Question # 1

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

A dominant strategy is.

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A winning strategy

A losing strategy

A players best strategy when moving fist

a player's best strategy whatever the strategies adopted by rivals

When capital mobility is perfect, interest rate differentials will tend to be offset by

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Price differences.

Balance of payments differences.

Current account differences.

Expected exchange rate changes

Real GNP is a crude measure of national welfare because it excludes.

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Consumption

Investment

Export's

work in the home

When the S/L exchange rate rises the pounds______ and whent he S/L rate falls the pounds.

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depreciates, appreciates

revalues, devalues

appreciates, deprecates

becomes more expensive, becomes cheaper

If two firms doing the same thing in the same industry join together this is known as a.

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vertical merger

Horizontal merger

Conglomerate merger

Hostile takeover

The Philips curve shows the trade off between ________ and _____

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The inflation rate, interest rates

The inflation rate, the unemployment rate

interest rates, output

Output, employment

An optimal tariff is one which reduces imports to the level at which ___ equals

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imports , exports

The balance of trade, zero

The demand for currency, the supply of currency

Social marginal cost social marginal benefit

In the short run, the supply of capital is _______ and in the long run iwll depend on.

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Variable technology

Fixed, expectations

Fixed, rental rate of capital

Variable, interest rates.

In the short run the level of floating exchange rates is determined mainly by.

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Interest rates

Competitiveness

Trade

Speculation

A current account deficit means that a country may.

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Reduce its stock of foreign assets

Increases its stock of foreign assets

Increases its savings

Increases its foreign currency reserves.

If one country, with floating exchange states, has higher inflation than its competitors, we would expect its exchange rate to.

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Appreciate

Depreciate

Revalue

be in short supply

We cannot say whether one allocation of resources is better than another allocation because.

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some people cant count

Some people may not be permanent residents

Not all economic activity is legal

We cant make value judgements to compare different people welfare.

If your income doubles and the prices of the goods you buy double, then your demand for these goods will likely

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Increase

Not change

Decrease

Shift

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.

Taxes create a wedge between the sales price and purchase price that prevents the price system equaling _________ and

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Marginal costs, marginal benefits

Demand, supply

Marginal cost, marginal revenue

Marginal cost, average cost

Satellite television subscription and television detection devices are ways in which broadcasting companies address the _____ problem.

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Externality

Market imperfection

Deadweight burden

Free rider

The long run Philips curve is _________ at the ______

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Horizontal natural rate of inflation

Horizontal , natural rate of unemployment

Vertical , natural rte of inflation

Vertical , equilibrium rate of unemployment.

The value of an asset depends upon

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Its scrap value

Its depreciation

The present value of the failure stream of income it can earn.

the cost of loans

The key issues of macroeconomics are

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Unemployment

Inflation

Economic growth

All of the above

In the circular flow we would expect leakages to __________ injections.

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equal

be less than

by greater than

Be less or greater than

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