Inverse relationship between the inflation rate and the unemployment rate is explained by:

• A) Price adjustment curve.
• B) Phillips Curve.
• C) Aggregate demand curve.
• D) Okun law.

Data that is recorded in money terms, unadjusted for inflation is called:

• A) Real data
• B) Nominal data
• C) Primary data
• D) Secondary data

The most commonly used index to calculate the inflation is:

• A) Wholesale Price Index (WPI)
• B) Producer Price Index (PPI)
• C) Consumer Price Index (CPI)
• D) GDP Deflator

Consider a closed economy where total savings equals Rs. 70000, investment is Rs. 90000 and total tax collection is Rs. 35000. What are leakages into the circular flow of income?

• A) Rs.125, 000
• B) Rs.160, 000
• C) Rs.105, 000
• D) Rs.195, 000

Falling inflation means that price level is rising at a(n):

• A) Fluctuating rate.
• B) Decreasing rate.
• C) Increasing rate.
• D) Constant Rate.

Macroeconomics equilibrium in a Keynesian sense obtains when:

• A) Total leakages = Total expenditures
• B) Total injections = Total investment
• C) Total injections = Total income
• D) Total injections = Total leakages

Suppose the consumption function is C = 450 + 0.5 Yd. What is marginal propensity to consume?

• A) 1.5
• B) 50
• C) 0.5
• D) 5

GDP Deflator is calculated as:

• A) Real GDP/Nominal GDP
• B) Nominal income/Real income
• C) Nominal interest rate/Real interest rate
• D) Nominal GDP/Real GDP

The output level in long run is determined by:

• A) Money supply.
• B) Aggregate demand.
• C) Aggregate supply.
• D) The government.

The saving function is:

• A) The ratio of a change in planned saving to a change in disposable income.
• B) The level of planned saving at different levels of disposable income.
• C) The level of planned saving for every change in disposable income.
• D) The ratio of total saving to total disposable income.

In Keynesian economics, an inflationary gap results if aggregate expenditures are:

• A) Undetermined.
• B) Greater than aggregate production.
• C) Less than aggregate production.
• D) Equal to aggregate production.

Suppose the consumption function is C = 350 + 0.5 Yd. If the value of disposable income is Rs. 13000 then total consumption equals:

• A) Rs. 6950.
• B) Rs. 6150.
• C) Rs. 6450.
• D) Rs. 6850.

Suppose the overall production of goods and services increases in a country because of technological improvement. This will shift:

• A) Aggregate demand curve to the right.
• B) Aggregate demand curve to the left.
• C) Aggregate supply curve to the right.
• D) Aggregate supply curve to the left.

Gross National Product (GNP) is:

• A) Gross Domestic Product (GDP) minus depreciation.
• B) Income from foreign investments.
• C) National income discounted by the GDP deflator.
• D) Net National Product (NNP) plus depreciation.

According to the quantity theory of money, which of the following is TRUE for the equation MV = PQ?

• A) P rises as V falls, other things constant
• B) M has no effect on the price level
• C) M is nominal money supply
• D) Q is the real output level

Rising inflation means that price level is rising at a(n):

• A) Constant Rate.
• B) Decreasing rate.
• C) Fluctuating rate.
• D) Increasing rate.

The relationship between saving and income is known as the:

• A) Consumption function.
• B) Disposable income.
• C) Saving function.
• D) 45-degree line.

According to Keynes inflation is the result of

• A) Excessive Supply
• B) Excessive Demand
• C) Low level of pricing
• D) Alternative Absolution

In Keynesian economics, if aggregate expenditures are less than aggregate output then:

• A) Aggregate output increases.
• B) Inventories decrease.
• C) Employment decreases.
• D) The price level rises.

The principle that states that a change in investment causes a magnified change in income is termed as the:

• A) Multiplier effect.
• B) Water paradox.
• C) Saving theorem.
• D) Paradox of thrift.