Question # 1

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

Depreciation is.

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A decrease in the stock of capital

Gross investment

Net investment

An increases in the stock of capital

World trade has been increasing due to.

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Increased tariffs

Increased legal barriers

Increased embargoes

Reduced protectionism

Given the saving equation S = - 50 + 0, 20 Y, where s is saving and Y is income.

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The break even level of income is 240

Dissaving takes place if income is 300

Consumption expenditures and saving are equal at an income level of 500

The MPS is constant for all levels of income

A fixed exchange rate, plus perfect capital mobility _______ the scope for monetary policy.

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Enhances

Undermines

Encourages

Facilitates

The firms long run output decision will be where.

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Long run average cost a lowest

Marginal revenue equals output

Marginal revenue equals long run marginal cost

Marginal cost equals output

To be allocatively efficient ta firm must produce where

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the total cost equals demand

the average revenue equals the marginal revenue

The price equals the average cost

The price equals the marginal cost

An increase labor supply would cause the IS curve to.

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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 constraints

When the level of income _______ there will be atendency for the trade balance to improve as imports.

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Increases, increase

falls, fall

Increase, fall

fall , increase

__________ policies attempt to foster industrialization by establishing high barriers to import of foreign goods to promote local production.

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absolute advantage

Comparative advantage

Export led growth

Import substitution

The very word statistics refers to.

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State craft

Science of state

Political state

Political craft

If there is a price celling there will be

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Shortages

Surpluses

Equilibrium

None of these

If average fixed cost is 40 and average variable cost is 80 for a given output we the know that average total cost is.

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40

¹²⁰

80

None of the above

The index used most often to measure inflation is the

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Consumer price index

Wholesale price index

Student price index

Producer price index

Economic growth can be measured by

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The CPI

The CBI

GDP

MPC

"Transactions" money is money used as a

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Store of value

Unit of account

Medium of exchange

Standard of deferred payment

All of the following are credit items in the balance of payments except.

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Investment inflows

Merchandise exports

Payment for American service's to foreigners

Private give to foreign residents

The expected profit from the profit distribution above is.

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40 units

60 units

100 units

20 units

In long run a reduction in labor supply would cause output to __ and the aggregate price level to.

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fall ; rise

fall ; fall

rise ; fall

rise ; rise

According to the factor price equalization theorem, the ______ factor should oppose free trade policies in any given country.

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Abundant

scarce

Neither

Can't tell without more information

A rise in the real exchange rate will __ the competitiveness of the domestic economy.

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Increase

reduce

do nothing do

all of these

in The Liquidity trap region

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Fiscal policy is not effective

Monetary policy is completely ineffective

Monetary policy is completely effective

Fiscal policy and monetary policy are equally effective

Indifference curve theory is old wine in new labeled bottle is said by.

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Marshall

Griffin

Ricardo

Allen

When there is a surplus in a market

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There is downward pressure on price

There is upward pressure on price

The market could still be in equilibrium

There are too many buyers chasing too few goods.

A tariff that probibits imports ahs only

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A revenue effect and redislnbution effect

Revenue effect and protection effect

Consumption effect and production effect

Redistribution effect and consumption effect

Under floating exchange rates, expectations of higher interest rates are likely to cause an __________ of the exchange rate.

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Depreciation

Appreciation

fall

Devaluation

A competitive firm produces a level of output at which.

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Price is greater than marginal cost

Price equals marginal cost

Price is less than marginal cost

None of the above

A fall in investment demand can result from

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Higher interest rates

Lower expected future profits

More expensive capital goods

All of the above

A depreciation of currency occur when

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The value of the currency falls

The value of the currency increases

Inflation falls

The balance of payments improves

Skills that can be transferred to other employers are called.

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General skills

Specific skills

Non pecuniary skills

All of the above

A monopolist will discontinue production if

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Marginal revenue is less than marginal cost

Marginal revenue is less than average total cost

Marginal revenue is less the average fixed cost

Price is less than average variable cost

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