1 Which one of the following statement is incorrect about the Monetarist school of macro-economics

Select one:

a. An increase in money supply influences nominal GDP and not real GDP

b. Change in the money supply has a real effect in the short-run and has not effect in the long-run

c. A change in the quantity of money in the economy is a good indicator of the monetary policy position

d. Change in the level of the money supply will not have any effect on the private sector

2 Which one of the following statement is not true about an economy with government and foreign sectors

Select one:

a. An increase in tax affects income indirectly and reduces disposable income

b. Leakage in the form of tax reduces the size of multiplier

c. Income is determined by aggregate spending of consumer's consumption, investors spending on factors of productions, government spending on infrastructures, and national spending on imports.

d. Imports and exports are leakages from the economy

3 Which one of the following statement is not true about inflation

Select one:

a. It can be measured by the producers price index

b. It refers an increase in the general price in the economy

c. It can be measured by the consumers price index

d. It refers to decline prices across all sectors of the economy

4 Which one of the following statement is true consumption function?

Select one:

a. Autonomous consumption is a type of consumption that is highly linked to the level of income that the consumer gets.

b. Consumption function shows the relationship between price expectations and aggregate consumption.

c. Marginal propensity to consume measures the slope of the consumption curve.

d. There is a negative relationship between consumption and income.

5 Which one of the following statements is correct about fiscal policy?

Select one:

a. Government spending and tax rates are the main policy instruments

b. It is highly involved in issuing T-bills and adjusting the rate of interest

c. It is a policy instrument that enables not to reach the point of full employment in the economy

d. Like the monetary policy it is not conducted by government but it is conducted by an independent institution