Question 1

Who argued that national income is simply equal to "net product of agriculture"?

Accepted Answer

A) .mercantilists 
B) physiocrats 
C) classical economists 
D) neo classical economists 
A) .mercantilists 
B) physiocrats 
C) classical economists 
D) neo classical economists B

Question 2

An increase in investment is caused by

Accepted Answer

A) lower interest rates 
B) expectations of lower national income 
C) a decrease in the marginal propensity to consume 
D) an increase in withdrawals 
A) lower interest rates 
B) expectations of lower national income 
C) a decrease in the marginal propensity to consume 
D) an increase in withdrawals A

Question 3

Who invented the General Equilibrium analysis?

Accepted Answer

A) l. walras. 
B) w. leontief 
C) j.m.keynes. 
D) none of these. 
A) l. walras. 
B) w. leontief 
C) j.m.keynes. 
D) none of these. A

Question 4

Employment equilibrium in the Classical theory is achievedthrough:

Accepted Answer

A) wage-price flexibility. 
B) changes in aggregate demand 
C) changes in aggregate supply 
D) none of these. 
A) wage-price flexibility. 
B) changes in aggregate demand 
C) changes in aggregate supply 
D) none of these.

Question 5

In the long-run ISLM model, the long-run effect of an autonomous increase in investment is to

Accepted Answer

A) increase real output and the interest rate. 
B) increase real output and not affect the interest rate. 
C) not affect real output and increase the interest rate. 
D) not affect real output and reduce the interest rate. 
A) increase real output and the interest rate. 
B) increase real output and not affect the interest rate. 
C) not affect real output and increase the interest rate. 
D) not affect real output and reduce the interest rate.

Question 6

A period of expansion and contraction measured by real GDP is called

Accepted Answer

A) business cycle 
B) expansion 
C) recession 
D) contraction 
A) business cycle 
B) expansion 
C) recession 
D) contraction

Question 7

A tax increase shifts the IS curve to the

Accepted Answer

A) left, causing output and interest rates to fall. 
B) left, causing output and interest rates to increase. 
C) right, causing output and interest rates to fall. 
D) right, causing output and interest rates to rise. 
A) left, causing output and interest rates to fall. 
B) left, causing output and interest rates to increase. 
C) right, causing output and interest rates to fall. 
D) right, causing output and interest rates to rise.

Question 8

In the long-run ISLM model, the long-run effect of a fall in net exports is to

Accepted Answer

A) increase real output and the interest rate. 
B) increase real output and not affect the interest rate. 
C) not affect real output and increase the interest rate. 
D) not affect real output and reduce the interest rate. 
A) increase real output and the interest rate. 
B) increase real output and not affect the interest rate. 
C) not affect real output and increase the interest rate. 
D) not affect real output and reduce the interest rate.

Question 9

The interest rate paid on bonds is known as:

Accepted Answer

A) call rate 
B) coupon rate 
C) repo rate 
D) bank rate 
A) call rate 
B) coupon rate 
C) repo rate 
D) bank rate

Question 10

Investment is reckoned by which method for computingGDP:

Accepted Answer

A) income method 
B) productmethod 
C) expenditure method 
D) value added method 
A) income method 
B) productmethod 
C) expenditure method 
D) value added method

Question 11

In the long-run ISLM model, the long-run effect of a tax cut is to

Accepted Answer

A) increase real output and the interest rate. 
B) increase real output and not affect the interest rate. 
C) not affect real output and increase the interest rate. 
D) not affect real output and reduce the interest rate. 
A) increase real output and the interest rate. 
B) increase real output and not affect the interest rate. 
C) not affect real output and increase the interest rate. 
D) not affect real output and reduce the interest rate.

Question 12

Factors that cause the IS curve to shift include

Accepted Answer

A) changes in autonomous consumer spending. 
B) changes in government spending. 
C) changes in investment spending related to a change in the interest rate. 
D) only (a) and (b) of the above. 
A) changes in autonomous consumer spending. 
B) changes in government spending. 
C) changes in investment spending related to a change in the interest rate. 
D) only (a) and (b) of the above.

Question 13

An increase in aggregate demand is more likely to lead to demand pull inflation

Accepted Answer

A) if aggregate supply is completely elastic 
B) if aggregate supply is completely inelastic 
C) if aggregate supply is unitary elastic 
D) if aggregate supply is moderately elastic 
A) if aggregate supply is completely elastic 
B) if aggregate supply is completely inelastic 
C) if aggregate supply is unitary elastic 
D) if aggregate supply is moderately elastic

Question 14

The Cambridge version of the quantity theory of money was developed by:

Accepted Answer

A) fisher 
B) alfred marshall 
C) pigou 
D) keynes 
A) fisher 
B) alfred marshall 
C) pigou 
D) keynes

Question 15

In the long-run ISLM model, the long-run effect of a cut in government spending is to

Accepted Answer

A) increase real output and the interest rate. 
B) increase real output and not affect the interest rate. 
C) not affect real output and increase the interest rate. 
D) not affect real output and reduce the interest rate. 
A) increase real output and the interest rate. 
B) increase real output and not affect the interest rate. 
C) not affect real output and increase the interest rate. 
D) not affect real output and reduce the interest rate.

Question 16

Which of the following is an example of fiscal policy

Accepted Answer

A) change in interest rate 
B) change in tax rate 
C) controlling money supply 
D) manipulating bank rate 
A) change in interest rate 
B) change in tax rate 
C) controlling money supply 
D) manipulating bank rate

Question 17

Market does not clear is a proposition of:

Accepted Answer

A) neoclassical theory. 
B) keynesian economics 
C) monetarism 
D) rational expectations 
A) neoclassical theory. 
B) keynesian economics 
C) monetarism 
D) rational expectations

Exam 1: Economic Concepts and Theories

Who argued that national income is simply equal to "net product of agriculture"?

An increase in investment is caused by

Who invented the General Equilibrium analysis?

Employment equilibrium in the Classical theory is achievedthrough:

In the long-run ISLM model, the long-run effect of an autonomous increase in investment is to

A period of expansion and contraction measured by real GDP is called

A tax increase shifts the IS curve to the

In the long-run ISLM model, the long-run effect of a fall in net exports is to

The interest rate paid on bonds is known as:

Investment is reckoned by which method for computingGDP:

In the long-run ISLM model, the long-run effect of a tax cut is to

Factors that cause the IS curve to shift include

An increase in aggregate demand is more likely to lead to demand pull inflation

The Cambridge version of the quantity theory of money was developed by:

In the long-run ISLM model, the long-run effect of a cut in government spending is to

Which of the following is an example of fiscal policy

Market does not clear is a proposition of:

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