Roots of Modern Macroeconomics Mcqs - Set 1

1)   The regarding the new classical macroeconomics is hoe realistic is the assumption ?

a. that monetary policy affects aggregates demand
b. that markets do not clear quickly
c. that fiscal policy affects aggregate demand
d. of rational expectations.
Answer  Explanation 

ANSWER: of rational expectations.

Explanation:
No explanation is available for this question!


2)   It is difficult to determine if the velocity of money is constant over time because ?

a. it is difficult to measure the value of nominal GDP over time
b. there has been very little fluctuation in the money supply over time.
c. it is difficult to measure the demand for money over time
d. whether velocity is constant or not may depend on how the money supply is measure.
Answer  Explanation 

ANSWER: whether velocity is constant or not may depend on how the money supply is measure.

Explanation:
No explanation is available for this question!


3)   The quantity theory of money implies that a given percentage change in the money supply will cause ?

a. an equal percentage change in nominal DGP.
b. an equal percentage change in real GDP
c. a larger percentage change in nominal GDP
d. a smaller percentage change in nominal
Answer  Explanation 

ANSWER: an equal percentage change in nominal DGP.

Explanation:
No explanation is available for this question!


4)   People are said to have rational expectations if they ?

a. assume that this year’s inflation rate will be the same as last year’s inflation rate
b. merely guess at the inflation rate.
c. assume that this year’s inflation rate will be equal to the average inflation rate over the past 10 years
d. Use all available information in forming their expectations.
Answer  Explanation 

ANSWER: Use all available information in forming their expectations.

Explanation:
No explanation is available for this question!


5)   The hypothesis that people know the true model of the economy and that they use this model to form their expectations of the future is the ?

a. Rational-expectations hypothesis
b. Passive-expectations hypothesis
c. adaptive expectations hypothesis
d. lagged-expectations hypothesis.
Answer  Explanation 

ANSWER: Rational-expectations hypothesis

Explanation:
No explanation is available for this question!


6)   The nation that the government can establish the macroeconomic is known as ?

a. fine tuning
b. monestarism
c. microeconomics foundations of macroeconomics
d. the classical model
Answer  Explanation 

ANSWER: fine tuning

Explanation:
No explanation is available for this question!


7)   According of Keynes, the level of employment is determined by ?

a. the behaviour of trade unions.
b. the quantity of money
c. price and wages
d. the level of aggregate demand for goods and services
Answer  Explanation 

ANSWER: the level of aggregate demand for goods and services

Explanation:
No explanation is available for this question!


8)   According to classical models, the level of employment is determined primarily by ?

a. the level of aggregate demand for goods and services.
b. prices and wages
c. interest rates
d. the quantity of money
Answer  Explanation 

ANSWER: prices and wages

Explanation:
No explanation is available for this question!


9)   The economists who emphasised wage flexibility as a solution for unemployment were ?

a. new-Keynesian.
b. post-Keynesian.
c. classical economists.
d. Keynesian.
Answer  Explanation 

ANSWER: classical economists.

Explanation:
No explanation is available for this question!


10)   A group of modern economists who believe that institutional factors and confidence strongly influence business behaviour and that expanding demand will usually increase output rather than prices are the ?

a. monetarists.
b. keynesians
c. post-keynesians
d. new classical school
Answer  Explanation 

ANSWER: post-keynesians

Explanation:
No explanation is available for this question!