Question # 1

During inflation.

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Lenders lose borrowers gain.

Borrowers lose , lenders gain

The real interest rate rises

Borrowers and lenders both lose.

GDP difference between GNP because.

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GDP = GNP - net factor payments from abroad

GNP = GDP -net factor payments from abroad

GDP = GNP -capital consumption allowances

GNP = GDP -capital consumption allowances.

An increase in investment leads to an increase in income and consumer spending, which in turn leads to a further increase in investment spending This is example of.

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The expenditure multiplier

Explosive gowth

Hyperinflation

Interaction of multiplier and accelerator

Which of the following does not result in an increase in U.S. autonomous net exports.

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The U.S. dollar depreciated

Major trading partners stimulate their economy

Foreign currencies depreciate

Foreign trading partners lift tariff barriers

To avoid double counting when the GNP is estimated, economists

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Price all goods and services bought and sold in all markets

Use the GNP deflator

Price only intermediate goods

Calculate value added at each stage of production.

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

Disinflationary demand management policies.

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Achieve a lower rate of inflation without causing a decreases in output.

Reduce output but have no initial effect on the inflation rate

Require an increase in government spending.

Require a reduction in the growth rate of the nominal money supply.

When plotted with the aggregate price level on the vertical axis and output on the horizontal axis which of the following curves is vertical.

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SRAS

AD

LRAS

None of the above

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

Which of the following solutions does the economist suggest to cost inflation in higher education.

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Cutting professor salaries

Make students live at home

Reduce college from four to three years

B and C

In the long run an increase in consumer spending would cause output to ________ and the price level to.___________

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rise;rise

rise; stay; constant

stay constant ; stay constant

Stay constant ; rise

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

Economics is the science of Wealth who gave this definition.

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J-x Mehta

Marshall

Adam Smith

Robbins

Appreciation of the U.S. dollar results in.

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U.S. tourists traveling abroad being worse off

U.S. imports increasing.

Foreign currency buying more U.S. goods and services.

No change iin foreign pucchases or sales.

The fac that the production function relating output to labor becomes flatter as wemove from left to right means that.

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The marginal product of labor is positive

The marginal product of capital is positive

There is diminishing marginal productivity of labor

There is diminishing marginal productivity of capital

If personal income equals Rs.570 white personal income takes equal Rs.90 consumption is Rs.430. interest payments total Rs. 10 and personal saving is Rs. 40, disposable income equals.

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Rs. 500

Rs.480

Rs. 470

Rs.400

Suppose your company is in equilibrium with its capital stock at the desired level A permanent decline in the expected real interest rate now has what effect on your desired capital stock

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Raises it because the future marginal productivity of capital is higher

Lowers it because the future marginal productivity of capital is lower

Raises it because the user cost of capital is now lower

Lowers it because the user cost of capital is now higher

An adverse supply shock that is permanent shifts which curve in addition to the curves shifted by.

One that is temporary.

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The LM curve

The IS curve

The FE line

The labor demand curve

Which policy is an expenditure switching policy.

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Increase in the money supply

Decrease in government expensitures

Increase in business and household taxes

Decrease in import tariffs

In the Keynesian model in the long run a decrease in the money supply will cause ___ in the interest rate and _____ in the price level.

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An increase ; an increase

A decrease ; a decrees

No change ; an increase

No change ; a decrease

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

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