McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Arts in Economics (BA Economics) .
| 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. | |
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