Business Economics Online MCQ Set 13

QN01. Consider a demand curve which takes the form of a straight line cutting both axes. Elasticity at the mid-point of the line would be:

  1. Zero
  2. One infinite
  3. infinite
  4. Can not be calculated
Answer

(B)One infinite

QN02. In case of Giffen goods, demand curve will slope:

  1. Vertical
  2. Horizontal
  3. Upward
  4. Downward
Answer

(C)Upward

QN03. In the real business cycle model, business cycles are

  1. Efficient and do not represent lost output
  2. Driven by technology shocks
  3. Occur when markets clear
  4. All of the above
Answer

(D)All of the above

QN04. New Keynesian economics differs from real business cycle economics in that

  1. Markets are perfectly competitive in new Keynesian models
  2. Business cycles are fluctuations in the natural rate of unemployment in new Keynesian models
  3. Wages and prices are perfectly flexible
  4. Agents maximize utility in the new Keynesian model
  5. None of these
Answer

(E)None of these

QN05. Which of the following cannot be used to justify efficiency wages

  1. Sticky price(menu cost) models
  2. Turnover costs
  3. Worker shirking
  4. Worker morale
Answer

(A)Sticky price(menu cost) models

QN06. Which of the following models view changes in real supply-side factors as determinants of short-run fluctuations in output and employment?

  1. New classical models
  2. Political business cycle models
  3. Keynesian models
  4. Real business cycle models
  5. None of the above
Answer

(D)Real business cycle models

QN07. Which of the following statements are correct? In the insider/outsider model there is

  1. Unemployment due to the real wage being set above the market clearing level
  2. Cyclical unemployment in response to changes in aggregate demand
  3. Structural unemployment in response to hysteresis
  4. Both a and b
  5. All of the above
Answer

(E)All of the above

QN08. When average product is falling, it is

  1. Less than the marginal product
  2. Not measurable in this case
  3. Greater than the marginal product
  4. Equal to the marginal product
Answer

(C)Greater than the marginal product

QN09. Protectionism in the international trade stands for:

  1. Semi-restricted Trade
  2. Free trade policy
  3. Restricted Trade policy
  4. All of the above
Answer

(C)Restricted Trade policy

QN10. Monopsony is a form of market organization in which there is a:

  1. Single buyer of an input
  2. Single seller of an output
  3. Single buyer of an output
  4. Single seller of an input
Answer

(A)Single buyer of an input

QN11. The proportionality between the velocity of price movement and the inflationary gap is:

  1. Indirect and irregular
  2. Direct and linear
  3. Irregular and direct
  4. Indirect and non-linear
Answer

(B)Direct and linear

QN12. The fundamental cause for the collapse of the Bretton woods system was:

  1. The liquidity problem
  2. The adjustment problem
  3. The confidence problem
  4. None of the above
Answer

(C)The confidence problem

QN13. When automatic fiscal stabilizers are in place, a shock that causes a fall in the kevel of economic activity automatically

  1. Results in a decline in the federal budget deficit that lessens the fall in income
  2. Results in a rise in the federal deficit that lessens the fall in income
  3. Requires the federal government to balance the budget
  4. Will lead to a permanent increase in the budget deficit
Answer

(B)Results in a rise in the federal deficit that lessens the fall in income

QN14. According to the Keynesians,

  1. An easy-fiscal tight-monetary policy reduces the trade deficit, such as what occurred during the 1980s
  2. An easy-fiscal tight-monetary policy mix affects the composition of output by encouraging imports of foreign goods and discouraging U.S. exports, as was experienced during the 1980s
  3. There was not a link between the rising government budgetary deficit and the rising trade deficit during the mid-1980s
  4. Budget deficits and trade deficits should not be a source of concern
Answer

(B)An easy-fiscal tight-monetary policy mix affects the composition of output by encouraging imports of foreign goods and discouraging U.S. exports, as was experienced during the 1980s

QN15. Which of the following hypotheses about voter behaviour have been advanced in public-choice literature?

  1. Voters are myopic
  2. Unemployment is more likely to result in vote loss than is higher inflation
  3. Deficit bias of the budget process
  4. Both a and c
  5. All of the above
Answer

(E)All of the above

QN16. The Historical school was based on

  1. Deductive method
  2. Inductive method
  3. Both of above
  4. None of these
Answer

(B)Inductive method

QN17. Demand for a commodity is elastic when it has:

  1. Only one use
  2. Uses which can not be postponed
  3. Many uses
  4. Uses very essential for the consumer
Answer

(C)Many uses

QN18. The utility may be defined as:

  1. The desire for a commodity
  2. The usefulness of a commodity
  3. The necessity of a commodity
  4. The power of a commodity to satisfy wants
Answer

(D)The necessity of a commodity

QN19. The elasticity of demand for a product will be higher:

  1. The more available are substitutes for that product
  2. The more its buyers demand loyalty
  3. The more the product is considered a necessity by its buyers
  4. All of the above
Answer

(A)The more available are substitutes for that product

QN20. If the percentage increase in quantity of a commodity demanded is its price, the coefficient of price elasticity of demand is:

  1. Greater than 1
  2. Equal to 1
  3. Less than 1
  4. Zero
Answer

(C)Less than 1

QN21. Which of the following statements are correct? In (the)

  1. Keynesian model, unemployment is voluntary.
  2. Real business cycle model, all unemployment is voluntary
  3. New classical models, there is voluntary unemployment
  4. Both b&c
Answer

(D)Both b&c

QN22. The aggregate production function for real business cycle models is shown as

  1. Yt=F(Kt,Nt)
  2. Yt= Zt F(Kt - Nt)
  3. Yt= Zt F(Kt,Nt)
  4. Yt=Zt / (Kt,Nt)
Answer

(D)

Yt= Zt F(Kt,Nt)

QN23. With respect to efficiency wage models the efficiency of workers depends

  1. Positively on the money wage they are paid
  2. Positively on the real wage paid
  3. Inversely on the age of the workers
  4. Positively on the unemployment rate
Answer

(B)Positively on the real wage paid

QN24. Real business cycle and new Keynesian models disagree upon

  1. Whether people form their expectations rationally
  2. Whether changes in unemployment are voluntary or involuntary
  3. Whether individuals engage in optimizing behavior at all times
  4. Whether changes in the money supply affect output in the long-run
Answer

(B)Whether changes in unemployment are voluntary or involuntary

QN25. Which of the following is the least liquid asset?

  1. Machines
  2. Money
  3. Shares
  4. Bonds
Answer

(A)Machines

QN26. The economist who said that international trade was based upon the concept of absolute advantage was:

  1. David Ricardo
  2. Adam Smith
  3. J.S.Mill
  4. Bertil Ohlin
Answer

(B)Adam Smith

QN27. Harrod-Domar model was formed the basis of which plan

  1. First plan
  2. Third plan
  3. Second plan
  4. None of the above
Answer

(A)First plan

QN28. Joint profits are maximized in the model cartel, which is model of:

  1. Duopsony
  2. Duopoly
  3. Oligopoly
  4. Oligopony
Answer

(C)Oligopoly

QN29. Which of the following is a problem connected with general equilibrium analysis?

  1. Uniqueness problem
  2. Existence problem
  3. stability problem
  4. all of the above
Answer

(D)all of the above

QN30. Advocates of the public-choice view argue that elected officials

  1. Will always respond to inflation with expansionary policies but will respond to unemployment with restrictive policies
  2. Will actively respond to inflation with restrictive policies but are reluctant to respond to unemployment with expansionary policies
  3. Will always respond to both inflation and unemployment with expansionary policies
  4. None of the above
Answer

(D)None of the above

QN31. Automatic stabilizers drive changes in

  1. The total deficit
  2. The cyclical deficit
  3. The structural deficit
  4. Monetary policy
Answer

(B)The cyclical deficit

QN32. Feudalistic economy is dominated by

  1. Entrepreneur
  2. Worker
  3. Landlord
  4. None of these
Answer

(C)Landlord

QN33. Marginal utility curve of a given consumer is also his:

  1. Indifference curve
  2. Total utility curve
  3. Demand curve
  4. Supply curve
Answer

(C)Demand curve

QN34. The real business cycle theory is most closely related to

  1. Keynesian theory
  2. Monetarist theory
  3. The classical theory
  4. The new Keynesian theory
Answer

(C)The classical theory

QN35. In the new Keynesian models,

  1. Imperfect competition comes is the result of optimizing behavior by individuals
  2. Perfect competition is assumed with respect to the product market
  3. A natural monopoly is presumed for the product market
  4. Both a and c
  5. None of the above
Answer

(A)Imperfect competition comes is the result of optimizing behavior by individuals

QN36. New Keynesian economists

  1. Believe that the deviations of output below potential output during recessions are socially costly
  2. Presume that much unemployment is involuntary
  3. Attempt to improve the microeconomic foundations of the traditional Keynesian models not challenge their major premises
  4. Both a and c
  5. All of the above
Answer

(E)All of the above

QN37. According to the real business cycle theory business cycles

  1. Can be eliminated with appropriate monetary and fiscal policy
  2. Are natural and efficient reactions to changes in productivity
  3. Do not occur
  4. Occur infrequently
  5. None of the above
Answer

(B)Are natural and efficient reactions to changes in productivity

QN38. If the tax function is T= t0+t1y where t1 equals 1/3, and if the marginal propensity to consume out of disposable income is 3/4, then the change in GDP oer unit change into t0 (ΔY/Δ t0) will be

  1. -1
  2. +1
  3. -1.5
  4. -2
  5. +1.5
Answer

(C)-1.5

ed010d383e1f191bdb025d5985cc03fc?s=120&d=mm&r=g

DistPub Team

Distance Publisher (DistPub.com) provide project writing help from year 2007 and provide writing and editing help to hundreds student every year.