PPSC Economics Chapter 11 Assess Your Basics With Answers

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PPSC Economics Chapter 11 Assess Your Basics

Sr. # Questions Answers Choice
1 The costs of inflation are Shoe leather costs Menu costs Income redistribution All of the above
2 The short run Philips curve can shift in response to changes in inflationary expectations Unemployment The inflation rate Wage rates
3 The long run Philips curve is _________ at the ______ Horizontal natural rate of inflation Horizontal , natural rate of unemployment Vertical , natural rte of inflation Vertical , equilibrium rate of unemployment.
4 The Philips curve shows the trade off between ________ and _____ The inflation rate, interest rates The inflation rate, the unemployment rate interest rates, output Output, employment
5 Government may contribute to inflationary pressure on account of building up large. Numbers of employees Welfare plans Budget deficits Expenditure.
6 During periods of rising inflation and rising interest rates we expect the demand for real cash to. rise fall not change fluctuate
7 Monetarists believe that a reduction in _____ can be achieved by reducing. Unemployment, prices Inflation, wages Unemployment, wages Inflation, the quantity of nominal money
8 The quantity theory of money says that changes in ______ lead to equivalent changes in ______ but have no effect on. Prices, wages, output and employment. Output, prices, employment Nominal money, the price level output and employment. Nominal money output prices
9 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. Fall Increases Remain the same Fluctuate
10 Expansionary fiscal policy in the classical model will cause aggregate demand to ______ potential output. Exceed Fall below Fluclaute around Remain equal to.
11 The Keynesian model is a good guide to ______ behavior and the classical model describes behavior in. <sup>Long run, short run</sup> Flexible, imperfect markets <div>Short term , long run</div> Ong run, imperfect market.
12 At the intersection of AD and AS equilibrium is achieved in. The goods market The money market The labour market All of the above
13 The equilibrium inflation rate is determine by the intersection of __________ and ___ demand, supply IS , LM AD, AS Labour demand, labour supply
14 In the classical model, potential output can not be increased by Monetary growth Better technology More capital higher labour supply
15 If a person thinks they are better off after a 10% wage increase, and all prices have risen 10%, then they are experiencing. Inflation A supply shocks Crowding out Inflation illusion
16 The AD schedule indicates that______ inflation is associated with______ output. higher , lower Higher , higher Lower , lower zero ,zero
17 All of the following are type of monetary policy except A nominal money stock target A balances budget An inflation target The pursuit of a target real interest rate
18 A fall in investment demand can result from Higher interest rates Lower expected future profits More expensive capital goods All of the above
19 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. Reduction, increases reduction,reduction increase, reduction increases, increases
20 One of the transmission mechanism of monetary policy is through consumer house hold wealth.___________ and consumption. rise, increases, increases rise, falls, increases rise, increases, falls rise, falls, falls
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