Macroeconomics Theories And Policies II Set 2
On This Page
This set of Macroeconomics, Theories and Policies 2 Multiple Choice Questions & Answers (MCQs) focuses on Macroeconomics Theories And Policies II Set 2
Q1 | The efficiency wage model is associated with
- new keynesian economics
- new classical economics
- supply side economics
- keynesian economics
Q2 | The insider outsider model is associated with
- new keynesian economics
- new classical economics
- supply side economics
- none of these
Q3 | The Menu cost model is associated with
- new classical economics
- new keynesian economics
- supply side economics
- none of these
Q4 | The New Classical economics was developed against the back ground of
- 1930‘s depression
- 1970’ stagflation
- 2008 subprime crisis
- none of these
Q5 | Reagonomics is related to
- supply side economics’
- new classical economics
- new keynesian economics
- natural unemployment hypothesis
Q6 | Ratex hypothesis is related to
- new classical economics
- supply side economics
- new keynesian economics
- none of these
Q7 | Inflation can be contained by
- surplus budget
- increase in taxation
- reduction in public expenditure
- all these three measures
Q8 | Gregory Mankiw belongs to
- new keynesian economics
- new classical economics
- supply side economics
- none of these
Q9 | According to Hawtrey, the business cycle is caused by
- variation in the interest of banking system
- variation in the price level of the economy
- variation in the money supply by bank
- all the above
Q10 | Which of the following are main postulates of Supply side Economics
- cut in tax rate
- increasing public expenditure
- both a and b
- none of these
Q11 | Which of the following economist is not related to New Classical Economics
- artherlaffer
- thomas surgent
- robert lucas
- neil walace
Q12 | According to New Classical Economist, Business cycle is due to
- anticipated policy change
- unanticipated policy change
- both a and b
- none of these
Q13 | The shape of Laffer curve is
- inverted u shape
- u shape
- inverse l shape
- none of these
Q14 | The curve which explains relationship between tax rate and tax revenue is called
- laffer curve
- kuznets curve
- lorenz curve
- none of these
Q15 | According to New classical Economics
- anticipated policy change will not affect output
- unanticipated policy change will affect output
- both a and b
- none of these
Q16 | According to New Classical Economics Philips curve is
- always vertical
- always horizontal
- always downward slopping
- downward slopping in short run and vertical in the long run
Q17 | Liquidity trap is a situation when,
- all potential investors expect the rate of interest to rise in future
- all potential investors expect the rate of interest to fall in future
- natural rate of interest is above the critical rate of interest
- demand for money for speculative purpose is interest inelastic
Q18 | The classical economists focussed on the role of money as
- medium of exchange
- medium of distribution
- wealth
- link between present and future
Q19 | According to Milton Friedman Theory of permanent component of consumption-expendituredepends on i. Transitory income alone ii. Transitory and permanent income iii. Permanent income alone iv. Windfall gains Codes :
- i and ii are correct
- i and iii are correct
- ii and iv are correct
- only iii is correct
Q20 | The classical model of economic development emphasises
- laissez-faire policy
- capital accumulation
- both (a) and (b)
- none of these
Q21 | Assertion (A): According to Keynes, individuals hold either cash or all bonds.Reasoning (R): Because, according to him, the speculative demand for money is associated with uncertainty. Codes:
- both (a) and (r) are correct and (r) is the correct explanation of (a).
- both (a) and (r) are correct, but (r) is not the correct explanation of (a).
- (a) is correct, but (r) is incorrect.
- both (a) and (r) are incorrect.
Q22 | Speculative demand for money is zero when market rate of interest is
- more than the ‘critical rate’.
- more than the market rate of interest but less than the critical rate (i.e. capital gains occur).
- less than the market rate of interest.
- lowest (i.e. in liquidity trap).
Q23 | Assertion (A) : There exits inverse relationship between interest rates and bond prices. Reason (R) : A bond price represents the present discounted value of the payments agreed uponat the time when the bond was issued. Codes :
- both (a) and (r) are correct, and (r) is the correct explanation of (a).
- (a) is correct, but (r) is not the correct explanation of (a).
- (a) is correct, but (r) is incorrect.
- (a) is incorrect, but (r) is correct.
Q24 | According to Says law of market what is the main cause of overproduction?
- unemployment
- fall in demand
- rise in price
- fall in wage rate
Q25 | In Classical system how to correct an overproduction or glut in the market?
- by increasing price o f input
- by wage cut policy
- by price cut policy
- by decreasing production