All models of ------------predict an upward-sloping SRAS curve.

• A) Mundell-Fleming
• B) Aggregate demand
• C) Aggregate supply
• D) IS-LM

As risk premium increases, interest rate---------, investment --------- and IS* curve shifts leftward.

• A) Increase; Increases
• B) Decreases; decreases
• C) Decreases; increases
• D) Increases; decreases

The role of--------- is very important under --------------rate.

• A) Central bank; floating exchange
• B) Central bank; fixed exchange
• C) Commercial bank; floating exchange
• D) Micro finance bank; fixed exchange

Trade policy is ---------on output under ------------exchange rate.

• A) Totally ineffective; fixed
• B) More effective; fixed
• C) Totally ineffective; nominal
• D) More effective; real

As risk premium increases, interest rate ----------, money demand decreases and LM* curve shifts----------.

• A) Increases; rightward.
• B) Decrease; leftward.
• C) Increase; leftward.
• D) Decrease; rightward.

People base their expectations on all available information, including information about current & prospective future policies is known as:

• A) Expectations.
• B) Rational expectations.
• C) Negative expectations.
• D) Adaptive expectations.

Suppose the price of product “X” increases due to increase in price of raw material. This is the example of ---------

• A) Cost push inflation.
• B) Disinflation.
• C) Hyperinflation.
• D) Demand pull inflation.

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

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

In the endogenous growth model, the assumption of ----------------return to capital is more plausible.

• A) increasing
• B) zero
• C) decreasing
• D) constant

Which of the following is an example of fiscal policy that will increase aggregate demand?

• A) A cut in government expenditure.
• B) A cut in discount rate.
• C) An increase in discount rate.
• D) A tax cut.

Which of the following is an example of LM shock?

• A) Business expectations
• B) Stock market boom
• C) Consumer confidence
• D) More ATM machine

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

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

"Change in consumer confidence" is an example of:

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

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

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

In the IS-LM model, an increase in money supply shifts ---------

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

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

• A) e.
• B) r*.
• C) P*.
• D) E.

As risk premium increases, interest rate --------, money demand --------- and LM* curve shifts rightward.

• A) Decreases; increases
• B) Decreases; decreases
• C) Increases; Increases
• D) Increases; decreases