Economics MCQs

Page No. 226

According to the Phillips curve unemployment will return to the natural rate when ?


aNominal wages are equal to expected wages

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bReal wages are back at equilibrium level

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cNominal wages are growing faster than inflation

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d Inflation is higher than the growth of nominal wages

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Menu costs in relation to inflation refers to ?


aCosts of finding better rates of return

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bCosts of altering price lists

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cCosts of money increasing its value

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dCosts of revaluing the currency

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An increase in costs will ?


aShift aggregate demand

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b Shift aggregate supply

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cReduce the natural rate of unemployment

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dIncrease the productivity of employees

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An increase in injections into the economy may lead to ?


aAn outward shift of aggregate demand- and demand-pull inflation

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b An outward shift of aggregate demand and cost push inflation

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cAn outward shift of aggregate supply and demand-pull inflation

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dAn outward shift of aggregate supply and cost push inflation

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Demand pull inflation may be caused by ?


aAn increase in costs

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bA reduction in interest rate

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cA reduction in government spending

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dAn outward shift in aggregate supply

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If borrowers and lenders agree on a nominal interest rate and inflation turns out to be less than they had expected ?


aneither borrowers nor lenders will gain because the nominal interest rate has been fixed by contract

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b None of these answers

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cborrowers will gain at the expense of lenders

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dlenders will gain at the expense of borrowers

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Under which of the following conditions would you prefer to be the lender ?


aThe nominal rate of interest is 15 percent and the inflation rate is 14 percent

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bThe nominal rate of interest is 20 percent and the inflation rate is 25 percent

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cThe nominal rate of interest is 12 percent and the inflation rate is 9 percent

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dThe nominal rate of interest is 5 percent and the inflation rate are 1 percent

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If the nominal interest rate is 7 percent and the inflation rate is 3 percent, then the real interest rate is ?


a4 percent

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b10 percent

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c -4 percent

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d21 percent

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View Answer 4 percent

Refer to Figure 24-1 What is the value of the basket in the base year ?


aRs459.25

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bRs418.75

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cRs300

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dNone of these

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View Answer Rs300

The “basket” on which the CPI is based is composed of ?


a consumer production

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bProducts purchased by the typical consumer

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c total current production

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dnone of these answers

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