Question # 1

Using the Keynesian model the effect of a government imposed celling on interest rates paid on personal checking accounts that is lower than the current market interest rate would be to cause._ in the real interest rate and _ in input out in the short sun.

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A decrease ; a decrease

A decrease ; no change

A decrease ; an increase

An increase ; a decrease

Classical economics believe that in the short run.

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Money neutrality exists and prices adjust rapidly

Money neutrality does not exist and prices adjust rapidly

Money neutrality exists and prices do not adjust rapidly.

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

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 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.

For a borrower an increase in the real interest rate will lead to.

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Higher current consumption and less borrowing

Higher current consumption and less saving

Lower current consumption and less borrowing

Lower current consumption and less saving

When investment spending is negatively related to the rate of interest, equilibrium income in the goods market.

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Is unrelated to the rate of interest

Is positively related to the rate or interest

Inversely related to the rate of interest

Falls as the rate of interest decreases

After a temporary beneficial supply shock hits the economy general equilibrium is restored by

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A shift down and to the left of the IS curve

A shift to the left of the FE line

A shift up and to the left to the LM curve

A shift down and to the right of the LM curve

To avoid double counting when the GNP is estimated, economists

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Price all goods and services bought and sold in all markets

Use the GNP deflator

Price only intermediate goods

Calculate value added at each stage of production.

The low point in the business cycle is referred to as the

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Expansion

Boom

Trough

Peak

The measured of GDP includes

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Non market goods such as home making and child rearing

The benefits of clean air and water

Estimated values of activity in the underground economy

Purchases and sales of goods produced in previous periods

The estimated regression coefficient for good Y indicates

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Goods X and Y are independent goods

Good Y is relatively elastic

Good Y is a luxury good

Goods X and Y are complementary goods

The Laffer curve depicts

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A trade off between tax rates and government receipts

Price levels and real income

government deficits and unemployment

Tax rates and infixation

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

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

Given the data above, the empirical equation for the IS curve is.

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Y = 275 + 10 i

Y = 225 + 50 i

Y = 250 - 10 i

Y = 275 - 501

"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

Which of the following macro economics variables is a cyclical.

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Real interest rates

Unemployment

Money supply

Consumption

"Economics is a science " the basis of this statement is.

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Relation between causes and effect

Use of deductive method and inductive method for the formations of laws

experiments

All of the above

Which of the following changes shifts the AD curve up and to the right.

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A rise in the nominal money supply

An increase in income taxes

An increase in the risk on nonmonetary assets

A decreasing the future marginal productivity of capital.

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

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