Macro Economics 1 Solved MCQs

1.

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
Answer» D. real wage rate
2.

In classical theory of employment, there isthe possibility of:

A. voluntary unemployment
B. no unemployment
C. involuntary unemployment
D. disguised unemployment
Answer» A. voluntary unemployment
3.

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
Answer» D. a.c.pigou
4.

Say’s law of market says:

A. supply creates its own demand
B. demand creates supply
C. income generates demand
D. savings create demand
Answer» A. supply creates its own demand
5.

The aggregate production function implied under classical theory is :

A. long run
B. short run
C. no time element
D. none of the above
Answer» A. long run
6.

In the Cambridge equation of M = kPR, the value of kis:

A. m/v
B. 1/v
C. v in fisher’s equation
D. none of these
Answer» B. 1/v
7.

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
Answer» B. increase
8.

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

A. credit money
B. primary money
C. both primary andcredit money
D. general price level
Answer» A. credit money
9.

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
Answer» D. p is considered as an active factor
10.

The cash balance equation M = KPO was given by:

A. keynes
B. pigou
C. robertson
D. marshall
Answer» D. marshall
11.

“Supply creates its own demand “is a law of:

A. investment
B. inflation
C. consumption
D. market
Answer» D. market
12.

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

A. velocity of money
B. money in circulation
C. bank deposit
D. none of these
Answer» B. money in circulation
13.

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
Answer» B. non-proportional
14.

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
Answer» A. an increasing function of rate of interest
15.

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

A. fisher
B. alfred marshall
C. pigou
D. keynes
Answer» C. pigou
16.

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
Answer» D. adjustment in money wages
17.

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
Answer» A. m
18.

According to classical economists, variationsin savings are due to:

A. level of investment
B. rate ofinterest
C. level of employment
D. none of the above
Answer» B. rate ofinterest
19.

In classical theory which of the following is found in the economy:

A. unemployment
B. involuntary unemployment
C. less than full employment
D. full employment
Answer» D. full employment
20.

In MV=PT, if M doubles and V and T remain constant, then P will:

A. double
B. 1/2
C. 1
D. 4
Answer» A. double
21.

Pigou’s version of Cambridge equation is:

A. m = kp/y
B. p= kr/m
C. mv = pt
D. mv = mivi
Answer» B. p= kr/m
22.

The quantity theory of money was restated by:

A. alfred marshall
B. milton friedman
C. irving fisher
D. j.m. .keynes
Answer» B. milton friedman
23.

The law which states that supply creates its own demand and overproduction is impossible is known as:

A. the law of supply
B. say’s law of market
C. law of demand
D. law of macro economics
Answer» B. say’s law of market
24.

Wages and prices do not adjust quickly to restore general equilibrium is a property of

A. classical economics
B. keynesian economics
C. monetary economics
D. supply side economics
Answer» B. keynesian economics
25.

Classicals treated money as a:

A. medium of exchange
B. store of value
C. both
D. none
Answer» A. medium of exchange
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