In the IS-LM model, a decrease in money supply shifts ---------

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

In the solow model with technological progress, the steady state growth rate of output per worker is -----------

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

With no population growth, the steady-state level of capital per worker will increase whenever the -------------- rate -------------

• A) Saving; decreases.
• B) Saving; increases.
• C) Consumption; decreases.
• D) Tax; increases.

In the two sector endogenous growth theory, the ------------affects the steady state----------

• A) Saving rate; growth rate of income.
• B) Fraction of labor; level of consumption.
• C) Saving rate; level of income.
• D) Fraction of labor; level of income.

With the help of fiscal and monetary policy, policy makers can affect ----------------variables.

• A) Endogenous
• B) One
• C) Exogenous
• D) Macroeconomic

In IS-LM framework, an expansionary fiscal policy shifts---------curve to the -----------

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

If labor productivity per week is 100 units and there are 5 employees. What is the total output?

• A) 500 units
• B) 20 units
• C) 100 units
• D) 105 units

If marginal propensity to consume (MPC) is 0.7, the government purchases multiplier is----------

• A) 0.7/0.7.
• B) 1-0.7/-0.7.
• C) 1/0.7.
• D) 1/0.3.

Due to a negative demand shock, aggregate demand curve will:

• A) Shift towards left.
• B) Become vertical.
• C) Remain the same.
• D) Shift towards right.

In macro-economics the word aggregate means--------

• A) Individual.
• B) Particular.
• C) One.
• D) Totals.

Suppose labor force (L) = 1000 in a year and population is growing at 1% per year then change in labor force will be---------------

• A) 1.
• B) 0.11.
• C) 10%.
• D) 10.

Investment causes the capital stock to------------ while depreciation causes capital stock to ----------------

• A) Rise; fall.
• B) Rise; rise.
• C) Fall; rise.
• D) Fall; fall.

Nominal exchange rate is denoted by---------------

• A) P*.
• B) E.
• C) e.
• D) r*.

If labor productivity per week is 10 units and there are 5 employees what is the total output?

• A) 50
• B) 5
• C) 2
• D) 10

A graph of all combinations of income (Y) and interest rate (r) that results in goods market equilibrium is called:

• A) IS curve
• B) LM curve
• C) Money supply curve
• D) Money demand curve

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

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

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

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

Which one of the following is correct formula of government purchases multiplier?

• A) 1/ (1-MPS)
• B) (1-MPS) / (1-MPC)
• C) 1/ (1-MPC)
• D) -MPC / (1-MPC)

The major difficulty for underdeveloped country to measure the economic growth is:

• A) Preoccupation with other more important problems.
• B) Lack of skilled manpower.
• C) Lack of supply of empirical data.
• D) All of the given options.

Under Mundell Fleming model a small open economy with a floating exchange rate, monetary expansion does all of the following EXCEPT:

• A) Cause net exports to rise.
• B) Increase the equilibrium income level.
• C) Decrease the exchange rate.
• D) Increase the exchange rate.