Question # 1

If banks and the private sector decide to hold less cash the money multiplier will be.

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Unchanged

Larger

Smaller

unstable

Nominal GNP measures income

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At the present time

Corrected for tax changes

Corrected for changes in interest rates

At current prices

When investment is assumed to autonomous the slope of the AD schedule is determined by the.

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Marginal propensity to invest.

disposable income

Marginal propensity to consume

Average properisity to consume

When we know the quantity of a product that buyers wish to purchases at each possible price we know.

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Demand

Supply

excess demand

Excess supply

Real business cycle theorists argue that ___________ can explain short and long term fluctuations in output.

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Imperfect labour markets

Rational expectations

Intertemporal decisions of households firms and government.

Sun spot cycles

In the UK under a _________ of the labour force belong to a trade union.

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Quarter

Third

Half

Three quarters

The equilibrium inflation rate is determine by the intersection of __________ and ___

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demand, supply

IS , LM

AD, AS

Labour demand, labour supply

All of the following are benefits of the single market except.

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It allows countries to exploit their comparative advantage, more fully

Firms could more readily exploit economies of scale

It intensified competition

It is easier book holidays in member countries.

An increase in consumer income will increase demand for a __________ for decrease demand for a.

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Substitute good interior good

Normal good, interior good

Interior good, normal good.

Normal good, complementary good.

Holding all factors constant except one and increasing a variable factor is expected to lead to steadily decreasing marginal product of the factor this is an example of.

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Decreasing returns to scale

The law of diminishing returns

Constant returns to scale

an inefficient production technique

When the level of income _______ there will be atendency for the trade balance to improve as imports.

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Increases, increase

falls, fall

Increase, fall

fall , increase

Bank create money by

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Printing it

Issuing debit cards

Accepting chequeens

Lending out part of their deposits

In a competitive industry each buyer and seller.

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Is a price taker

Produce different products

Believes that can influence price

Prevents the entry of competitors

With fixed exchange rates and no private currency flow, when the central bank buys domestic currency the domestic money supply is.

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Increased

Unaffected

Reduced

All of the above

In an open economy leakages to imports ______ the value of the multiplier.

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Reduce

Increase

do not change

None of these

Fiscal policy is weak under floating exchange rates as fiscal expansion.

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Crowds out imports

Crowds out public consumption

Crowds out exports

Reduces the budget deficit

Monetarists believe that a reduction in _____ can be achieved by reducing.

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Unemployment, prices

Inflation, wages

Unemployment, wages

Inflation, the quantity of nominal money

Floating exchange rates are __ in the short run

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Stable

Volatile

Predictable

Depreciating

Leakages from the circular flow are____ and _____

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Investment savings, government expenditure

Saving , taxes net of subsidies, imports

Consumption, investment , government expenditure.

Consumption, taxes, impports

The prisoners Dilemma Game demonstrates that.

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Players are better off to act independently

Monopoly is better than competition

People will always cheat

Players are better off if they con operate

The allocation of resources is not efficient it

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The marginal cost of production does not equal society marginal benefit

The distribution is inequitable

Economic growth is low

Unemployment is high

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