Question # 1

Increases in government spending increase interest rates and aggregate output in the ISLM framework this is a ____ shift of the _____ curve.

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Left ward ; LM

Right ; LM

Left ward ; IS

Left ward ; AD

Which of the following represents monetary policy geared to increases the supply of money.

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The purchase of bonds by the Federal Reserve Bank

The sale of bonds by the Central Bank

An increase in reserve requirement

A decrease in taxes

A consumer is said to be in equilibrium when the marginla utility and price of a commodity

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More

Less

Irrelevant

Equal

Expansion in money supply stems from.

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Increasing the cost of bank credit

Reducing availability of bank credit

Reducing the financial cost of bank credit

None of above

In order to maximize profits a monopoly company will produce that quantity at which the

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A marginal revenue equals average total cost

Price equals marginal revenue

Marginal revue equals marginal cost

Total revenue equals total cost

An increases in the value of the Rupee makes foreign goods cheaper relative to Pakistan goods, resulting in a _______ in net exports and a __ shift of the IS curve

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fall ; leftward

rise ; leftward

fall ; rightward

rise ; rightward

An increase in aggregate demand will have most effect on prices if.

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Aggregate supply is price inelastic

Aggregate supply is price elastic

Aggregate supply has a unitary price elasticity

Aggregate demand is price inelastic

In monopolistic competition if firms are making abnormal profit other firms will enter and

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The marginal cost will shift outwards

the demand curve will shift inwards

The average cost will shift downwards

The average variable cost will increase

The downward kinked demand curve facing the individual oligopolistic implies that

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He face price certainlty

Competitors have a tendency to follow price decreases but not price increase

Total revenue remains same if a firm increases price

None of these

Which of the following is the second law of gossen.

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Law of equal marginal utility.

Law of equi product

Theory of indifference curve

Law of diminishing marginal utility.

An invention that speeds up the internet is an example of.

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An income effect

An increase in labor

A substitution effect

A supply shock

The most important determinant of price elasticity is.

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The slope of the demand curve

The availability of substitutes

The price of other goods

The income of the consumer

Horizontal integration may lead to internal economics of scale. Which of the following is not a type of internal economy of scale.

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Purchasing

Technical

Financial

Safety

Which skills are most likely to be paid for by the employer.

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General skills

Specific skills

Educational skills

None of these

Health of a country's economy is indicated by

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Number of doctors per 1,000 population

Per capital income

Literacy rate

None of the above

When one country provides most favored nation status for another if agrees to.

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Change that nation's product a lower tariff than any other nations

Charge that nation's products a tariff rate no higher than that on any other nation.

Charge that nation's products a higher tariff than any other nation's

Export to that nation any products that it wants to purchase

The gain from international trade are closely related to.

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the labor theory of value

How much the autarky price differs from international terms of trade change.

The fact that a country must lose from trade

All of the above

Advocates of industrial policy maintain that government should.

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Purse free trade as a policy that leads to maximum global efficiency

Grant subsides to firms offering potential comparative advantage.

Provide loans to domestic workers in exporting industries.

Increase interest rates on loans made to firms in import competing industries.

In the ERM, each country fixed ___ against each other ERM participant collectively the group._____ against the rest of the world.

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A nominal exchange rate, floated

A real exchange rate, pegged

a purchasing power parity, pegged

a real exchange rate, floated

According to the supply side model a reduction in the tax rate.

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Could reduce the size of any budget deficit

Would have no effect on output

Would have no effect on consumption

None of the above

If there is a prices celling, which of the following is NOT likely to occur.

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Rationing by first come first served

Black markets

Gray markets

Sellers providing goods for free that were formerly not free

The multiplier accelerator model assumes _______ depends on.

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Consumption, expected future profits.

Investment, interest rates.

Investment expected future profits.

Stock building, interest rates.

If my neighbor burns garden waste causing my house to fil with smoke this is an example of.

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A production extremality

A second best solution

Transaction costs

A consumption externality

GDP plus net property income from aboard equals what.

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GNP

NNP

Depreciation

Real GDP

According to Nurkse a balance growth a ncessary to.

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Develop resources

Develop capital

Break vicious circle of poverty

Develop infrastructure.

Which of the following would decrease aggregate demand.

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Increased consumption

Increasing export revenue

Increased taxation revenue

Increased investment

In monopoly when abnormal profits are made.

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The prize set is greater than the marginal cost

The price is less than the average cost

The average revenue equals the marginal cost

Revenue wquals total cost

Current account deficits are offset by

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Merchandise trade deficits

Merchandise trade surpluses

Capital /financial account surpluses

Capital /financial account deficits

Increased levels of spending on imports

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shift aggregate supply to the right

Shift aggregate supply to the left

Shift aggregate demand to the right

Shift aggregate demand to the left

Suppose there is full employment and a neoclassical aggregate supply schedule A 105 increases in the nominal money supply.

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Has no effect upon the price level

Increase the rate of interest

Increase the nominal wage 10%

Increase the real money supply 10%

The locus of equilibrium of consumers due to changes in price of a commodity is known as.

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Price consumption curve

Income consumption curve

Producing possibility curve

None of these

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