MCQOPTIONS
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MCQOPTIONS
This section includes 27 Mcqs, each offering curated multiple-choice questions to sharpen your Master of Arts in Economics (M.A. Economics) knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Which of the following statement is inconsistent with Say’s Law |
| A. | the economy has flexible wages and prices. |
| B. | the economy’s level of investment solely depends on the level of income. |
| C. | the economy will produce at full employment level of output. |
| D. | the economy has an environment of”laissez faire” |
| Answer» C. the economy will produce at full employment level of output. | |
| 2. |
The interest rate paid on bonds is known as: |
| A. | call rate |
| B. | coupon rate |
| C. | repo rate |
| D. | bank rate |
| Answer» C. repo rate | |
| 3. |
Market does not clear is a proposition of: |
| A. | neoclassical theory. |
| B. | keynesian economics |
| C. | monetarism |
| D. | rational expectations |
| Answer» C. monetarism | |
| 4. |
Employment equilibrium in the Classical theory is achievedthrough: |
| A. | wage-price flexibility. |
| B. | changes in aggregate demand |
| C. | changes in aggregate supply |
| D. | none of these. |
| Answer» B. changes in aggregate demand | |
| 5. |
Who invented the General Equilibrium analysis? |
| A. | l. walras. |
| B. | w. leontief |
| C. | j.m.keynes. |
| D. | none of these. |
| Answer» B. w. leontief | |
| 6. |
In the long-run ISLM model, the long-run effect of a fall in net exports is to |
| 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. |
| Answer» E. | |
| 7. |
In the long-run ISLM model, the long-run effect of an autonomous increase in investment is to |
| 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. |
| Answer» D. not affect real output and reduce the interest rate. | |
| 8. |
In the long-run ISLM model, the long-run effect of a tax cut is to |
| 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. |
| Answer» D. not affect real output and reduce the interest rate. | |
| 9. |
Factors that cause the IS curve to shift include |
| 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. |
| Answer» E. | |
| 10. |
In the long-run ISLM model, the long-run effect of a cut in government spending is to |
| 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. |
| Answer» E. | |
| 11. |
Which one of the following will cause a movement up along an economy's saving schedule? |
| A. | an increase in interest rates. |
| B. | an increase in household borrowing. |
| C. | an increase in disposable income. |
| D. | an increase in stock prices. |
| Answer» D. an increase in stock prices. | |
| 12. |
A tax increase shifts the IS curve to the |
| 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. |
| Answer» B. left, causing output and interest rates to increase. | |
| 13. |
Dissaving means: |
| A. | that households are spending more than their current incomes. |
| B. | the same thing as disinvesting. |
| C. | that saving and investment are equal. |
| D. | that disposable income is less than zero. |
| Answer» B. the same thing as disinvesting. | |
| 14. |
A period of expansion and contraction measured by real GDP is called |
| A. | business cycle |
| B. | expansion |
| C. | recession |
| D. | contraction |
| Answer» B. expansion | |
| 15. |
Investment is reckoned by which method for computingGDP: |
| A. | income method |
| B. | productmethod |
| C. | expenditure method |
| D. | value added method |
| Answer» D. value added method | |
| 16. |
Which of the following is an example of fiscal policy |
| A. | change in interest rate |
| B. | change in tax rate |
| C. | controlling money supply |
| D. | manipulating bank rate |
| Answer» C. controlling money supply | |
| 17. |
The Cambridge version of the quantity theory of money was developed by: |
| A. | fisher |
| B. | alfred marshall |
| C. | pigou |
| D. | keynes |
| Answer» D. keynes | |
| 18. |
Who argued that national income issimply equal to “net product of agriculture� |
| A. | .mercantilists |
| B. | physiocrats |
| C. | classical economists |
| D. | neo classical economists |
| Answer» C. classical economists | |
| 19. |
An increase in aggregate demand is more likely to lead to demand pull inflation |
| 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 |
| Answer» C. if aggregate supply is unitary elastic | |
| 20. |
Demand pull inflation may be caused by |
| A. | an increase in cost |
| B. | a decrease in interest rate |
| C. | a reduction in government spending |
| D. | an outward shift of aggregate supply |
| Answer» C. a reduction in government spending | |
| 21. |
Which type of bank deals with short term credit? |
| A. | agricultural bank |
| B. | industrial bank |
| C. | commercial bank |
| D. | none of these |
| Answer» D. none of these | |
| 22. |
Which of the following statement is inconsistent with Say’s Law |
| A. | the economy has flexible wages and prices. |
| B. | the economy’s level of investment solely depends on the level of income. |
| C. | the economy will produce at full employment level of output. |
| D. | the economy has an environment ofâ€laissez faire†|
| Answer» C. the economy will produce at full employment level of output. | |
| 23. |
Other things equal, if the real interest rate falls and business taxes rise: |
| A. | we can be certain that investment will rise. |
| B. | investment will rise until it is equal to saving. |
| C. | we can be certain that investment will fall. |
| D. | we will be uncertain as to the resulting change in investment. |
| Answer» E. | |
| 24. |
An increase in investment is caused by |
| A. | lower interest rates |
| B. | expectations of lower national income |
| C. | a decrease in the marginal propensity to consume |
| D. | an increase in withdrawals |
| Answer» B. expectations of lower national income | |
| 25. |
The investment demand curve suggests: |
| A. | that changes in the real interest rate will not affect the amount invested. |
| B. | there is a direct relationship between the real rate of interest and the level of investment spending. |
| C. | that an increase in business taxes will tend to stimulate investment spending. |
| D. | there is an inverse relationship between the real rate of interest and the level of investment spending. |
| Answer» E. | |
| 26. |
As disposable income goes up, the: |
| A. | average propensity to consume falls. |
| B. | volume of investment diminishes. |
| C. | average propensity to save falls. |
| D. | volume of consumption declines absolutely |
| Answer» B. volume of investment diminishes. | |
| 27. |
The most important determinant of consumption and saving is the: |
| A. | price level. |
| B. | level of income. |
| C. | interest rate. |
| D. | level of bank credit. |
| Answer» C. interest rate. | |