers will shirk if they are paid a low wage

What is the average money balance according to the square root rute if income is Rs.1500, each transaction cost is Rs.4, and the opportunity cost of holding money is.2%

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387

50

175

203

Which market adjusts the quickest in response to shocks to the economy.

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The asset market

The labor market

The goods market

In the macro economy

The long run aggregate supply curve

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Is vertical

slopes upward

Is horizontal

Slopes downward

An increase in the number of workers hired by a firm could result from

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a decrease in the marginal product of labor

a decrease in the marginal revenue product of labor

An increase in the real wage

A decrease in the real wage

The break even level of income where C = Y is

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200

300

500

400

The equilibrium level of employment achieved after the complete adjustment of wages and prices, is known as the.

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Zero unemployment level of employment

Natural state

Invisible handshake

Full employment level of employment

The short run impact of unanticipated expansionary monetary policy is that.

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Real output decrease

Employment decreases

Real interest rates decrease

Profit margins decrease

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

According to the life cycle hypothesis consumption is related to.

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Current income

Past peak income

Expected lifetime income

Price expectations over one's life time

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

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

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

The natural rate of unemployed is generally thought of as the.

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Ratio of the frictional unemployment rate to the cyclical unemployment rate

sum of structural unemployment and cyclical unemployment

sum of frictional unemployment and cyclical unemployment

sum of frictional unemployment and structural unemployment.

According to Keynesians the primary source of business cycle fluctuation is.

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Aggregate demand shocks

Productivity shocks

Oil price shocks

Consumer confidence shocks

If personal income equals Rs.570 white personal income takes equal Rs.90 consumption is Rs.430. interest payments total Rs. 10 and personal saving is Rs. 40, disposable income equals.

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Rs. 500

Rs.480

Rs. 470

Rs.400

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