Macroeconomics Theories And Policies I Set 1
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This set of Macroeconomics Theories and Policies 1 Multiple Choice Questions & Answers (MCQs) focuses on Macroeconomics Theories And Policies I Set 1
Q1 | The most important determinant of consumption and saving is the:
- price level.
- level of income.
- interest rate.
- level of bank credit.
Q2 | As disposable income goes up, the:
- average propensity to consume falls.
- volume of investment diminishes.
- average propensity to save falls.
- volume of consumption declines absolutely
Q3 | The investment demand curve suggests:
- that changes in the real interest rate will not affect the amount invested.
- there is a direct relationship between the real rate of interest and the level of investment spending.
- that an increase in business taxes will tend to stimulate investment spending.
- there is an inverse relationship between the real rate of interest and the level of investment spending.
Q4 | Other things equal, if the real interest rate falls and business taxes rise:
- we can be certain that investment will rise.
- investment will rise until it is equal to saving.
- we can be certain that investment will fall.
- we will be uncertain as to the resulting change in investment.
Q5 | Which of the following statement is inconsistent with Say’s Law
- the economy has flexible wages and prices.
- the economy’s level of investment solely depends on the level of income.
- the economy will produce at full employment level of output.
- the economy has an environment of”laissez faire”
Q6 | An increase in investment is caused by
- lower interest rates
- expectations of lower national income
- a decrease in the marginal propensity to consume
- an increase in withdrawals
Q7 | Which type of bank deals with short term credit?
- agricultural bank
- industrial bank
- commercial bank
- none of these
Q8 | Demand pull inflation may be caused by
- an increase in cost
- a decrease in interest rate
- a reduction in government spending
- an outward shift of aggregate supply
Q9 | An increase in aggregate demand is more likely to lead to demand pull inflation
- if aggregate supply is completely elastic
- if aggregate supply is completely inelastic
- if aggregate supply is unitary elastic
- if aggregate supply is moderately elastic
Q10 | Which of the following is an example of fiscal policy
- change in interest rate
- change in tax rate
- controlling money supply
- manipulating bank rate
Q11 | The Cambridge version of the quantity theory of money was developed by:
- fisher
- alfred marshall
- pigou
- keynes
Q12 | Investment is reckoned by which method for computingGDP:
- income method
- productmethod
- expenditure method
- value added method
Q13 | Who argued that national income issimply equal to “net product of agriculture”?
- .mercantilists
- physiocrats
- classical economists
- neo classical economists
Q14 | A period of expansion and contraction measured by real GDP is called
- business cycle
- expansion
- recession
- contraction
Q15 | Dissaving means:
- that households are spending more than their current incomes.
- the same thing as disinvesting.
- that saving and investment are equal.
- that disposable income is less than zero.
Q16 | Which one of the following will cause a movement up along an economy's saving schedule?
- an increase in interest rates.
- an increase in household borrowing.
- an increase in disposable income.
- an increase in stock prices.
Q17 | A tax increase shifts the IS curve to the
- left, causing output and interest rates to fall.
- left, causing output and interest rates to increase.
- right, causing output and interest rates to fall.
- right, causing output and interest rates to rise.
Q18 | Factors that cause the IS curve to shift include
- changes in autonomous consumer spending.
- changes in government spending.
- changes in investment spending related to a change in the interest rate.
- only (a) and (b) of the above.
Q19 | In the long-run ISLM model, the long-run effect of a cut in government spending is to
- increase real output and the interest rate.
- increase real output and not affect the interest rate.
- not affect real output and increase the interest rate.
- not affect real output and reduce the interest rate.
Q20 | In the long-run ISLM model, the long-run effect of a tax cut is to
- increase real output and the interest rate.
- increase real output and not affect the interest rate.
- not affect real output and increase the interest rate.
- not affect real output and reduce the interest rate.
Q21 | In the long-run ISLM model, the long-run effect of an autonomous increase in investment is to
- increase real output and the interest rate.
- increase real output and not affect the interest rate.
- not affect real output and increase the interest rate.
- not affect real output and reduce the interest rate.
Q22 | In the long-run ISLM model, the long-run effect of a fall in net exports is to
- increase real output and the interest rate.
- increase real output and not affect the interest rate.
- not affect real output and increase the interest rate.
- not affect real output and reduce the interest rate.
Q23 | Who invented the General Equilibrium analysis?
- l. walras.
- w. leontief
- j.m.keynes.
- none of these.
Q24 | Employment equilibrium in the Classical theory is achievedthrough:
- wage-price flexibility.
- changes in aggregate demand
- changes in aggregate supply
- none of these.
Q25 | Market does not clear is a proposition of:
- neoclassical theory.
- keynesian economics
- monetarism
- rational expectations