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This set of Macro Economics 1 Multiple Choice Questions & Answers (MCQs) focuses on Macro Economics 1 Set 1

Q1 | The classical economists believed that the demand for labour is a function of:
  • total money wages
  • money wage rate
  • total real wages
  • real wage rate
Q2 | In classical theory of employment, there isthe possibility of:
  • voluntary unemployment
  • no unemployment
  • involuntary unemployment
  • disguised unemployment
Q3 | The idea that a general cut in wages will finally lead to a state of full employment wassuggested by :
  • keynes
  • marshall
  • j.b.say
  • a.c.pigou
Q4 | Say’s law of market says:
  • supply creates its own demand
  • demand creates supply
  • income generates demand
  • savings create demand
Q5 | The aggregate production function implied under classical theory is :
  • long run
  • short run
  • no time element
  • none of the above
Q6 | In the Cambridge equation of M = kPR, the value of kis:
  • m/v
  • 1/v
  • v in fisher’s equation
  • none of these
Q7 | As a result of an increase in capital, ceteris paribus, ------- the marginal productivity oflabour:
  • remains constant
  • increase
  • decreases
  • none of these
Q8 | In the Fisher’s extended equation of exchange MI VI represents:
  • credit money
  • primary money
  • both primary andcredit money
  • general price level
Q9 | In Fisher’s transaction velocity model, one of the following is not an assumption:
  • velocity of circulation of money is constant
  • the volume of transactions is constant
  • full employment
  • p is considered as an active factor
Q10 | The cash balance equation M = KPO was given by:
  • keynes
  • pigou
  • robertson
  • marshall
Q11 | “Supply creates its own demand “is a law of:
  • investment
  • inflation
  • consumption
  • market
Q12 | In the equation MV+ MI VI = PT, ‘M ‘denotes:
  • velocity of money
  • money in circulation
  • bank deposit
  • none of these
Q13 | I classical demand for money, the relationship between money supply and price level is:
  • proportional
  • non-proportional
  • neither proportional nor non-proportional
  • none of these
Q14 | As per classical theory saving is:
  • an increasing function of rate of interest
  • decreasing function of rate of interest
  • decreasing function of level of income
  • none of these
Q15 | The Cambridge version of the quantity theory of money was developed by:
  • fisher
  • alfred marshall
  • pigou
  • keynes
Q16 | In classical system which of the following keeps the economy at full employment:
  • level of saving
  • increase in money supply
  • adjustment in investment
  • adjustment in money wages
Q17 | In Fisher’s equation of exchange MV=PT, the variation of which produces aproportional change in price:
  • m
  • v
  • p
  • t
Q18 | According to classical economists, variationsin savings are due to:
  • level of investment
  • rate ofinterest
  • level of employment
  • none of the above
Q19 | In classical theory which of the following is found in the economy:
  • unemployment
  • involuntary unemployment
  • less than full employment
  • full employment
Q20 | In MV=PT, if M doubles and V and T remain constant, then P will:
  • double
  • 1/2
  • 1
  • 4
Q21 | Pigou’s version of Cambridge equation is:
  • m = kp/y
  • p= kr/m
  • mv = pt
  • mv = mivi
Q22 | The quantity theory of money was restated by:
  • alfred marshall
  • milton friedman
  • irving fisher
  • j.m. .keynes
Q23 | The law which states that supply creates its own demand and overproduction isimpossible is known as:
  • the law of supply
  • say’s law of market
  • law of demand
  • law of macro economics
Q24 | Wages and prices do not adjust quickly to restore general equilibrium is a property of
  • classical economics
  • keynesian economics
  • monetary economics
  • supply side economics
Q25 | Classicals treated money as a:
  • medium of exchange
  • store of value
  • both
  • none