Question # 1

A tariff causes domestic firms to __________ and consumers to

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Overproduced, under consume

overproduce , overconsume

Underproduce, under consume

underproduce, overconsume

A production technique is technically efficient if.

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Output is maximized

Input are minimized

there is no way to make a given output using less of one input and no more of the other inputs.

costs are minimized

The abolition of income tax would probably ________ the number of workers in employment and____________ the equilibrium. rate of unemployment.

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increase ; decrease

increase ; increase

reduce ; increase

reduce ; reduce

In the UK mergers can be referred to the competition commission of they create a firm with _______ of the market.

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15%

20%

25%

30%

A fixed exchange rate, plus perfect capital mobility _______ the scope for monetary policy.

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Enhances

Undermines

Encourages

Facilitates

The key issues of macroeconomics are

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Unemployment

Inflation

Economic growth

All of the above

Aggregate demand in an economy trading internationally with a government sector can be written s.

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AD = C+1

AD = C + 1+ G

AD = C +1+G+X+Z

AD+C+1+G+X-Z

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

GDP per head may be an imperfect measure of economic welfare because it excludes.

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The value of leisure

Externalities

Untraded goods

All of the above

Aggregate demand without a foreign sector is the sum of.

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c+1

C+G

1+G

C+!+G

Real GNP measures income

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Including non market activities

Adjusted for inflation

Including externalities

Including tax evasion

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

All of the following represent obstacles to LDC development except.

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Resource scarcity

Low level of investment

Low population

Poor infrastructure

If the MPC is 0.5 the multiplier is

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2

1/2

0.2

20

If a firm not operating at the output necessary to achieve al scale economies it has not achieved its.

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Efficient scale

Average efficient scale

Maximum efficient scale

Minimum efficient scale

In an economy, measuring total value (1) added, total value(2) spending on final goods and 3 total factor earning gives the result that.

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3>2>1

3 +2>1

3<2<1

Any measure can be larger or smaller than any other

The imposition of a tariff causes consumption to _______ and imports to.

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rise , rise

fall , rise

fall , fall

rise , fall

The price elasticity of demand measures

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The responsiveness of quantity demanded to a change in prie.

How far a demand curve shifts

A change in price

A change in quantity demanded

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 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

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