ECO403 Quiz 1

Q1. If the growth rate of real income (Y) falls it is because of a:

1. Negative inflation
2. Fall in inflation
3. Rise in inflation
4. No change in Inflation

Correct answer: Fall in inflation

Q2. What is the slope of investment function?

1. Horizontal
2. Vertical
3. Positive
4. Negative

Correct answer: Positive

Q3. Which of the following is important decision that an economy must make?

1. Whether or not to allow people to work?
2. What goods and in what quantity to produce?
3. How to avoid using any resources at all?
4. How to eliminate consumer preferences?

Correct answer: What goods and in what quantity to produce?

Q4. What is another name for the GDP deflator?

1. Consumer price index
2. Producer price index
3. Implicit price deflator for GDP
4. Price index for consumer goods

Correct answer: Implicit price deflator for GDP

Q5. What is the slope of consumption function?

1. Horizontal
2. Negative
3. Positive
4. Vertical

Correct answer: Positive

Q6. How is total labor income calculated?

1. MPL × L
2. MPK × K
3. W/P × K
4. R/P × L

Correct answer: MPL × L

Q7. How are factor prices determined in the economy?

1. By international trade agreements
2. Through supply and demand in factor markets
3. Based on consumer spending
4. By government policies

Correct answer: Through supply and demand in factor markets

Q8. Which of the following point shows the market equilibrium condition?

1. Supply = Demand
2. Supply > Demand
3. Supply = Zero
4. Supply < Demand

Correct answer: Supply = Demand

Q9. What does the Marginal Product of Labor (MPL) measure?

1. Wage rate per hour
2. Number of hours worked by an employee
3. Additional output produced by employing one more unit of labor
4. Total revenue generated by labor

Correct answer: Additional output produced by employing one more unit of labor

Q10. How to define nominal GDP in an economy?

1. Value of final goods and services at current prices
2. Production capacity of an economy
3. Value of final goods and services at constant prices
4. Total consumption of a country

Correct answer: Value of final goods and services at current prices