Wednesday, July 8, 2009

ECO401- Economics 7th july page 2

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Question No: 18 ( Marks: 1 ) - Please choose one
The kinked demand curve model is based on which of the following assumptions?
► Each firm considers its rival's output to be fixed.
► Each firm considers its rival's price to be fixed.
► Each firm believes rivals will match all price changes.
► None of the given options.

Question No: 19 ( Marks: 1 ) - Please choose one
Which of the following is NOT conducive to the successful operation of a cartel?

► Market demand for the good is relatively inelastic.
► The cartel supplies all of the world's output of the good.
► Cartel members have substantial cost advantages over non-member producers.
► The supply of non-cartel members is very price elastic.

Question No: 20 ( Marks: 1 ) - Please choose one
Cartels are:
► Organizations of independent firms, producing similar products, that work together to raise prices and restrict output.
► Organizations of interdependent firms, producing similar products, that work together to raise prices and restrict output.
► Organizations of independent firms, producing different products, that work together to raise prices and restrict output.
► Considered as part of monopolistic competition.

Question No: 21 ( Marks: 1 ) - Please choose one
The marginal revenue product is:

► Upward sloping due to the law of demand.
► Upward sloping due to the law of marginal utility.
► Downward sloping due to the law of diminishing returns.
► Downward sloping due to the law of supply.

Question No: 22 ( Marks: 1 ) - Please choose one
A reason why some economists basically ignore the short run is because they believe that the economy:

► Has self-correcting mechanisms.
► Can only be graphed with a horizontal curve.
► Never needs correction.
► None of the given options.

Question No: 23 ( Marks: 1 ) - Please choose one
The long run aggregate supply curve will shift to the right if:

► The price level increases.
► Factors of production (such as labor and capital) increase.
► Expenditures (such as consumption and net exports) increase.
► The prices of inputs used to produce goods and services (such as wages and the price of oil) decrease.

Question No: 24 ( Marks: 1 ) - Please choose one
A primary implication of Keynesian economics is:

► The best government is the least government.
► Flexible wages and prices ensure full employment.
► Monetary policy is far superior to fiscal policy.
► Business-cycle instability is best corrected through government policies.

Question No: 25 ( Marks: 1 ) - Please choose one
The economic analysis most closely related to Say's Law is:

► Short-run aggregate market.
► Production possibilities.
► Imperfect competition.
► Circular flow.

Question No: 26 ( Marks: 1 ) - Please choose one
Which of the following is NOT a reason of downward slope of aggregate demand curve?


► The exchange-rate effect.
► The wealth effect.
► The classical dichotomy / monetary neutrality effects.
► The interest-rate effect.

Question No: 27 ( Marks: 1 ) - Please choose one
The upward-sloping aggregate supply curve indicates that:

► As firms increase their level of output, the cost of producing an extra unit increases.
► An increase in aggregate demand causes little, if any increase in real output the economy is operating in the long run.
► Any increase in aggregate demand causes the output of producers to fall because the general price level rises.
► None of the given options.

Question No: 28 ( Marks: 1 ) - Please choose one
An important difference between the Classical and Keynesian approaches to achieve a macroeconomic equilibrium is that:

► Keynesian economists actively promote the use of fiscal policy while the classical economists do not.
► Keynesian economists actively promote the use of monetary policy to improve aggregate economic performance while the classical economists do not.
► Classical economists believe that monetary policy will certainly affect the level of output while the Keynesians believe that money growth affects only prices.
► Classical economists believe that fiscal policy is an effective tool for achieving economic stability while the Keynesians do not.

Question No: 29 ( Marks: 1 ) - Please choose one
According to classical economists, the:


► Aggregate demand curve is downward sloping and the aggregate supply curve is vertical.
► Aggregate demand curve is downward sloping and the aggregate supply curve is upward sloping.
► Aggregate demand curve is vertical and the aggregate supply curve is upward sloping.
► Aggregate demand curve is vertical and the aggregate supply curve is horizontal.

Question No: 30 ( Marks: 1 ) - Please choose one
How many methods are there to measure Gross Domestic Product?
► Three.
► Four.
► Five.
► Six.

Question No: 31 ( Marks: 1 ) - Please choose one
Which of the following is a flow variable?
► The value of the house in which you live.
► The balance in your savings account.
► Your monthly consumption on food items.
► The number of carrots in your refrigerator at the beginning of the month.

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