Deck 4: Classical Economic Theory

Question 1

The deductive method is also called

A)abstract
B)analytical
C)priori method
D)all the above

Answer 1

all the above

Question 2

An Essay on the Nature and Significance of Economic Science was written by

A)adamsmith
B)alfred marshall
C)lord robbins
D)samuelson

Answer 2

lord robbins

Question 3

The word 'Micro Economics and Macro Economics' were first coined by

A)adamsmith
B)ragnar frisch
C)alfred marshall
D)lord robbins

Answer 3

ragnar frisch

Question 4

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

A)Total money wages
B)Money wage rate
C)Total real wages
D)Real wage rate

Question 5

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

A)Keynes
B)Marshall
C)J.B.Say
D)A.C.Pigou

Question 6

The aggregate production function implied under classical theory is :

A)Long run
B)Short run
C)No time element
D)None of the above

Question 7

In the Cambridge equation of M = kPR, the value of k is:

A)M/V
B)1/V
C)V in Fisher's equation
D)None of these

Question 8

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

A)Remains constant
B)Increase
C)decreases
D)none of these

Question 9

In the classical theory, one of the following is an important assumption:

A)Wages and prices are inflexible
B)There is full employment
C)Agents are price setters
D)Adjustment is through quantity.

Question 10

In the Fisher's extended equation of exchange MI VI represents:

A)Credit money
B)Primary money
C)Both primary and credit money
D)General price level

Question 11

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

A)Velocity of circulation of money is constant
B)The volume of transactions is constant
C)Full employment
D)P is considered as an active factor

Question 12

The cash balance equation M = KPO was given by:

A)Keynes
B)Pigou
C)Robertson
D)Marshall

Question 13

In the equation MV+ MI VI = PT, 'M 'denotes:

A)Velocity of money
B)Money in circulation
C)Bank deposit
D)None of these

Question 14

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

A)Proportional
B)Non-proportional
C)Neither proportional nor non-proportional
D)None of these

Question 15

As per classical theory saving is:

A)An increasing function of rate of interest
B)Decreasing function of rate of interest
C)Decreasing function of level of income
D)None of these

Question 16

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

A)Fisher
B)Alfred Marshall
C)Pigou
D)Keynes

Question 17

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

A)Level of saving
B)Increase in money supply
C)Adjustment in investment
D)Adjustment in money wages

Question 18

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

A)M
B)V
C)P
D)T