Question # 1

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

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Consumption

Investment

Export's

work in the home

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

In a free market

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Government intervene

Government plan production

Government interfere

Price adjust to reconcile scarcity and desires.

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.

Moral Hazard means that the act of insuring __________ that the desired outcome will occur.

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Reduces the likelihood

Increase the likelihood

Guarantees

None of the above

import substitution is the replacement of ________ by domestic production under the protection of.

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exports, subsidies

Exports, patents

imports, high tariffs or import quotes

Imports, subsidies

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

The firms long run output decision will be where.

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Long run average cost a lowest

Marginal revenue equals output

Marginal revenue equals long run marginal cost

Marginal cost equals output

If both Marginal cost and marginal revenue increase, a firm.

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Should increase output

Should reduce output

Will require further information on how to respond

should not change output

International specialization takes place because of.

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Differences in technology

Differences in factor endowments

Scale economies

All of the above

The increase in total cost when one more units is produced is known as.

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Marginal cost

Opportunity cost

Limited cost

Average cost

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

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.

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

In the event of an increase in the international price of oil that encouraged the central bank to accept lower real interest rates, inflation would most likely.

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Fall

Increases

Remain the same

Fluctuate

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.

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

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

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

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

The extra utility from consuming one more unit of a good is called.

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Marginal utility

Additional utility

surplus utility

Bonus utility

Extremality's arise because there is a divergence between ____ and _

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Private costs, private benefits

Private costs, social costs of benefits

Social cost, social benefit

Insiders, outsiders

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