Quiznetik

Macro Economics 1 | Set 1

1. The classical economists believed that the demand for labour is a function of:

Correct : D. real wage rate

2. In classical theory of employment, there isthe possibility of:

Correct : A. voluntary unemployment

3. The idea that a general cut in wages will finally lead to a state of full employment was suggested by :

Correct : D. a.c.pigou

4. Say’s law of market says:

Correct : A. supply creates its own demand

5. The aggregate production function implied under classical theory is :

Correct : A. long run

6. In the Cambridge equation of M = kPR, the value of kis:

Correct : B. 1/v

7. As a result of an increase in capital, ceteris paribus, ------- the marginal productivity of labour:

Correct : B. increase

8. In the Fisher’s extended equation of exchange MI VI represents:

Correct : A. credit money

9. In Fisher’s transaction velocity model, one of the following is not an assumption:

Correct : D. p is considered as an active factor

10. The cash balance equation M = KPO was given by:

Correct : D. marshall

11. “Supply creates its own demand “is a law of:

Correct : D. market

12. In the equation MV+ MI VI = PT, ‘M ‘denotes:

Correct : B. money in circulation

13. I classical demand for money, the relationship between money supply and price level is:

Correct : B. non-proportional

14. As per classical theory saving is:

Correct : A. an increasing function of rate of interest

15. The Cambridge version of the quantity theory of money was developed by:

Correct : C. pigou

16. In classical system which of the following keeps the economy at full employment:

Correct : D. adjustment in money wages

17. In Fisher’s equation of exchange MV=PT, the variation of which produces a proportional change in price:

Correct : A. m

18. According to classical economists, variationsin savings are due to:

Correct : B. rate ofinterest

19. In classical theory which of the following is found in the economy:

Correct : D. full employment

20. In MV=PT, if M doubles and V and T remain constant, then P will:

Correct : A. double

21. Pigou’s version of Cambridge equation is:

Correct : B. p= kr/m

22. The quantity theory of money was restated by:

Correct : B. milton friedman

23. The law which states that supply creates its own demand and overproduction is impossible is known as:

Correct : B. say’s law of market

24. Wages and prices do not adjust quickly to restore general equilibrium is a property of

Correct : B. keynesian economics

25. Classicals treated money as a:

Correct : A. medium of exchange

26. When there is an increase in the autonomous money supply, ceteris paribus, LM shifts:

Correct : B. rightward

27. An Economic model is a statement of relationship among economic ------

Correct : A. variables

28. LM curve shows the equilibrium condition in ---------- market

Correct : C. money market

29. Supply creates its own demand is the Basis of:

Correct : A. classical economics

30. The simplest ISLM model consists of:

Correct : A. two markets

31. The equilibrium in the product market is represented by which curve?

Correct : A. is

32. The IS curve has a------slope

Correct : B. negative

33. The LM curve has a------slope

Correct : A. positive

34. ISLM model was developed by:

Correct : A. hicks

35. The perfectly elastic segment of the LM curve is:

Correct : A. keynesian range

36. Which policy is effective in the Classical range?

Correct : A. monetary policy

37. Which policy is effective in the Keynesian range?

Correct : B. fiscal policy

38. Which policy is effective in the intermediate range?

Correct : C. both policies

39. IS-LM model was developed by:

Correct : C. j.r.hicks

40. Frictional unemployment exists:

Correct : B. because it takes time to find a job when one is first entering the labour force

41. The natural rate of unemployment equals the sum of those who are:

Correct : A. frictionally and structurally unemployed

42. The marginal productivity of labour is:

Correct : B. the incremental output due to an increase in labour, ceteris paribus.

43. The marginal productivity of labour:

Correct : B. decreases when there is an adverse supply shock, ceteris paribus

44. When saving is greater than investment in a two-sectormodel,

Correct : B. output should decrease

45. When output exceeds spending:

Correct : A. there is unsold output, and level of output will fall

46. When investment is negatively related to the rate of interest, equilibrium output in the goods market:

Correct : B. is inversely related to the rate of interest

47. Simultaneous equilibrium in the money (LM) and goods (IS) market exists:

Correct : B. at only one output level and rate ofinterest

48. In which of the following situations will an increase in the money supply have no effect upon output?

Correct : C. lm is steeply sloped and is is vertical

49. Policy Neutrality is the main proposition of:

Correct : D. rational expectations hypothesis

50. Who invented the General Equilibrium analysis?

Correct : A. l. walras.

51. Employment equilibrium in the Classical theory is achievedthrough:

Correct : A. wage-price flexibility.

52. Market does not clear is a proposition of:

Correct : B. keynesian economics

53. The interest rate paid on bonds is known as:

Correct : B. coupon rate

54. The monetary policy is completely ineffective when the LM curve is:

Correct : B. horizontal.

55. Monetarism is associated with:

Correct : B. chicago school

56. Changes in the subjective or objective factors

Correct : D. they cause upward or downward shifts in consumption function

57. Saving is a function of

Correct : D. income

58. Entrepreneurs will have no tendency to expand or contract output and employment when

Correct : C. ad=as

59. The slope of the consumption function is called

Correct : A. mpc

60. The concept of effective demand is associated with the nameof

Correct : B. keynes

61. In a closed economy, the value of multiplier , when MPC is 0.90

Correct : C. 10

62. Income is a ------- variable

Correct : A. flow

63. Ratio of consumption expenditure to any particular level ofincome

Correct : C. apc

64. Psychological law of consumption states that the value of MPC is lies between zero and

Correct : A. 1

65. Net investment is also known as

Correct : D. capital formation

66. In the saving function S = -a + (1-b)Y, the term ‘b’ denotes

Correct : B. mpc

67. Who propounded Psychological law of consumption

Correct : C. keynes

68. When MPS = 0.2, MPC will be

Correct : A. 0.8

69. In the linear consumption function C = a + bY, coefficient ‘a’ denotes

Correct : C. autonomous consumption

70. According to Keynes, rising aggregate income is always associated with

Correct : A. higher saving rate

71. When MPC = 0.5, the value of multiplier is

Correct : C. 2

72. Who postulated the law Supply creates its own demand

Correct : B. j b say

73. Autonomousinvestment is

Correct : A. income inelastic

74. MEC for a capital good was found out to be 10% and the market rate of interest is 9%, then the investment is

Correct : B. profitable

75. In the Keynesian two sector economy, AD>AS, then

Correct : C. s<i

76. Value of MPC is

Correct : D. 0≤ mpc ≥1

77. Schedule that expressesrelationship between rate of interest and corresponding amount of investment

Correct : A. mei

78. Net investment is

Correct : B. investment after providing for depreciation

79. MEC is directly related to

Correct : A. prospective yield

80. According to Keynes the most important determinant ofconsumption

Correct : C. income

81. In the Keynesian two sector economy, AD<AS, then

Correct : B. s>i

82. In the equation C = 60 + 0.6 Y, MPCis

Correct : B. 0.6

83. Keynes assumed thepresence of --------- economy for the fundamental law of consumption

Correct : A. capitalistic

84. According to Keynes the most important determinant ofinvestment

Correct : A. mec

85. When disposable income risesfrom Rs 500 to Rs 600 and consumption expenditure changes from Rs 470 to Rs 560, MPC will be equalto

Correct : C. 0.9

86. In a two sector economy, aggregate demand is equalto

Correct : A. c+i

87. In Keynesian terminology, investment means:

Correct : B. real investment

88. Rate of change in savings to change in income:

Correct : C. mps

89. Keynesian economics is also known as:

Correct : D. depression economics

90. Which of the following can cause shifts in consumption function:

Correct : D. changes in price level

91. APC is determined by the following equation:

Correct : A. c/y

92. In the Keynesian two sector model, when AD = AS, then:

Correct : C. s=i

93. Which of the following is not correct:

Correct : C. mps is always positive

94. According to Keynes, saving is:

Correct : A. private virtue but not social virtue

95. MEC isinversely related to:

Correct : A. prospective yield

96. Keynes considered subjective and objective factors:

Correct : B. unimportant determinants of consumption

97. The sum of marginal propensity to consume plus marginal propensity to save must equal to:

Correct : B. 1

98. Keynesian economics is:

Correct : A. macro

99. The MEC increases when:

Correct : B. capitalstock decreases

100. Which of the following is correct?

Correct : B. 1- mpc =mps