Question # 1

The movement to free international trade is most likely to generate short term unemployment in which industries'.

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Industries in which there are neither imports nor exports

Import competing industries.

Industries that sell to domestic and foreign buyers

Industries that sell to only foreign buyers

If an economy experience an increase in productivity it means that.

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the level of output has risen

Employees are working harder than before

Output per unit of input has risen

Technical change has taken place

According to the permanent income hypothesis all increases in .

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Permanent income are saved

Permanent income are consumed

transitory income are saved

Transitory income are consumed

If a monopolist's has only fixed costs and chooses that output at which marginal cost equals price. it will

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Earn positive economic profits

Earn zero economic profits

Incur a loss equal to its variable costs

Incur a loss equal to its fixed costs

An increasingly higher marginal income tax is

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Progressive

Regressive

Proportional

Both b and c

You are gold the level of savings in the economy is Rs.25 billion of equilibrium Using the consumption function C =20 + .9 Y, find equilibrium income .

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250

900

450

350

In the long run, an increase in productivity would cause output to _________ and the aggregate price level to

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fall ; rise

fall ; fall

rise ; fall

rise ; rise

The total utility of the third unit of product x is.

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10

5

23

38

The idea that the money supply should change to accommodate changes in aggregate demand is associated with the ideas of.

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Milton Friedman

Ronald reagan

Margaret Thatcher

John Maynard Keynes

A decrease in the quantity of money supplied shifts the money supply curve to the________ and the equilibrium interest rate

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right ; fall

right ; rises

left ; falls

left ; rises

An increase in aggregate demand if aggregate supply is totally inelastic will.

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Increase price but not output

Increase output but not price

Increase out put and price

Decrease output and price

Which of the following is not an example of the functions of statistic.

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Average

Intelligence quotient

Diagram

x2 test

If firms paying employees monthly began paying them weakly then the demand for money would.

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Rise and income would rise

Rise and income would fall

Fall and income would rise

Fall and income would fall

What happens to the money supply if the deficit is financed by selling bonds to the central bank.

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The money supply increases

The money supply decreases

The money supply is unaffected

We cannot tell what will happen to the money supply

W.W. Rostow considered that the economic development period consist of.

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Two stages

Three stages

Four stages

Five stages

An increase in interest rates.

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Is likely to reduce savings

Is likely to reduce the external value of the currency

Leads to a shift in the MEC schedule

Leads to a movement along the MEC schedule

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

Which exchange rate system does not require monetary reserves for official exchange rate intervention.

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Floating exchange rates

Pegged exchange rates

Managed floating exchange rates

Dual exchange rates

Which of the following shifts the demand curve for hot dogs leftward.

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An increase in the price of a hot dog bun

A decreases in the price of a hot dog bun

An increased in the price of a hamburger

An increases in the price of a hot dog

Holding all other factors constant consumers demand more of a good the

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Higher its price

Lower its price

Steeper the downward slope of the demand curve

Steeper the upward slope of the demand curve

Why does it make sense in assume that people are rational, if you want to predict their behavior.

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People are not guided by emotions when making decisions

People wheo act in the way that best gets them what they want will tend to repeat that behavior, and will tend to learn from mistakes that they do make

People never make mistakes, and tend to make the correct choices all of the time

People always logically figure out what to do.

Expenditure on unproductive assets are strangely criticized and savings are emphasized by

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Ibn e Khaldun

Ibn e Taimiya

Nasiruddin Tosi

None of these

A price decrease and an increase in income are similar in that

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Both force the consumer to achieve a lower level of well being

Both force the consumer to reach a lower indifference curve

Both move the budget line outward

^{They are not similar at all}

The movement of disguised unemployment is.

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integrating factor

Social factor

push and pull factor

All of these

In oligopoly market seller are.

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Few

Four

Some

A large number

Which of the following changes shifts the AD curve down and to the left.

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A temporary increase in government purchases.

A rise in the nominal money supply

A decrease in corporate taxes

A decrease in consumer confidence

Why do people keep currency in their pockets when bank deposits pay interest.

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Because banks might steal your money

Because currency is more liquid

Because bank deposits lose value due to inflation

Because bank deposits lose value due to exchange in interest rates.

Demand for a normal product may shift outwards if.

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Price decreases

The price fo a substitute falls

the price of a complement rises

Income falls

Extremality's arise because there is a divergence between ____ and _

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Private costs, private benefits

Private costs, social costs of benefits

Social cost, social benefit

Insiders, outsiders

Which of the following is not viewed by the text as a major political obstacle to development.

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Growth oriented polices may damage the short term interest of influential groups

Civil war

Corruption

Departing from strict laissez faire principles

Which of the following is a NOT component of M-2.

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Small time deposited

Money market mutual funds

Stocks

Checkable deposits

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