If marginal propensity to consume is 0.5, the tax multiplier is equal to-----------

• A) -1.
• B) +0.5.
• C) -0.5.
• D) +1.

A decrease in tax that results from expansionary -------------policy causes interest rate to -------

• A) Monetary; fall.
• B) Monetary; rise.
• C) Fiscal; fall
• D) Fiscal; rise.

In the Solow growth model with technological growth rate, L × E shows the number of effective--------

• A) Workers.
• B) Output per worker.
• C) Capital per worker.
• D) Saving per worker.

In the Solow growth model with technological growth rate,y = Y/ (L×E) shows-----------per effective worker.

• A) Output
• B) Technology
• C) Capital
• D) Labor

In the steady state ----------does not change because investment equal to-----------

• A) Investment; saving.
• B) Capital; saving.
• C) Capital; depreciation.
• D) Investment; consumption.

In Solow model,national income identity in per worker terms:

• A) Y = C + I + T
• B) Y = C + I + S
• C) y = c + i
• D) Y = C + I

In basic endogenous growth theory capital exhibits------------return.

• A) constant
• B) Increasing
• C) zero
• D) Decreasing

Which of the following is also known as endogenous growth model?

• A) Best growth model
• B) AK Model
• C) Population growth model
• D) Exogenous growth model

Currency exchange rate which is determined by free market forces is called --------------

• A) Pegged exchange rate.
• B) Floating exchange rate.
• C) Exchange rate.
• D) Fixed exchange rate.

The liquidity preference theory is presented by ---------

• A) Milton.
• B) Johan Maynard Keynes.
• C) Fisher.
• D) Adam smith.

In Solow model consumption per person is equal to ----------

• A) (1-s)y.
• B) (1+s)y.
• C) (1*s)y.
• D) sy.

If marginal propensity to consume (MPC) is 0.9, the government purchases multiplier is----------

• A) 2
• B) 1.11
• C) 5
• D) 10

Macro-economic disequilibrium exists when aggregate supply is -------

• A) not equal to aggregate demand.
• B) equal to aggregate demand.
• C) equal to aggregate investment.
• D) not equal to aggregate investment.

The aggregate demand curve shows the relationship between the price level and the:

• A) Quantity of output supplied.
• B) Income.
• C) Quantity of output demanded.
• D) Investment.

An expansionary monetary policy shifts ------------to the---------

• A) IS curve; left.
• B) IS curve; right.
• C) LM curve; right.
• D) LM curve; left.

In the Solow growth model with technological growth, k = K/ (L×E) shows---------------per effective worker.

• A) Labor
• B) Capital
• C) Output & labor
• D) Output

In the IS-LM model, --------------in government purchases can shift ---------curve to the left.

• A) A decrease; IS
• B) A decrease; LM
• C) An increase; IS
• D) An increase; LM

Suppose the economy of China with population growth but no technological change.Which of the following will generate a higher steady state growth rate of total output?

• A) Higher birth rate.
• B) Higher inflation rate.
• C) Higher hoarding rate.
• D) Higher saving rate.

In the ------------model,capital exhibits diminishing returns. In a basic --------------- model, capital exhibits constant returns.

• A) Solow growth; Population growth
• B) Population growth; Endogenous growth
• C) Solow growth; endogenous growth
• D) Endogenous growth; Solow growth

Which of the following is a true statement?

• A) Expansionary monetary policy shifts IS curve.
• B) A negative IS shocks shifts IS curve to the left.
• C) Expansionary monetary policy increases interest rate.
• D) A negative IS shocks shifts AD curve to the right.