PPSC Economics Chapter 3 Macro Economics With Answers

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PPSC Economics Chapter 3 Macro Economics

Sr. # Questions Answers Choice
1 A decrease in the effective tax rate on capital would cause the IS curve to. 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
2 A decline expected future output would cause the IS curve to. 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 constratints.
3 The IS curve shows the combinations of output and the real interest rate for which. The goods market is in equilibrium The labor market is in equilibrium. The financial assets market is in equilibrium An increase in output will cause the market clearing interest rate to be bid up.
4 A disadvantage of the barter system is that No trade occurs People must produce all their own food clothing and shelter The opportunity to specialize is greatly reduced. Gold is the only unit of account
5 Economists use the phrase ceteris paribus to express the assumption. All else equal Everything affects everything else. Scarcity is a fact of life There is no such thing as a free lunch
6 If the demand for coffee decreases as income decreases, coffee is a Normal good Inferior good Substitute good Complementary good
7 Which of the following solutions does the economist suggest to cost inflation in higher education. Cutting professor salaries Make students live at home Reduce college from four to three years B and C
8 An efficient economy is an economy In which output is steady or growing and there is low inflation That produces what consumers demand and does so at the least possible cost. that distributes output equally among all consumers In which there is a fair distribution of wealth.
9 As the economy nears full capacity the short run aggregate supply curve Stagflation Structural inflation Demand side inflation Supply side inflation
10 The main cause of cyclical unemployment is that. Firms engage in race gender and sex discrimination in their hiring practices. Some induvial do not have marketable job skills. the level of overall economic activity fluctuates Workers offer voluntarily quit a job to look for a better job.
11 Which of the following actions is an example of expansionary fiscal policy. A decrees in welfare payments A purchase of government scantiest in the open market A decrease in the Bank rate A decrease in the corporate profits tax rates
12 An increase in total production causes the demand for money to _____ and the interest rate to ______ Increase ; increase Increase ; decrease decrease ; decrease decrease,; increase
13 If the quantity of money demands is less than the quantity of money supplied then the interest rate will. Either increases or decrease, depending on the amount of excess demand. Increase Decrease not change
14 Banks can create money Only by illegally printing additional dollar bills By paying interest to their depositors By making loans that result in additional deposits By offering financial services, such as stick market brokerage
15 The ratio of the change in the equilibrium level of income to a change in some automats increase in spending is the Elasticity coefficient Multiplier Automatic stabilizer Marginal propensity of the autonomous variable
16 The natural rate of unemployed is generally thought of as the. Ratio of the frictional unemployment rate to the cyclical unemployment rate sum of structural unemployment and cyclical unemployment sum of frictional unemployment and cyclical unemployment sum of frictional unemployment and structural unemployment.
17 Expansionary monetary policy Tends to lead to an appreciation of nation's currency Usually has no effect on a currency's exchange value Tends to lea dto a depreciation of the currencies of other nations Tends to lead to a depreciation of a nation's currency.
18 Deflation occurs only when Some prices fall but average prices still rise All prices for all goods fall The average price level falls The average price level increases bat at a slower rate than before
19 The reason that only final sales are counted in GDP is To avoid double counting good that are sold so as to be resold To not count production in other countries Because the government can't get records on intermediate sales. To simplify the computation and no other reason
20 According to Okun's law an increase in the unemployment rate will cause_______ in the level of empolyment and __ in the level of output. An increase ; an increase An increase; a decrease A decrease ; an increase a decrease ; a decrease
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