Business Economics

291. 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
Correct answer: (B)
One infinite

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

  1. Vertical
  2. Horizontal
  3. Upward
  4. Downward
Correct answer: (C)
Upward

293. 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
Correct answer: (D)
All of the above

294. 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
Correct answer: (E)
None of these

295. 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
Correct answer: (A)
Sticky price(menu cost) models

296. 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
Correct answer: (D)
Real business cycle models

297. 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
Correct answer: (E)
All of the above

298. 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
Correct answer: (C)
Greater than the marginal product

299. Protectionism in the international trade stands for:

  1. Semi-restricted Trade
  2. Free trade policy
  3. Restricted Trade policy
  4. All of the above
Correct answer: (C)
Restricted Trade policy

300. 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
Correct answer: (A)
Single buyer of an input
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