Question No: 1 ( M a r k s: 1 ) - Please choose one |
| Scarcity can best be defined as a situation in which: | | | | ► | There are no buyers willing to purchase what sellers have produced. | | ► | There is more than enough money to satisfy consumers' wants. | | ► | Resources are limited in quantity and can be used in different ways. | | ► | There are not enough goods to satisfy all of the buyers' demand. |
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Question No: 2 ( M a r k s: 1 ) - Please choose one |
| In the circular flow diagram, firms _____________ inputs and households ____________ products. | | | | ► | Supply; Demand | | ► | Demand; supply | | ► | Supply; supply | | ► | Demand ; demand |
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Question No: 3 ( M a r k s: 1 ) - Please choose one |
| Gross domestic product measured in terms of the prices of a fixed, or base, year is: | | | | ► | Base GDP. | | ► | Current GDP. | | ► | Real GDP. | | ► | Nominal GDP. |
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Question No: 4 ( M a r k s: 1 ) - Please choose one |
| The number of people unemployed equals: | | | | ► | The number of people employed minus the labor force. | | ► | The labor force plus the number of people employed. | | ► | The number of people employed divided by the labor force. | | ► | The labor force minus the number of people employed. |
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Question No: 5 ( M a r k s: 1 ) - Please choose one |
| Keeping in mind the functions of money, which one of the following is not money? | | | | ► | Currency | | ► | Checks | | ► | Credit cards | | ► | Time deposits |
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Question No: 6 ( M a r k s: 1 ) - Please choose one |
| Which of the following would not be included in M2? | | | | ► | Demand deposits | | ► | Checking accounts | | ► | Money market accounts | | ► | None of the given options |
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Question No: 7 ( M a r k s: 1 ) - Please choose one |
| The relationship between consumer spending and income is known as the: | | | | ► | 45-degree line. | | ► | Consumption function. | | ► | Investment function. | | ► | Consumer price index. |
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Question No: 8 ( M a r k s: 1 ) - Please choose one |
| All of the following statements about the marginal product of capital MPK are true EXCEPT: | | | | ► | MPK = f(k + 1) - f(k). | | ► | MPK tends to decline as k increases. | | ► | When there is only a little capital, MPK is very small. | | ► | MPK is equal to the slope of the production function y = f(k). |
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Question No: 9 ( M a r k s: 1 ) - Please choose one |
| A rightward shift in the aggregate demand curve can be caused by: | | | | ► | An increase in government spending. | | ► | An increase in money supply. | | ► | A decrease in taxes. | | ► | All of the given options. |
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Question No: 10 ( M a r k s: 1 ) - Please choose one |
| The aggregate supply curve in the short run is different from the aggregate supply curve in the long run due to: | | | | ► | The recurring nature of supply shocks. | | ► | The existence of sticky prices in the short run. | | ► | The wealth effect. | | ► | The crowding out effect. |
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Question No: 11 ( M a r k s: 1 ) - Please choose one |
| Fiscal policy shifts the: | | | | ► | The short run aggregate supply curve. | | ► | The long run aggregate supply curve. | | ► | Full employment level of output. | | ► | The aggregate demand curve. |
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Question No: 12 ( M a r k s: 1 ) - Please choose one |
| If wages are sticky downward, an increase in labor: | | | | ► | Demand increases the wage rate. | | ► | Demand decreases the wage rate. | | ► | Supply increases the wage rate. | | ► | None of the given options. |
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Question No: 13 ( M a r k s: 1 ) - Please choose one |
| Which of the following would a macroeconomist consider as investment? | | | | ► | Julie buys a government bond. | | ► | Fred purchases 100 shares of stock in Microsoft. | | ► | Tom buys a new tractor for his farm. | | ► | Jane buys a new car. |
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Question No: 14 ( M a r k s: 1 ) - Please choose one |
| The nominal interest rate is: | | | | ► | Unadjusted for the effects of inflation. | | ► | The interest rate quoted in financial markets. | | ► | Both unadjusted for the effects of inflation and the interest rate quoted in financial markets. | | ► | None of the given options. |
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Question No: 15 ( M a r k s: 1 ) - Please choose one |
| If interest rates increase, people will most likely hold: | | | | ► | More bonds and less cash. | | ► | Less bonds and less cash. | | ► | More bonds and more cash. | | ► | Less bonds and more cash. |
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Question No: 16 ( M a r k s: 1 ) - Please choose one |
| Intermediate goods are counted in the calculation of GDP. |
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Question No: 17 ( M a r k s: 1 ) - Please choose one |
| Structural unemployment is the unemployment resulting from real wage rigidity and job rationing. |
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Question No: 18 ( M a r k s: 1 ) - Please choose one |
| As income rises, average propensity to consume (APC) falls. |
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Question No: 19 ( M a r k s: 1 ) - Please choose one |
| Adaptive expectation is an approach that assumes that people base their expectations on all available information, including information about current and prospective future policies. |
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Question No: 20 ( M a r k s: 1 ) - Please choose one |
| The deposits that banks have received but have not lent out are called banks investments. |
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Question No: 21 ( M a r k s: 1 ) |
| To compute the total value of different goods and services, the national income accounts use _____________________. |
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Question No: 22 ( M a r k s: 1 ) |
| Monetary policy is conducted by country’s __________________. |
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Question No: 23 ( M a r k s: 1 ) |
| ___________________is a graph of all combinations of interest rate and income that results in goods market equilibrium. |
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Question No: 24 ( M a r k s: 1 ) |
| Full-employment output does not depend on the price level, so the long run aggregate supply (LRAS) curve is ______________. |
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Question No: 25 ( M a r k s: 1 ) |
| Economists decompose the impact of an increase in the real interest rate on consumption into two effects: an income effectand a _________________. |
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Question No: 26 ( M a r k s: 5 ) |
| Define hyperinflation. What causes hyperinflation? Also explain briefly why government creates hyperinflation. |
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Question No: 27 ( M a r k s: 5 ) |
| What are the advantages of floating exchange rates and fixed exchange rates? |
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Question No: 28 ( M a r k s: 5 ) |
| Define budget deficit and government debt. Also write down the major components of government debt. |
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Question No: 29 ( M a r k s: 10 ) |
| Discuss the policies to promote economic growth. |
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Question No: 30 ( M a r k s: 10 ) |
| Explain Milton Friedman’s permanent income hypothesis. |
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