Question # 1

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

Choose an answer

Zero unemployment level of employment

Natural state

Invisible handshake

Full employment level of employment

The short run aggregate supply curve the absence of misperceptions.

Choose an answer

Is vertical

Slopes upward

Is horizontal

Slopes downward

The fraction of additional current income that a person consumes in the current period is known as the

Choose an answer

Consumption smoothing motive

Consumption deficit

Saving rate

marginal propensity to consume

Find the revenue the government collects as a result of the tax

Choose an answer

Rs.10 million

Rs.40 million

Rs.16 million

Rs.30 million

The three main components of the aggregate demand aggregate supply model include.

Choose an answer

AD, SRAS, LM

SRAS, LRAS, IS

AD, IS, LM

AD, SRAS, LRAS

In closed economic model aggregate demand is not sensitive to.

Choose an answer

Interest rates

Exchange rates

Price level

Tax policy

Firms hire labor at the point where the

Choose an answer

Nominal wage rate equals the marginal product of labor

Real wage rate equals the marginal revenue product of capital

Nominal wage rate equals the marginal revenue product of labor

Real wage rate equals the marginal revenue product of capital

What did economist Adam Smith identity as the "invisible hand" that directs the decision making of firms and households in a market economy.

Choose an answer

Government

Product demand

Self interest

International trade

A nation experience external balance if it achieves.

Choose an answer

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

The long run aggregate supply curve

Choose an answer

Is vertical

slopes upward

Is horizontal

Slopes downward

Which of the following is incorrect with respect to the consumption diagram.

Choose an answer

the interest rate is a premium

MRS = (i +r)

The consumer will be lender in time zero

The consumer lends 700

The monetary base in composed of.

Choose an answer

Gold and silver

Currency only

Currency and reserves

Currency and checkable deposits

The multiplier which specifically refers to an equal increase in government spending and taxes, giving rise to that same equal increase in national income is called.

Choose an answer

the Keynesian multiplier

The balanced budget multiplier

the deficit multiplier

None of the above

In long run a reduction in labor supply would cause output to __ and the aggregate price level to.

Choose an answer

fall ; rise

fall ; fall

rise ; fall

rise ; rise

The nominal interest rate minus the inflation rate is the

Choose an answer

Depreciation rate

Discount rate

Forward rate

Real interest rate

In the Keynesian model in the long run a decrease in the money supply will cause ___ in the interest rate and _____ in the price level.

Choose an answer

An increase ; an increase

A decrease ; a decrees

No change ; an increase

No change ; a decrease

If government spending of Rs. 10 and a lump sum tax of Rs.10 is added, the empirical equation for the new IS curve becomes.

Choose an answer

Y = 285 + 20 I

Y = 270 - 10 i

Y = 285 - 50 i

Y = 210 - o.5 i

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.

Choose an answer

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 change that increase real money demand relative to the real money supply causes.

Choose an answer

The LM curve to shift down and to the right

The LM curve to shift up and to the left

The IS curve to shift down and to the left

The IS curve to shift up and to the right

During inflation.

Choose an answer

Lenders lose borrowers gain.

Borrowers lose , lenders gain

The real interest rate rises

Borrowers and lenders both lose.

The fac that the production function relating output to labor becomes flatter as wemove from left to right means that.

Choose an answer

The marginal product of labor is positive

The marginal product of capital is positive

There is diminishing marginal productivity of labor

There is diminishing marginal productivity of capital

More Classes

Other Links

PPSC Economics Chapter 3 Macro Economics MCQs With Answers

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer

Choose an answer