Q1. The inverse relationship between unemployment and inflation is demonstrated by Pareto optimality Ricardian equivalence Keynesian cross Phillips curve Q2. Choose a concept originating from Marx General equilibrium Reserve army of the unemployed Animal spirits Laissez-faire Q3. Which phenomenon has become central for the New Keynesian macroeconomics? Long-term stability of the capitalist economies High growth rates in the developed world

Instability of the general price level Frictions and rigidities on the labor market Q4. A concept of optimum distribution of scarce resources, defined as one in which it is impossible to make someone better off without making someone else worse off, was first rigorously formulated by Vilfredo Pareto Adam Smith Paul Samuelson Lon Walras Q5. Choose a scholar who introduced game theory into economics John von Neumann Kenneth Arrow Paul Samuelson Robert Lucas Q6. Choose an economist who was holding socialist views

John M. Keynes Milton Friedman Oscar Lange David Ricardo Q7. Indicate the school that belonged to the mainstream of economics in 1960-1970s Marxian economics Feminist economics Institutionalist school Chicago school Q8. What was the difference in the approach to utility theory between Jevons and Menger, on the one hand, and Hicks, on the other? Jevons and Menger assumed that the marginal utility is decreasing, while Hicks believed it is increasing For Jevons and Menger, utility is subjective, while for Hicks, it is objective

Jevons and Menger believed we can measure and compare utilities in units, while Hicks thought we can only compare levels of utility Jevons and Menger supported the equimarginal rule, and Hicks opposed it

Q9. What was the method mostly practiced by the members of the Historical school? deduction induction econometric estimation mathematical modeling Q10. What was the objective of economic policy, according to Bentham? GDP growth sustainable development freedom and democracy for everyone the greatest happiness for the greatest number of people

Q11. Give a correct definition of the natural price according to Adam Smith a price which yields a normal return on the factors of production a price determined by the relation of supply and demand on the market a price which does not account for the landowner's rent a price which does not account for the capitalist's profit Q12. Division of labor, according to Smith, increases output through three mechanisms. Which of the mechanisms does not belong to the list? workers improve their skill while performing one single task repeatedly time is saved if the worker does not go from one kind of work to another specialization drives international competitiveness routine tasks allow the workers to innovate Q13. Name a school that was a theoretical source of Marxism

German Historical School Institutionalism French socialism Mercantilism Q14. Pick an economist who belonged to the Classical school Gustav Schmoller Karl Menger Jean-Baptiste Say John von Neumann Q15. Neutrality of money means that changes in the amount of money do not influence real parameters of the economy everyone can borrow money at any rate of interest the source of income does not matter when making or receiving payments

money is created both by central bank and by the investment banks Q16. For David Hume, mercantilist policies were useful, because they increased the amount of money within the country useless, because they increased domestic prices and decreased the country's competitiveness useful, because they contributed to country's independence and sovereignty useless, because they concentrated too much power within the state Q17. How did Leonard J. Savage respond to the paradox presented to him by Maurice Allais? Expected utility theory should be modified to incorporate phenomena described by Allais Allais' experiment is incorrect, and we need to keep expected utility theory as a descriptive analysis of rational behavior Expected utility theory is wrong and should be rejected

Expected utility theory describes how rational people should behave, not how they really behave Q18. Choose a correct sequence of events in the history of economics Classical School - Mercantilism - New Classical Economics - Marginal Revolution Mercantilism - Marginal Revolution - Classical School - New Classical Economics Mercantilism - Classical School - Marginal Revolution - New Classical Economics Physiocracy - Mercantilism - Keynesian School - Marginal revolution Q19. Which of the assumptions of standard mainstream economics was abandoned in the behavioral economics? perfect competition full rationality zero transaction costs benevolent social planner

Q20. According to Thomas Malthus, the poor laws should be abolished, because they do not solve the problem of inflation: poor people spend money, and the price level increases kept, because they help fight poverty: poor people get support abolished, because they do not solve the problem of poverty: poor people get more children, and scarcity remains a problem kept because they help fight the market gluts: poor people spend money and buy excessive goods and services Q21. Which pair of concepts and assumptions best characterizes the economic ideas of Carl Menger? supply-based theory of prices; decreasing marginal utility demand-based theory of prices; decreasing marginal utility demand-based theory of prices; increasing marginal utility

supply-based theory of prices; increasing returns to scale in production Q22. What was the explanation used by W. S. Jevons to resolve the water-diamond paradox? marginal utility of diamonds is higher than marginal utility of water diamonds are harder to produce total utility of diamonds is higher than total utility of water marginal utility of water is higher than marginal utility of diamonds Q23. What was the question Akerlof's model of 'lemons' was intended to answer? why do the new cars get broken so quickly? why are the bad cars so cheap? why are the old cars so expensive? why do the cars lose value immediately after the purchase? Q24. Which behavior is an example of 'conspicuous consumption'?

Wearing the most expensive watch to demonstrate your wealth Visiting the same supermarket every day Purchasing the expensive items, but not demonstrating it publicly in order to avoid the envy of the others Buying a cheaper second-hand bike to save money Q25. What did Keynes mean when he said that 'in the long run we are all dead'? long run perspective is irrelevant for informing macroeconomic policy macroeconomic stability cannot be achieved in the short run global economy is facing a catastrophe humans are mortal