Question # 1

Which one of the following would cause demand pull inflation.

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Increases iin production costs

Wage gains in proportion productivity gains

An increase in aggregate demand with shortages of sup ply

Monoposonistic labor markets

A rise in the exchange rate value of the rupee will most likely cause.

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A dollar to be worth less in learns of other currencies.

Imports to decrease

Exports to increase

The balance of payments curve to shift to the left

Over a two year period your income has increased 10% At the same time the consumer price index has increased 205 Your real purchasing power is.

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92% of the original value

50% of its original value

Not affected by the price change

109% of its original value

The value of real GDP in the current year equals.

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The value of current year output in prices of the base year

The value of current year output in pries of the current year

The value of base year output in prices of the base year

The value of base year output in prices of the current year

If the expected rate of inflation rose at the same time the natural rate of unemployment rose the Philips curve.

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would shift down

would shift up

Would not move

Might shift up or down or not move depending on which effect was larger.

A mathematical expression relating the amount of output produced to quantities of capital and labor utilized is the

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Real interest rate

Production function

Productivity relation

Marginal product

According to the life cycle hypothesis consumption is related to.

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Current income

Past peak income

Expected lifetime income

Price expectations over one's life time

Industries that are extremely sensitive to the business cycle are the.

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Durable goods and service sectors

Nondurable goods and service sectors.

Capital goods and nondurable goods sectors.

Capital goods and durable goods sectors.

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

The Root Mean square Error for the actual sales and sales forecast for 1985 and 1986 is.

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20.2

19.9

14.7

17.2

The value of a household's assets minus the value of its liabilities is called.

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Income

Debt

Stock

Wealth

Which of the following will not result in an increase in the level of income.

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An increase in autonomous spending

A decrease in autonomous taxes

An increase in autonomous transfers

an increased in net tax revenues

Whose opinions have revolutionized the scope of macro economics.

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Adam Smith

J.B. Say

J.M. Keynes

All of the above

When equilibrium in the money and goods markets occurs at a rate of interest below the BP schedule internal and external equilibrium for the United States can he achieved by.

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Expanding the U.S. money supply

Increasing government spending

Increasing taxes

Lowering interest rates in the united states.

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

According to classical economists the economy.

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Requires fine tuning to reach full employment

Should not be left to market forces

Will never be at full employment

Is self correction

Equilibrium occurs in a two sector model when

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Saving equals investment.

Consumption plys investment equals the value of putput

Planned saving equals planned investment.

Aggregate spending equals the revenues of the business sector

Keynes considered subjective and objective factors.

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Determinants of investment

Determinants of business will ingress to supply

Unimportant determinants of consumption.

Important determinants of consumption.

What did economist Adam Smith identity as the "invisible hand" that directs the decision making of firms and households in a market economy.

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Government

Product demand

Self interest

International trade

An increase in the expected real interest rate tends to.

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Raise desired saving only

Raise desired investment only

Raise both desired savings and desired investment

Raise desired savings, but lower desired investment.

An expansionary supply side shock results in.

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An increased real national income

The aggregate supply curve shifting to the left

The aggregate demand curve shifting to the right

The aggregate demand curve shifting to the left

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