Question # 1

The data indicates that country A in billions of rupees is experiencing a

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A deficit of Rs.60

A surplus of Rs. 300

Deficit of Rs.900

A deficit of Rs. 500

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

When the value of output exceeds planned spending .

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There is unsold output, and the level of income will fall

there is unsold output and the level of income will rise

There is unsold output, and the level of income does not change.

All of the above

A firm's total labor cost when six workers are employed is Rs.580 When seven workers are employed the total labor cost is Rs.700 the Rs. 120 change in total labor cost represents.

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Marginal physical product

Marginal resources cost

Marginal cost

Marginal revenue

While resources and products flow in one direction of the circular flow model what flow the other direction.

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Services

Public goods

Money

Imported goods

Suppose your company is in equilibrium with its capital stock at the desired level A permanent decline in the expected real interest rate now has what effect on your desired capital stock

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Raises it because the future marginal productivity of capital is higher

Lowers it because the future marginal productivity of capital is lower

Raises it because the user cost of capital is now lower

Lowers it because the user cost of capital is now higher

Expansionary monetary policy

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Tends to lead to an appreciation of nation's currency

Usually has no effect on a currency's exchange value

Tends to lea dto a depreciation of the currencies of other nations

Tends to lead to a depreciation of a nation's currency.

Based on the data above , the increase in potential MI would be

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Rs.50 billion

Rs.300 billion

Rs.60 billion

Rs.100 billion

The long term demand for real money balance will rise when

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the income elasticity of the demand for money is less than unity.

There is a long term increase in the price level

There is a relative increase in the stock of government securities.

Long term market interest rates are falling.

In the short run in the Keynesian model a sharp increase in oil prices would leave the economy with a ____ level of output and a ______ real interest rate.

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Higher ; lower

Lower ; Higher

Higher ; higher

An increase in the expected real interest rate tends to.

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Raise desired saving only

Raise desired investment only

Raise both desired savings and desired investment

Raise desired savings, but lower desired investment.

Which of the following assets is most liquid.

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Shares of stock in IBM

Land

Gold

Currency

An increase labor supply would cause the IS curve to.

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Shift up and to the right

Shift down and to the left

Remain unchanged

Shift up and to the right only if people face borrowing constraints

The hypothesis would the tested with

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A two tailed test

A one tailed test with the rejection region in the left tail

a one tailed test with the rejection region on the right tail

The normal distiribution

Economics is the science of Wealth who gave this definition.

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J-x Mehta

Marshall

Adam Smith

Robbins

Given fixed change rate assume Pakistan initiates expansionary monetary and fiscal polices to combat recession these policies will also.

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Increase both imports and exports

Increase exports and reduce import

Reduce a balance of payments surplus

Reduce a balance of payment deficit

Classical economics think general equilibrium is attained relatively quickly because.

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The real interest rate adjusts quickly

The level of output adjusts quickly.

The real wage rate adjusts quickly

The price level adjusts quickly.

When the supply of money increases.

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The LM curve will shift in

The LM curve will shit out

The demand for money will decrease

The demand for money will increase

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

When the export function is Rs.100-0.2 Y , net exports are 0 when income is .

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Rs.300

Rs.400

Rs.500

Rs.600

Given the Is -LM construction of the figure above an unexpected increase in the price level, in the absence of any policy adjustment will.

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Increase both interest rates and GNP

Reduce both interest rates and GNP

Increase GNP but cause interest rates to tall

Increase interest but cause GNP to fall.

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