ECO401 Final Term Past Papers Mega File

ECO401

Consumption spending, investment expenditures, government expenditures and net exports are:

1. The components of household income.
2. The components of aggregate supply.
3. The components of aggregate demand
4. The components of government revenue.

Correct answer: The components of aggregate demand

Classical economics was replaced as the dominant theory of macroeconomic analysis by:

1. Monetarism.
2. Rational expectations.
3. Keynesian economics.
4. Neoclassical economics.

Correct answer: Keynesian economics.

According to classical economics, the economy will always tend toward full employment due to:

1. Minimum wages.
2. Flexible wages and prices.
3. Extended periods of unemployment.
4. Inequality between saving and investment.

Correct answer: Flexible wages and prices.

The real interest rate will increase:

1. If there is an excess supply of loanable funds in the financial markets.
2. If there is an excess demand for loanable funds in the financial markets.

Correct answer: If there is an excess supply of loanable funds in the financial markets.

ECO401

1. If there is an excess supply of loanable funds in the foreign exchange markets.
2. If there is an excess demand for loanable funds in the foreign exchange markets.

A source of fluctuations in investment spending is:

1. Changes in government expectations of future output growth.
2. Changes in household's expectations about future output growth.
3. Changes in household's expectations about future risk.
4. Changes in investor's expectations about future profits.

Correct answer: Changes in investor's expectations about future profits.

What does the term "balance of payment deficit" refer to?

1. An increase in official international reserves.
2. A positive statistical discrepancy.
3. A negative statistical discrepancy.
4. A decline in official international reserves.

Correct answer: A decline in official international reserves.

M1 component of money supply consists of:

1. Paper currency and coins.
2. Paper currency, coins and check writing deposits.
3. Paper currency, coins, check writing deposits and savings deposits.
4. Paper currency, coins, check writing deposits, savings deposits

Correct answer: Paper currency, coins and check writing deposits.

When one producer can produce a given amount of output with fewer inputs, which of the following would occur?

1. Comparative advantage.

ECO401

1. Comparative disadvantage.
2. Absolute advantage.
3. Absolute disadvantage.

Correct answer: Absolute advantage.

The concave shape of the production possibilities curve for two goods X and Y illustrates:

1. Increasing opportunity cost for both goods.
2. Increasing opportunity cost for good X but not for good Y.
3. Increasing opportunity cost for good Y but not for good X.
4. Constant opportunity cost for both goods.

Correct answer: Increasing opportunity cost for both goods.

When college students leave town for the summer, the demand for meals at the local restaurants decline. This results in:

1. A decrease in equilibrium price and an increase in quantity of meal.
2. An increase in equilibrium price and quantity of meal.
3. A decrease in equilibrium price and quantity of meal.
4. An increase in equilibrium price and a decrease in quantity of meal.

Correct answer: A decrease in equilibrium price and quantity of meal.

A demand curve is price elastic when:

1. Changes in demand are proportionately greater than changes in price.
2. Changes in demand are equal to changes in price.
3. None of the given options.
4. Changes in demand are proportionately smaller than changes in price.

Correct answer: Changes in demand are proportionately greater than changes in price.

The numerical measurement of a consumer’s preference is called:

1. Use.