The LM curve is -----------

• A) Horizontal.
• B) Vertical.
• C) Positively sloped.
• D) Negatively sloped.

According to aggregate demand (AD) & aggregate supply (AS) analysis; the favorable supply shock will -------output---------inflation and increase employment.

• A) Increase; Decrease
• B) Increase; Increase
• C) Decrease; Decrease
• D) Decrease; Increase

In Solow model; production functions shows labor augmenting technological progress. Y is equal to:

• A) F (K+1, L + K)
• B) F (K, L x E)
• C) F (K+1, L+1 + E+1)
• D) F (K, L + E)

Output per worker is------------

• A) Y = y/L
• B) y = L/Y
• C) Y = Y/L
• D) y = Y/L

Economic growth occurs when there is a(n)----------------rate.

• A) Decrease in birth
• B) Increase in the death
• C) Increase in tax
• D) Increase in the economy's productive

IS curve is --------------

• A) Horizontal.
• B) Positively sloped.
• C) Vertical.
• D) Negatively sloped.

In the short run equilibrium, if output is ------------------level, then prices will fall.

• A) At the full employment
• B) Below the full employment
• C) Above the unemployment
• D) Above the natural rate of unemployment

The important determinant of the steady state ratio of capital to labor is--------

• A) Foreign aid.
• B) Output.
• C) Saving rate.
• D) Labor force.

In the Solow model with technological progress, the steady state growth rate of capital per effective worker is -----------

• A) n - g.
• B) n + g.
• C) One.
• D) Zero.

Development is impossible without domestic--------

• A) Unemployment.
• B) Debt.
• C) Inflation.
• D) Savings.

IS* curve shows the negative relationship between nominal exchange rate and ----------

• A) Price level.
• B) Output level.
• C) Real exchange rate.
• D) Interest rate.

Which one of the following is production function?

• A) Y = F (K, L) + sfk
• B) Y = F (K, L) + Y/L
• C) Y = F (K/k, L + K/L)
• D) Y = F (K, L)

An increase in the money supply will shift ------

• A) LM curve upward (to the left).
• B) LM curve downward (to the right).
• C) IS curve to the left.
• D) IS curve to the right.

In the solow model there is -------type of capital.

• A) Four
• B) One
• C) Three
• D) Two

The ---------aggregate supply curve is ----------- at the full-employment level.

• A) Short run; steeper
• B) Long-run; vertical
• C) Short run; convex
• D) Long-run; horizontal

If the stock of physical capital remains same but population increases then labor productivity will --------

• A) increase.
• B) decrease.
• C) remain same.
• D) be zero.

An expansionary monetary policy ---------

• A) Shifts the LM curve to the left.
• B) Shifts IS curve to left.
• C) Reduces the interest rate.
• D) Decreases real output.

Which one of the following is NOT the example of adverse supply shock?

• A) Flood
• B) Discovery of reserves
• C) Heavy rain
• D) Earthquakes

"Change in consumer confidence" is an example of:

• A) Supply Shock
• B) LM Shock
• C) IS Shock
• D) Production Shock

The policy actions aimed to reduce the severity of --------- economic fluctuations is known as-------------

• A) Long run; Trade policy.
• B) Long run; Monetary policy.
• C) Short run; Fiscal policy.
• D) Short run; Stabilization policy.