Macroeconomics, Theories and Policies 2 MCQs and Notes

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📊 Macroeconomics, Theories and Policies 2
Q. Attempts to force inflation below no-accelerating inflation rate of unemployment (NAIRU) will cause:
  • (A) inflation accelerate without any change in employment or output
  • (B) inflation to decelerate with rising employment and output
  • (C) inflation to decelerate with employment and output remaining the same
  • (D) inflation to remain unchanged with fall in employment and output
💬 Discuss
✅ Correct Answer: (A) inflation accelerate without any change in employment or output
📊 Macroeconomics, Theories and Policies 2
Q. If the aggregate supply curve is perfectly elastic as in the Keynesian model at low level of national incomes, as increase in AD will cause an increase in
  • (A) the rate of inflation
  • (B) the level of real national output
  • (C) the government budget deficit
  • (D) the level of consumer debt
💬 Discuss
✅ Correct Answer: (B) the level of real national output
📊 Macroeconomics, Theories and Policies 2
Q. A decrease in expected future income, ______ consumption expenditure and ______ saving.
  • (A) increases: increases
  • (B) increases: decreases
  • (C) decreases: increases
  • (D) decreases: decreases
💬 Discuss
✅ Correct Answer: (C) decreases: increases
📊 Macroeconomics, Theories and Policies 2
Q. The slope of the consumption function is (Keynesian)
  • (A) less than the slope of the 45 degree line, but not equal to zero
  • (B) greater than the slope of the 45 degree line
  • (C) equal to the slope of the 45 degree line
  • (D) equal to zero
💬 Discuss
✅ Correct Answer: (A) less than the slope of the 45 degree line, but not equal to zero
📊 Macroeconomics, Theories and Policies 2
Q. In the very short term, in the Keynesian model which of the following is fixed and does not change when GDP changes
  • (A) planned investment
  • (B) planned consumption
  • (C) planned imports
  • (D) all of the above
💬 Discuss
✅ Correct Answer: (A) planned investment
📊 Macroeconomics, Theories and Policies 2
Q. In the Keynesian range of the SRAS, if AD shift to the right, then
  • (A) the price level falls
  • (B) the price level rises
  • (C) real gdp is unchanged
  • (D) the price level is unchanged
💬 Discuss
✅ Correct Answer: (D) the price level is unchanged
📊 Macroeconomics, Theories and Policies 2
Q. The purpose of Keynesian analysis is to explain what to determines the
  • (A) size of the labor force
  • (B) price level
  • (C) amount of money required in the economy
  • (D) levels of national income, output and employment
💬 Discuss
✅ Correct Answer: (D) levels of national income, output and employment
📊 Macroeconomics, Theories and Policies 2
Q. According to Keynesian analysis, the great depression was caused by:
  • (A) a lack of spending
  • (B) a sharp rise in the mpc
  • (C) too much investment
  • (D) too much foreign influence on the economy
💬 Discuss
✅ Correct Answer: (A) a lack of spending
📊 Macroeconomics, Theories and Policies 2
Q. Using Keynesian multiplier, MPC= 0.8 and government spending increased by 40 billion dollars. How much will GDP increased?
  • (A) 100 billion dollars
  • (B) 200 billion dollars
  • (C) 300 billion dollars
  • (D) 500 billion dollars
💬 Discuss
✅ Correct Answer: (B) 200 billion dollars
📊 Macroeconomics, Theories and Policies 2
Q. “In a closed economy with no government; s=100+0.2y investment increases by 100, what is the increase in consumption?
  • (A) 100
  • (B) 200
  • (C) 300
  • (D) 400
💬 Discuss
✅ Correct Answer: (D) 400

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