Business Economics

221. In the IS-LM model, an easy monetary in conjunction with a tight fiscal policy

  1. Increases exports and decreases imports
  2. Decreases exports and increases imports
  3. Encourages foreign capital inflows to the U.S.
  4. Both b and c
Correct answer: (D)
Both b and c

222. Physiocrats give utmost importance to

  1. Services
  2. Industry
  3. Agriculture
  4. None of these
Correct answer: (C)
Agriculture

223. Which one is not an exception to the Law of Demand?

  1. Normal good
  2. Articles of Distinction
  3. Ignorance
  4. Inferior good
Correct answer: (A)
Normal good

224. A fall in the price of a commodity whose demand curve is a rectangular hyperbola causes total expenditure on the commodity to:

  1. Increases
  2. Decrease
  3. Remains unchanged
  4. Any of the above
Correct answer: (C)
Remains unchanged

225. The relationship between demand for a commodity and price, ceteris paribus, is:

  1. Negative
  2. Positive
  3. Non-negative
  4. Non-positive
Correct answer: (A)
Negative

226. A consumers demand curve can be obtained from:

  1. ICC
  2. Engel curve
  3. Lorence curve
  4. PCC
Correct answer: (D)
PCC

227. Unitary elasticity of demand is:

  1. Zero
  2. Equal to one
  3. Greater than 1
  4. Less than 1
Correct answer: (B)
Equal to one

228. A usual assumption in real business cycle models is that the economy is populated by a group of identical individuals and the behavior of the group can then be explained in terms of the behavior of one individual, called a _____________________

  1. Maximizing agent
  2. Representative agent
  3. Republican agent
  4. Informative agent
  5. Democratic agent
Correct answer: (B)
Representative agent

229. Which of the following statements are correct? According to real business cycle theory,

  1. The desirable monetary policy would appear to be one that results in a slow steady growth in the money supply and, thus stable prices.
  2. There is some role for activist monetary stabilization policy of a Keynesian type
  3. Changes in aggregate demand cannot impact output
  4. Both a and b
  5. Both a and c
Correct answer: (E)
Both a and c

230. New Keynesian would agree with all of the following except

  1. Stabilization policy can reduce the severity of business cycles
  2. Wages and prices are sticky
  3. Markets are perfectly competitive
  4. Market equilibrium is often suboptimal
Correct answer: (C)
Markets are perfectly competitive
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