Question 1

Market does not clear is a proposition of:

Accepted Answer

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

Question 2

Income is a ------- variable

Accepted Answer

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

Question 3

When MPS = 0.2, MPC will be

Accepted Answer

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

Question 4

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

Accepted Answer

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

Question 5

Who postulated the law Supply creates its own demand

Accepted Answer

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

Question 6

Ratio of consumption expenditure to any particular level ofincome

Accepted Answer

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

Question 7

Autonomous investment is

Accepted Answer

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

Question 8

Changes in the subjective or objective factors

Accepted Answer

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 9

The interest rate paid on bonds is known as:

Accepted Answer

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

Question 10

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

Accepted Answer

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

Question 11

According to Keynes, rising aggregate income is always associated with

Accepted Answer

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

Question 12

Monetarism is associated with:

Accepted Answer

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

Question 13

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

Accepted Answer

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

Question 14

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

Accepted Answer

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

Question 15

Employment equilibrium in the Classical theory is achievedthrough:

Accepted Answer

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

Exam 3: Macro Economics Terminology and Concepts