26. If The Empire economy is operating at a level inside the production possibilities frontier, The Empire Peoples Central Bank could implement a(n):

A. Contractionary monetary policy to decrease aggregate demand

B. Expansionary monetary policy to decrease aggregate demand

C. Expansionary monetary policy to increase aggregate demand

D. Contractionary monetary policy to increase aggregate demand.

27. One firm that produces blaster rifles records the following cost data as presented in Table 4 below.

Average total costs	$130 per unit
Average variable costs	$80 per unit
Average fixed costs	$50 per unit
Price	$250 per unit

Table 4

Refer to the data in Table 4. If the firm produces 500 units of output, the marginal revenue equates to: (Micro - Chaps 7 - 9)

A. $170

B. $125,000

C. $60,000

D. $40,000

28. Automatic stabilisers exist in The Empire economy just as they do on Earth. The best example of an automatic stabiliser is demonstrated by: (Macro - Chaps xx)

A. Charities providing help after catastrophes

B. A tax system which requires higher income earners to pay more tax than lower income earners

C. Changes in monetary policy to control inflation

D. A person winning the lottery

29. If The Empire Peoples Central Bank wants to effect an increase in interest rates across the Death Star it will most likely: (Macro - Chaps xx)

A. Sell bonds to decrease the money supply

B. Buy bonds to decrease the money supply

C. Sell bonds to increase the money supply

D. Buy bonds to increase the money supply

30. Budget deficits increase as a result of: (Macro - Chaps xx)

A. Expansionary monetary policy

B. Contractionary monetary policy

C. Expansionary fiscal policy

D. Contractionary fiscal policy

31. Droughts in Australia over recent years have reduced the number of lambs going to the slaughterhouse. For the retail consumer the price of lamb has increased due to the shift of the: (Micro - Chaps 3 - 5)

A. demand curve to left

B. supply curve to the right

C. demand curve to the right

D. supply curve to the left

32. Other things being equal, which of the following would tend to shift an economy's production possibilities curve to the right in the short term?

A.Change to superannuation laws which prevents employees retiring prior to 70 years of age.

B.Extreme drought affecting crops.

C.Removal of import tariffs.

D.Mandatory requirement of all school leavers to join the armed forces for a minimum of 3 years.

33. The following represents the marginal revenue and marginal cost data for a firm:

Table 3

Output	Marginal revenue	Marginal cost
1	10	15
2	10	10
3	10	15
4	10	20

Refer to the information in Table 3 above. Select the correct statement from the following: A. This firm is a monopoly and is most profitable at 1 units.

B. This firm is perfectly competitive and is most profitable at 2 units.

C. This firm is perfectly competitive and is most profitable at 3 units.

D. This firm is perfectly competitive and is most profitable at 4 units.

34. If the economy is in the classical range of the aggregate supply line, an appropriate combination of monetary and fiscal policies would aim to:

A. Increase net government spending through tax increases and expand the money supply

B. Decrease net government spending through tax increases and contract the money supply

C. Increase net government spending through tax decreases and expand the money supply

D. Decrease net government spending through tax decreases and contract the money supply

35. If the price of Salted cashew peanuts decreases, the demand curve for close-substitute products Salted & candy-coated peanuts will:

A. shift to the left.

B. remain unchanged but quantity demanded C. only will change as price changes.

D. shift upward toward the horizontal axis.

E. shift to the right.