Question # 1 of 15 ( Start time: 11:14:04 AM ) Total Marks: 1

Question # 1 of 15 ( Start time: 11:14:04 AM )  Total Marks: 1 

In a small open economy with a floating exchange rate, fiscal policy will be ineffective because: 

Select correct option: 

 Monetary policy will completely offset it.

 The exchange rate will remain constant.

 A fall in net exports will offset any increases in government purchases or consumption.

 The exchange rate will rise by the same amount as the interest rate.

    

Quiz Start Time: 11:14 AM  Time Left  86

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Question # 2 of 15 ( Start time: 11:15:19 AM )  Total Marks: 1 

Real interest rates are the: 

Select correct option: 

 Nominal interest rates plus the inflation rate.

 Interest rates quoted in the market.

 Interest rates quoted in the market minus the inflation rate.

 Interest rates quoted in the market plus the expected inflation rate.

    

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Question # 3 of 15 ( Start time: 11:16:29 AM )  Total Marks: 1 

The idea that government spending causes a reduction in private investment is called: 

Select correct option: 

 Fiscal drag. 

 Crowding-out.

 Investment blight.

 Accelerator effect.

Quiz Start Time: 11:14 AM  Time Left  87

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Question # 4 of 15 ( Start time: 11:17:43 AM )  Total Marks: 1 

In the steady state for the Solow model of economic growth with depreciation (ð), positive labor force growth (n) and technological change (a), we would expect Y/L to grow: 

Select correct option: 

 At the rate (a + n + ð). 

 At the rate (a + n - ð). 

 At the rate (a + n).

 At the rate a.

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Question # 5 of 15 ( Start time: 11:19:09 AM )  Total Marks: 1 

If people suddenly wish to hold more money at each interest rate: 

Select correct option: 

 The money demand curve will shift to the right.

 The LM curve will shift upward (to the left).

 Real income will fall.

 All of the given options.

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Question # 6 of 15 ( Start time: 11:19:47 AM )  Total Marks: 1 

The relative price of domestic goods in terms of foreign goods is known as: 

Select correct option: 

 Real exchange rate.

 Nominal exchange rate.

 Discount rate.

 Inflation rate.

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Question # 7 of 15 ( Start time: 11:20:08 AM )  Total Marks: 1 

An asset that is included in M3 but not in M2 is: 

Select correct option: 

 Currency.

 Checkable deposits.

 Small-denomination certificates of deposit.

 Large-denomination certificates of deposit.

Quiz Start Time: 11:14 AM  Time Left  87

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Question # 8 of 15 ( Start time: 11:20:53 AM )  Total Marks: 1 

If labor productivity per week is 200 units and there are 5 employees what is the total output? 

Select correct option: 

 40 units.

 95 units.

 1000 units.

 200 units.

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Question # 9 of 15 ( Start time: 11:21:31 AM )  Total Marks: 1 

Which of the following statements about net exports is correct? 

Select correct option: 

 The term C + I + G understate domestic production of goods and services because it leaves out exports, which must be subtracted out of GDP to obtain the correct figure.

 The term C + I + G overstates domestic production of goods and services because it contains imports, which must be subtracted out of GDP to obtain the correct figure.

 The difference between exports and imports is negative when the country is a net exporter.

 Before 1976, the United States was generally a net importer. Only after 1976, exports began to exceed imports.

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Question # 10 of 15 ( Start time: 11:22:48 AM )  Total Marks: 1 

Stock market boom or crash is an example of which of the following? 

Select correct option: 

 IS Shock

 LM Shock

 Demand Shock

 Supply Shock 

    

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Question # 11 of 15 ( Start time: 11:23:35 AM )  Total Marks: 1 

If State Bank of Pakistan wishes to pursue a “tight” monetary policy it would: 

Select correct option: 

 Increase the minimum reserve asset ratio.

 Buy government securities on the open market.

 Lower interest rates.

 Sell government securities on the open market.

Quiz Start Time: 11:14 AM  Time Left  87

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Question # 12 of 15 ( Start time: 11:24:23 AM )  Total Marks: 1 

Which plays the most important role in increasing the rate of growth in real GDP per capita over time? 

Select correct option: 

 Increases in labor productivity

 Increases in the money supply

 Decreases in the level of inflation

 Increases in the real rate of interest

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Question # 13 of 15 ( Start time: 11:25:23 AM )  Total Marks: 1 

Which of the following is the closest definition of the term "investment"? 

Select correct option: 

 Investment is the purchase of financial assets, such as stocks and bonds

 Investment is the value of newly produced capital goods

 Investment is the purchase of goods for present consumption

 Investment is the accumulation of previous capital

    

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Question # 14 of 15 ( Start time: 11:26:50 AM )  Total Marks: 1 

Human wants are: 

Select correct option: 

 Always fixed.

 Limited.

 Unlimited. 

 Likely to decrease over time.

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Question # 15 of 15 ( Start time: 11:27:04 AM )  Total Marks: 1 

A common misperception about inflation is that it reduces real wages; this is: 

Select correct option: 

 True only in the short run.

 True only in the Long run.

 True only in Command economies.

 None of the given options.

    

Quiz Start Time: 12:29 PM  Time Left  87

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Question # 1 of 15 ( Start time: 12:29:15 PM )  Total Marks: 1 

If the U.S. real exchange rate decreases, U.S. ---------------- will fall and U.S. ----------------- will rise. 

Select correct option: 

 Exports; income 

 Exports; imports

 Income; imports 

 Imports; exports

    

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Question # 2 of 15 ( Start time: 12:29:42 PM )  Total Marks: 1 

In a macroeconomic model without foreign trade or government spending, aggregate demand is the sum of: 

Select correct option: 

 Personal saving and private investment.

 Personal saving and personal consumption.

 Personal consumption and personal income.

 Personal consumption and private investment.

    

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Question # 3 of 15 ( Start time: 12:31:08 PM )  Total Marks: 1 

The major difficulty in measuring economic growth in underdeveloped countries is: 

Select correct option: 

 Lack of skilled manpower.

 Lack of supply of empirical data.

 Preoccupation with other more important problems.

 All of the given options.

    

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Question # 4 of 15 ( Start time: 12:31:53 PM )  Total Marks: 1 

Which of the following is the best measure of the economic cost of higher unemployment? 

Select correct option: 

 The loss of potential exports for the economy.

 The loss of tax revenue.

 The increase in social security benefits paid by the government.

 The output of goods and services the unemployed workers could have produced

    

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Question # 5 of 15 ( Start time: 12:33:18 PM )  Total Marks: 1 

An increase of $1 in government purchases will: 

Select correct option: 

 Shift the planned expenditure curve upward by $1.

 Shift the IS curve to the right by $1/ (1 - MPC).

 Not shift the LM curve.

 All of the given options.

    

Quiz Start Time: 12:29 PM  Time Left  87

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Question # 6 of 15 ( Start time: 12:34:29 PM )  Total Marks: 1 

Inflation resulting from demand shocks is known as: 

Select correct option: 

 Demand pull inflation.

 Cost push inflation.

 Expected inflation.

 Food inflation.

    

Quiz Start Time: 12:29 PM  Time Left  86

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Question # 7 of 15 ( Start time: 12:37:49 PM )  Total Marks: 1 

Which of the following equations is correct? 

Select correct option: 

 Nominal interest rate = real interest rate - inflation

 Real interest rate = nominal interest rate + inflation

 Real interest rate = nominal interest rate × inflation

 Real interest rate = nominal interest rate - inflation

    

Quiz Start Time: 12:29 PM  Time Left  88

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Question # 8 of 15 ( Start time: 12:39:16 PM )  Total Marks: 1 

Which of the following statements best describes the definition of scarcity? 

Select correct option: 

 There are no buyers willing to purchase what sellers have produced

 There is more than enough money to satisfy consumers' wants

 Resources are limited in quantity and can be used in different ways

 There are not enough goods to satisfy all of the buyers' demand

    

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Question # 9 of 15 ( Start time: 12:40:20 PM )  Total Marks: 1 

Real GDP (Gross Domestic Product) is measured: 

Select correct option: 

 In the prices of a base year.

 In current dollars.

 At a constant output level but at current prices.

 As the difference between the current year’s GDP and last year’s GDP.

    

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Question # 10 of 15 ( Start time: 12:41:49 PM )  Total Marks: 1 

A sustained high rate of growth of an economy results in: 

Select correct option: 

 High rate of growth of the agriculture sector.

 Change in occupational structure in favor of industry.

 Rapid industrialization.

 All of the given options. 

    

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Question # 11 of 15 ( Start time: 12:42:14 PM )  Total Marks: 1 

During periods of poor economic performance, real GDP: 

Select correct option: 

 Declines but unemployment typically does not change.

 Declines and unemployment rises sharply.

 Is unchanged but unemployment rises sharply.

 Declines and unemployment rises moderately.

    

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Question # 12 of 15 ( Start time: 12:43:16 PM )  Total Marks: 1 

As risk premium ? increases, interest rate increases, investment decreases and IS* curve: 

Select correct option: 

 Shifts leftward.

 Shifts rightward.

 Does not change.

 All of the above are possible.

    

Quiz Start Time: 12:29 PM  Time Left  86

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Question # 13 of 15 ( Start time: 12:44:38 PM )  Total Marks: 1 

Which of the following is the largest component of total expenditures? 

Select correct option: 

 Consumption

 Investment

 Government spending

 Net exports

    

Quiz Start Time: 12:29 PM  Time Left  86

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Question # 14 of 15 ( Start time: 12:45:48 PM )  Total Marks: 1 

An increase in the money supply will shift the: 

Select correct option: 

 IS curve to the left and decrease both the interest rate and the level of income.

 LM curve downward (to the right) and increase both the interest rate and the level of income.

 IS curve to the right and increase the level of income but decrease the interest rate.

 LM curve downward (to the right) and increase the level of income but decrease the interest rate.

    

Quiz Start Time: 12:29 PM  Time Left  86

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Question # 15 of 15 ( Start time: 12:47:12 PM )  Total Marks: 1 

The socially optimal rate of growth is: 

Select correct option: 

 Zero.

 Negative.

 Where the marginal social benefit = the marginal social cost.

 Total social costs are minimized.