1) What is the demand for labour derived from?

a) The supply of labour

b) The supply of the product

c) The demand for the final product

d) The demand for capital

2) When might the demand for labour shift outwards?

a) Wages fall

b) Labour productivity increases

c) Demand for the product falls

d) The price of capital goods falls

3) When is an increase in investment most likely?

a) Interest rates rise

b) Managers become more optimistic about the economy

c) Costs are expected to rise

d) Revenues are expected to fall

4) When is the market capitalization of a business most likely to increase?

a) The share price falls

b) The profits are lower than expected

c) The dividends are higher than expected

d) The returns on assets other than shares rise

5) If a minimum wage rate is introduced that is higher than the equilibrium wage rate in the labour market what effect will this have?

a) Excess supply of labour

b) A surplus of labour

c) A shortage of labour

d) An increase in wages

6) Complete the sentence. The supply of labour to an economy will not depend on ?

a) The school leaving age

b) The retirement age

c) The level of unemployment benefits

d) The demand for labour

7) A profit maximising businesses will invest in projects up to the point where

a) The total costs equal the total benefits

b) There is the biggest positive difference between the marginal cost of borrowing and the marginal efficiency of capital

c) The marginal efficiency of capital is zero

d) The marginal cost of finance equals the marginal efficiency of capital

8) The effect of a shift in the supply of labour on the equilibrium wage rate will be the greatest if the wage elasticity of demand for labour is?

a) -0.1

b) -0.5

c) -1

d) -5

9) What does an appreciation of the pound-dollar exchange rate mean?

a) There are more pounds in circulation domestically

b) A pound has more purchasing power domestically

c) A pound is worth more in dollars

d) A pound is worth more against all other currencies

10) Under what circumstance is a currency most likely to appreciate?

a) Domestic interest rates fall

b) Domestic prices rise faster than those internationally

c) Demand for exports rise

d) Local incomes rise

Give explanation