Question # 1

According to Keynesian macro economics price adjust _____ to shocks, so the government should.

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Slowly ; do little

Rapidly ; do little

Rapidly ; fight recessions

Slowly ; fight recessions

The aggregate supply of labor is the

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Total amount of time a person works over his or her lifetime

Total amount of time a person spend in the labor force over his or her life time

Unemployment rate

Sum of the labor supplied by everyone in the economy

According to classical economists unemployment rises in recessions due to an increase in ______ unemployment , not in _______ unemployment.

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Cyclical ; frictional and structural

Frictional and cyclical , structural

Structural , frictional and cyclical

Frictional and structural ; cyclical

In the Keynesian model short run equilibrium occurs where

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The IS and LM curves interest

The IS curve LM curve and FE lines intersect

the IS curve intersects the FE line

The LM curve intersects the FE line

"Human Welfare is the subject of Economics" Y. This statement is associated with the name of which of the economists.

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Marshall

Pigou

Pension

All of the above

The impact of contractionary fiscal policy, according to new classical theory is that.

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Real interest rates do not change

Aggregate demand increase

Current real output substantially decreases

The price level substantially increases.

A Rs.10 increase in autonomous investment spending shifts is.

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Rightward by Rs. 10

Leftwards by Rs. 10

Rightward by Ke (Rs.10)

Leftward y Ke (Rs.10)

The break even level of income where C = Y is

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200

300

500

400

The MPS = 0.4 and government spending increases by 20 billion. The LM curve

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Shifts to the right by 20 billion

Shifts to the right by 50 billion

Does not shift

shifts to the left by 30 billion

Which of the following is an example of a productivity shock.

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The introduction of new management techniques

A change in taxes on corporate profits

A change in the level of government transferors

An increase in the money supply

The equation for the LM curve is.

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Y = 100 -50 i

Y = 50 + 50 i

Y = 50 - 80 i

Y = 80 + 50 i

Total factor productivity growth is that part of economic growth due to.

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Capital growth plus labor growth

Capital growth less labor growth

Capital growth times labor growth

Neither capital growth nor labor growth

Company X sells Rs.75 million dollars of 9.5% first mortgage bonds at par The company's marginal tax rate to 30% The after tax cost of debt is.

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2.85%

3.175

6.68%

7.55

The idea that the natural rate of unemployment rises when the acual rate of unemployment rise is known s.

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Stabilization

Insider outsider theory

Hysteresis

an efficiency wage model

Marginal utility is equal to average utility at that time when average utility is.

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Increasing

Maximum

Falling

Minimum

Most industrial construes generally considered _______ as the most important economic goal

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External balance

Internal balance

Maximum efficiency for business

Maximum efficiency for labor

Suppose the government provides a tax cut today that is matched by a tax increase in the future that's equal in present value to the tax cut This causes a consumer's saving to.

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Decrease

Increase

Remain unchanged

Increase if the person was a lender and decrease if the person was a borrower

Which of the following is the second law of gossen.

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Law of equal marginal utility.

Law of equi product

Theory of indifference curve

Law of diminishing marginal utility.

The appropriate expenditure switching policy to correct a balance of payment surplus is.

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Currency revaluation

Currency devaluation

Expansionary monetary policy

Contractionary fiscal policy

A decrease in the effective tax rate on capital would cause the IS curve to.

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Shift up and to the right

shift down and to the left

Remain unchanged

Remain unchanged if taxes are fully deducible from income otherwise, shift up and to the right

The costs of disinflation would be low if

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Expected inflation falls as inflation falls

Wages and price controls were used

The Phillips curve were nearly horizontal

The Phillips curve adjusted slowly to changes in inflation

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