Question No: 1 ( M a r k s: 1 ) - Please choose one
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Scarcity can best be defined as a situation in which:
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There are no buyers willing to purchase what sellers have produced.
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There is more than enough money to satisfy consumers' wants.
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Resources are limited in quantity and can be used in different ways.
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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
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In the circular flow diagram, firms _____________ inputs and households ____________ products.
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Supply; Demand
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Demand; supply
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Supply; supply
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Demand ; demand
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Question No: 3 ( M a r k s: 1 ) - Please choose one
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Gross domestic product measured in terms of the prices of a fixed, or base, year is:
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Base GDP.
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Current GDP.
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Real GDP.
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Nominal GDP.
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Question No: 4 ( M a r k s: 1 ) - Please choose one
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The number of people unemployed equals:
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The number of people employed minus the labor force.
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The labor force plus the number of people employed.
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The number of people employed divided by the labor force.
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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
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Keeping in mind the functions of money, which one of the following is not money?
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Currency
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Checks
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Credit cards
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Time deposits
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Question No: 6 ( M a r k s: 1 ) - Please choose one
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Which of the following would not be included in M2?
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Demand deposits
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Checking accounts
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Money market accounts
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None of the given options
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Question No: 7 ( M a r k s: 1 ) - Please choose one
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The relationship between consumer spending and income is known as the:
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45-degree line.
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Consumption function.
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Investment function.
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Consumer price index.
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Question No: 8 ( M a r k s: 1 ) - Please choose one
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All of the following statements about the marginal product of capital MPK are true EXCEPT:
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MPK = f(k + 1) - f(k).
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MPK tends to decline as k increases.
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When there is only a little capital, MPK is very small.
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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
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A rightward shift in the aggregate demand curve can be caused by:
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An increase in government spending.
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An increase in money supply.
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A decrease in taxes.
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All of the given options.
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Question No: 10 ( M a r k s: 1 ) - Please choose one
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The aggregate supply curve in the short run is different from the aggregate supply curve in the long run due to:
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The recurring nature of supply shocks.
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The existence of sticky prices in the short run.
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The wealth effect.
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The crowding out effect.
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Question No: 11 ( M a r k s: 1 ) - Please choose one
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Fiscal policy shifts the:
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The short run aggregate supply curve.
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The long run aggregate supply curve.
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Full employment level of output.
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The aggregate demand curve.
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Question No: 12 ( M a r k s: 1 ) - Please choose one
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If wages are sticky downward, an increase in labor:
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Demand increases the wage rate.
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Demand decreases the wage rate.
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Supply increases the wage rate.
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None of the given options.
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Question No: 13 ( M a r k s: 1 ) - Please choose one
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Which of the following would a macroeconomist consider as investment?
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Julie buys a government bond.
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Fred purchases 100 shares of stock in Microsoft.
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Tom buys a new tractor for his farm.
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Jane buys a new car.
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Question No: 14 ( M a r k s: 1 ) - Please choose one
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The nominal interest rate is:
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Unadjusted for the effects of inflation.
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The interest rate quoted in financial markets.
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Both unadjusted for the effects of inflation and the interest rate quoted in financial markets.
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None of the given options.
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Question No: 15 ( M a r k s: 1 ) - Please choose one
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If interest rates increase, people will most likely hold:
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More bonds and less cash.
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Less bonds and less cash.
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More bonds and more cash.
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Less bonds and more cash.
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Question No: 16 ( M a r k s: 1 ) - Please choose one
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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
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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
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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
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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
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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 )
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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 )
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Monetary policy is conducted by country’s __________________.
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Question No: 23 ( M a r k s: 1 )
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___________________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 )
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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 )
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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 )
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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 )
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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 )
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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 )
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Discuss the policies to promote economic growth.
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Question No: 30 ( M a r k s: 10 )
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Explain Milton Friedman’s permanent income hypothesis.
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