McqMate
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 |
26. |
When there is an increase in the autonomous money supply, ceteris paribus, LM shifts: |
A. | leftward |
B. | rightward |
C. | no shift |
D. | none |
Answer» B. rightward |
27. |
An Economic model is a statement of relationship among economic ------ |
A. | variables |
B. | phenomena |
C. | development |
D. | none of these |
Answer» A. variables |
28. |
LM curve shows the equilibrium condition in ---------- market |
A. | goods market |
B. | product market |
C. | money market |
D. | none of these |
Answer» C. money market |
29. |
Supply creates its own demand is the Basis of: |
A. | classical economics |
B. | keynesian economics |
C. | monetarism |
D. | none of these |
Answer» A. classical economics |
30. |
The simplest ISLM model consists of: |
A. | two markets |
B. | three markets |
C. | four markets |
D. | five markets |
Answer» A. two markets |
31. |
The equilibrium in the product market is represented by which curve? |
A. | is |
B. | lm |
C. | demand |
D. | supply curve |
Answer» A. is |
32. |
The IS curve has a------slope |
A. | positive |
B. | negative |
C. | zero |
D. | none of these |
Answer» B. negative |
33. |
The LM curve has a------slope |
A. | positive |
B. | negative |
C. | zero |
D. | none of these |
Answer» A. positive |
34. |
ISLM model was developed by: |
A. | hicks |
B. | keynes |
C. | friedman |
D. | none of these |
Answer» A. hicks |
35. |
The perfectly elastic segment of the LM curve is: |
A. | keynesian range |
B. | classical range |
C. | intermediate range |
D. | none of these |
Answer» A. keynesian range |
36. |
Which policy is effective in the Classical range? |
A. | monetary policy |
B. | fiscal policy |
C. | incomes policy |
D. | none of these |
Answer» A. monetary policy |
37. |
Which policy is effective in the Keynesian range? |
A. | monetary policy |
B. | fiscal policy |
C. | incomes policy |
D. | none of these |
Answer» B. fiscal policy |
38. |
Which policy is effective in the intermediate range? |
A. | monetary policy |
B. | fiscal policy |
C. | both policies |
D. | none of these |
Answer» C. both policies |
39. |
IS-LM model was developed by: |
A. | keynes |
B. | walras |
C. | j.r.hicks |
D. | don-patinkin |
Answer» C. j.r.hicks |
40. |
Frictional unemployment exists: |
A. | when there is a decrease in real gdp |
B. | because it takes time to find a job when one is first entering the labour force |
C. | as a result of technological change |
D. | when an individual retires |
Answer» B. because it takes time to find a job when one is first entering the labour force |
41. |
The natural rate of unemployment equals the sum of those who are: |
A. | frictionally and structurally unemployed |
B. | frictionallyandcyclicallyunemployed |
C. | structurallyandcyclicallyunemployed |
D. | frictionally structurally and cyclically unemployed |
Answer» A. frictionally and structurally unemployed |
42. |
The marginal productivity of labour is: |
A. | the incremental output due to an increase in capital, ceteris paribus |
B. | the incremental output due to an increase in labour, ceteris paribus. |
C. | the incremental output due to a change in technology, ceteris paribus |
D. | the incremental output due to a change in technology and a change in the |
Answer» B. the incremental output due to an increase in labour, ceteris paribus. |
43. |
The marginal productivity of labour: |
A. | increases when the price of the good sold increases, ceteris paribus |
B. | decreases when there is an adverse supply shock, ceteris paribus |
C. | increase when more workers are hired, ceteris paribus |
D. | decreases when there is an increase in the quantity of capital, ceteris paribus |
Answer» B. decreases when there is an adverse supply shock, ceteris paribus |
44. |
When saving is greater than investment in a two-sectormodel, |
A. | outputshould increase |
B. | output should decrease |
C. | output should not change |
D. | none of these |
Answer» B. output should decrease |
45. |
When output exceeds spending: |
A. | there is unsold output, and level of output will fall |
B. | there is unsold output, and level of output will rise |
C. | there is unsold output, and level of spending willrise |
D. | there is no unsold output since the level of spending will rise |
Answer» A. there is unsold output, and level of output will fall |
46. |
When investment is negatively related to the rate of interest, equilibrium output in the goods market: |
A. | is unrelated to the rate of interest |
B. | is inversely related to the rate of interest |
C. | is positively related to the rate of interest |
D. | falls as the rate of interest decreases |
Answer» B. is inversely related to the rate of interest |
47. |
Simultaneous equilibrium in the money (LM) and goods (IS) market exists: |
A. | at an unlimited number of output levels and rates of interest |
B. | at only one output level and rate ofinterest |
C. | at an unlimited number of output levels and only one rate of interest |
D. | at only one output level and an unlimited number of rates of interest |
Answer» B. at only one output level and rate ofinterest |
48. |
In which of the following situations will an increase in the money supply have no effect upon output? |
A. | lm is steeply sloped and is is steeply sloped |
B. | lm is vertical and is is steeply sloped |
C. | lm is steeply sloped and is is vertical |
D. | lm is relatively flat as is is |
Answer» C. lm is steeply sloped and is is vertical |
49. |
Policy Neutrality is the main proposition of: |
A. | supply side economics. |
B. | keynesian economics |
C. | monetarism |
D. | rational expectations hypothesis |
Answer» D. rational expectations hypothesis |
50. |
Who invented the General Equilibrium analysis? |
A. | l. walras. |
B. | w. leontief |
C. | j.m.keynes. |
D. | none of these. |
Answer» A. l. walras. |
51. |
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» A. wage-price flexibility. |
52. |
Market does not clear is a proposition of: |
A. | neoclassical theory. |
B. | keynesian economics |
C. | monetarism |
D. | rational expectations |
Answer» B. keynesian economics |
53. |
The interest rate paid on bonds is known as: |
A. | call rate |
B. | coupon rate |
C. | repo rate |
D. | bank rate |
Answer» B. coupon rate |
54. |
The monetary policy is completely ineffective when the LM curve is: |
A. | vertical . |
B. | horizontal. |
C. | upward sloping. |
D. | downward sloping |
Answer» B. horizontal. |
55. |
Monetarism is associated with: |
A. | keynesian school |
B. | chicago school |
C. | cambridge school. |
D. | neo-classical school. |
Answer» B. chicago school |
56. |
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 |
Answer» D. they cause upward or downward shifts in consumption function |
57. |
Saving is a function of |
A. | export |
B. | import |
C. | investment |
D. | income |
Answer» D. income |
58. |
Entrepreneurs will have no tendency to expand or contract output and employment when |
A. | ad>as |
B. | ad<as |
C. | ad=as |
D. | none of the above |
Answer» C. ad=as |
59. |
The slope of the consumption function is called |
A. | mpc |
B. | mps |
C. | apc |
D. | aps |
Answer» A. mpc |
60. |
The concept of effective demand is associated with the nameof |
A. | marshall |
B. | keynes |
C. | krugman |
D. | say |
Answer» B. keynes |
61. |
In a closed economy, the value of multiplier , when MPC is 0.90 |
A. | 25 |
B. | 90 |
C. | 10 |
D. | 9 |
Answer» C. 10 |
62. |
Income is a ------- variable |
A. | flow |
B. | discontinuous |
C. | stock |
D. | none of the above |
Answer» A. flow |
63. |
Ratio of consumption expenditure to any particular level ofincome |
A. | mps |
B. | aps |
C. | apc |
D. | mpc |
Answer» C. apc |
64. |
Psychological law of consumption states that the value of MPC is lies between zero and |
A. | 1 |
B. | 2 |
C. | 3 |
D. | 4 |
Answer» A. 1 |
65. |
Net investment is also known as |
A. | depreciation |
B. | induced investment |
C. | autonomousinvestment |
D. | capital formation |
Answer» D. capital formation |
66. |
In the saving function S = -a + (1-b)Y, the term ‘b’ denotes |
A. | saving |
B. | mpc |
C. | mps |
D. | aps |
Answer» B. mpc |
67. |
Who propounded Psychological law of consumption |
A. | adam smith |
B. | ricardo |
C. | keynes |
D. | pigou |
Answer» C. keynes |
68. |
When MPS = 0.2, MPC will be |
A. | 0.8 |
B. | 0.2 |
C. | 1.2 |
D. | 20 |
Answer» A. 0.8 |
69. |
In the linear consumption function C = a + bY, coefficient ‘a’ denotes |
A. | mpc |
B. | apc |
C. | autonomous consumption |
D. | induced consumption |
Answer» C. autonomous consumption |
70. |
According to Keynes, rising aggregate income is always associated with |
A. | higher saving rate |
B. | higher import |
C. | lower export |
D. | low production |
Answer» A. higher saving rate |
71. |
When MPC = 0.5, the value of multiplier is |
A. | 5 |
B. | 0.5 |
C. | 2 |
D. | 4 |
Answer» C. 2 |
72. |
Who postulated the law Supply creates its own demand |
A. | keynes |
B. | j b say |
C. | marshall |
D. | pigou |
Answer» B. j b say |
73. |
Autonomousinvestment is |
A. | income inelastic |
B. | instable |
C. | interest elastic |
D. | incomeelastic |
Answer» A. income inelastic |
74. |
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 |
Answer» B. profitable |
75. |
In the Keynesian two sector economy, AD>AS, then |
A. | s=i |
B. | s>i |
C. | s<i |
D. | s=0 |
Answer» C. s<i |
76. |
Value of MPC is |
A. | >1 |
B. | <1 |
C. | 0 |
D. | 0≤ mpc ≥1 |
Answer» D. 0≤ mpc ≥1 |
77. |
Schedule that expressesrelationship between rate of interest and corresponding amount of investment |
A. | mei |
B. | mec |
C. | effective demand |
D. | aggregate demand |
Answer» A. mei |
78. |
Net investment is |
A. | value of gross minus subsidies |
B. | investment after providing for depreciation |
C. | value of gross output before providing forsubsidies |
D. | none of the above |
Answer» B. investment after providing for depreciation |
79. |
MEC is directly related to |
A. | prospective yield |
B. | supply price |
C. | rate of interest |
D. | all of the above |
Answer» A. prospective yield |
80. |
According to Keynes the most important determinant ofconsumption |
A. | rate of interest |
B. | saving |
C. | income |
D. | investment |
Answer» C. income |
81. |
In the Keynesian two sector economy, AD<AS, then |
A. | s=i |
B. | s>i |
C. | s<i |
D. | s=0 |
Answer» B. s>i |
82. |
In the equation C = 60 + 0.6 Y, MPCis |
A. | 60 |
B. | 0.6 |
C. | 0 |
D. | 1 |
Answer» B. 0.6 |
83. |
Keynes assumed thepresence of --------- economy for the fundamental law of consumption |
A. | capitalistic |
B. | socialistic |
C. | planned |
D. | none of the above |
Answer» A. capitalistic |
84. |
According to Keynes the most important determinant ofinvestment |
A. | mec |
B. | effective demand |
C. | aggregate demand |
D. | rate of interest |
Answer» A. mec |
85. |
When disposable income risesfrom Rs 500 to Rs 600 and consumption expenditure changes from Rs 470 to Rs 560, MPC will be equalto |
A. | 900 |
B. | 100 |
C. | 0.9 |
D. | 1 |
Answer» C. 0.9 |
86. |
In a two sector economy, aggregate demand is equalto |
A. | c+i |
B. | c+s |
C. | s+i |
D. | all of the above |
Answer» A. c+i |
87. |
In Keynesian terminology, investment means: |
A. | financial investment |
B. | real investment |
C. | induced investment |
D. | none of the above |
Answer» B. real investment |
88. |
Rate of change in savings to change in income: |
A. | aps |
B. | apc |
C. | mps |
D. | mpc |
Answer» C. mps |
89. |
Keynesian economics is also known as: |
A. | supply side economics |
B. | monetary economics |
C. | rational expectations |
D. | depression economics |
Answer» D. depression economics |
90. |
Which of the following can cause shifts in consumption function: |
A. | psychological attitude |
B. | social practices |
C. | business motives |
D. | changes in price level |
Answer» D. changes in price level |
91. |
APC is determined by the following equation: |
A. | c/y |
B. | s/y |
C. | ∆c/∆y |
D. | ∆s/∆y |
Answer» A. c/y |
92. |
In the Keynesian two sector model, when AD = AS, then: |
A. | s<i |
B. | s>i |
C. | s=i |
D. | i=0 |
Answer» C. s=i |
93. |
Which of the following is not correct: |
A. | mpc declines as income increases |
B. | mpc is positive but less than one |
C. | mps is always positive |
D. | all the above |
Answer» C. mps is always positive |
94. |
According to Keynes, saving is: |
A. | private virtue but not social virtue |
B. | private and social virtue |
C. | is neither private virtue nor social virtue |
D. | is either social virtue or private virtue |
Answer» A. private virtue but not social virtue |
95. |
MEC isinversely related to: |
A. | prospective yield |
B. | supply price |
C. | investment |
D. | rate of interest |
Answer» A. prospective yield |
96. |
Keynes considered subjective and objective factors: |
A. | important determinants of consumption |
B. | unimportant determinants of consumption |
C. | determinants of investment |
D. | determinants of business’s willingness to pay |
Answer» B. unimportant determinants of consumption |
97. |
The sum of marginal propensity to consume plus marginal propensity to save must equal to: |
A. | 0 |
B. | 1 |
C. | 100 |
D. | 1000 |
Answer» B. 1 |
98. |
Keynesian economics is: |
A. | macro |
B. | micro |
C. | both |
D. | none |
Answer» A. macro |
99. |
The MEC increases when: |
A. | capitalstock increases |
B. | capitalstock decreases |
C. | capital remains constant |
D. | none of the above |
Answer» B. capitalstock decreases |
100. |
Which of the following is correct? |
A. | 1+mps =mpc |
B. | 1- mpc =mps |
C. | mpc + mps >1 |
D. | mpc+ mps<1 |
Answer» B. 1- mpc =mps |
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