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War is Life and Economics is evil of all the War (Akhtar Saba Khan)
MACRO ECONOMICS MCQs
1
...
Which of the following is not an assumption of classical theory?
(A) Price flexibility
(B) Unemployment✔
(C) Say’s law
(D) Neutrality of money
3
...
The normal condition of a capitalist economy in classical theory is:
(A) Underemployment
(B) Full employment✔
(C) General unemployment
(D) Frictional unemployment
5
...
B
...
The theory explaining the direct relationship between the price level and quantity of money is
known as :
(A) Quantity theory of money✔
(B) Say’s law of markets
(C) Real theory of interest
(D) None of these
7
...
Equation of exchange is converted into the quantity theory of money by assuming the
following variables as constants:
(A) V and T ✔
(B) M and V

War is Life and Economics is evil of all the War (Akhtar Saba Khan)
(C) M and P
(D) V and P
9
...
Fisher’s Equation of quantity theory states that :
(A) P varies directly with income
(B) P varies directly with M✔
(C) P and M are constants
(D) None of the above
11
...
In classical theory of employment, there is the possibility of:
(A) Voluntary unemployment✔
(B) No unemployment
(C) Involuntary unemployment
(D) Disguised unemployment
13
...
B
...
C
...
Say’s law of market says:
(A) Supply creates its own demand✔
(B) Demand creates supply
(C) Income generates demand
(D) Savings create demand
15
...
In the Cambridge equation of M = kPR, the value of k is:
(A) M/V
(B) 1/V✔

War is Life and Economics is evil of all the War (Akhtar Saba Khan)
(C) V in Fisher’s equation
(D) None of these
17
...
In the classical theory, one of the following is an important assumption:
(A) Wages and prices are inflexible
(B) There is full employment✔
(C) Agents are price setters
(D) Adjustment is through quantity
...
In the Fisher’s extended equation of exchange MI VI represents:
(A) Credit money✔
(B) Primary money
C) Both primary and credit money
(D) General price level
20
...
The cash balance equation M = KPO was given by:
(A) Keynes
(B) Pigou
(C) Robertson
(D) Marshall✔
22
...
In the equation MV+ MI VI = PT, ‘M ‘denotes:
(A) Velocity of money
(B) Money in circulation✔
(C) Bank deposit
(D) None of these
24
...
As per classical theory saving is:
(A) An increasing function of rate of interest✔
(B) Decreasing function of rate of interest
(C) Decreasing function of level of income
(D) None of these
26
...
In classical system which of the following keeps the economy at full employment:
(A) Level of saving
(B) Increase in money supply
(C) Adjustment in investment
(D) Adjustment in money wages✔
28
...
According to classical economists, variations in savings are due to:
(A) Level of investment
(B) Rate of interest✔
(C) Level of employment
(D) None of the above
30
...
In MV=PT, if M doubles and V and T remain constant, then P will:
(A) Double✔
(B) 1/2
(C) 1
(D) 4
32
...
The quantity theory of money was restated by:
(A) Alfred Marshall
(B) Milton Friedman✔
(C) Irving Fisher
(D) J
...
Keynes
34
...
Wages and prices do not adjust quickly to restore general equilibrium is a property of
(A) Classical economics
(B) Keynesian economics✔
(C) Monetary economics
(D) Supply side economics
36
...
When there is an increase in the autonomous money supply, ceteris paribus, LM shifts:
(A) Leftward
(B) Rightward✔
(C) No shift
(D) None
38
...
LM curve shows the equilibrium condition in ---------- market
(A) Goods market
(B) Product market
(C) Money market✔
(D) None of these
40
...
The simplest ISLM model consists of:

War is Life and Economics is evil of all the War (Akhtar Saba Khan)
(A) Two markets✔
(B) Three markets
(C) Four markets
(D) Five markets
42
...
The IS curve has a ------slope
(A) Positive
(B) Negative✔
(C) Zero
(D) None of these
44
...
ISLM model was developed by:
(A) Hicks ✔
(B) Keynes
(C) Friedman
(D) None of these
46
...
Which policy is effective in the Classical range?
(A) Monetary policy✔
(B) Fiscal policy
(C) Incomes policy
(D) None of these
48
...
Which policy is effective in the intermediate range?
(A) Monetary policy
(B) Fiscal policy

War is Life and Economics is evil of all the War (Akhtar Saba Khan)
(C) Both policies✔
(D) None of these
50
...
R
...
Frictional unemployment exists:
(A) When there is a decrease in real GDP
(B) Because it takes time to find a job when one is first entering the labour force✔
(C) As a result of technological change
(D) When an individual retires
52
...
The marginal productivity of labour is:
(A) The incremental output due to an increase in capital, ceteris paribus
(B) The incremental output due to an increase in labour, ceteris paribus
...

54
...
When saving is greater than investment in a two-sector model,
(A) Output should increas
(b) Output should decrease✔
C) Output should not change
(d) None of these
56
...
When investment is negatively related to the rate of interest, equilibrium output in the

War is Life and Economics is evil of all the War (Akhtar Saba Khan)
goods market:
(A) Is unrelated to the rate of interest
(B) Is inversely related to the rate of interest✔
(C) Is positively related to the rate of interest
(D) Falls as the rate of interest decreases
58
...
In which of the following situations will an increase in the money supply have no effect
upon output?
(A) LM is steeply sloped and IS is steeply sloped
(B) LM is vertical and IS is steeply sloped
(C) LM is steeply sloped and IS is vertical✔
(D) LM is relatively flat as is IS
60
...
Policy Neutrality is the main proposition of:
(A) Supply Side Economics
...
Who invented the General Equilibrium analysis?
(A) L
...
✔
(B) W
...
M
...

(D) None of these
...
Employment equilibrium in the Classical theory is achieved through:
(A) Wage-Price flexibility
...


War is Life and Economics is evil of all the War (Akhtar Saba Khan)
64
...

(B) Keynesian Economics✔
(C) Monetarism
(D) Rational expectations
65
...
The monetary policy is completely ineffective when the LM curve is:
(A) Vertical
...
✔
(C) Upward sloping
(D) Downward sloping
67
...

(D) Neo-Classical school
...
Changes in the subjective or objective factors
(A) Never affect consumption function
(B) Always cause downward shift in consumption function
(C) Always cause upward shift in consumption function
(D) They cause upward or downward shifts in consumption function✔
69
...
Entrepreneurs will have no tendency to expand or contract output and employment
when
(A) AD>AS
(B) AD(C) AD=AS✔
D) None of the above
71
...
The concept of effective demand is associated with the name of
(A) Marshall
(B) Keynes✔
(C) Krugman
(D) Say
73
...
90
(A) 25
(B) 90
(C) 10✔
(D) 9
74
...
Ratio of consumption expenditure to any particular level of income
(A) MPS
(B) APS
(C) APC✔
(D) MPC
76
...
Net investment is also known as
(A) Depreciation
(B) Induced investment
(C) Autonomous investment
(D) Capital formation✔
78
...
Who propounded Psychological law of consumption
(A) Adam Smith
(B) Ricardo
(C) Keynes ✔
(D) Pigou
80
...
2, MPC will be

War is Life and Economics is evil of all the War (Akhtar Saba Khan)
(A) 0
...
2
(C) 1
...
In the linear consumption function C = a + bY, coefficient ‘a’ denotes
(A) MPC
(B) APC
(C) Autonomous consumption✔
(D) Induced consumption
82
...
When MPC = 0
...
5
(C) 2 ✔
(D) 4
84
...
Autonomous investment is
A
...
Instable
C
...
Income elastic
86
...
Not profitable
B
...
Breakeven
D
...
In the Keynesian two sector economy, AD>AS, then
A
...
S>I
C
...
S=0

War is Life and Economics is evil of all the War (Akhtar Saba Khan)
88
...
>1
B
...
0
D
...
Schedule that expresses relationship between rate of interest and corresponding amount
of investment
A
...
MEC
C
...
Aggregate Demand
90
...
Value of gross minus subsidies
B
...
Value of gross output before providing for subsidies
D
...
MEC is directly related to
A
...
Supply price
C
...
All of the above
92
...
Rate of interest
B
...
Income✔
D
...
In the Keynesian two sector economy, ADA
...
S>I✔
C
...
S=0
94
...
6 Y, MPC is
A
...
0
...
0
D
...
Keynes assumed the presence of --------- economy for the fundamental law of consumption

War is Life and Economics is evil of all the War (Akhtar Saba Khan)
A
...
Socialistic
C
...
None of the above
96
...
MEC✔
B
...
Aggregate demand
D
...
When disposable income rises from Rs 500 to Rs 600 and consumption expenditure
changes from Rs 470 to Rs 560, MPC will be equal to
A
...
100
C
...
9✔
D
...
In a two sector economy, aggregate demand is equal to
A
...
C+S
C
...
All of the above
99
...
Financial investment
B
...
Induced investment
D
...
Rate of change in savings to change in income:
A
...
APC
C
...
MPC



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Title: Introduction to macroeconomic
Description: Topic : introduction to macroeconomic Types all information available

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