tag:blogger.com,1999:blog-13683879201590695142024-03-27T12:06:03.269+05:30Indian Economic Service | NET/JRF Economics | RBI Grade B DEPRSantosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.comBlogger94125tag:blogger.com,1999:blog-1368387920159069514.post-62304491398962612942023-08-08T10:43:00.001+05:302023-08-08T10:43:41.172+05:30Application of Linear Algebra in Economics | Mathematical Economics Foundation Course<div>This page is being updated. Visit this page after some time.</div>Students of Economicshttp://www.blogger.com/profile/10849903856511606912noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-84556375520385476772023-08-02T22:04:00.060+05:302023-08-12T22:07:49.678+05:30Basic Algebraic Operations - Addition and Subtraction | Mathematical Economics Foundation Course
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Students of Economicshttp://www.blogger.com/profile/10849903856511606912noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-60875549190406292102023-02-26T20:44:00.000+05:302023-02-26T20:44:32.322+05:30International Economics MCQ Test - 3: International Trade Theory - Demand and Supply<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>If the quantity supplied of exports of commodity X by a nation exceeds the quantity demanded of exports of commodity X by another nation, the relative commodity price of commodity X will</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">fall</li><br/>
<li onclick="style.color='red';">rise</li><br/>
<li onclick="style.color='red';">remain unchanged</li><br/>
<li onclick="style.color='red';">any of the above</li>
</ol><br>
<li>Community indifference curves introduce</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">the production conditions in the nation</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the tastes or demand preferences of the nation</li><br/>
<li onclick="style.color='red';">both the production conditions and the tastes of the nation</li><br/>
<li onclick="style.color='red';">neither the production conditions nor the tastes of the nation</li><br/>
</ol><br>
<li>As we move down a community indifference curve in Fig. 3-2, MRS<sub>CW</sub></li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">declines</li><br/>
<li onclick="style.color='red';">rises</li><br/>
<li onclick="style.color='red';">remains unchanged</li><br/>
<li onclick="style.color='red';">may decline rise or remain unchanged</li><br/>
</ol><br>
<li>The internal equilibrium relative commodity price in a nation in the absence of trade is determined by the nation's</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">production possibilities curve</li><br/>
<li onclick="style.color='red';">indifference map</li><br/>
<li onclick="style.color='red';">production possibilities curve or indifference map</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">production possibilities curve and indifference map</li><br/>
</ol><br>
<li>At point A in Fig. 3-3(i.e., at the pretrade equilibrium point in production and consumption in the U.K.)</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\(MR{T_{CW}} = {P_A} = MR{S_{CW}}\)</li><br/>
<li onclick="style.color='red';">\(MR{T_{CW}} = {P_A} \ne MR{S_{CW}}\)</li><br/>
<li onclick="style.color='red';">\(MR{T_{CW}} \ne {P_A} = MR{S_{CW}}\)</li><br/>
<li onclick="style.color='red';">\(MR{T_{CW}} \ne {P_A} \ne MR{S_{CW}}\)</li><br/>
</ol><br>
<li>When the U.K. is in equilibrium with trade in Fig. 3-3</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\(MR{T_{CW}} = {P_B} = MR{S_{CW}}\)</li><br/>
<li onclick="style.color='red';">\(MR{T_{CW}} = {P_B} \ne MR{S_{CW}}\)</li><br/>
<li onclick="style.color='red';">\(MR{T_{CW}} \ne {P_B} = MR{S_{CW}}\)</li><br/>
<li onclick="style.color='red';">\(MR{T_{CW}} \ne {P_B} \ne MR{S_{CW}}\)</li><br/>
</ol><br>
<li>Trade triangle BFE in panel A of Fig. 3-4 corresponds in panel B to trade triagle </li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">OFF</li><br/>
<li onclick="style.color='red';">OHJ</li><br/>
<li onclick="style.color='red';">either OHJ or OFE</li><br/>
<li onclick="style.color='red';">neither OHJ nor OFE</li><br/>
</ol><br>
<li>Trade triangle G'H'J' in panel A of Fig. 3-5 corresponds in panel B to trade triangle</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">OF'E'</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">OH'J'</li><br/>
<li onclick="style.color='red';">either OF'E' or H'J'</li><br/>
<li onclick="style.color='red';">neither OF'E nor OH'J'</li><br/>
</ol><br>
<li>The offer curve of a nation bulges or bends toward the axis that measures its</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">export commodity</li><br/>
<li onclick="style.color='red';">import commodity</li><br/>
<li onclick="style.color='red';">export or import commodity</li><br/>
<li onclick="style.color='red';">nontraded commodity</li><br/>
</ol><br>
<li>At point E in Fig. 3-6</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">the U.K. is willing to exchange 60C for 60W</li><br/>
<li onclick="style.color='red';">the U.S. is willing to exchange 60W for 60C</li><br/>
<li onclick="style.color='red';">the U.S. is willing to export 60W and the U.K. is willing to import 60W</li><br/>
<li onclick="style.color='red';">the U.K. is willing to export 60C and the U.S. is willing to import 60C</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br>
<li>At P<sub>G</sub>in Fig. 3-6</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the wheat exports of the U.S. fall short of the wheat imports demanded by the U.K.</li><br/>
<li onclick="style.color='red';">the wheat exports of the U.S. exceed the wheat imports demanded by the U.K.</li><br/>
<li onclick="style.color='red';">the cloth exports of the U.S. exceed the cloth imports demanded by the U.K.</li><br/>
</ol><br>
<li>If a nation's terms of trade is 2, its trade partner's terms of trade is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">4</li><br/>
<li onclick="style.color='red';">2</li><br/>
<li onclick="style.color='red';">1</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">1/2</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-66952615365429868282023-02-26T20:43:00.000+05:302023-02-26T20:43:23.189+05:30International Economics MCQ Test - 2: The Pure Theory of International Trade - Supply<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>The opportunity cost theory assumes that</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">labor is the only factor of production</li><br/>
<li onclick="style.color='red';">the price or cost of a commodity can be inferred from its labor content</li><br/>
<li onclick="style.color='red';">labor is homogeneous</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">none of the above</li>
</ol><br>
<li>with respect to a production possibilities curve, we can say that</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">a point inside or below it implies that the economy is either not fully utilizing all of its resources or not using the best technology available to it</li><br/>
<li onclick="style.color='red';">a point on it involves the full employment of the economy's resources and the use of the best technology available</li><br/>
<li onclick="style.color='red';">a point above it cannot be reached with the resources and technology presently available to the nation</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li><br/>
</ol><br>
<li>A straight-line production possibilities curve refers to</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">constant costs</li><br/>
<li onclick="style.color='red';">increasing costs</li><br/>
<li onclick="style.color='red';">decreasing costs</li><br/>
<li onclick="style.color='red';">any of the above</li><br/>
</ol><br>
<li>With cloth measured along the horizontal axis and wheat along the vertical axis, the absolute slope of a straight-line production possibilities curve gives</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">\({\rm{the MR}}{{\rm{T}}_{CW}}\)</li><br/>
<li onclick="style.color='red';">\({\rm{the }}{{\rm{p}}_c}/{p_w}\)</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\({\rm{both the MR}}{{\rm{T}}_{CW}}{\rm{ and the }}{{\rm{P}}_C}/{P_W}\)</li><br/>
<li onclick="style.color='red';">\({\rm{ neither the MR}}{{\rm{T}}_{CW}}{\rm{ nor the }}{{\rm{P}}_C}/{P_W}\)</li><br/>
</ol><br>
<li>If in the absence of trade the internal equilibrium \({P_C}/{P_W}\) is lower in the U.K. than in the U.S., then</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">the U.K. has a comparative advantage in cloth with respect to the U.S.,</li><br/>
<li onclick="style.color='red';">the U.K. has a comparative disadvantage in wheat</li><br/>
<li onclick="style.color='red';">the U.S. has a comparative advantage in wheat</li><br/>
<li onclick="style.color='red';">the U.S. has a comparative disadvantage in cloth</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br>
<li>The production frontier for the U.K. in Fig. 2-2 is given by the straight line through points</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">A and B in the absence of trade, E and B with trade</li><br/>
<li onclick="style.color='red';">A and B with trade, and E and B without trade</li><br/>
<li onclick="style.color='red';">E and B with and without trade</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">A and B with and without trade</li><br/>
</ol><br>
<li>If a nation gains from trade, its consumption point is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">on its production possibilities frontier</li><br/>
<li onclick="style.color='red';">inside its production possibilities frontier</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">above its production possibilities frontier</li><br/>
<li onclick="style.color='red';">any of the above</li><br/>
</ol><br>
<li>Increasing opportunity costs to produce more and more units of a commodity are given by a production possibilities curve that is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">concave to the origin</li><br/>
<li onclick="style.color='red';">convex to the origin</li><br/>
<li onclick="style.color='red';">a straight line</li><br/>
<li onclick="style.color='red';">any of the above</li><br/>
</ol><br>
<li>With cloth measured along the horizontal axis and wheat along the vertical axis, the absolute slope of a concave production possibilities curve gives</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\({\rm{the MR}}{{\rm{T}}_{CW}}\)</li><br/>
<li onclick="style.color='red';">the internal equilibrium \({P_C}/{P_W}\) in isolation</li><br/>
<li onclick="style.color='red';">both the \({\rm{MR}}{{\rm{T}}_{CW}}\) and the internal equilibrium \({P_C}/{P_W}\)</li><br/>
<li onclick="style.color='red';">neither the \({\rm{MR}}{{\rm{T}}_{CW}}\) nor the internal equilibrium \({P_C}/{P_W}\)</li><br/>
</ol><br>
<li>With cloth measured along the horizontal axis and wheat along the vertical axis, a movement down the production possibilities curve results in</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">a decrease in \({\rm{MR}}{{\rm{T}}_{CW}}\)</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">an increase in \({\rm{MR}}{{\rm{T}}_{CW}}\)</li><br/>
<li onclick="style.color='red';">an increase in \({\rm{MR}}{{\rm{T}}_{CW}}\)</li><br/>
<li onclick="style.color='red';">any of the above</li><br/>
</ol><br>
<li>With trade, specialization in production is likely to be</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">complete with increasing costs and incomplete with constant costs</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">complete with constant costs and incomplete with increasing costs</li><br/>
<li onclick="style.color='red';">complete with constant and increasing costs</li><br/>
<li onclick="style.color='red';">incomplete with both constant and increasing costs</li><br/>
</ol><br>
<li>A difference in relative commodity prices between two nations can be based upon a difference in</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">factor endowments</li><br/>
<li onclick="style.color='red';">technology</li><br/>
<li onclick="style.color='red';">tastes</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-17118155965707955802023-02-26T20:40:00.000+05:302023-02-26T20:40:56.077+05:30International Economics MCQ Test - 1: Introduction<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>Four which of the following groups of products does the U.S. rely exclusively on imports?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Petroleum, coal, natural gas, wood</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">coffee, tea, cocoa, tin</li><br/>
<li onclick="style.color='red';">copper, aluminum, iron, steel</li><br/>
<li onclick="style.color='red';">computers,</li>
</ol><br>
<li>One similarity between international and interregional trade is that in general both must overcome</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">tariffs</li><br/>
<li onclick="style.color='red';">differences in language</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">distance or space</li><br/>
<li onclick="style.color='red';">differences in currencies and monetary systems</li><br/>
</ol><br>
<li>in the study of international economics we use the tools of</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">microeconomic theory only</li><br/>
<li onclick="style.color='red';">macroeconomic theory only</li><br/>
<li onclick="style.color='red';">neither micro nor macro theory</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">both micro and macro theory, but we also extend, adapt and integrate them</li><br/>
</ol><br>
<li>With which of the following topics does international economics deal?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">International trade theory</li><br/>
<li onclick="style.color='red';">international trade policy</li><br/>
<li onclick="style.color='red';">the balance of payments</li><br/>
<li onclick="style.color='red';">adjustment to disequilibria in the balance of payments</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br>
<li>To which of the following would the mercantilists have ojected?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Free trade</li><br/>
<li onclick="style.color='red';">stimulating exports</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">restricting imports</li><br/>
<li onclick="style.color='red';">accumulation of gold by their nation</li><br/>
</ol><br>
<li>We can best understand Smith's views on trade if we regard them as a reaction to</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">a law of comparative advantage</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the mercantilist view on trade</li><br/>
<li onclick="style.color='red';">Ricardo's views on trade</li><br/>
<li onclick="style.color='red';">all of the above</li><br/>>
</ol><br>
<li>What proportion of world trade is based on absolute advantage?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">All</li><br/>
<li onclick="style.color='red';">most</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">some</li><br/>
<li onclick="style.color='red';">none</li><br/>
</ol><br>
<li>The commodity in which a nation has the least absolute disadvantage represents its area of</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">comparative disadvantage</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">comparative advantage</li><br/>
<li onclick="style.color='red';">absolute advantage</li><br/>
<li onclick="style.color='red';">cannot say without additional information</li><br/>
</ol><br>
<li>With reference to Table 1.2 in Example 4, we can sya that the U.S. has a comparative advantage over the U.K. in the production of wheat because 1 labor-hour in the U.S. is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">twice as productive in C as in W</li><br/>
<li onclick="style.color='red';">twice as productive in W as in C</li><br/>
<li onclick="style.color='red';">1.5 times more productive in W but 6 times more productive in C as in the U.K.</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">6 times more productive in W but only 1.5 times more productive in C as in the U.K.</li><br/>
</ol><br>
<li>With reference to table 1.2 and Examples 4 and 5, indicate which of the following statements is correct</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The rate at which W exchanges for C in production in the U.S. is 2:1</li><br/>
<li onclick="style.color='red';">The rate at which W exchanges for C in production in the U.K. is 1:2</li><br/>
<li onclick="style.color='red';">Tje rate at which W exchanges for C in trade between the U.S. and the U.K. is 1:1</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">All of the above</li><br/>
</ol><br>
<li>With reference to Example 5, indicate which of the following statements is correct</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The U.S. gains 3C by trading 6W for 6C with the U.K.</li><br/>
<li onclick="style.color='red';">The U.K. gains 6C by exchanging 6 of its 12C for 6W with the U.S.</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The increase in the combined output of the U.S. and the U.K. when 6W are exchanged for 6C is 9C and 0W</li><br/>
<li onclick="style.color='red';">All of the above</li><br/>
</ol><br>
<li>Ricardo's law of comparative advantage is based on</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">the opportunity cost theory</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the labor theory of value</li><br/>
<li onclick="style.color='red';">the law of diminishing returns</li><br/>
<li onclick="style.color='red';">all of the above</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-72989770920396345102023-02-25T21:31:00.001+05:302023-02-25T21:31:47.782+05:30Macroeconomics Practice Test - 14: Theories of Investment<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>In the rigid version of the accelerator theory of investment, net investment in successive periodds is as follows when the capital-output ratio is 2 and the expected increase in output is $15, $20, $20 and $15</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">$30 each period</li><br/>
<li onclick="style.color='red';">$15, $20, $20 and $15 in successive periods</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">$30, $40, $40, and $30 in successive periods</li><br/>
<li onclick="style.color='red';">$7.50, $10, $10, and $7.50 in successive periods</li>
</ol><br>
<li>Which of the following statements is true?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Gross investment is more stable than net investment when replacement investment is constant over time</li><br/>
<li onclick="style.color='red';">Net investment is more stable than gross investment when replacement is constant over time</li><br/>
<li onclick="style.color='red';">Replacement investment equals \(\upsilon \Delta Y\)</li><br/>
<li onclick="style.color='red';">Net investment is greatet than \(\upsilon \Delta Y\) when the capital-output ratio decreases</li><br/>
</ol><br>
<li>The user cost of capital is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The real rate of interest</li><br/>
<li onclick="style.color='red';">The nominal rate of interest</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The real rate of interest plus the rate of depreciation</li><br/>
<li onclick="style.color='red';">The nominal rate of interest plus the rate of depreciation</li><br/>
</ol><br>
<li>Which of the following economic policies will not lower the user cost of capital?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">A 5% increase in the nominal money supply, which causes a 5% increase in the expected rate of inflation</li><br/>
<li onclick="style.color='red';">The introduction of an investment tax credit</li><br/>
<li onclick="style.color='red';">An increase in the rate at which firms are allowed to depreciate machinery for tax purposes</li><br/>
<li onclick="style.color='red';">A reduction in the corporate income tax rate</li><br/>
</ol><br>
<li>The marginal cost benefit from capital is the</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Incremental output associated with an addition to the stock of capital</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Cost saving associated with employing less labor inputs and additional capital inputs to produce a fixed level of output</li><br/>
<li onclick="style.color='red';">Incremental cost of capital associated with the addition of a unit of capital</li><br/>
<li onclick="style.color='red';">Incremental profit associated with the addition of a unit of capital</li><br/>
</ol><br>
<li>A decrease in the user cost of capital will result in the production process becoming</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">More capital-intensive and the capital-output ratio decreasing</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">More capital-intensive and the capital-output ratio increasing</li><br/>
<li onclick="style.color='red';">Less capital-intensive and the capital-output ratio decreasing</li><br/>
<li onclick="style.color='red';">Less capital-intensive and the capital-output ratio increasing</li><br/>
</ol><br>
<li>A distributed lag for net investment may be due to</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">A decrease in the capital-output ratio</li><br/>
<li onclick="style.color='red';">An increase in the capital-output ratio</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Limited, short-run production capabilities in the capital goods industry</li><br/>
<li onclick="style.color='red';">A decrease in the expected level of output</li><br/>
</ol><br>
<li>Tobin's q-theory of investment indicates that firms add to their stock of capital when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The replacement value of their real assets exceeds the market value of their financial assets</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The market value of their financial assets exceeds the replacement value of their real assets</li><br/>
<li onclick="style.color='red';">The market value of their real assets exceeds the book value of their financial assets</li><br/>
<li onclick="style.color='red';">The market value of their real assets exceeds the book value of their real assets</li><br/>
</ol><br>
<li>When the inventory-sales ratio is 0.25, a</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">25% increase in expected sales results in a 100% increase in inventory</li><br/>
<li onclick="style.color='red';">$25 increase in expected sales results in a $100 increase in inventory</li><br/>
<li onclick="style.color='red';">100% increase in expected sales results in a 25% increase in inventory</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">$100 increase in expected sales results in a $25 increase in inventory</li><br/>
</ol><br>
<li>Which of the following results in an increase in the inventory-sales ratio?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">A decrease in the cost of holding inventory, ceteris paribus</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">An increase in the probability of delivery delays for materials, ceteris paribus</li><br/>
<li onclick="style.color='red';">An increase in expected sales, ceteris paribus</li><br/>
<li onclick="style.color='red';">An increase in the uncertainty of expected sales, ceteris paribus</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-38473275273018583102023-02-25T21:29:00.001+05:302023-02-25T21:29:50.520+05:30Macroeconomics Practice Test - 13: Consumption<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>There is a proportional relationship between consumption and disposable income</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">When the APC is the same for all levels of disposable income</li><br/>
<li onclick="style.color='red';">When the consumption function is a straight line through the origin</li><br/>
<li onclick="style.color='red';">When the MPC equals the APC for all levels of disposable income</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">All the above</li>
</ol><br>
<li>Changes in subjective or objective factors</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Never affect the consumption function</li><br/>
<li onclick="style.color='red';">Always cause downward shifts of the consumption function</li><br/>
<li onclick="style.color='red';">Always cause upward shifts of the consumption function</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">May cause upward or downward shifts of the consumption function</li><br/>
</ol><br>
<li>Keynes considered subjective and objective factors</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Important determinants of consumption</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Unimportant determinants of consumption</li><br/>
<li onclick="style.color='red';">Determinants of investment</li><br/>
<li onclick="style.color='red';">Determinants of business' willingness to supply</li><br/>
</ol><br>
<li>According to the permanent income hypothesis, all increases in</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Permanent income are saved</li><br/>
<li onclick="style.color='red';">Permanent income are consumed</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Transitory income are saved</li><br/>
<li onclick="style.color='red';">Transitory income are consumed</li><br/>
</ol><br>
<li>When current income includes a negative transitory component, relating consumption with current income will produce</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">An average propensity to consume that is lower than the long-run average propensity to consume</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">An average propensity to consume that is higher than the long-run average propensity to consume</li><br/>
<li onclick="style.color='red';">An average propensity to consume that equals the long-run average propensity to consume</li><br/>
<li onclick="style.color='red';">None of the above</li><br/>
</ol><br>
<li>The permanent income hypothesis is consistent with cross-section and time-series data because</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Higher-income households are savers, since their current income includes positive transitory components</li><br/>
<li onclick="style.color='red';">Higher-income households are savers, since their current income includes negative transitory components</li><br/>
<li onclick="style.color='red';">Lower-income households are savers, since their current income includes negative transitory components</li><br/>
<li onclick="style.color='red';">Lower-income households are dissavers, since their current income includes positive transitory components</li><br/>
</ol><br>
<li>According to the life-cycle hypothesis, consumption is related to</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Current income</li><br/>
<li onclick="style.color='red';">Past peak income</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Expected lifetime income</li><br/>
<li onclick="style.color='red';">Price expectations over one's lifetime</li><br/>
</ol><br>
<li>Suppose a 25-year-old individual expects to earn $25,000 annually until retirement at age 70. When income is spent uniformly during the individual's lifetime and life expectancy is 80, the</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Individual consumes $22,000 a year during the employment years</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Individual's endowment at retirement is $204,545</li><br/>
<li onclick="style.color='red';">Individual saves $4000 a year during the employment years</li><br/>
<li onclick="style.color='red';">Individual's lifetime income is $1.3 million</li><br/>
</ol><br>
<li>Suppose an individual intends to spend income uniformly during her or his lifetime During the employment years, the APC</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Is constant when annual income is unchanged</li><br/>
<li onclick="style.color='red';">Decreases with age when annual income increases during the individual's employment years</li><br/>
<li onclick="style.color='red';">Increase with age when annual income decreases during the individual's employment years</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">All the above</li><br/>
</ol><br>
<li>Which of the following best describes the reasons for involuntary bequests?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Interest rates had increased in recent years</li><br/>
<li onclick="style.color='red';">There was considerable uncertainty associated with expendiures during retirement</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">There were substantial gains in the stock market</li><br/>
<li onclick="style.color='red';">Individuals wanted to leave an inheritance to their children</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-17080735783268196662023-02-25T21:28:00.001+05:302023-02-25T21:28:15.320+05:30Macroeconomics Practice Test - 12: The Supply and Demand for Money<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>The following functions of money are provided by a unique set of financial assets:</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Medium of exchange, store of value, and unit of account</li><br/>
<li onclick="style.color='red';">Store of value, unit of account, and standard of deferred value</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Unit of account, standard of deferred value, and medium of exchange</li><br/>
<li onclick="style.color='red';">Standard of deferred value, medium of exchange, and store of value</li>
</ol><br>
<li>The M 1 definition of money is the sum of</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Currency outside banks and checking deposits</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Currecny outside banks, checking deposits, and travelers' checks</li><br/>
<li onclick="style.color='red';">Currency outstanding and checking deposits</li><br/>
<li onclick="style.color='red';">Currency outstanding, checking deposits, and money market deposit accounts</li><br/>
</ol><br>
<li>The Federal Reserve controls</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The monetary base through open market operations</li><br/>
<li onclick="style.color='red';">The monetary base through reserve requirements on deposit accounts</li><br/>
<li onclick="style.color='red';">The money multiplier through open market operations</li><br/>
<li onclick="style.color='red';">The money multiplier through reserve requirements on deposit accounts</li><br/>
</ol><br>
<li>When the reserve requirement on checking deposits is 0.10 and the Federal Reserve purchases government securities valued at $100,000, the M 1 money supply</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Is unchanged</li><br/>
<li onclick="style.color='red';">Increases by $100,000</li><br/>
<li onclick="style.color='red';">Increases by $1,000,000</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Increases by an amount determined by the money multiplier</li><br/>
</ol><br>
<li>According to the quantity theory of money</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">An increase in the nominal money supply causes a proportional increase in the price level, ceteris paribus</li><br/>
<li onclick="style.color='red';">An increase in the nominal money supply causes a proportional increase in real GNP, ceteris paribus</li><br/>
<li onclick="style.color='red';">An increase in the real money supply causes a proportional increase in the price level, ceteris paribus</li><br/>
<li onclick="style.color='red';">An increase in the real money supply causes a proportional increase in real GNP, ceteris paribus</li><br/>
</ol><br>
<li>The average M1 balance held for transactions is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Negatively related to the length of the pay period and positively related to the income level</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Positively related to both the length of the pay period and the income level</li><br/>
<li onclick="style.color='red';">Negatively related to both the length of the pay period and the income level</li><br/>
<li onclick="style.color='red';">Positively related to the length of the pay period and negatively related to the income level</li><br/>
</ol><br>
<li>When holding M1 balances involves an opportunity cost, the average M1 balance held is negatively related to the return on</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Currency, ceteris paribus</li><br/>
<li onclick="style.color='red';">Travelers' checks, ceteris paribus</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Money market deposit accounts, ceteris paribus</li><br/>
<li onclick="style.color='red';">Demand deposit, ceteris paribus</li><br/>
</ol><br>
<li>Which of the following statements is incorrect?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The precautionary demand for money is unrelated to income</li><br/>
<li onclick="style.color='red';">There is a precautionary demand for money because of uncertainty about the receipt of future income</li><br/>
<li onclick="style.color='red';">The precautionary demand for money is affected by the opportunity cost of holding M1 balances</li><br/>
<li onclick="style.color='red';">There is a precautionary demand for money because of unexpected expenditures</li><br/>
</ol><br>
<li>According to Keynes, there is a speculative demand for money because</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">People like to speculate in the stock market</li><br/>
<li onclick="style.color='red';">There is considerable risk in holding M1 balances</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Money, at times, may be a better store of value than long-term bonds</li><br/>
<li onclick="style.color='red';">Money always provides a cetain, higher return than long-term bonds</li><br/>
</ol><br>
<li>The Federal Reserve should should follow a money supply monetary policy when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The IS schedule is negatively sloped</li><br/>
<li onclick="style.color='red';">The LM schedule is largely insensitive to the rate of interest</li><br/>
<li onclick="style.color='red';">The location of IS in space is more certain than that of LM</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The location of LM in space is more certain than that of IS</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-14549962940165396552023-02-25T21:25:00.001+05:302023-02-25T21:25:56.155+05:30Macroeconomics Practice Test - 11: Economic Growth<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>Which of the following will not result in an increase in output per worker?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">An increase in the capital stock, ceteris paribus</li><br/>
<li onclick="style.color='red';">The capital stock increases at a faster rate than the labor supply, ceteris paribus</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The capital stock and labor supply increase at the same rate, ceteris paribus</li><br/>
<li onclick="style.color='red';">There is a labor-augmenting technological change, ceteris paribus</li>
</ol><br>
<li>A steady state exists when there is no growth of the labor supply and</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Saving per worker is greater than depreciation investment per worker</li><br/>
<li onclick="style.color='red';">Depreciation investment per worker is greater than saving per worker</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Saving per worker less depreciation investment per worker is zero</li><br/>
<li onclick="style.color='red';">Depreciation per worker is zero</li><br/>
</ol><br>
<li>When A = 2, K = 80, L = 20, and the Cobb-Douglas production function is \(Y = {K^{0.5}}{L^{0.5}}\)</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The capital-labor ratio is 4 and output per worker is $4.00</li><br/>
<li onclick="style.color='red';">The capital-labor ratio is 0.25 and output per worker is $4.00</li><br/>
<li onclick="style.color='red';">The capital-labor ratio is 4 and output per worker is $2.00</li><br/>
<li onclick="style.color='red';">The capital-labor ratio is 0.25 and output per worker is $2.00</li><br/>
</ol><br>
<li>When A = 3, the saving rate is 0.40, the depreciation rate is 0.10, and there is no labor supply growth</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The steady state capital-labor ratio is 48 and output per worker is $36.00</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The steady state capital-labor ratio is 144 and output per worker is $36.00</li><br/>
<li onclick="style.color='red';">The steady state capital-labor ratio is 16 and output per worker is $12.00</li><br/>
<li onclick="style.color='red';">The steady state capital-labor ratio is 36 and output per worker is $18.00</li><br/>
</ol><br>
<li>When an economy is at steady state growth and there is an increase in the saving rate</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The saving curve shifts upward and there is no change in output curve</li><br/>
<li onclick="style.color='red';">Saving per worker exceeds depreciation investment per worker and the economy is below the steady state capital-labor ratio</li><br/>
<li onclick="style.color='red';">The saving curve shifts upward and there is no shift of the depreciation line</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">All of the above</li><br/>
<li onclick="style.color='red';">None of the above</li>
</ol><br>
<li>The golden rule steady state exists when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Saving per worker is maximized at a steady state capital-labor ratio</li><br/>
<li onclick="style.color='red';">Depreciation investment per worker at a steady state capital-labor ratio is maximized</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The distance between the output curve and depreciation line is maximized at a steady state capital-labor ratio</li><br/>
<li onclick="style.color='red';">The depreciation rate is zero</li><br/>
</ol><br>
<li>An increase in teh rate of labor supply growth</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Has no effect upon the steady state capital-labor ratio</li><br/>
<li onclick="style.color='red';">Increases the steady state capital-labor ratio</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Decreases the steady state capital-labor ratio</li><br/>
<li onclick="style.color='red';">Increases output per worker at the steady state</li><br/>
</ol><br>
<li>A neutral technological change</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Shifts the depreciation line leftward</li><br/>
<li onclick="style.color='red';">Increases the effective labor supply</li><br/>
<li onclick="style.color='red';">Has no effect upon the capital-labor ratio</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Shifts the saving and output curve upward</li><br/>
</ol><br>
<li>A labor-augmenting technological change has no effect upon the</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Depreciation investment line</li><br/>
<li onclick="style.color='red';">Saving curve</li><br/>
<li onclick="style.color='red';">Output curve</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Capital-effective labor ratio</li><br/>
</ol><br>
<li>When the share of output going to.capital is 0.25, the share going to labor is 0.75, output increases 4%, labor increases 1%, and capital increases 2%, the increase in productivity is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">0.75%</li><br/>
<li onclick="style.color='red';">1%</li><br/>
<li onclick="style.color='red';">1.25%</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">2.75</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-87883434505849917302023-02-25T21:23:00.001+05:302023-02-25T21:23:48.809+05:30Macroeconomics Practice Test - 10: Aggregate Supply, Aggregate Demand and Inflation<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>When the aggregate supply schedule is positively sloped, continous increases in the nominal money supply, ceteris paribus, result in </li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">No change in the price level and proportional increases in real output</li><br/>
<li onclick="style.color='red';">No change in real output and proportional increases in the price level</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">An increase in the price level and real output</li><br/>
<li onclick="style.color='red';">An increase in the price level and a decrease in real output</li>
</ol><br>
<li>The Phillips curve shows</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">An inverse relationship between the real and nominal wage</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">An inverse relationship between the rate of inflation and the rate of unemployment</li><br/>
<li onclick="style.color='red';">A positive relationship between the nominal wage and the rate of unemployment</li><br/>
<li onclick="style.color='red';">A positive relationship between the rate of inflation and the nominal wage</li><br/>
</ol><br>
<li>The dynamic aggregate demand schedule shifts rightward when there is an increase in</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The expected rate of inflation, ceteris paribus</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The growth rate of the nominal money supply, ceteris paribus</li><br/>
<li onclick="style.color='red';">The income tax rate, ceteris paribus</li><br/>
<li onclick="style.color='red';">The inflatin rate, ceteris paribus</li><br/>
</ol><br>
<li>The equation for dynamic aggregate demand is \(y = {y_{ - 1}} + \beta \left( {M - \pi } \right) + \alpha f\) Dynamic aggregate demand shifts to the</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Right when \({y_{ - 1}}\) increases, ceteris paribus</li><br/>
<li onclick="style.color='red';">Right when \(\pi \) increases, ceteris paribus</li><br/>
<li onclick="style.color='red';">Right when \(\mathop M\limits^ \cdot \) decreases, ceteris paribus</li><br/>
<li onclick="style.color='red';">Left when \(\pi \) decreases, ceteris paribus</li><br/>
</ol><br>
<li>Dynamic aggregate supply is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Positively sloped when \({\pi ^e} = f\left( {{\pi _{ - 1}}} \right)\)</li><br/>
<li onclick="style.color='red';">Positively sloped when \(gW = f\left( \pi \right)\)</li><br/>
<li onclick="style.color='red';">Vertical when \(gW = f\left( {{\pi _{ - 1}}} \right)\)</li><br/>
<li onclick="style.color='red';">Vertical when \(gW = f\left( {{\pi ^e}} \right)\)</li><br/>
</ol><br>
<li>The equation for dynamic aggregate supply is \(\pi = {\pi ^e} + \lambda \left( {y - {y_e}} \right).\) Dynamic aggregate supply shifts leftward, when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">There is an increase in y, ceteris paribus</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">There is an increase in \({\pi ^e},\) ceteris paribus</li><br/>
<li onclick="style.color='red';">There is an increase in \(\pi ,\) ceteris paribus</li><br/>
<li onclick="style.color='red';">There is a decrease in \(\lambda ,\) ceteris paribus</li><br/>
</ol><br>
<li>An economy is in inflationary equilibrium. An increase in the groth rate of the nominal money supply shifts</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">DAD rightward, establishing equilibrium at a higher rate of inflation and level of output</li><br/>
<li onclick="style.color='red';">DAD and DAS rightward, establishing equilibrium at a higher rate of inflation and level of output</li><br/>
<li onclick="style.color='red';">DAD and DAS leftward with a new equilibrium established at a future period at a higher rate of inflation and level of output</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">DAD to the right and DAS to the left with a new equilibrium established at a future period at a higher rate of inflation and no change in output</li><br/>
</ol><br>
<li>An economy is in inflationary equilibrium. A sustained increase in government spending shifts</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">DAD rightward for one period
<li onclick="style.color='red';">DAD rightward permanently
<li onclick="style.color='red';">DAD and DAS rightward permanently
<li onclick="style.color='red';">DAD rightward, and a new equilibrium is established after successive periods at a higher rate of inflation
</ol><br>
<li>Disinflationary demand-management policies:</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Achieve a lower rate of inflation without causing a decrease in output</li><br/>
<li onclick="style.color='red';">Reduce output but have no initial effect on the inflation rate</li><br/>
<li onclick="style.color='red';">Require an increase in government spending</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Require a reduction in the growth rate of the nominal money supply</li><br/>
</ol><br>
<li>The economy is in inflationary equilibrium. A reduction in</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Government spending permanently lowers the economy's rate of inflation</li><br/>
<li onclick="style.color='red';">Nominal money supply growth lowers the inflation rate with no effect on output in the short run</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Nominal money supply growth lowers the inflation rate and the level of output in the short run</li><br/>
<li onclick="style.color='red';">Government spending lowers the rate of inflation with no effect on output in the short run</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-87013176249035743362023-02-25T21:20:00.001+05:302023-02-25T21:20:54.024+05:30Macroeconomics Practice Test - 9: Aggegate Demand and Aggregate Supply Analysis<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>When there is full employment and aggregate supply is vertical, a decrease in taxes</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Increases the price level and real output</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Increases the price level but has no effect on real output</li><br/>
<li onclick="style.color='red';">Increases real output but has no effect on the price level</li><br/>
<li onclick="style.color='red';">Has no effect on the price level or real output</li>
</ol><br>
<li>When there is full employment and aggregate supply is vertical, a 10% increase in the nominal money supply</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Has no effect upon the price level</li><br/>
<li onclick="style.color='red';">Increases the rate of interest</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Increases the nominal wage 10%</li><br/>
<li onclick="style.color='red';">Increases the real money supply 10%</li><br/>
</ol><br>
<li>When there is full employment and aggregate supply is vertical, an increase in government spending</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Pushes up the rate of interest, which changes the composition of output</li><br/>
<li onclick="style.color='red';">Increases the real money supply, which changes the composition of output</li><br/>
<li onclick="style.color='red';">Has no effect on the real money supply or the composition of output</li><br/>
<li onclick="style.color='red';">Has no effect on the rate of interest or the composition of output</li><br/>
</ol><br>
<li>When there is full employment and aggregate supply is vertical, an increase in the nominal money supply</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Increases the real money supply, which changes the composition of output</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Has no effect on the real money supply or the composition of output</li><br/>
<li onclick="style.color='red';">Causes a proportional increase in real output</li><br/>
<li onclick="style.color='red';">Reduces the rate of interest and changes the composition of output</li><br/>
</ol><br>
<li>When there is full employment and aggregate supply is positively sloped, a decrease in taxes increases</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The price level and output</li><br/>
<li onclick="style.color='red';">The price level but has no effect on output</li><br/>
<li onclick="style.color='red';">Output but has no effect on the price level</li><br/>
<li onclick="style.color='red';">The nominal and real wage</li><br/>
</ol><br>
<li>When there is full employment and aggregate supply is positively sloped, an increase in government spending</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Decreases output and the price level</li><br/>
<li onclick="style.color='red';">Decreases output and the real wage</li><br/>
<li onclick="style.color='red';">Increases output and the real wage</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Increases output and the price levl</li><br/>
</ol><br>
<li>When there is full employment and aggregate supply is positively sloped, a rightward shift of aggregate demand increases</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The real wage, the employment of labor, and real output</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The nominal wage, the employment of labor, and real output</li><br/>
<li onclick="style.color='red';">The productivity of labor and real output</li><br/>
<li onclick="style.color='red';">The demand for labor, the employment of labor, and the real wage</li><br/>
</ol><br>
<li>When aggregate supply is positively sloped and there is an increase in the per-unit cost of materials, aggregate supply shifts</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Rightward, the price level falls, and output increases</li><br/>
<li onclick="style.color='red';">Leftward, the price level falls, and output increases</li><br/>
<li onclick="style.color='red';">Rightward, the price level increases, and output decreases</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Leftward, the price level increases, and output decreases</li><br/>
</ol><br>
<li>When aggregate supply is positively sloped and there is a decrease in the mark-up on variable cost, aggregate supply shifts</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Leftward, the price level falls, and real output increases</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Roghtward, the price level falls, and real output increases</li><br/>
<li onclick="style.color='red';">Leftward, the price level increases, the real output decreases</li><br/>
<li onclick="style.color='red';">Rightward, the price level increases, and real output decreases</li><br/>
</ol><br>
<li>Which of the following statements about the labor markets is false?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The imperfect knowledge model contends that nominal wages adapt to changes in the price level</li><br/>
<li onclick="style.color='red';">In a rational expectations model, aggregate supply may be positively sloped in the short run because of forecasting errors</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">In the "new classical" macroeconomics, aggregate supply is positively sloped in the long run</li><br/>
<li onclick="style.color='red';">Contemporary Keynesian macroeconomics attributes the positively sloped aggregate supply schedule to nominal wage contracts</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-90913734954597055762023-02-24T21:53:00.001+05:302023-02-24T21:53:46.948+05:30Macroeconomics Practice Test - 8: Schedules of Aggregate Demand and Aggregate Supply<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>Which of the following statements is not true?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">When the relative increase in the price level is greater than the relative increase in the nominal money supply, the real money supply decreases</li><br/>
<li onclick="style.color='red';">When the relative increase in the nominal money supply is greater than the the relative increase in the price level, the real money supply increases</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">When the price level decreases, ceteris paribus, the real money supply decreases</li><br/>
<li onclick="style.color='red';">When the price level increases, ceteris paribus, the real money supply decreases</li>
</ol><br>
<li>An increase in the price level</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Reduces the real money supply and shifts the LM schedule rightward</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Reduces the real money supply and shifts the LM schedule leftward</li><br/>
<li onclick="style.color='red';">Increase the real money supply and shifts the LM schedule righward</li><br/>
<li onclick="style.color='red';">Increase the real money supply and shifts the LM schedule leftward</li><br/>
</ol><br>
<li>The short-run labor supply function is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Positively sloped because of the disutility of work</li><br/>
<li onclick="style.color='red';">Negatively sloped because of the disutility of work</li><br/>
<li onclick="style.color='red';">Positively sloped because of the disutility of leisure</li><br/>
<li onclick="style.color='red';">Negativley sloped because of the disutility of leisure</li><br/>
</ol><br>
<li>The demand for labor schedule</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Shifts leftward when the price level rises</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Shifts rightward when the price level rises</li><br/>
<li onclick="style.color='red';">Shifts rightward when there is a proportionate increase in the price level and the nominal wage</li><br/>
<li onclick="style.color='red';">Shifts leftward when there is a proportionate increase in the price level and the nominal wage</li><br/>
</ol><br>
<li>When the marginal physical product of labor is 800 - 2 L, the price of goods is $2, and the cost of labor is $4 per unit, the quantity of labor employed is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">20 units</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">399 units</li><br/>
<li onclick="style.color='red';">800 units</li><br/>
<li onclick="style.color='red';">80 units</li><br/>
</ol><br>
<li>Aggregate demand is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Negatively related to the price level because a decline in the price level has a negative effect on the demand for output</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Negatively related to the price level because a decline in the price level has a positive effect on the demand for output</li><br/>
<li onclick="style.color='red';">Positively related to the price level because a decline in the price level has a negative effect on the demand for output</li><br/>
<li onclick="style.color='red';">Positively related to the price level because a decline in the price has a positive effect on the demand for output</li><br/>
</ol><br>
<li>The slope of aggregate demand becomes flatter</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The more sensitive investment spending is to the rate of interest</li><br/>
<li onclick="style.color='red';">The more sensitive the demand for money is to the rate of interest</li><br/>
<li onclick="style.color='red';">The smaller the value of the expenditure multiplier</li><br/>
<li onclick="style.color='red';">The larger the nominal money supply</li><br/>
</ol><br>
<li>Aggregate demand shifts</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Roightward when government spending decreases</li><br/>
<li onclick="style.color='red';">Leftward when the price level increases, ceteris paribus</li><br/>
<li onclick="style.color='red';">Leftward when there is a decrease in taxes, ceteris paribus</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Rightward when the nominal money supply increases, ceteris paribus</li><br/>
</ol><br>
<li>A neoclassical aggregate supply schedule exists</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">At an output level which is associated with zero rate of unemployment</li><br/>
<li onclick="style.color='red';">At an output level determine by the supply of and demand for labor</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">When the demand-for-labor and supply-of-labor schedules adjust immediately to a change in the price level</li><br/>
<li onclick="style.color='red';">When equilibrium in the labor markets is unaffected by a shift of the supply of labor schedule</li><br/>
</ol><br>
<li>Aggregate supply is positively related to the price level when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Frictional and structural unemployment exists</li><br/>
<li onclick="style.color='red';">The supply of labor schedule adjusts immediately to a change in the demand for labor</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The demand for labor schedule adjusts immediately to the price level, and the labor supply schedule does not</li><br/>
<li onclick="style.color='red';">The supply of labor schedule adjusts immediately to the price level, and the demand for labor does not</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-74984648506037582192023-02-24T21:46:00.001+05:302023-02-24T21:46:48.003+05:30Macroeconomics Practice Test - 7: Monetary and Fiscal Policy in an Open Economy<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>Which of the following does not result in an increase in U.S. net exports?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The U.S. dollar depreciates</li><br/>
<li onclick="style.color='red';">Output for U.S. trading partners increases</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Foreign currencies depreciate</li><br/>
<li onclick="style.color='red';">U.S. trading partners lift tariff barriers</li>
</ol><br>
<li>An increase in autonomous net exports</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Shift IS rightward by \({k_e}\Delta \overline X \)</li><br/>
<li onclick="style.color='red';">Shifts IS leftward by \({k_e}\Delta \overline X \)</li><br/>
<li onclick="style.color='red';">Increases the slope of IS</li><br/>
<li onclick="style.color='red';">Decreases the slope of IS</li><br/>
</ol><br>
<li>Which of the following result in an increase in the value of the dollar in a flexible exchange rate environment?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Interest rates in the U.S.A. decrease</li><br/>
<li onclick="style.color='red';">Interest rates in foreing countries increase</li><br/>
<li onclick="style.color='red';">The price level in the U.S.A. increases</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The price level in the U.S.A. decreases</li><br/>
</ol><br>
<li>In a fixed exchange rate environment, an increase in the U.S. rate of interest result in</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">A depreciation of the dollar</li><br/>
<li onclick="style.color='red';">An appreciation of the dollar</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">An increase in the U.S. money supply</li><br/>
<li onclick="style.color='red';">A decrease in the U.S. money supply</li><br/>
</ol><br>
<li>In the Mundell-Fleming model, an increase in the rate of interest in Country B</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Increases the world rate</li><br/>
<li onclick="style.color='red';">Decreases the world rate</li><br/>
<li onclick="style.color='red';">Results in a depreciation of B's currency in a flexible exchange rate environment</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Results in an appreciation of B's currency in a flexible exchange rate environment</li><br/>
</ol><br>
<li>When Country B's rate of interest falls below the world rate in a fixed exchange rate environment,</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">B's exports decrease and IS shifts leftward</li><br/>
<li onclick="style.color='red';">B's exports increase and IS shifts leftward</li><br/>
<li onclick="style.color='red';">B's money supply increases and LM shifts rightward</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">B's money supply decreases and LM shifts leftward</li><br/>
</ol><br>
<li>In the Mundell-Fleming model, an increase in Country B's money supply</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Increasea B's exports in a flexible exchange rate environment</li><br/>
<li onclick="style.color='red';">Decreasea B's exports in a flexible exchange rate envirnoment</li><br/>
<li onclick="style.color='red';">Increasea B's exports in a fixed exchange rate environment</li><br/>
<li onclick="style.color='red';">Decreases B's exports in a fixed exchange rate environment</li><br/>
</ol><br>
<li>When exchange rates are flexible, a decrease in Country B's taxes</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Has no effect upon output in Country B</li><br/>
<li onclick="style.color='red';">Causes output in Country B to increase</li><br/>
<li onclick="style.color='red';">Results in an increase in Country B's exports</li><br/>
<li onclick="style.color='red';">Results in a decrease in the value of country B's currency</li><br/>
<li onclick="style.color='red';"></li>
</ol><br>
<li>Which of the following does not increase output when exchange rates are fixed?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">There is an increase in the money supply</li><br/>
<li onclick="style.color='red';">There is an increase in government spending</li><br/>
<li onclick="style.color='red';">There is a decrease in taxes</li><br/>
<li onclick="style.color='red';">None of the above</li><br/>
</ol><br>
<li>Which of the following increases output when exchange rates are flexible?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">There is an increase in the money supply</li><br/>
<li onclick="style.color='red';">There is an increase in government spending</li><br/>
<li onclick="style.color='red';">There is a decrease in taxes</li><br/>
<li onclick="style.color='red';">None of the above</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-23136314517182686742023-02-24T21:44:00.001+05:302023-02-24T21:44:38.853+05:30Macroeconomics Practice Test - 6: Monetary and Fiscal Policy in a Closed Economy<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>A liquidity effect occurs when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">A reduction in government spending lowers the rate of interest</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">A money supply increase lowers the rate of interest</li><br/>
<li onclick="style.color='red';">An increase in government spending increases the rate of interest</li><br/>
<li onclick="style.color='red';">A money supply increase raises the rate of interest</li>
</ol><br>
<li>A liquidity effect will normally result in an output effect because</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Lower interest rates will increase the store-of-value demand for money</li><br/>
<li onclick="style.color='red';">Lower interest will cause less crowding-out</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Lower interest rates will increase interest-sensitive spending</li><br/>
<li onclick="style.color='red';">Lower interest rates will cause more crowding-out</li>
</ol><br>
<li>A change in the money supply has a greater effect upon output</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The more interest-sensitive private sector spending is</li><br/>
<li onclick="style.color='red';">The less interest-sensitive private sector spending is</li><br/>
<li onclick="style.color='red';">The smaller the expenditure multiplier is</li><br/>
<li onclick="style.color='red';">The more interest-sensitive money holdings are to the rate of interest</li><br/>
</ol><br>
<li>A money supply increase shifts LM rightward by \(\Delta \overline M \left( {1/k} \right),\) with the actual change in output closely approximating the shift of LM when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">LM is steeply sloped and IS is steeply sloped</li><br/>
<li onclick="style.color='red';">LM is vertical and IS is steeply sloped</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">LM is steeply sloped and IS is vertical</li><br/>
<li onclick="style.color='red';">LM is relatively flat as is IS</li><br/>
</ol><br>
<li>In which of the following situations will an increase in the money supply have no effect upon output?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">LM is steeply sloped and IS is relatively flat</li><br/>
<li onclick="style.color='red';">LM is vertical and IS is steeply sloped</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">LM is steeply sloped and IS is vertical</li><br/>
<li onclick="style.color='red';">LM is relatively flat as is IS</li><br/>
</ol><br>
<li>\({k_e}\)is the expenditure multiplier, b the interest sensitivity of private sector spending, h the interest sensitivity of the demand for money, and k is the transaction demand for money. From the following sets of values for \({k_e},\) b, h, and k, find the one in which a change in the money supply will have the largest multiplying effect on output</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">\({k_e},\) = 5, b = 5, h = 5, k = 0.20</li><br/>
<li onclick="style.color='red';">\({k_e},\) = 4, b = 1, h = 5, k = 0.20</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\({k_e},\) = 5, b = 10, h = 1, k = 0.20</li><br/>
<li onclick="style.color='red';">\({k_e},\) = 4, b = 5, h = 10, k = 0.10</li><br/>
</ol><br>
<li>An increase in government spending shifts IS rightward by \({k_e}\Delta \overline G ,\) with the actual change in output closely approximating the schedule's shift when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The LM is relatively flat and IS is steeply sloped</li><br/>
<li onclick="style.color='red';">The LM is vertical and IS is steeply sloped</li><br/>
<li onclick="style.color='red';">The LM is relatively flat as is IS</li><br/>
<li onclick="style.color='red';">The LM is steeply sloped and the IS is relatively flat</li><br/>
</ol><br>
<li>Crowding-out is more likely to occur when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The demand for money is interest-sensitive, and private sector spending is largely interest-insensitive</li><br/>
<li onclick="style.color='red';">The demand for money is interest-sensitive, and private sector spending is interest-sensitive</li><br/>
<li onclick="style.color='red';">The demand for money is interest-insensitive, and private sector spending is interest-insensitive</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The demand for money is interest-insensitive, and private sector spending is interest-sensitive</li><br/>
</ol><br>
<li>Crowding-out occurs when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">A decrease in the money supply raises the rate of interest which crowds-out interest-sensitive private sector spending</li><br/>
<li onclick="style.color='red';">An increase in taxes for the private sector reduces private sector disposable income and spending</li><br/>
<li onclick="style.color='red';">A reduction in income taxes results in a higher interest rate, which crowds-out interest-sensitive private sector spending</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">A reduction in government spending induces less consumption spending</li><br/>
<li onclick="style.color='red';"></li>
</ol><br>
<li>From the following sets of values fo \({k_e},\) b, h, and k, find the set in which a change in government spending has the largest multiplier effect on output</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">\({k_e},\) = 5, b = 5, h = 5, k = 0.20</li><br/>
<li onclick="style.color='red';">\({k_e},\) = 10, b = 5, h = 10, k = 0.20</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\({k_e},\) = 5, b = 10, h = 1, k = 0.20</li><br/>
<li onclick="style.color='red';">\({k_e},\) = 5, b = 5, h = 1, k = 0.10</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-1554668062907879672023-02-24T21:41:00.001+05:302023-02-24T21:41:43.202+05:30Macroeconomics Practice Test - 5: The IS-LM Framework<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>When investment is negatively related to the rate of interest, equilibrium output in the goods market</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Is unrelated to the rate of interest</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">In inversely related to the rate of interest</li><br/>
<li onclick="style.color='red';">Is positively related to the rate of interest</li><br/>
<li onclick="style.color='red';">Falls as the rate of interest decreases</li>
</ol><br>
<li>A $10 increase in autonomous investment shifts IS</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Rightward by $10</li><br/>
<li onclick="style.color='red';">Leftward by $10</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Rightward by K<sub>e</sub> ($10)</li><br/>
<li onclick="style.color='red';">Leftward by K<sub>e</sub> ($10)</li><br/>
</ol><br>
<li>Given the IS equation bi, the IS slope decrease (the IS schedule becomes flatter) when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\({k_e}\) increases and b increases</li><br/>
<li onclick="style.color='red';">\({k_e}\) decreases and b increases</li><br/>
<li onclick="style.color='red';">\({k_e}\) increasea and b decreases</li><br/>
<li onclick="style.color='red';">\({k_e}\) decreases and b decreases</li><br/>
</ol><br>
<li>An increase in autonomous lump-sum taxes shifts IS</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Rightward by \({k_t}\left( {\Delta \overline T x} \right)\)</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Leftward by \({k_t}\left( {\Delta \overline T x} \right)\)</li><br/>
<li onclick="style.color='red';">Rightward by \({k_t}\left( {\Delta \overline T x} \right)\)</li><br/>
<li onclick="style.color='red';">Leftward by \({k_t}\left( {\Delta \overline T x} \right)\)</li><br/>
</ol><br>
<li>The demand for money is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Positively related to output and the rate of interest</li><br/>
<li onclick="style.color='red';">Negatively related to output and the rate of interest</li><br/>
<li onclick="style.color='red';">Negative related to output and positively related to the rate of interest</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Positively related to output and negatively related to the rate of interest</li><br/>
</ol><br>
<li>Suppose the money supply and price level are constant, and the demand for money is a function of output and the rate of interest. When output increases, there is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">An increase in the quantity of money demanded and an increase in the rate of interest</li><br/>
<li onclick="style.color='red';">An increase in the quantity of money demanded and a decrease in the rate of interest</li><br/>
<li onclick="style.color='red';">A decrease in the quantity of money demanded and a decrease in the rate of interest</li><br/>
<li onclick="style.color='red';">A decrease in the quantity of money demanded and an increase in the rate of interest</li><br/>
</ol><br>
<li>When the LM equation is Y = $750 + 20i, there is equilibrium between the supply of and the demand for money when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The rate of interest is 10% and output is $750</li><br/>
<li onclick="style.color='red';">The rate of interest is 10% and output is $800</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The rate of interest is 10% and output $950</li><br/>
<li onclick="style.color='red';">The rate of interest is 10% and output is $900</li><br/>
</ol><br>
<li>When there is an increase in the autonomous money supply, ceteris paribus, LM shifts</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Rightward by \(\Delta \overline M \)</li><br/>
<li onclick="style.color='red';">Rightward by \(k(\Delta \overline M )\)</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Rightward by \((\Delta \overline M )/k\)</li><br/>
<li onclick="style.color='red';">Rightward by \(k/(\Delta \overline M )\)</li><br/>
</ol><br>
<li>Equilibrium in the money markets can be expressed by the equation \(i = \left( {k/h} \right)Y - \overline M /h\) The slope of LM decreases (the LM schedule becomes flatter) when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">K increases and h increases</li><br/>
<li onclick="style.color='red';">K increases and h decreases</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">K decreases and h increases</li><br/>
<li onclick="style.color='red';">K decreases and h decreases</li><br/>
</ol><br>
<li>Simultaneous equilibrium in the money (LM) and goods (IS) markets exists</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">At an unlimited number of output levels and rates of interest</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">At only one output level and rate of interest</li><br/>
<li onclick="style.color='red';">At an unlimited number of output levels and only one rate of interest</li><br/>
<li onclick="style.color='red';">At only one output level and an unlimited number of rates of interest</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-31974230491763833672023-02-24T21:39:00.001+05:302023-02-24T21:39:33.990+05:30Macroeconomics Practice Test - 4: Models of Spending Equilibrium<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>When saving is greater than investment in a two-sector model</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">output should increase</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Output should decrease</li><br/>
<li onclick="style.color='red';">Output should not change</li><br/>
<li onclick="style.color='red';">None of the above</li>
</ol><br>
<li>When output exceeds spending</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">There is unsold output, and the level of output will fall</li><br/>
<li onclick="style.color='red';">There is unsold output, and the level of output will rise</li><br/>
<li onclick="style.color='red';">There is unsold output, and the level of spending will rise</li><br/>
<li onclick="style.color='red';">There is no unsold output since the level of spending will rise</li><br/>
</ol><br>
<li>In a two-sector model, when consumption is $40 + 0.90 Yd and investment is $60, equilibrium output is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">$100</li><br/>
<li onclick="style.color='red';">$400</li><br/>
<li onclick="style.color='red';">$500</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">$900</li><br/>
</ol><br>
<li>In a two-sector model, when saving is -$40 + 0.20 Yd and investment is $60, equilibrium output is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">$100</li><br/>
<li onclick="style.color='red';">$400</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">$500</li><br/>
<li onclick="style.color='red';">$1000</li><br/>
</ol><br>
<li>By definition, the marginal propensity to consume</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Equals \(\Delta C/\Delta Yd\)</li><br/>
<li onclick="style.color='red';">Is the behavioral coefficient c in the equation \(C = \overline C + cYd\)</li><br/>
<li onclick="style.color='red';">Is the slope of the consumption function</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">All of the above</li><br/>
</ol><br>
<li>A change in autonomous spending is represented by</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">A movement along a (C + I + G) spending line</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">A shif of a (C + I + G) spending line</li><br/>
<li onclick="style.color='red';">A Change in a behavioral coefficient</li><br/>
<li onclick="style.color='red';">None of the above</li><br/>
</ol><br>
<li>Which of the 'following will not result in an increase in output?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">An increase in autonomous spending</li><br/>
<li onclick="style.color='red';">A decrease in autonomous taxes</li><br/>
<li onclick="style.color='red';">An increase in autonomous transfers</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">An increase in lump-sum taxes</li><br/>
</ol><br>
<li>An increase in lump-sum taxes, ceteris paribus, causes the</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">(c + I + G) spending line to shift upward by \(c\Delta \overline T x\)</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">(c + I + G) spending line to shift downward by \(c\Delta \overline T x\)</li><br/>
<li onclick="style.color='red';">Leakage line (S + Tx) to shift downward by \(c\Delta \overline T x\)</li><br/>
<li onclick="style.color='red';">Leakage line (S + Tx) to shift downward by \(\Delta \overline T x\)</li><br/>
</ol><br>
<li>When there is an increase in lump-sum taxes and government spending, ceteris paribus, then the</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">(S + Tx) leakage line shifts upward and the (I + G) injection line shifts upward</li><br/>
<li onclick="style.color='red';">(S + Tx) leakage line shifts downward, and the (I + G) injection line shifts downward</li><br/>
<li onclick="style.color='red';">(S + Tx) leakage lline shifts downward, and the (I + G) injection line shifts upward</li><br/>
<li onclick="style.color='red';">(S + Tx) leakage line shifts upward, and the (I + G) injection line shifts downward</li><br/>
</ol><br>
<li>When an increase in government spending is matched by an equal decrease in government transfers, output will</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Stay the same</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Increase</li><br/>
<li onclick="style.color='red';">Decrease</li><br/>
<li onclick="style.color='red';">None of the above</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-41496365085714841142023-02-24T21:36:00.001+05:302023-02-24T21:36:35.645+05:30Macroeconomics Practice Test - 3: Output in the Short and Long Run<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>When graphed, a production function displays a</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Positive relationship between output and the level of technology, ceteris paribus</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Positive relationship between output and labor inputs, ceteris paribus</li><br/>
<li onclick="style.color='red';">Negative relationship between output and the level of technology, ceteris paribus</li><br/>
<li onclick="style.color='red';">Negative relationship between output and labor inputs, ceteris paribus</li>
</ol><br>
<li>When the value of K = 4 and L = 4 with a production function of \(y = A\left( {{K^{0.5}}{L^{0.5}}} \right),\) output is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">80 when A = 5</li><br/>
<li onclick="style.color='red';">80 when A = 10</li><br/>
<li onclick="style.color='red';">40 when A = 5</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">40 when A = 10</li><br/>
</ol><br>
<li>The marginal productivity of labor is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The incremental output due to an increase in capital, ceteris paribus</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The incremental output due to an increase in labor, ceteris paribus</li><br/>
<li onclick="style.color='red';">The incremental output due to a change in technology, ceteris paribus</li><br/>
<li onclick="style.color='red';">The incremental output due to a change in technology and a change in the amount of capital</li><br/>
</ol><br>
<li>The marginal productivity of labor</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Increases when the price of the good sold increases, ceteris paribus</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Decreases when there is an adverse supply shock, ceteris paribus</li><br/>
<li onclick="style.color='red';">Increases when more workers are hired, ceteris paribus</li><br/>
<li onclick="style.color='red';">Decreases when there is an increase in the quantity of capital, ceteris paribus</li><br/>
</ol><br>
<li>The marginal revenue product of labor</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Increases when there is an adverse supply shock, ceteris paribus</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Increases when there is an increase in the price of output, ceteris paribus</li><br/>
<li onclick="style.color='red';">Increases when more workers are hired, ceteris paribus</li><br/>
<li onclick="style.color='red';">Increases when fewer capital units are used with a fixed quantity of labor, ceteris paribus</li><br/>
</ol><br>
<li>The demand for labor</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Increases when there is a technolgical advance, ceteris paribus</li><br/>
<li onclick="style.color='red';">Increases when there is an increase in the supply of labor, ceteris paribus</li><br/>
<li onclick="style.color='red';">Decreases when fewer labor units are hired, ceteris paribus</li><br/>
<li onclick="style.color='red';">Decreases when there is an increase in the supply of labor, ceteris paribus</li><br/>
</ol><br>
<li>Which of the following does not increase ouput?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">An increaese in the supply of labor, ceteris paribus</li><br/>
<li onclick="style.color='red';">There is a technological advance, ceteris paribus</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Government imposes new environmental laws, ceteris paribus</li><br/>
<li onclick="style.color='red';">There are improved methods for managing economic resources, ceteris paribus</li><br/>
</ol><br>
<li>Which of the following statements is incorrect?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Potential output increases in the short run when there is an increase in the marginal productivity of labor, ceteris paribus</li><br/>
<li onclick="style.color='red';">Potential ouput increases in the short run when there is an increase in the supply of labor, ceteris paribus</li><br/>
<li onclick="style.color='red';">Potential output increases when there is a favorable supply shock, ceteris paribus</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Potential output increases when government passes a law that mandates retirement at the age of 65, ceteris paribus</li><br/>
</ol><br>
<li>Suppose output over four successive quarters is: 1:1 $350.00; 1:2 $357.00; 1:3 $353.40; 1:4 $346.40; 2:1 $342.90; 2:2 $349.80; 2:3 $360.20; 2:4 $365.60. The economy is in a recession during which of the following quarters?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">1:1 through 1:4</li><br/>
<li onclick="style.color='red';">1:3 through 2:3</li><br/>
<li onclick="style.color='red';">1:1 through 2:2</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">1:1 through 2:1</li><br/>
</ol><br>
<li>Which of the following statements is true?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">An adverse supply shock can cause a recession</li><br/>
<li onclick="style.color='red';">A substantial increase in the minimum wage can cause a recession</li><br/>
<li onclick="style.color='red';">A decline in aggregate spending can cause a recession</li><br/>
<li onclick="style.color='red';">All of the above</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">None of the above</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-11061572101238765462023-02-24T21:25:00.003+05:302023-02-24T21:26:24.060+05:30Macroeconomics Practice Test - 2: Measures of Output, Prices and Employment<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>In a private sector model</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Household saving is a leakage from the circular flow</li><br/>
<li onclick="style.color='red';">Investment is a spending injection</li><br/>
<li onclick="style.color='red';">Saving leakages equal investment injections</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">All of the above</li><br/>
</ol><br>
<li>In an open economy model, GDP is the sum of</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Consumption, gross investment, government spending, and net exports</li><br/>
<li onclick="style.color='red';">Consumption, net investment, government spending, and net exports</li><br/>
<li onclick="style.color='red';">Consumption, gross investment, government spending, and gross exports</li><br/>
<li onclick="style.color='red';">Wages, rent, interest, profit, and depreciation</li><br/>
<li onclick="style.color='red';"></li>
</ol><br>
<li>In a closed economy, three-sector model</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Household saving equals net investment</li><br/>
<li onclick="style.color='red';">Household Saving equals gross investment</li><br/>
<li onclick="style.color='red';">Household saving plus depreciation equals gross investment plus government spending</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Household saving plus taxes plus depreciation equls gross investment plus government spending</li><br/>
</ol><br>
<li>If personal income is $570, personal income taxes are $90, consumption is $430, personal interest payments total $10, and personal saving is $40, disposable income equals</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">$500</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">$480</li><br/>
<li onclick="style.color='red';">$470</li><br/>
<li onclick="style.color='red';">$400</li><br/>
</ol><br>
<li>When nominal GDP is $1100 and real GDP is $1000, the GDP deflator is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">9.09</li><br/>
<li onclick="style.color='red';">90.91</li><br/>
<li onclick="style.color='red';">1.11</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">110</li><br/>
</ol><br>
<li>Suppose nominal GDP is $500 in year 1. If the GDP deflator doubles by year 6 while real output has increased 40% nominal output in year 6 is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">$2000</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">$1400</li><br/>
<li onclick="style.color='red';">$1000</li><br/>
<li onclick="style.color='red';">$750</li><br/>
</ol><br>
<li>In the U.S.A. the labor force includes</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Those who are employed and unemployed</li><br/>
<li onclick="style.color='red';">Those who are employed</li><br/>
<li onclick="style.color='red';">Those who are of working-age</li><br/>
<li onclick="style.color='red';">The entire population</li><br/>
</ol><br>
<li>Frictional unemployment exists</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">When there is a decrease in real GDP</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Because it takes time to find a job when one is first entering the labor force.</li><br/>
<li onclick="style.color='red';">As a result of technological change</li><br/>
<li onclick="style.color='red';">When an individual retires</li><br/>
</ol><br>
<li>The natural rate of unemployment equals the sum of those who are</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Frictionally and structurally unemployed</li><br/>
<li onclick="style.color='red';">Frictionally and cyclically unemployed</li><br/>
<li onclick="style.color='red';">Structurally and cyclically unemployed</li><br/>
<li onclick="style.color='red';">Frictionally, structurally, and cyclically unemployed</li><br/>
</ol><br>
<li>When there is no change in central bank holding of international reserves, a country's</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Trade balance always equals 0</li><br/>
<li onclick="style.color='red';">current account balance always equals 0</li><br/>
<li onclick="style.color='red';">Capital account balance always equals 0</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Balance of payments always equals 0</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-51037721309283137952023-02-24T21:22:00.001+05:302023-02-24T21:22:06.664+05:30Macroeconomics Practice Test - 1: Introduction to Macroeconomic Analysis<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>Macroeconomics is concerned with</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The level of output of goods and services</li><br/>
<li onclick="style.color='red';">The general level of prices</li><br/>
<li onclick="style.color='red';">The growth of real output</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">All the above</li><br/>
</ol><br>
<li>Real GDP increases</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">When there is an increase in the price level</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">When there is an increase in the output of goods and services</li><br/>
<li onclick="style.color='red';">When there is an increase in the population</li><br/>
<li onclick="style.color='red';">At a constant rate over time</li><br/>
</ol><br>
<li>The equation C = $20 + 0.90 Yd predicts that consumption is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">$90 when disposable income is $100</li><br/>
<li onclick="style.color='red';">$100 when disposanle income is $90</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">$110 when disposable income is $100</li><br/>
<li onclick="style.color='red';">$180 when disposable income is $200</li><br/>
</ol><br>
<li>In the equation \(C = \overline C + cYd,\) the behavioral coefficient is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">\(\overline C \)</li><br/>
<li onclick="style.color='red';">\(Yd\)</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\(c\)</li><br/>
<li onclick="style.color='red';">all the above</li><br/>
</ol><br>
<li>In the equatio \(C = \overline C + cYD,\,\,\overline C \)</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">A parameter helping to determine the level of consumption</li><br/>
<li onclick="style.color='red';">A parameter whose value depends upon the level of disposable income</li><br/>
<li onclick="style.color='red';">A behavioral coefficient</li><br/>
<li onclick="style.color='red';">A dependent variable</li><br/>
</ol><br>
<li>Cetris paribus means that</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Other factors are held constant</li><br/>
<li onclick="style.color='red';">No other variable affects the dependent variable</li><br/>
<li onclick="style.color='red';">No other model can explain the dependent variable</li><br/>
<li onclick="style.color='red';">The model is logical</li><br/>
</ol><br>
<li>Which of the following statements is correct?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">A variable is endogeneous when its value id determined by forces outside the model</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">A change in an exogeneous variable is classified as an autonomous change</li><br/>
<li onclick="style.color='red';">A variable is exogenous when its value is determined by forces within the model</li><br/>
<li onclick="style.color='red';">A variable is autonomous when its value is determined by forces within the model</li><br/>
</ol><br>
<li>In stating chat C = f (Yd, W)</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">It is hypothesized that Yd is a more important determinant of C than W</li><br/>
<li onclick="style.color='red';">It is hypothesized that W is a more important determinant of C than Yd W and Yd</li><br/>
<li onclick="style.color='red';">W and Yd are dependent variables explaining C</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Yd and W are independent variables explaining C</li><br/>
</ol><br>
<li>In a market-clearing model</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The price level always exists at the intersection of aggregate supply and aggregate demand</li><br/>
<li onclick="style.color='red';">Output is determined by the intersection of aggregate supply and aggregate demand</li><br/>
<li onclick="style.color='red';">Shifts of aggregate demand or aggregate supply immediately change price and/or output</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">All of the above</li><br/>
</ol><br>
<li>In a disequilibrium model where the price level remains above the price level at which aggregate supply and aggregate demand intersect</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Output is determined by the aggregate supply curve</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Output is determined by the aggregate demand curve</li><br/>
<li onclick="style.color='red';">There is an output shortage</li><br/>
<li onclick="style.color='red';">There is an output surplus</li><br/>
</ol><br>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-30359775934694992752023-02-20T17:12:00.003+05:302023-02-20T17:19:29.567+05:30Microeconomics Practice Test - 15: The Economics of Information<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>The cost of search may include</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">time spent to learn the properties of the product</li><br/>
<li onclick="style.color='red';">time spent to compare the product to possible substitutes</li><br/>
<li onclick="style.color='red';">time spent to find lower-price sellers of the product</li><br/>
<li onclick="style.color='red';">money spent to purchase
information on the product</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br>
<li>With each additional search, the marginal benefit from more search</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">increases</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">declines</li><br/>
<li onclick="style.color='red';">first increases and then decreases</li><br/>
<li onclick="style.color='red';">does not change</li>
</ol><br/>
<li>With a greater range of product prices, the marginal benefit from search</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">increases</li><br/>
<li onclick="style.color='red';">decreases</li><br/>
<li onclick="style.color='red';">does not change</li><br/>
<li onclick="style.color='red';">can increase or decrease</li>
</ol><br/>
<li>Asymmetric information refers to the case where</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">the seller of a product or service has more information than the buyer</li><br/>
<li onclick="style.color='red';">the buyer of a product has more information than the seller</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the seller or the buyer of a product or service has more information than the other</li><br/>
<li onclick="style.color='red';">information is irrelevant to the transaction</li>
</ol><br/>
<li>Which of the following statements is correct?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Asymmetric information leads to adverse selection</li><br/>
<li onclick="style.color='red';">adverse selection leads to asymmetric information</li><br/>
<li onclick="style.color='red';">adverse selection leads to an insurance problem</li><br/>
<li onclick="style.color='red';">moral hazard leads to asymmetric information</li>
</ol><br/>
<li>How can the problem of adverse selection be overcome?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">By buyers getting more information about the quality or the good or service</li><br/>
<li onclick="style.color='red';">by sellers providing more information of the quality of the good or service</li><br/>
<li onclick="style.color='red';">by brand names and chain retailers</li><br/>
<li onclick="style.color='red';">by professional licensing</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br/>
<li>Credit companies reduce the adverse selection problem that they face by</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">sharing borrowers’ credit histories with other credit companies</li><br/>
<li onclick="style.color='red';">asking borrowers to purchase health insurance</li><br/>
<li onclick="style.color='red';">asking borrowers for a medical checkup</li><br/>
<li onclick="style.color='red';">all of the above</li>
</ol><br/>
<li>Which of the following is not a market signaling device?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Guarantees and warranties</li><br/>
<li onclick="style.color='red';">coinsurance and deductibles</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">hedging</li><br/>
<li onclick="style.color='red';">a college education</li>
</ol><br/>
<li>Which of the following is not related to moral hazard?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The probability of an illness</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the probability of a flood</li><br/>
<li onclick="style.color='red';">the probability of a car accident</li><br/>
<li onclick="style.color='red';">the probability of a fire</li>
</ol><br/>
<li>The problem of moral hazard can be reduced by</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">requiring certain precautions from buyers of insurance</li><br/>
<li onclick="style.color='red';">co-insurance</li><br/>
<li onclick="style.color='red';">deductibles</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br/>
<li>All of the following are examples of a principal-agent problem, except:</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">managers seeking to maximize their own interests rather than the total benefits of the firm</li><br/>
<li onclick="style.color='red';">workers seeking to maximize their salaries rather than the interests of the firm</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the owners of the firm seeking to maximize the value of the firm</li><br/>
<li onclick="style.color='red';">the manager of a hospital resisting a merger with another hospital</li>
</ol><br/>
<li>A principal-agent problem can be overcome by the firm</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">offering golden parachutes to its top managers</li><br/>
<li onclick="style.color='red';">setting up generous deferred-compensation schemes for its top managers</li><br/>
<li onclick="style.color='red';">setting up profit-sharing schemes for its workers</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br/>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-7958071324962918482023-02-20T17:10:00.001+05:302023-02-20T17:10:39.136+05:30Microeconomics Practice Test - 14: General Equilibrium and Welfare Economics<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>In an economy of two individuals (A and B) and two commodities (X and Y), general equilibrium of exchange is
reached when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">\(MR{T_{xy}} = MR{S_{xy}}\)for A and B</li><br/>
<li onclick="style.color='red';">\(MR{S_{xy}} = {P_x}/{P_y}\)</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\({(MR{S_{xy}})_A} = {(MR{S_x})_B}\)</li><br/>
<li onclick="style.color='red';">all of the above</li>
</ol><br>
<li>The locus of general equilibrium points of exchange in a two-individual, two-commodity economy is called</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the consumption contract curve</li><br/>
<li onclick="style.color='red';">the production contract curve</li><br/>
<li onclick="style.color='red';">the social welfare function</li><br/>
<li onclick="style.color='red';">the transformation curve</li>
</ol><br/>
<li>In an economy of two commodities (X and Y) and two factors (L and K), general equilibrium of production is reached when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">\(MRT{S_{LK}} = {P_L}/{P_K}\)</li><br/>
<li onclick="style.color='red';">\(MRT{S_{LK}} = MR{S_{xy}}\)</li><br/>
<li onclick="style.color='red';">\(MR{T_{xy}} = MR{S_{xy}}\)</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\({(MRT{S_{LK}})_x} = {(MRT{S_{LK}})_y}\)</li>
</ol><br/>
<li>The transformation curve is derived from</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">the consumption curve</li><br/>
<li onclick="style.color='red';">the utility-possibility curve</li><br/>
<li onclick="style.color='red';">the social welfare function</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the production contract curve</li>
</ol><br/>
<li>The slope of the transformation curve is given by</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\(MR{T_{xy}}\)</li><br/>
<li onclick="style.color='red';">\(MR{S_{xy}}\)</li><br/>
<li onclick="style.color='red';">\(MRT{S_{LK}}\)</li><br/>
<li onclick="style.color='red';">all of the above</li>
</ol><br/>
<li>In an economy of two individuals (A and B) and two commodities (X and Y), general equilibrium of production and exchange occurs when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">\(MR{T_{xy}} = {P_x}/{P_y}\)</li><br/>
<li onclick="style.color='red';">\(MR{S_{xy}}{\rm{ for A and B}} = {P_x}/{P_y}\)</li><br/>
<li onclick="style.color='red';">\({(MR{S_{xy}})_A} = {(MR{S_{xy}})_B}\)</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\(MR{T_{xy}} = {(MR{S_{xy}})_A} = {(MR{S_{xy}})_B}\)</li>
</ol><br/>
<li>The distribution of two commodities between two individuals is said to be Pareto optimal if</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">one individual cannot be made better off without making the other worse off</li><br/>
<li onclick="style.color='red';">the individuals are on their consumption contract curve</li><br/>
<li onclick="style.color='red';">the individuals are on their utility-possibility curve</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br/>
<li>In deriving the utility-possibility curve, we make interpersonal comparisons of utility</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Always</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">never</li><br/>
<li onclick="style.color='red';">sometimes</li><br/>
<li onclick="style.color='red';">often</li>
</ol><br/>
<li>The locus of Pareto optimality in production and consumption is given by</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">the social welfare function</li><br/>
<li onclick="style.color='red';">the utility-possibility curve</li><br/>
<li onclick="style.color='red';">the transformation curve</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the grand utility-possibility curve</li>
</ol><br/>
<li>An ethical or value judgment must be made in order to derive</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">the transformation curve</li><br/>
<li onclick="style.color='red';">the consumption contract curve</li><br/>
<li onclick="style.color='red';">the grand utility-possibility curve</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the social welfare function</li>
</ol><br/>
<li>In a two-commodity (X and Y) and two-individual (A and B) economy, the maximum social welfare is reached at</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">any point on the grand utility-possibility curve</li><br/>
<li onclick="style.color='red';">any point on the social welfare function</li><br/>
<li onclick="style.color='red';">the point where the \(MR{T_{xy}} = MR{S_{xy}}\) for A and B</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the point of tangency of the grand utility-possibility curve with a social welfare function</li>
</ol><br/>
<li>Perfect competition leads to a point on the grand utility-possibility curve</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Always</li><br/>
<li onclick="style.color='red';">never</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">sometimes</li><br/>
<li onclick="style.color='red';">we cannot say</li>
</ol><br/>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-84207333379137808842023-02-20T17:08:00.001+05:302023-02-20T17:08:44.217+05:30Microeconomics Practice Test - 13: Input Pricing and Employment<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>A firm operating in perfectly competitive product and input markets maximizes its total profits when</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">\({P_x} = M{C_x}{\rm{ and M}}{{\rm{C}}_x}{\rm{ is rising}}\)</li><br/>
<li onclick="style.color='red';">\(\frac{{M{P_a}}}{{{P_a}}} = \frac{{M{P_b}}}{{{P_b}}}\)</li><br/>
<li onclick="style.color='red';">\(\frac{{M{P_a}}}{{{P_a}}} = \frac{{M{P_b}}}{{{P_b}}} = \frac{1}{{M{C_x}}}\)</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\(\frac{{M{P_a}}}{{{P_a}}} = \frac{{M{P_b}}}{{{P_b}}} = \frac{1}{{M{C_x}}} = \frac{1}{{{P_x}}}\)</li>
</ol><br>
<li>If input A is the only variable input for a perfectly competitive firm in the product market, the firm’s demand curve for input A is given by its</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">VMP<sub>a</sub> curve</li><br/>
<li onclick="style.color='red';">MP<sub>a</sub> curve</li><br/>
<li onclick="style.color='red';">MRC<sub>a</sub> curve</li><br/>
<li onclick="style.color='red';">none of the above</li>
</ol><br/>
<li>In order to get the demand curve for a firm for one of several variable inputs, we must consider</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the internal effect of the change in the input price</li><br/>
<li onclick="style.color='red';">the external effect of the change in the input price</li><br/>
<li onclick="style.color='red';">monopolistic exploitation</li><br/>
<li onclick="style.color='red';">monopolistic exploitation</li>
</ol><br/>
<li>Consideration of the external effect of a fall in the input price will make the market demand curve of the input</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">vertical</li><br/>
<li onclick="style.color='red';">more elastic than otherwise</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">less elastic than otherwise</li><br/>
<li onclick="style.color='red';">will have no effect on the elasticity of the market demand curve for the input</li>
</ol><br/>
<li>When the market supply curve of input A (S<sub>a</sub>) is positively sloped</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">QS<sub>a</sub> is fixed regardless of P<sub>a</sub></li><br/>
<li onclick="style.color='red';">D<sub>a</sub> alone determines the equilibrium P<sub>a</sub></li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the intersection of D<sub>a</sub> and Sa determines the equilibrium P<sub>a</sub> but not the equilibrium Q<sub>a</sub></li><br/>
<li onclick="style.color='red';">the intersection of D<sub>a</sub> and Sa determines both the equilibrium P<sub>a</sub> and Q<sub>a</sub></li>
</ol><br/>
<li>When S<sub>a</sub> has zero (price) elasticity</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">QS<sub>a</sub> is fixed regardless of P<sub>a</sub></li><br/>
<li onclick="style.color='red';">the D<sub>a</sub> curve alone determines the equilibrium P<sub>a</sub> (given the level at which QS<sub>a</sub> is fixed)</li><br/>
<li onclick="style.color='red';">the entire payment received by input A is a rent</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above are true</li>
</ol><br/>
<li>Quasi-rent is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">equal to the firm’s total profit</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">greater than the firm’s total profits</li><br/>
<li onclick="style.color='red';">smaller than the firm’s total profits</li><br/>
<li onclick="style.color='red';">any of the above is possible</li>
</ol><br/>
<li>When input A is the only variable input for an imperfect competitor in the product market, the firm’s demand for input A is given by its</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">VMP<sub>a</sub> curve</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">MRP<sub>a</sub> curve</li><br/>
<li onclick="style.color='red';">MFC<sub>a</sub> curve</li><br/>
<li onclick="style.color='red';">none of the above</li>
</ol><br/>
<li>When all firms using input A are monopolists in their respective product markets, D<sub>a</sub> is obtained by a consideration of the firms’ MRP<sub>a</sub> curves and</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the internal effects only of a change in P<sub>a</sub></li><br/>
<li onclick="style.color='red';">the external effects only of a change in P<sub>a</sub></li><br/>
<li onclick="style.color='red';">either the internal effects or the external effects</li><br/>
<li onclick="style.color='red';">both the internal and the external effects</li>
</ol><br/>
<li>The \(MR{C_a} > {P_a}\) when the firm is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">a monopsonist</li><br/>
<li onclick="style.color='red';">an oligopsonist</li><br/>
<li onclick="style.color='red';">a monopsonistic competitor</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br/>
<li>When \(VM{P_a} > MR{P_a} > {P_a},\) we have</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">monopolistic exploitation</li><br/>
<li onclick="style.color='red';">monopsonistic exploitation</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">both monopolistic and monopsonistic exploitation</li><br/>
<li onclick="style.color='red';">neither type of exploitation</li>
</ol><br/>
<li>The general condition for profit maximization for a firm under any form of organization in the input and product markets is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">\(\frac{{M{P_b}}}{{{P_b}}} = \cdot \cdot \cdot = \frac{{M{P_n}}}{{{P_n}}} = \frac{1}{{M{C_x}}} = \frac{1}{{P{}_x}}\)</li><br/>
<li onclick="style.color='red';">\(\frac{{M{P_a}}}{{{P_a}}} = \frac{{M{P_a}}}{{{P_a}}} = \cdot \cdot \cdot = \frac{{M{P_b}}}{{{P_b}}} = \frac{{M{P_n}}}{{{P_n}}} = \frac{1}{{MC{}_x}} = \frac{1}{{M{R_x}}}\)</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">\(\frac{{M{P_a}}}{{MR{C_a}}} = \frac{{M{P_b}}}{{MR{C_b}}} = \cdot \cdot \cdot = \frac{{M{P_n}}}{{MR{C_n}}} = \frac{1}{{M{C_x}}} = \frac{1}{{M{R_x}}}\)</li><br/>
<li onclick="style.color='red';">all of the above</li>
</ol><br/>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-41746442964765720162023-02-20T17:00:00.001+05:302023-02-20T17:00:54.186+05:30Microeconomics Practice Test - 12: Game Theory and Oligopolistic Behavior<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>Game theory</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">examines the choice of optimal strategies in conflict situations</li><br/>
<li onclick="style.color='red';">seeks to predict the behavior of players</li><br/>
<li onclick="style.color='red';">can be used to analyze oligopolistic interdependence</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br>
<li>A dominant strategy refers to the strategy that a player in a game chooses</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">independently of the strategy of the other player</li><br/>
<li onclick="style.color='red';">given the strategy of the other player</li><br/>
<li onclick="style.color='red';">in Nash equilibrium</li><br/>
<li onclick="style.color='red';">in a cartel</li>
</ol><br/>
<li>Which of the following statements is correct?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">a dominant strategy equilibrium is always a Nash equilibrium</li><br/>
<li onclick="style.color='red';">a dominant strategy equilibrium can be a Nash equilibrium</li><br/>
<li onclick="style.color='red';">a Nash equilibrium is also a dominant strategy equilibrium</li><br/>
<li onclick="style.color='red';">a Nash equilibrium cannot be a dominant strategy equilibrium</li>
</ol><br/>
<li>All games always have</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">a single dominant strategy</li><br/>
<li onclick="style.color='red';">multiple dominant strategies</li><br/>
<li onclick="style.color='red';">a single Nash equilibrium</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">none of the above</li>
</ol><br/>
<li>In a prisoners’ dilemma</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">each player has a dominant strategy</li><br/>
<li onclick="style.color='red';">the players are not in Nash equilibrium</li><br/>
<li onclick="style.color='red';">the players cannot do better by cooperating</li><br/>
<li onclick="style.color='red';">none of the above</li>
</ol><br/>
<li>The prisoners’ dilemma can be used to analyze</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">price competition</li><br/>
<li onclick="style.color='red';">advertising expenditures by rival firms</li><br/>
<li onclick="style.color='red';">product style changes</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br/>
<li>For a prisoners’ dilemma to occur it is sufficient</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">for each player to have a dominant strategy</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">for both players to be in Nash equilibrium</li><br/>
<li onclick="style.color='red';">for each player to adopt its dominant strategy but to be able to do better by cooperation</li><br/>
<li onclick="style.color='red';">all of the above</li>
</ol><br/>
<li>One disadvantage of the analysis of the prisoners’ dilemma is that it</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">refers to a one-move game only</li><br/>
<li onclick="style.color='red';">does not lead the players to maximize gains</li><br/>
<li onclick="style.color='red';">only applies to economics</li><br/>
<li onclick="style.color='red';">cannot be overcome by cooperation</li>
</ol><br/>
<li>The best strategy for repeated prisoners’ dilemma games is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">tit-for-tat</li><br/>
<li onclick="style.color='red';">the dominant strategy</li><br/>
<li onclick="style.color='red';">the Nash equilibrium</li><br/>
<li onclick="style.color='red';">the Cournot solution</li>
</ol><br/>
<li>Tit-for-tat refers to the game theory rule that</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">you should cooperate as long as your rival cooperates</li><br/>
<li onclick="style.color='red';">you should not cooperate when your rival does not cooperate</li><br/>
<li onclick="style.color='red';">is best to follow in repeated games</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br/>
<li>The following condition is required for tit-for-tat to be the best strategy in repeated prisoners’ dilemma games:</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">there must be a reasonably stable set of players, preferably two</li><br/>
<li onclick="style.color='red';">each firm must be able to quickly detect cheating by other firms</li><br/>
<li onclick="style.color='red';">demand and cost conditions must be relatively stable</li><br/>
<li onclick="style.color='red';">the number of moves must be infinite, or at least a very large and uncertain</li>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br/>
<li>A strategic move refers to all the following except</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">a Nash equilibrium</li><br/>
<li onclick="style.color='red';">making a credible threat</li><br/>
<li onclick="style.color='red';">adopting policies to deter entrance into the market</li><br/>
<li onclick="style.color='red';">making a preventive investment</li>
</ol><br/>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-24461246688757731752023-02-20T16:59:00.001+05:302023-02-20T16:59:02.272+05:30Microeconomics Practice Set - 10: Price and Output Under Monopolistic Competition and Oligopoly<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>In monopolistic competition, we have</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">few firms selling a differentiated product</li><br/>
<li onclick="style.color='red';">many firms selling a homogeneous product</li><br/>
<li onclick="style.color='red';">few firms selling a homogeneous product</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">many firms selling a differentiated product</li>
</ol><br>
<li>The short-run equilibrium level of output for a monopolistic competitor is given by the point where</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">P = SMC</li><br/>
<li onclick="style.color='red';">P = SAC</li><br/>
<li onclick="style.color='red';">the MR curve intersects the SMC curve</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the MR curve intersects the SMC curve from below and \(P \ge AVC\)</li>
</ol><br/>
<li>The short-run supply curve of the monopolistic competitor</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">cannot be defined</li><br/>
<li onclick="style.color='red';">cannot be defined, (b) is given by the rising portion of monopolistic competitor’s SMC curve</li><br/>
<li onclick="style.color='red';">is given by the rising portion of monopolistic competitor’s SMC curve over and above AVC</li><br/>
<li onclick="style.color='red';">can be defined only if factor prices remain constant</li>
</ol><br/>
<li>When the industry is in long-run equilibrium, the monopolistic competitor will produce at the lowest point on its LAC curve</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">Always</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">never</li><br/>
<li onclick="style.color='red';">sometimes</li><br/>
<li onclick="style.color='red';">cannot say</li>
</ol><br/>
<li>Which of the following most closely approximates our definition of oligopoly?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">The cigarette industry</li><br/>
<li onclick="style.color='red';">the barber shops in a city</li><br/>
<li onclick="style.color='red';">the gasoline stations in a city</li><br/>
<li onclick="style.color='red';">wheat farmers in the midwest</li>
</ol><br/>
<li>With reference to the Cournot model, determine which of the following statements is false</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The duopolists do not recognize their interdependence</li><br/>
<li onclick="style.color='red';">Each duopolist assumes the other will keep its quantity constant</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Each duopolist assumes the other will keep its price constant</li><br/>
<li onclick="style.color='red';">The solution is stable</li>
</ol><br/>
<li>With reference to the Edgeworth model, determine which of the following statements is correct</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">The duopolists recognize their interdependence</li><br/>
<li onclick="style.color='red';">It explains price rigidity</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Each duopolist assumes the other keeps its price constant</li><br/>
<li onclick="style.color='red';">Each duopolist assumes the other keeps its quantity constant</li>
</ol><br/>
<li>In both the Chamberlin and the kinked demand curve models, the oligopolists</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">recognize their interdependence</li><br/>
<li onclick="style.color='red';">do not collude</li><br/>
<li onclick="style.color='red';">tend to keep prices constant</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br/>
<li>The centralized cartel</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">leads to the monopoly solution</li><br/>
<li onclick="style.color='red';">behaves as the multiplant monopolist if it wants to minimize the total costs of production</li><br/>
<li onclick="style.color='red';">is illegal in the U.S.</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">all of the above</li>
</ol><br/>
<li>A market-sharing cartel will reach the monopoly solution</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">sometimes</li><br/>
<li onclick="style.color='red';">always when the product is homogeneous</li><br/>
<li onclick="style.color='red';">always when the product is differentiated</li><br/>
<li onclick="style.color='red';">never</li>
</ol><br/>
<li>In the case of price leadership by the dominant firm, all the firms in the purely oligopolistic industry will produce their best level of output</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Always</li><br/>
<li onclick="style.color='red';">never</li><br/>
<li onclick="style.color='red';">sometimes</li><br/>
<li onclick="style.color='red';">often</li>
</ol><br/>
<li>If an oligopolist incurs losses in the short run, then in the long run</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">the oligopolist will go out of business</li><br/>
<li onclick="style.color='red';">the oligopolist will stay in business</li><br/>
<li onclick="style.color='red';">the oligopolist will break even</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">any of the above is possible</li>
</ol><br/>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0tag:blogger.com,1999:blog-1368387920159069514.post-85455280266703977612023-02-20T16:57:00.001+05:302023-02-20T16:57:15.121+05:30Microeconomics Practice Set - 9: Price and Output Under Pure Monopoly<h5>Click on the correct option. Text colour will change into <span style="color:green">green</span> if your chosen option is corret and if it is wrong, it will change into <span style="color:red">red</span>:</h5>
<ol>
<li>When the D curve is elastic, MR is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">1</li><br/>
<li onclick="style.color='red';">0</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">positive</li><br/>
<li onclick="style.color='red';">negative</li>
</ol><br>
<li>If P = $10 at the point on the D curve where e = 0.5, MR is</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">$5</li><br/>
<li onclick="style.color='red';">$0</li><br/>
<li onclick="style.color='red';">-$1</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">-$10</li>
</ol><br/>
<li>The best, or optimum, level of output for the pure monopolist occurs at the point where</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">STC is minimum</li><br/>
<li onclick="style.color='red';">TR = STC</li><br/>
<li onclick="style.color='red';">TR is maximum</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">the TR and STC curves are parallel</li>
</ol><br/>
<li>At the best, or optimum, level of output for the pure monopolist</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">MR = SMC</li><br/>
<li onclick="style.color='red';">P = SMC</li><br/>
<li onclick="style.color='red';">P = lowest SAC</li><br/>
<li onclick="style.color='red';">P is highest</li>
</ol><br/>
<li>In the short run, the monopolist</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">breaks even</li><br/>
<li onclick="style.color='red';">incurs a loss</li><br/>
<li onclick="style.color='red';">makes a profit</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">any of the above</li>
</ol><br/>
<li>If the monopolist incurs losses in the short run, then in the long run</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">the monopolist will go out of business</li><br/>
<li onclick="style.color='red';">the monopolist will stay in business</li><br/>
<li onclick="style.color='red';">the monopolist will break even</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">any of the above is possible</li>
</ol><br/>
<li>The monopolist who is in</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">short-run equilibrium will also be in a long-run equilibrium</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">long-run equilibrium will also be in short-run equilibrium</li><br/>
<li onclick="style.color='red';">long-run equilibrium may or may not be in short-run equilibrium</li><br/>
<li onclick="style.color='red';">none of the above</li>
</ol><br/>
<li>In long-run equilibrium, the pure monopolist (as opposed to the perfectly competitive firm) can make pure profits because of</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">blocked entry</li><br/>
<li onclick="style.color='red';">high selling prices</li><br/>
<li onclick="style.color='red';">low LAC costs</li><br/>
<li onclick="style.color='red';">advertising</li>
</ol><br/>
<li>The imposition of a maximum price at the point where the monopolist’s SMC curve intersects the D curve causes the monopolist to</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">break even</li><br/>
<li onclick="style.color='red';">incur losses</li><br/>
<li onclick="style.color='red';">make profits</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">any of the above</li>
</ol><br/>
<li>The imposition of a per-unit tax causes the monopolist’s</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">SAC curve alone to shift up</li><br/>
<li onclick="style.color='red';">SAC and SMC curves to shift up, because the per-unit tax is like a fixed cost</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">SAC and SMC curves to shift up, because the per-unit tax is like a variable cost</li><br/>
<li onclick="style.color='red';">none of the above</li>
</ol><br/>
<li>Which form of monopoly regulation is most advantageous for the consumer?</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.fontWeight='bold';style.color='green';">Price control</li><br/>
<li onclick="style.color='red';">lump-sum tax</li><br/>
<li onclick="style.color='red';">per-unit tax</li><br/>
<li onclick="style.color='red';">all of the above three forms are equally advantageous</li>
</ol><br/>
<li>If the demand curves for a monopolist’s commodity are identical in two separate markets, then, by practicing thirddegree price discrimination, the monopolist</li>
<ol style="list-style-type: upper-alpha";><br/>
<li onclick="style.color='red';">will increase TR and total profits</li><br/>
<li onclick="style.color='red';">can increase TR and total profits</li><br/>
<li onclick="style.fontWeight='bold';style.color='green';">cannot increase TR and total profits</li><br/>
<li onclick="style.color='red';">will charge a different price in different markets</li>
</ol><br/>
</ol>Santosh Kumarhttp://www.blogger.com/profile/01469625530059844533noreply@blogger.com0