Question # 1

In the efficiency wage model with the efficiency wage above the market clearing wage when employment is at its full employment level.

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Labor supply equals labor demand

There is an excess supply of labor

there is an excess demand for labor

There could be either an excess demand for or an excess supply of labor

The value of real GDP in the current year equals.

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The value of current year output in prices of the base year

The value of current year output in pries of the current year

The value of base year output in prices of the base year

The value of base year output in prices of the current year

Given the saving equation S = - 50 + 0, 20 Y, where s is saving and Y is income.

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The break even level of income is 240

Dissaving takes place if income is 300

Consumption expenditures and saving are equal at an income level of 500

The MPS is constant for all levels of income

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

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Expansion

Boom

Trough

Peak

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

"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

The long run aggregate supply curve.

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Is vertical

Slopes upward

Is horizontal

Slopes downward

In the Keynesian model in the long run an increase in the money supply will raise

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The price level but not the level of output

The level of output but not the price level

Both the level of output and the price level

Neither the level of output nor the price level

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

The value of a producer's output minus the value of the inputs if purchases from other producers is called the producer's

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Surplus

Profit

Gross product

Value added

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

Most industrial construes generally considered _______ as the most important economic goal

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External balance

Internal balance

Maximum efficiency for business

Maximum efficiency for labor

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

According to the efficiency wage model during a recession firms will not reduce real wages because.

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Unions would go on strike reducing profitability

This would reduce worker effort and productivity.

The equilibrium real wage has increased

Legally, they can't

When aggregate economic activity increasing the economy is said to be in.

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An expansion

A contraction

A peak

A turning point

Which of the following macro economic variables is procyclical and coincident with the business cycle.

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Residential investment

Nominal interest rates

Industrial production

Unempolyment

Which of the following is an example of a productivity shock.

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The introduction of new management techniques

A change in taxes on corporate profits

A change in the level of government transferors

An increase in the money supply

The two main characteristics of the production function are.

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It slopes downward from left to right and the slope become flatter as teh input increases

It slopes upward from left to the right the slope becomes steeper as the input increase

It slopes upward from left to right unput increases

It slopes downward from left to right and the slope becomes steeper ath the input increase

Economists use the phrase ceteris paribus to express the assumption.

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All else equal

Everything affects everything else.

Scarcity is a fact of life

There is no such thing as a free lunch

An asset with zero carrying costs and a present value of Rs.50,000 will return continuous annual yield of Rs.5000 if the current and future rate of inters is.

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5%

8%

10%

3%

When plotted with the aggregate price level on the vertical axis and output on the horizontal axis, which of the following curves slopes downward.

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SRAS

AD

LRAS

None of the above

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