The aggregate expenditure model assumes flexible prices *

1 point

True

False

Demand-pull inflation is due to an increase in aggregate demand when *

1 point

Aggregate supply is unit elastic

Aggregate supply is relatively elastic

Aggregate supply is perfectly elastic

Aggregate supply is perfectly inelastic

The monetary policy does not focus on_______? *

1 point

Maximum employment

Low taxes

Stable prices

Moderate long-term interest rate

The shift in the aggregate supply curve to the left with the relative elastic aggregate demand curve describes the *

1 point

Decline in supply of final goods produced in an economy

Cost-push inflation

Demand-pull inflation

An expansionary fiscal policy to handle the___________ can use _______ as a tool? *

1 point

Inflation, facilitate the lending by commercial banks

Recession, An increase in government spending

Inflation, A decrease in corporate tax

Recession, Low interest rate

Increase in AD cause _________, and decrease in AD cause ________ *

1 point

Recession, cyclical unemployment

Cyclical unemployment, inflation

Inflation, recession

Inflation, Recession/cyclical unemployment

At any given level of income, an increase in consumption and decrease in saving is likely to lead to *

1 point

A fall in taxation revenue

An increase in exports

Higher aggregate demand

A decrease in import spending

The real balance effect means "A higher income level increase the real value or purchasing power of the public's accumulated savings balances". *

1 point

True

False

The outcome of expansionary monetary policy is decreasing aggregate demand by lowering the interest rate and increasing investment opportunities. *

1 point

True

False

Which of the following statement is true about the cost-push inflation *

1 point

only a and c is true

it occurs, and recessionary GDP also appeared

it occurs due to the shift in short-run AS curve to left

all statements are true

the real output also declines

The shift in the AD curve to right will describe the ..........when the AS curve is totally priced inelastic *

1 point

Increase in price but no change in output

Increase in price but increase in output

Decrease in price but decrease in output

Decrease in price but no change in output

The monetary policy describes what the SBP does to influence the amount of ------ and ------ in Pakistan's economy? *

1 point

Money and credit

Interest and debt

Taxes and revenue

Currency and gold reserves

To resolve the problem of unemployment and recession, which action is preferable----? *

1 point

Increasing the reserve ratio

Increasing the discount rate

Reduce the money supply

Buying bonds

An increase in planned investment will cause aggregate expenditure to *

1 point

decrease by an amount less than the change in investment spending.

increase by an amount equal to the change in investment spending.

increase by an amount less than the change in investment spending.

increase by an amount greater than the change in investment spending.

Keynes assumed the fixed price level in his aggregate expenditure model because of *

1 point

(c)his primary focus was on interest rates and investment spending.

both (a) and (b)

both (a) and (c)

(a) inflation was not a serious problem during the Great Depression.

(b) his primary focus was on output and employment.

The consumer expenditure describes the spending by .......... according to the Keynesian model. *

1 point

Government on laptop

All statements are true since laptop is consumer durable

Businesses on laptop

Consumer on personal laptop

The slope of the aggregate demand curve is downward because of ...? *

1 point

Real balance effect, interest rate effect

Change in determinants of AD curve

Income effect

Substitution effect

The slope of the aggregate supply curve is upward because of....? *

1 point

High per unit cost of production after the full employment level of GDP

Interest rate effect

Substitution effect

Output market fluctuations

Inflationary expenditure gap describes the situation of *

1 point

Both Cost push inflation and overspending

Both over spending and demand-pull inflation

Frictional unemployment

Demand-pull inflation

Cost-push inflation

Over spending

A depression abroad will tend to __________ our exports, which in turn will_________ net exports, which in turn will __________ equilibrium real GDP. *

1 point

Reduce; increase; increase.

Reduce; reduce; reduce.

Increase; reduce; reduce.

Increase; increase; increase.

When the AS curve will be parallel to the horizontal axis, and movement along the curve describes: *

1 point

Variable price level and fixed real domestic output level

Variable price and variable real domestic output level

Fixed price level and fixed Real domestic output (GDP) level

Fixed price level and variable real domestic output level

Which macroeconomic indicator is not analyzed by fiscal policy?? *

1 point

Fiscal deficit

Debt per capita

Total net revenue receipts

Debt policy of a commercial bank

A closed economy describes the aggregate expenditure will be the sum of *

1 point

consumer expenditure, planned investment spending, government spending, and net exports.

consumer expenditure, planned investment spending, and government spending.

consumer expenditure, actual investment spending, government spending, and net exports.

consumer expenditure, actual investment spending, and government spending.

Which of the following shift the aggregate demand curve to the right *

1 point

Increased savings

Increased investment

Increase import spending

Increase tax revenue