ECO403 Final Term Past Paper Spring 2006

ECO403 · Final Term Examination – Spring 2006 · Time Allowed: 150 Minutes · Marks : 1 · Q

A simultaneous Rs.10 million increase in both taxes and govt. spending will have no net effect on aggregate demand. 1. T 2. F

Marks : 3

Q

hat four policies could be adopted to encourage the technological

progress?

W

Marks : 3

Q3. The relationship between MPL and labor unit is:

1. Positive 2. Negative onship 3. No relati 4. Vertical

Marks : 1

Q

he _____________________is an accumulation of all past annual deficits T

Marks : 1 · Q · he consumption of individuals in the aggregate tends to · vary: · T

1. More than income 2. Less then income 3. Equal to income 4. Unrelated to income

Q6. Marks : 1

recessionary gap exists

when:

4. Potential output exceeds aggregate demand

Marks : 1

At any given value of exchange rate ‘e’, a tariff or quota will not affect net exports.

2. F

Marks : 1

hy the CPI may over estate inflation?

Marks : 1

ell at the same currency-adjusted price in all countries is alled_________________________.

Marks : 3

he budget deficit or surplus:

ting practices. mately in several ways. 4. Is so arbitrarily defined that it is meaningless.

Marks : 3

Phi e shows the relationship between population and inflation rate.

2. F

Marks : 10 · Investment is the most volatile components · of: · A

1. Aggregate demand exceeds aggregate supply 2. Aggregate demand exceeds potential output 3. Aggregate supply exceeds aggregate demand

Q

1. T

Q · W · Q

A doctrine that states that goods must sc

Q

T

1. Is well defined and straightforward to measure. 2. Is well defined but frequently distorted by creative but improper accoun 3. Is difficult to measure and can be defined legiti

Q

lips curv

1. T

Q

1. GDP
2. GNP
3. Personal income
4. Disposable income

Marks : 1

utomatic stabilizers refer to:

1. s to be

3. diture items that change automatically in response to 4. nary monetary policy maneuvers designed to keep inflation automatically under control.

Marks : 1 · The multiplier effect exists · because:

one increases expenditure dependen t

4. Production causes expenditures.

Marks : 1

_________________is the stock of assets that can be readily used to make transactions.

Marks : 1

t associated with it. Which f the following statements is associated with the income

effect?

2. age rate makes work more attractive relative to leisure and other non market

4. As wages rise, the opportunity cost of leisure declines.

Marks : 1

Favorable __________________lower costs and prices.

Marks : 10 · Q · A

Inherent stock market mechanisms that automatically cause stock market gain cancelled out by losses, which make expected long-run returns equal to zero.

2. Invisible hand mechanisms to automatically bring the economy out of a recession. Government revenue and expen changes in economic activity. Discretio

Q

1. Production and expenditure are interdependent.
2. when one person increases expenditure every
3. Production and expenditure are in

Q · Q · A change in the wage rate has a substitution and an income · effec · o

1. People with higher incomes will spend some of it on leisure by working less. A higher w activities.
2. When wages rise, people will tend to work more.