Question # 1

Which of the following macro economic variables is procyclical and coincident with the business cycle.

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Residential investment

Nominal interest rates

Industrial production

Unempolyment

Economics is the science of Wealth who gave this definition.

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J-x Mehta

Marshall

Adam Smith

Robbins

In the short run in the Keynesian model a sharp increase in oil prices would leave the economy with a ____ level of output and a ______ real interest rate.

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Higher ; lower

Lower ; Higher

Higher ; higher

The break even level of income where C = Y is

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200

300

500

400

In which of the following situations will an increase in the money supply have no effect upon equilibrium iincome.

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LM is steeply sloped and IS is relatively that

LM is vertical and IS is stopped

LM is steeply sotped and IS is vertical

LM is relatively flat as is IS

An IOU of the Federal Reserve Bank of Scan Francisco to Bank of America is called.

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Discourse

Federal funds

Reserves

Collateral

The origin of the idea of a trae off between inflation and unemployment was a 1958 article by

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A.W Philips

Edmund phelps

Milton Friedman

Robert Gordon

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

In a private sector model

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Household saving is a leakage from the circular flow

Investment is a spending injection

All of the above

None of the above

A change that increases the real money supply relative to real money demand causes.

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The LM curve to shift down and to the right.

The LM curve to shift up and to the left

The IS curve to shift down and to the left

The IS curve to shift up and to the right.

Characteristics of economic laws are

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Mere statement of economic tenduencies

Less certain

Hypothetical

All of the above

According to the efficiency wage model during a recession firms will not reduce real wages because.

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Unions would go on strike reducing profitability

This would reduce worker effort and productivity.

The equilibrium real wage has increased

Legally, they can't

A model in which individual producers act as price setters because there are only a few sellers and the product they sell is not standardized, is called.

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Imperfect competition

Perfect competition

Monopoly

Monopsony

When aggregate economic activity is declining , the economy is said to be in.

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A contraction

An expansion

A trough

A turning point

The marginal product of labor

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Is measured by the slope of the production function relating capital of employment

Is larger when the labor supply is relatively larger

Is smaller when the labor supply is relatively smaller

Decreases as the number of workers already employed increases

Which of the following methods is used for internalizaing positive externalities

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Positive taxes

Government exchange of property rights

Effluent fees

Corrective substidies

If government tax function is T = 80 + .6 Y and the marginal propensity to consume is a constant 8 and increase in GNP of Rs.50 would cause consumption to.

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Increase by Rs.16

Decrease by Rs.16

Increase by Rs.40

Decrease by Rs.30

Peaks and trough of the business cycle are known collectively as.

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Volatility

Turning points

Equilibrium point

Real business cycle events

When planned consumption equals Rs. 40 + 0.90 Yd and planned investment is Rs.50, the equilibrium level of income is.

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Rs.90

Rs.400

Rs.500

Rs.900

An increase labor supply would cause the IS curve to.

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Shift up and to the right

Shift down and to the left

Remain unchanged

Shift up and to the right only if people face borrowing constraints

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