| 1 |
According to classical models, the level of employment is determined primarily by
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A. The level of aggregate demand for goods and services
B. Prices and wages
C.Government taxation
D. Government spending
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| 2 |
A rise in planned investment spending unrelated to the interest rate causes teh equilibrium level of aggregate output to __________ at shifts the _____ curve to the _______
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A. rise ; LM ;right
B. rise ; IS ; right
C.Fall ; LM ; left
D. rise ;IS; right
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| 3 |
"Some economists criticized the central bank for not moving in the face of the waning recovery One who prefers anonymity stated the failure to move today leaves us with low inflation a weak economy and climbing jobless claims these are classic signs of an impending downturn The fed fiddles while the economy burns This economist would want to see.
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A. A higher interests rate
B. A higher reserve requirement
C.a decrease in the money supply
D. An increase in the money supply
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| 4 |
Money or paper currency serves at least _______ functions.
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A. Three
B. Four
C.Five
D. Seven
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| 5 |
Which of the following would qualify as an aggregate supply shock.
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A. An unexpected increase in oil prices
B. Seasonally expected increase in oil prices
C.An unexpected reduction in consumer confidence
D. an anticipated tax cut
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| 6 |
"A monetary rule need not mean a single baid number If the central bank fears velocity shifts rules could be adopted for adjusting the target in the face of a trends change in velocity "If velocity were trending upward the target money growth rate would be adjusted.
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A. Upward
B. Down ward
C.To be zero
D. To match inflation
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| 7 |
During periods of negative demand shocks deficit target reductions such as those mandated in the Gramm Rudman Hollings Act would tend to.
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A. Stimulate the economy and increase empolyment.
B. Result in additional recessionary declines in employment and income
C.Stimulator defiance spending
D. Have an automatic stabilizing impact upon the economy
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| 8 |
Which of the following measures is the best measure of money as a medium of exchange.
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A. M1
B. M2
C.M3
D. None of the above
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| 9 |
Given fixed exchange rates assume Pakistan initiates contractionary monetary ad fiscal policies to combat inflation. these policies will also.
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A. Reduce a balance of payments surplus
B. Reduce a balance of payments deficit
C.Increases both imports and exports
D. Decrease both imports and exports
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| 10 |
Fiscal policy refers to the manipulation of government income and expenditure to.
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A. control the volume and price of money
B. Limit the rate of increaes in incomes
C.Effect the value of the dollar on world financial market.
D. Affect the level of total expenditure output and employment
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| 11 |
A Political problem with discretionary fiscal policy is the.
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A. Contractionary bias
B. Big state bias
C.Expansionary bias
D. Over reaction bias
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| 12 |
You know that all taxes are distortionary under what conditions will this knowledge lead you to appose the imposition of every single tax in the economy.
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A. If you live in a 1st best world.
B. If you live in a 2nd best world
C.If the tax rates on some of the items are prohibitively high
D. Either of the above
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| 13 |
A bonds becomes a riskier asset the demand for money_______ and all else constant, the equilibrium interest rate
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A. Rises ; rises
B. rises ; falls
C.falls ; rises
D. falls ; falls
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| 14 |
The opportunity cost of holding currency decreases when.
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A. Income decreases
B. The interest rate on bonds decrease
C.Buying newly issued government bonds directly from the central bank
D. Buying newly issued government bonds directly to the central bank.
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| 15 |
A business cycle refers to.
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A. Fluctuations in the general price level
B. changes in the long term growth pattern of the CPI
C.The ups and downs of real GDP
D. Fluctuations in the level of corporate.
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| 16 |
In the Keynesian cross diagram, an expenditure causes the aggregate demand function to shift _________ and the equilibrium level of aggregate output to.
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A. up ; rise
B. up ; fall
C.down ; rise
D. down ; fall
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| 17 |
A decrease in the quantity of money supplied shifts the money supply curve to the _____ and the LM curve to the
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A. right ; left
B. right ; right
C.left ; left
D. left ; right
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| 18 |
Credit constitutes.
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A. Saving made available to borrowers
B. A form of liquid asset
C.bank loans converted into commodity money
D. Money used as a standard of deferred payment.
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| 19 |
A reduction in government spending causes the equilibrium level of aggregate output to ___________ at any given interest rate and shifts the ________ curve to the.
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A. fall ;LM; right
B. fall ;IS; Left
C.fall ;LM; Left
D. rise ;LM; Rifht
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| 20 |
A bank has excess liquidity reserves to lend but is unable to find a willing borrower these will_______ the size of the money multiplier.
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A. Reduce
B. Increase
C.Have no effect on
D. Double
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