Due to positive demand shock, labor demand curve:

• A) Remains unchanged.
• B) Shifts upward.
• C) Shifts downward.
• D) Becomes vertical.

The good produced by a monopolist:

• A) Has perfect substitutes.
• B) Has no close substitutes.
• C) Can be easily duplicated.
• D) Has close substitutes.

Deflation is:

• A) A decrease in the overall level of economic activity.
• B) An increase in the overall price level.
• C) An increase in the overall level of economic activity.
• D) A decrease in the overall price level.

Inflation is measured on the basis of

• A) Whole Sales Index
• B) Consumer Price Index
• C) Marshall's Index
• D) Consumer Borrowing Rate Index

Suppose the consumption function is C = 200 + 0.6 Yd. What is marginal propensity to consume?

• A) 600
• B) 60
• C) 0.6
• D) 6

The number employed in manufacturing has declined over the last two decades. Which of the following best explains this trend?

• A) Foreign firms have invested heavily in the UK.
• B) There has been a fall in the demand for imports.
• C) The government has subsidized manufacturing industry too much.
• D) Firms have substituted capital for labor to control costs.

Assume that there is no government or foreign sector, if the marginal propensity to consume (MPC) is 0.60, then the value of multiplier will be equal to:

• A) 0.40.
• B) 2.5.
• C) 1.66.
• D) 5.0.

The deregulation of foreign exchange market is an example of

• A) Free market economy
• B) Increased role of central bank
• C) Authoritarianism
• D) Government control of economy

Which of the following is a stock variable?

• A) Income
• B) All of the given options
• C) Government debt
• D) Gross domestic product

Multiplier principle states that a change in investment causes a magnified change in:

• A) Saving.
• B) Income.
• C) Consumption.
• D) Unemployment.

Government driven actual inflation in period t as expected in period t-1, and then agents erroneously spend more than they should, because:

• A) Agents view the decrease as nominal rather than real
• B) Agents view the decrease as real rather than nominal
• C) Agents view the increase as nominal rather than real
• D) Agents view the increase as real rather than nominal

The expenditure method sums up the value of all the........transactions taking place in the economy.

• A) Normal goods
• B) Final goods
• C) Intermediate goods
• D) Inferior goods

In case of balance of payment account analysis, the obligations received from the foreigners always refers to

• A) Debit payments
• B) Late payments
• C) Obsolete payments
• D) Credit payments

The average propensity to consume is the ratio of:

• A) Total consumption to total disposable income at a specific income level.
• B) A change in consumption to total disposable income at a specific income level.
• C) A change in consumption to a change in disposable income.
• D) Total consumption to a change in disposable income.

Suppose the consumption function is C = 1000 + 0.75Y. If Y = 100, then the amount of consumption is:

• A) 1075.
• B) 1750.
• C) 1500.
• D) 1100.

Total income minus net taxes is called:

• A) Individual income.
• B) Per capita income.
• C) Personal income.
• D) Disposable income.

The method which sums up all the incomes earned by all factors of production in the economy is known as:

• A) The factor income method
• B) The value added method
• C) The spending method
• D) The expenditure method

GDP measures which of the following?

• A) All of the given options.
• B) Expenditures on all final goods and services.
• C) Total value-added by all firms in the economy.
• D) Total income of everyone in the economy.

An exchange rate of 123 Japanese yen (JPY, ¥) to the United States dollar (USD, $)
means that JPY 123 is worth:

• A) The same as USD 5
• B) The same as USD 1
• C) Less than the USD 1
• D) More than the USD 1

From 2005 to 2006, change in disposable income is Rs. 430, 000 and change in consumption is Rs. 250, 000. What is the value of marginal propensity to consume?

• A) 0.058
• B) 0.72
• C) 1.72
• D) 0.58