Question # 1

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

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

The cost of using capital services is the

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wage rate of capital

Interest charges

Marginal capital cost

Rental rate for capital

A competitive firm produces a level of output at which.

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Price is greater than marginal cost

Price equals marginal cost

Price is less than marginal cost

None of the above

The AD schedule indicates that______ inflation is associated with______ output.

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higher , lower

Higher , higher

Lower , lower

zero ,zero

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

We would normally expect the size of the labour force to be ____ than the number of workers willing to accept job offers at any real wage rate.

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Smaller

Larger

the same size

None of these

Expansionary fiscal policy in the classical model will cause aggregate demand to ______ potential output.

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Exceed

Fall below

Fluclaute around

Remain equal to.

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

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

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Interest rates

Competitiveness

Trade

Speculation

International specialization takes place because of.

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Differences in technology

Differences in factor endowments

Scale economies

All of the above

The main cause of different relative costs between countries are.

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Relative factors competition

Relative factor mobility

Relative factor substitution

Relative factor endowments

A natural monopoly has a declining ________ over a large range of output.

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Long run marginal cost

Short run marginal cost

Long run average cost

Long run marginal cost

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.

For perfect competition ot work there must be

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Many buyers and sellers

A standard product

Free entry and exit

All of the above

When a market is contestable , incumbent firms must.________ to avoid the entry of new competitors.

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Behave like competitive firms

Agree to act together

Differentiate their products

Practice price discrimination

All of the following are types of imperfect competition except

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Monopolistic competition

Oligopoly

Monopoly

Unfair competition

Real business cycle theories suggest that _____ to correct departures from the desired growth path.

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There is a role of fiscal policy

There is a role for monetary policy

There is a role for supply side policies

There is no case for stabilizing output over the business cycle.

The opportunity cost of a good is.

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The time lost in finding it

The quantity of other goods sacrificed to get another unit of that good

The expenditure on the good

The loss of interest in using savings

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

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Enhances

Undermines

Encourages

Facilitates

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