Question # 1

Perfect international capital mobility suggests that international funds will be responsive to _______ differentials.

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Current account

Interest rate

Tax

Price

A straight line diagram can be drawn knowing the _______ and _____

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Vertical axis and horizontal axis

Intercept and slope

Scale and slope

Intercept and scale.

A rise in the real exchange rate will __ the competitiveness of the domestic economy.

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Increase

reduce

do nothing do

all of these

Firms are assumed to ____ costs and to _______ profit.

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Incur , desire

Pay ; make

Change ;earn

Minimize ; maximize

A competitive equilibrium is Pareto efficient because.

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Producers are price takers

Consumers and producer's face the same prices

Marginal costs and benefits are equal

All of the above

Marginal revenue is the ________ when output is.

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Change in average revenue, inversed.

change in total revenue, increased by one unit

change in average revenue, increased by one unit

Change in total revenue, incresed.

In the economy when a steel producer sells steel to car producer it is regarded as.

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A final good

An intermediate good

an injection

a leakage

Injection into the circular flow are _________ and _______

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Consumption, investment, exports

Investment exports, transfer payments

Investment government expenditure, exports.

Taxes, exports, transfer payments.

If the government increase spending and raises taxes by just enough to finance the increase it will.

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Leave output unchagned

Increase output

Reduce output

Increase the MPC

At the intersection of AD and AS equilibrium is achieved in.

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The goods market

The money market

The labour market

All of the above

The business cycle is not transmitted from one country to another through.

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Private sector imports and exports

Economic policy

The duration of compulsory education

Labour supply changes

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

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

If goods are exported for less than society's marginal production cost and the marginal benefit to domestic consumers, it is likely that they benefit from.

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An import subsidy

A quota

Comparative advantage

An export subsidy

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

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.

Economics is the study of

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Production technology

Consumption decisions

How society decides what how and for whom to produce

The best way to run society

If a price increase of good A increases the quantity demanded of good B, then good B is a.

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substitute good

Complementary good

Bargain

Interior good

A reduction in interest rates, causes an increases in the monetary base that result in an_____ in the availability of consumer credit and a _ in the cost of consumer credit.

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Reduction, increases

reduction,reduction

increase, reduction

increases, increases

When real income increases, other things equal we fan expect the demand for real money holdings to.

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Fall

Not change

Increase

Decrease

Potential output can be increased by _________ or by_________

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Increasing the use of labour, increasing the use of land

Increasing the use of capital, increasing the use of labour

Increasing the use of land, increasing the use of capital

Increasing the use of all inputs technical advances

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