Question:

When output exceeds spending:

A.

there is unsold output, and level of output will fall

B.

there is unsold output, and level of output will rise

C.

there is unsold output, and level of spending willrise

D.

there is no unsold output since the level of spending will rise

Answer» a. there is unsold output, and level of output will fall

Question:

Say’s law of market says:

A.

supply creates its own demand

B.

demand creates supply

C.

income generates demand

D.

savings create demand

Answer» a. supply creates its own demand

Question:

According to classical economists, variationsin savings are due to:

A.

level of investment

B.

rate ofinterest

C.

level of employment

D.

none of the above

Answer» b. rate ofinterest

Question:

Changes in the subjective or objective factors

A.

never affect consumption function

B.

always cause downward shift in consumption function

C.

always cause upward shift in consumption function

D.

they cause upward or downward shifts in consumption function

Answer» d. they cause upward or downward shifts in consumption function

Question:

Schedule that expressesrelationship between rate of interest and corresponding amountof investment

A.

mei

B.

mec

C.

effective demand

D.

aggregate demand

Answer» a. mei

Question:

Saving is a function of:

A.

export

B.

investment

C.

improvement in productivity

D.

income

Answer» d. income

Question:

Entrepreneurs will have no tendency to expand or contract output and employmentwhen

A.

ad>as

B.

ad<as

C.

ad=as

D.

none of the above

Answer» c. ad=as

Question:

Simultaneous equilibrium in the money (LM) and goods (IS) market exists:

A.

at an unlimited number of output levels and rates of interest

B.

at only one output level and rate ofinterest

C.

at an unlimited number of output levels and only one rate of interest

D.

at only one output level and an unlimited number of rates of interest

Answer» b. at only one output level and rate ofinterest

Question:

IS-LM model was developed by:

A.

keynes

B.

walras

C.

j.r.hicks

D.

don-patinkin

Answer» c. j.r.hicks

Question:

The aggregate production function implied under classical theory is :

A.

long run

B.

short run

C.

no time element

D.

none of the above

Answer» a. long run