Question # 1

What happens to the money supply if the deficit is financed by selling bonds to the general public.

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The money supply increaes

The money supply decreases

The money supply is unaffected

We cannot tell what will happen to the money supply

Which of the following macro economic variables doesn't vary much ove the seasons.

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The nominal money stock

The unemployment rate

The real wage

Average labor productivity

Given the cost data indicated in the table above the average variable cost of producing 7 units of output is

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Rs.37

Rs.29

Rs.31

Greater than Rs.37

When total utility becomes maximum then marginal utility will be.

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Minimum

Average

Zero

Negative

A disadvantage of chain weighting is that

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Past inflation rates change whenever the base year changes.

Past growth rates of real GDP change whenever the base year changes.

It causes output growth to slow

The components of real GDP don't sum to real GDP

Which of the following would increase aggregate demand.

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Increasing saving

Increasing import spending

Increasing taxation revenue

increased investment

Inflation.

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Reduces the cost of living

Reduces the standard of living

Reduce the price of products

Reduces the purchasing power of a price

Price equal to.

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Total revenue -quantity

Total revenue/quantity sold

total quantity sold * quantity sold

Total revenue/total cost

An item designed as money that is intrinsically worthless could the.

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A currency note

A silver coin

A barter item

Any tradeable commodity

Company X sells Rs.75 million dollars of 9.5% first mortgage bonds at par The company's marginal tax rate to 30% The after tax cost of debt is.

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2.85%

3.175

6.68%

7.55

Total utility of a commodity is measured by which price of that commodity.

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Value in use.

Value in exchange

Both of above

None of above

The two main characteristics of the production function are.

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It slopes downward from left to right and the slope become flatter as teh input increases

It slopes upward from left to the right the slope becomes steeper as the input increase

It slopes upward from left to right unput increases

It slopes downward from left to right and the slope becomes steeper ath the input increase

By financial crowding our economists mean

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What the government borrows cannot be used for private investment

Government borrowing drives up interest rates.

Bank of England controls on commercial bank lending

Credit rationing

The Philips curve shows the relationship between inflation and what?

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The balance of trade

The rate of growth in an economy

The rate of price increases

Un employment

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

Money must fulfill all of the following functions except.

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Be a medium of exchange

Be a store of value

Be generally accepted as a means of purchasing commodities

The above are all functions of money

To reduce the supply of money the government could.

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Reduce interest rates

Buy back government bonds

Sell government bonds

Encourage banks to lend

Finding a partner to work with abroad is called a.

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Takeover

Merger

Acquisition

Joint venture

Import substitution is an example of

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The principle of comparative advantage

The pricnipal of absolute advantage

An outward looking growth strategy

An inward looking growth strategy

An increase in autonomous net exports

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Shifts IS rightward by k, ox

shifts IS left eard by k, AX

Increase the slope of IS

Decreases the slope of IS

The role of _________ is to direct one nation's savings into investments of another nation

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Merchandise trade flows

Service flows

Current account flows

Capital flows

Compared to the case of perfect competition.

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Monopolist is more likely to

Charge a higher price

Produce a lower quantity of the product

All of the above

International specialization takes place because of.

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Differences in technology

Differences in factor endowments

Scale economies

All of the above

The multiplier which specifically refers to an equal increase in government spending and taxes, giving rise to that same equal increase in national income is called.

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the Keynesian multiplier

The balanced budget multiplier

the deficit multiplier

None of the above

Economists use the phrase ceteris paribus to express the assumption.

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All else equal

Everything affects everything else.

Scarcity is a fact of life

There is no such thing as a free lunch

a possible use in encomia's for the circle or the ellipse is to model.

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Production possibility curve

Demand cuve

Isocost liine

Supply curve

A public good

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Is provided by the government

Is free

Has the properties of being non excludable and non diminishable

Has external costs

Using the Keynesian model the effect of a government imposed celling on interest rates paid on personal checking accounts that is lower than the current market interest rate would be to cause._ in the real interest rate and _ in input out in the short sun.

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A decrease ; a decrease

A decrease ; no change

A decrease ; an increase

An increase ; a decrease

In Vann diagram the universal set is represented by

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Points within a rectangle

Points within a circle

Both a and b

None of these

In 1950's liberal policy was adopted regarding.

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Export

Imports

Both

Non

During the early years of the Great depression there was a significant decrees n the the money supply that causes. the ______ to shift____

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IS ; Leftward

IS ; rightwards

LM ; Leftward

LM ; rightward

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