Quiz: PRACTICE QUIZ - III

(2014-16)
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Question

The dominant school of economic thought until midway through the Great Depression of the 1930
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1
(19187)

1 classical.
2 Keynesian.
3 monetarism.
4 supply-side.
5 rational expectations.
Correct Answer: 1
The marginal propensity to consume measures the ratio of the:
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2
(19209)

1 average amount of our disposable income that we spend.

2 average amount of our savings that we spend.
3 change in consumer spending to a change in money holdings
4 change in consumer spending to a change in interest rates.
5 change in consumer spending to a change in disposable income.
Correct Answer: 5

In a Keynesian model of income determination, when intended spending is greater than actual outp
adjustment to a new macro-economic equilibrium is based on changes in
3
(19301)

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1 Autonomous consumption
2 Unplanned inventories
3 Government spending

4 Net exports
5 All of the above
Correct Answer: 2
If there is no government or foreign sector and planned investment equals planned saving, then
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4
(19302)

1 Actual output is equal to planned spending on consumption and investment

2 Consumption plus investment equals income
3 The quantity of output produced is equal to aggregate demand
4 There are no unplanned inventory changes
5 All of the above
Correct Answer: 5

Assume a model with no government or foreign sector. If actual output is $13.1 trillion while aggr
$13.2 trillion, we know that
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5
(19303)

1 The magnitude of unintended inventory adjustments is - $100 billion

2 The magnitude of unintended inventory adjustments is + $100 billion
3 The magnitude of unintended inventory adjustments is + $10 billion
4 The actual income level is above its equilibrium
5 There currently is an excess supply of goods and services
Correct Answer: 1

Assume a simple model without any government. If an increase in autonomous investment of 40 le

increase in consumption of 160, then the marginal propensity to save is
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(19304)

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1 0.10
2 0.20
3 0.25
4 0.40

5 0.80
Correct Answer: 2

In a model with no government or foreign sector, if autonomous consumption is Co = 80, investme

the marginal propensity to save is s = 0.25, equilibrium income is
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7
(19305)

1 150
2 200
3 225
4 600
5 750
Correct Answer: 4

In a simple model with no government or foreign sector, a decline in investment of $10 billion wil
billion decline in the equilibrium level of income if
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8
(19306)

1 The mps is 0.2

2 The mpc is 0.5
3 The ratio of total consumption to total income is 0.8
4 Changes in consumption divided by changes in income equal 0.2
5 Changes in saving divided by changes in income equal 0.8
Correct Answer: 1

9
(19307)

If autonomous investment increases by 100 and government purchases decrease by 100, which of t
true?
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1 Income will increase by 100
2 Income will increase by 200
3 Income will increase by the multiplier times 100
4 Income will decrease by the multiplier times 100

5 Income will not change

Correct Answer: 5

Assume a model with no government, where consumption is the only component of aggregate dem
consumption function is of the form C = 400 + (0.9)Y, what is the equilibrium level of consumptio
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10
(19308)

1 400
2 1.000
3 1,600
4 3,600
5 4,000
Correct Answer: 5

Assume a model of the expenditure sector with no government or foreign sector. If the savings fun
as S = - 300 + (0.1)Y and autonomous investment increases by 200, by how much will consumptio
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11
(19309)

1 180
2 200
3 1,800
4 2,000
5 2,100
Correct Answer: 3

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(21612)

Both Tom and Jerry work eight hours a day. Tom can produce six baskets of goods per hour while
four baskets of the same goods per hour. It follows that Tom's
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1 productivity is greater than Jerry's
2 output is greater thatn Jerry's
3 standard of living is higher than Jerry's
4 All of the above are correct

5 None of the above is correct

Correct Answer: 4

In one day Alpha Cabinet Company made 40 cabinets with 320 hours of labour. What was their pr
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13
(21616)

1 1/8 cabinet per hour

2 8 hours per cabinet
3 40 cabinets
4 None of the option is correct.
Correct Answer: 1
Which of the following is a determinant of productivity?
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14
(21618)

1 human capital per worker

2 physical capital per worker
3 natural resources per worker
4 All of the above are correct
5 None of the above is correct
Correct Answer: 4
The key determinant of a person's standard of living in a country is
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15
(21621)

1 the amunt of goods and services produced from each hour of a worker's time.
2 the total amount of goods and services produced within the country.
3 the total amount of its physical capital.
4 its growth rate of real GDP.
5 none of the above.
Correct Answer: 1