ECO401 Quiz File 1

According to Keynesian economics, aggregate expenditures are the sum of desired or planned spending undertaken by:

The household sector after taxes The business and government sectors All four sectors only when the economy is at full employment

Al l f ou r s ectors at a s p e ci f i c aggregate p rod u cti on l ev el

Microeconomics is the branch of economics that deals with which of the following topics?

The behavior of individual consumers Unemployment and interest rates The behavior of individual firms and investors T h e b eh avi or of in d i vi du al con s u mers an d b eh avi or of i n di vi du al f i rms an d i n ves tors

If the cross price elasticity of demand between two products is +3.5, then:

One of the products is expensive and one is relatively inexpensive. One product is a normal good and the other is an inferior good. The two products are complements. T h e tw o p rodu cts are s u b s ti tu tes .

The total value of goods exchanged in product markets each year is measured by:

Net national product

Gros s d o mes ti c p rod u ct

Net national product

A firm maximizes profit by operating at the level of output where:

Average revenue equals average cost. Average revenue equals average variable cost. Total costs are minimized. Margi n al reven u e eq u al s ma rgi n al cos t. The total market value of all final goods and services produced within a given period by factors of production located within a country is:

Gross domestic product

Net n ati on al p rod u ct

Net national income

The most important factor in determining the long-run profit potential in monopolistic competition is:

Fr ee en try an d exi t

The elasticity of the market demand curve The elasticity of the firm's demand curve The reaction of rival firms to a change in price

Unemployment benefits reduce the cost of job search, this may:

Decrease the unemployment rate

I n creas e th e u n e mp l oy men t rat e

Increase the output in country Leads to higher inflation

In a perfectly competitive market:

Firms can freely enter and exit Firms sell a differentiated product Transaction costs are high

Al l of th e gi ven op ti o ns

Which of the following is NOT an account in the balance of payments?

Cap i tal accou n t

Financial account Current account Future account

There are __________________methods of measuring GDP:

Four

T h ree

Five None

GDP is: A stock

A f l ow

Both a stock and a flow Neither a stock nor a flow

The study of economics basically focuses on:

For whom resources are allocated to increase efficiency. How society spends the income of individuals. How scarce resources are allocated to fulfill society's goals. Wh at s carce res ou r ces are u s ed to p rod u ce goo d s an d s ervi ces .

Which of the following will happen if there is an increase in the long term economic growth?

T h e p rod u cti on p os si b i li ti es cu rve w i l l s h if t ou tw ard . The production possibilities curve will shift inward. There will be a movement from inside the production possibilities curve to a point on the production possibilities curve. There will be a movement from the production possibilities curve to a point inside the production possibilities curve.

If more substitutes available in the market, the ________ demand will be in response to a change in price.

More el as ti c

Less elastic Unit elastic Infinite elastic

Those who hold the classical view of the labor market are likely to believe that

Monetary, but not fiscal policy will have an effect on output and employment Fiscal but not monetary policy will have an effect on output and employment. Both monetary and fiscal policy will have an effect on output and employment. Nei th er mon e tary n or f i s cal p o l i cy w il l h ave an ef f ect on ou tp u t and emp l oymen t.

Q = c + d P represents equation of

Supply function

De man d f u n cti on

Labor supply function Market demand function

According to Classical Economists, Economy always remains: