Question 1

According to Keynes, unemployment is due to:&#10;A)deficiency of capital&#10;B)deficiency of labour&#10;C)deficiency of education&#10;D)deficiency in effective demand

Accepted Answer

Keynes argued that unemployment is primarily due to a deficiency in effective demand, meaning that there is not enough demand for goods and services in the economy to employ all those who are willing to work.

Question 2

&#34;In the long run, we are all dead&#34;. Who said this?&#10;A)keynes&#10;B)adam smith&#10;C)karl marx&#10;D)david ricardo

Accepted Answer

This quote is attributed to John Maynard Keynes, a British economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. He made this statement in the context of discussing the long-term effects of economic policies, emphasizing the importance of addressing current economic issues rather than focusing solely on potential long-term outcomes.

Question 3

According to Keynes, investment is a function of:&#10;A)rate of interest&#10;B)rate of profit&#10;C)rate of mei&#10;D)mei and rate of interest

Accepted Answer

According to Keynes, investment is determined by the marginal efficiency of capital (MEC) or investment demand schedule and the rate of interest. The MEC is influenced by the expected rate of profit on new investments, but it is the interaction of the MEC with the rate of interest that determines the level of investment. Therefore, both MEI (Marginal Efficiency of Investment, often used interchangeably with MEC) and the rate of interest are correct.

Question 4

Keynes believed in :&#10;A)full employment equilibrium&#10;B)under employment equilibrium&#10;C)both&#10;D)none

Accepted Answer

Keynes is best known for his theory that in a capitalist economy, there can be equilibrium at less than full employment, which is known as underemployment equilibrium. He argued that due to insufficient aggregate demand, economies can settle into a state where there are resources, especially labor, that are not fully utilized.

Question 5

According to Keynes, wages and prices are:&#10;A)rigid&#10;B)flexible&#10;C)variable&#10;D)automatic

Accepted Answer

Keynes argued that wages and prices are rigid or sticky, especially in the downward direction, because of factors like contracts, minimum wage laws, and worker resistance to nominal wage cuts.

Question 6

In Economics, 1930s is popularly known as the period of:&#10;A)great battle&#10;B)great depression&#10;C)industrial revolution&#10;D)great devide

Accepted Answer

The 1930s is widely known as the period of the Great Depression, a severe worldwide economic downturn that took place mostly during the 1930s, beginning in the United States.

Question 7

Keynes strongly argued for:&#10;A)free trade&#10;B)non-intervention of government&#10;C)laissez-faire&#10;D)governmental intervention

Accepted Answer

Keynes is well-known for advocating for governmental intervention in the economy, especially during periods of recession or economic downturn, to stimulate demand and address unemployment. This is a core principle of Keynesian economics.

Question 8

Consumption expenditure directly varies with:&#10;A)savings&#10;B)investment&#10;C)disposable income&#10;D)rate of interest

Accepted Answer

Consumption expenditure is directly related to disposable income because as people have more income available to spend (after taxes), they are likely to spend more on consumption.

Question 9

An important issue of macro economics is the determination of:&#10;A)consumption&#10;B)production&#10;C)utility&#10;D)income and employment

Accepted Answer

The determination of income and employment is a central issue in macroeconomics, focusing on the overall economic activity and labor market conditions in an economy.

Question 10

Pick the odd one:&#10;A)aggregate demand&#10;B)effective demand&#10;C)j.m. keynes&#10;D)law of market

Accepted Answer

The "law of market" is associated with classical economics, while the other terms are related to Keynesian economics.

Question 11

Which of the following items does not include in the group?&#10;A)consumption&#10;B)investment&#10;C)rate of interest&#10;D)net exports

Accepted Answer

The answer of Which of the following items does not...

Question 12

Who is known as the father of Modern Economics?&#10;A)adam smith&#10;B)j.m.keynes&#10;C)robinson&#10;D)ricardo

Accepted Answer

The answer of Who is known as the father of...

Question 13

Goods without which people can not live are called:&#10;A)comforts&#10;B)luxuries&#10;C)necessaries&#10;D)none

Accepted Answer

The answer of Goods without which people can not live...

Question 14

The problem of what to produce is a problem of:&#10;A)distribution&#10;B)technological choice&#10;C)consumption&#10;D)allocation of resources

Accepted Answer

The answer of The problem of what to produce is...

Question 15

Those things that possess both utility and scarcity are called:&#10;A)economic goods&#10;B)free goods&#10;C)intermediate goods&#10;D)luxuries

Accepted Answer

The answer of Those things that possess both utility and...

Question 16

If a worker specializes in the production of a single good, it is called:&#10;A)product based division of labour&#10;B)process based division of labour&#10;C)worker based division of labour&#10;D)none of these

Accepted Answer

The answer of If a worker specializes in the production...

Question 17

Goods produced for use in future productive process are called:&#10;A)intermediate goods&#10;B)final goods&#10;C)consumer goods&#10;D)capital goods

Accepted Answer

The answer of Goods produced for use in future productive...

Question 18

Who wrote the article Laws of Returns Under Competitive Conditions?&#10;A)joan robinson&#10;B)e.h. chamberlin&#10;C)a.c. pigou&#10;D)p. sraffa

Accepted Answer

The answer of Who wrote the article Laws of Returns...

Question 19

Increase in output less than proportional to increase in inputs is called:&#10;A)increasing returns&#10;B)constant returns&#10;C)diminishing returns&#10;D)marginal returns

Accepted Answer

The answer of Increase in output less than proportional to...

Question 20

When marginal product reaches its maximum, what can be said of total product?&#10;A)total product must be at its maximum&#10;B)total product starts to decline even if marginal product is positive&#10;C)total product is increasing if marginal product is still positive&#10;D)total product levels off

Accepted Answer

The answer of When marginal product reaches its maximum, what...

Deck 7: Economics and Keynesian Theory