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This set of Macro Economics 1 Multiple Choice Questions & Answers (MCQs) focuses on Macro Economics 1 Set 2
Q1 | When there is an increase in the autonomous money supply, ceteris paribus, LM shifts:
- leftward
- rightward
- no shift
- none
Q2 | An Economic model is a statement of relationship among economic ------
- variables
- phenomena
- development
- none of these
Q3 | LM curve shows the equilibrium condition in ---------- market
- goods market
- product market
- money market
- none of these
Q4 | Supply creates its own demand is the Basis of:
- classical economics
- keynesian economics
- monetarism
- none of these
Q5 | The simplest ISLM model consists of:
- two markets
- three markets
- four markets
- five markets
Q6 | The equilibrium in the product market is represented by which curve?
- is
- lm
- demand
- supply curve
Q7 | The IS curve has a------slope
- positive
- negative
- zero
- none of these
Q8 | The LM curve has a------slope
- positive
- negative
- zero
- none of these
Q9 | ISLM model was developed by:
- hicks
- keynes
- friedman
- none of these
Q10 | The perfectly elastic segment of the LM curve is:
- keynesian range
- classical range
- intermediate range
- none of these
Q11 | Which policy is effective in the Classical range?
- monetary policy
- fiscal policy
- incomes policy
- none of these
Q12 | Which policy is effective in the Keynesian range?
- monetary policy
- fiscal policy
- incomes policy
- none of these
Q13 | Which policy is effective in the intermediate range?
- monetary policy
- fiscal policy
- both policies
- none of these
Q14 | IS-LM model was developed by:
- keynes
- walras
- j.r.hicks
- don-patinkin
Q15 | Frictional unemployment exists:
- when there is a decrease in real gdp
- because it takes time to find a job when one is first entering the labour force
- as a result of technological change
- when an individual retires
Q16 | The natural rate of unemployment equals the sum of those who are:
- frictionally and structurally unemployed
- frictionallyandcyclicallyunemployed
- structurallyandcyclicallyunemployed
- frictionally structurally and cyclically unemployed
Q17 | The marginal productivity of labour is:
- the incremental output due to an increase in capital, ceteris paribus
- the incremental output due to an increase in labour, ceteris paribus.
- the incremental output due to a change in technology, ceteris paribus
- the incremental output due to a change in technology and a change in the
Q18 | The marginal productivity of labour:
- increases when the price of the good sold increases, ceteris paribus
- decreases when there is an adverse supply shock, ceteris paribus
- increase when more workers are hired, ceteris paribus
- decreases when there is an increase in the quantity of capital, ceteris paribus
Q19 | When saving is greater than investment in a two-sectormodel,
- outputshould increase
- output should decrease
- output should not change
- none of these
Q20 | When output exceeds spending:
- there is unsold output, and level of output will fall
- there is unsold output, and level of output will rise
- there is unsold output, and level of spending willrise
- there is no unsold output since the level of spending will rise
Q21 | When investment is negatively related to the rate of interest, equilibrium output in thegoods market:
- is unrelated to the rate of interest
- is inversely related to the rate of interest
- is positively related to the rate of interest
- falls as the rate of interest decreases
Q22 | Simultaneous equilibrium in the money (LM) and goods (IS) market exists:
- at an unlimited number of output levels and rates of interest
- at only one output level and rate ofinterest
- at an unlimited number of output levels and only one rate of interest
- at only one output level and an unlimited number of rates of interest
Q23 | In which of the following situations will an increase in the money supply have no effectupon output?
- lm is steeply sloped and is is steeply sloped
- lm is vertical and is is steeply sloped
- lm is steeply sloped and is is vertical
- lm is relatively flat as is is
Q24 | Policy Neutrality is the main proposition of:
- supply side economics.
- keynesian economics
- monetarism
- rational expectations hypothesis
Q25 | Who invented the General Equilibrium analysis?
- l. walras.
- w. leontief
- j.m.keynes.
- none of these.