Deck 3: Macro Economics Terminology and Concepts

Question 1

Employment equilibrium in the Classical theory is achievedthrough:

A)wage-price flexibility.
B)changes in aggregate demand
C)changes in aggregate supply
D)none of these.

Answer 1

wage-price flexibility.

Question 2

Market does not clear is a proposition of:

A)neoclassical theory.
B)keynesian economics
C)monetarism
D)rational expectations

Answer 2

keynesian economics

Question 3

The interest rate paid on bonds is known as:

A)call rate
B)coupon rate
C)repo rate
D)bank rate

Answer 3

coupon rate

Question 4

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

A)vertical .
B)horizontal.
C)upward sloping.
D)downward sloping

Question 5

Monetarism is associated with:

A)keynesian school
B)chicago school
C)cambridge school.
D)neo-classical school.

Question 6

Changes in the subjective or objective factors

A)never affect consumption function
B)always cause downward shift in consumption function
C)always cause upward shift in consumption function
D)they cause upward or downward shifts in consumption function

Question 7

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

A)25
B)90
C)10
D)9

Question 8

Income is a ------- variable

A)flow
B)discontinuous
C)stock
D)none of the above

Question 9

Ratio of consumption expenditure to any particular level ofincome

A)mps
B)aps
C)apc
D)mpc

Question 10

When MPS = 0.2, MPC will be

A)0.8
B)0.2
C)1.2
D)20

Question 11

According to Keynes, rising aggregate income is always associated with

A)higher saving rate
B)higher import
C)lower export
D)low production

Question 12

Who postulated the law Supply creates its own demand

A)keynes
B)j b say
C)marshall
D)pigou

Question 13

Autonomous investment is

A)income inelastic
B)instable
C)interest elastic
D)incomeelastic

Question 14

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

A)not profitable
B)profitable
C)breakeven
D)cannot say

Question 15

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

A)s=i
B)s>i
C)sD)s=0