FINAL TERM EXAMINATION
Sprin 2010
ECO401- Economics (Session - 4)
Question No: 23 ( Marks: 1 ) - Please choose one
In classical theory, excess supply of a product would be associated with:
► Risin interest rates.
► Fallin interest rates.
► Risin price for the product.
► Fallin price for the product.
Question No: 24 ( Marks: 1 ) - Please choose one
The Monetarist key to solve the inflation problem was: ► Stable money supply.
► Stable output.
► Stable prices.
► Stable economic rowth.
Question No: 25 ( Marks: 1 ) - Please choose one
Which of the followin predictions can be made usin the rowth rates associated with the equation of exchane, iven that velocity is stable and that the economy moves to its potential output (YP) in the lon run? ► If the money supply rows at a faster rate than rowth in YP, there will be inflation.
► If the money supply rows at the same rate as rowth in YP, the price level will fall and there will be deflation.
► If the money supply rows at the same rate as rowth in YP, the price level will also increase at the same rate as rowth in YP,.
► None of the iven options.
Question No: 26 ( Marks: 1 ) - Please choose one
Which of the followin will happen by a reduction in net exports all other thins bein equal? ► It will result in a movement up alon the areate demand curve.
► It will reduce areate supply.
► It will reduce areate demand.
► It will not chane areate demand or areate supply in the domestic economy.
Question No: 27 ( Marks: 1 ) - Please choose one
Which of the followin will happen by an increase in net exports all other thins bein equal? ► It will result in a movement downward alon the areate demand curve.
► It will increase areate demand.
► It will increase areate supply.
► It will not chane areate demand or areate supply in the domestic economy.
Question No: 28 ( Marks: 1 ) - Please choose one
A chane from $1.00 = Rs. 80.00 to $1.00 = Rs. 85.00 represents: ► Depreciation of the dollar.
► An appreciation of the dollar.
► An appreciation of the rupee.
► None of the iven options.
Question No: 29 ( Marks: 1 ) - Please choose one
We can measure economic rowth with the help of: ► The Consumer Price Index.
► The Producer Price Index.
► ross Domestic Product.
► Marinal Propensity to Consume.
Question No: 30 ( Marks: 1 ) - Please choose one
A contractionary fiscal policy shifts: ► The areate demand curve o the left.
► The areate demand curve to the riht.
► The areate supply curve to the riht.
► The areate supply curve to the left.
Question No: 31 ( Marks: 1 ) - Please choose one
Which of the followin is a primary function of a central bank? ► To reulate dividend payments by corporations.
► To act as a reulator of banks.
► To control the bond market.
► To publish statistics on bankin and related financial matters.
Question No: 32 ( Marks: 1 ) - Please choose one
In which condition, the IS curve will shift to the riht? ► Consumer confidence in the economy improves.
► Firms become more optimistic about the economy and decide to invest more at each interest rate.
► The overnment increases transfer payments.
► It will shift to the riht in all of the iven conditions.
Question No: 33 ( Marks: 1 ) - Please choose one
Which of the followin will be TRUE if real income rose and the interest rate fell followin an increase in overnment purchases? ► IS curve must be vertical.
► LM curve must be vertical.
► Central Bank must have increased the money supply at the same time.
► Central Bank must have decreased the money supply at the same time.
Question No: 34 ( Marks: 1 ) - Please choose one
What will happen to LM curve if the central bank increased the supply of real money balances? ► It would become steeper.
► It would become flatter.
► It would shift upward.
► It would shift downward.
Question No: 35 ( Marks: 1 ) - Please choose one
In rowth process of under developed countries, hih rate of population rowth: ► Is not accompanied by smaller increase in product per capita.
► Is not accompanied by increasin total product.
► Is an obstacle in economic rowth.
► Is ood for economic rowth.
Question No: 36 ( Marks: 1 ) - Please choose one
Which of the followin is the main reason of poverty in third world countries? ► eneration ap.
► Communication ap.
► Forein exchane ap.
► None of the iven options.
Question No: 37 ( Marks: 1 ) - Please choose one
Refer to the above fiure, the marinal propensity to consume equals:
► 0.
► 0.5.
► 1.0.
► 2.0.
Question No: 38 ( Marks: 1 ) - Please choose one
Which of the followin is TRUE in a planned economy? ► oods and services produced reflect consumer sovereinty.
► Price is relatively unimportant as a means of allocatin resources.
► There is no incentive for people to work hard.
► All income is completely evenly distributed.
Question No: 39 ( Marks: 1 ) - Please choose one
For which of the followin ood, the substitution effect of a lowered price is counteractin by the income effect? ► For an inferior ood.
► A substitute ood.
► For an independent ood.
► For a normal ood.
Question No: 40 ( Marks: 1 ) - Please choose one
Suppose all inputs are increased by 30% and output increases by more than 30% in a production process. This means that the firm experiences: ► Decreasin returns to scale.
► Constant returns to scale.
► Increasin returns to scale.
► None of the iven options.
Question No: 41 ( Marks: 1 ) - Please choose one
The total cost (TC) function is iven as TC = 500 + 30Q. What is the averae total cost? ► 500
► 30+ (500/Q)
► 30Q2+500Q
► 30
Question No: 42 ( Marks: 1 ) - Please choose one
The total cost (TC) function is iven as TC = 200 + 5Q. What will be the averae total cost if four units of commodity are produced? ► 20
► 55
► 50
► 220
Question No: 43 ( Marks: 1 ) - Please choose one
Collusion occurs when two or more firms decide to cooperate with each other in the settin of prices and ► Labor demanded.
► Capital demanded.
► Quantity of ood supplied.
► Quanlity of ood supplied.
Question No: 44 ( Marks: 1 ) - Please choose one
A public ood is non-excludable because: ► One person’s use or consumption does not reduce the ability of another to use it.
► External costs are enerated throuh its production.
► External benefits are enerated throuh more consumption.
► No one can be effectively excluded from usin that ood.
Question No: 45 ( Marks: 1 ) - Please choose one
Accordin to Keynesian economics, the Inflation is neatively related with: ► Level of income.
► Employment.
► Poverty.
► Unemployment.
Question No: 46 ( Marks: 1 ) - Please choose one
The principle which states that a chane in income causes a manified chane in investment is termed as the: ► None of the iven.
► Paradox of thrift.
► Multiplier effect.
► Accelerator effect.
Question No: 47 ( Marks: 1 ) - Please choose one
Monetarists characterized the lon-term tradeoff between output and: ► Employment level.
► Inflation.
► Forein direct investment.
► Deflation.
Question No: 48 ( Marks: 1 ) - Please choose one
If central bank increased the money supply, then what will be happen to IS curve? ► IS curve will Shifts rihtward.
► IS curve will Shifts leftward.
► IS curve will remain unaffected.
► IS curve will become vertical.
Question No: 49 ( Marks: 3 )
What is meant by exchane rate? Also ive example of exchane rate.Question No: 50 ( Marks: 3 )
On what basis countries ain from trade?Question No: 51 ( Marks: 5 )
A. "Slope of the consumption function is less than 1".What is meant by this statement?
"Slope of the consumption function is less than 1".What is meant by this statement? B. What are the major macroeconomic variables involved in the determination of national income?
(Marks: 2+3)
Question No: 52 ( Marks: 5 )
Why is taxation necessary? What are the principles of taxation?Question No: 53 ( Marks: 5 )
Why could the world as a whole not experience a problem of a current account balance of payments deficit?
