Question 1

According to Keynes, there is
A)no direct relationship between the quantity of money and price level
B)direct relationship between money and price level
C)no direct relationship between demand for money and supply of money
D)direct relationship between demand for money and supply of money

Accepted Answer

According to Keynes, there is no direct relationship between the quantity of money and the price level. Keynesian economics suggests that changes in the money supply have complex effects that do not directly translate to proportional changes in the price level, emphasizing the role of aggregate demand and other factors in determining economic outcomes.

Question 2

The concepts of inside money and outside money is given by
A)milton friedman
B)j m keynes
C)gurley and shaw
D)none of these

Accepted Answer

The concepts of inside money and outside money were introduced by economists Gurley and Shaw in their work on the distinctions between types of money within the economy.

Question 3

Assertion (A): Long-run Philips curve is a vertical line at the NAIRU Reason (R): Non-accelerating inflation raise of unemployment, more or less, stands accepted
A)both (a) and (r) are false.
B)both (a) and (r) are true, but (r) is not the correct reason.
C)both (a) and (r) are true, and (r) is the explanation.
D)(a) is true, (r) is false.

Accepted Answer

The long-run Phillips curve is indeed a vertical line at the NAIRU (Non-Accelerating Inflation Rate of Unemployment), indicating that in the long run, there is no trade-off between inflation and unemployment. The reason provided, that the concept of a non-accelerating inflation rate of unemployment is widely accepted, correctly explains why the long-run Phillips curve is vertical. This acceptance implies that at the NAIRU, inflation does not accelerate or decelerate, which is why the curve is vertical at this point.

Question 4

The quantity theory of money first propounded in 1588 by an Italian Economist
A)david hume
B)davanzatti
C)j s mill
D)ricardo

Accepted Answer

The quantity theory of money, which posits a direct relationship between the amount of money in an economy and the level of prices of goods and services, was first propounded in 1588 by the Italian economist Davanzatti.

Question 5

Which among the followings is not the feature of monetarism?
A)fiscal policy causes no long-term increase in real output
B)only a trade-off in the short-term
C)tend to emphasis supply-side unemployment (natural rate)
D)demand- deficient unemployment big causes

Accepted Answer

Monetarism emphasizes the role of governments in controlling the amount of money in circulation and typically downplays the role of demand-deficient unemployment, focusing instead on supply-side factors and the natural rate of unemployment.

Question 6

According to Keynes Investment is a function of
A)dumping
B)income
C)saving
D)interest

Accepted Answer

Keynesian economics suggests that investment levels in an economy are primarily determined by the interest rate. Lower interest rates make borrowing cheaper, encouraging businesses to invest in new projects and expansion.

Question 7

"Interest is poorly a monetary phenomenon "is a very famous statement made by
A)j m keynes
B)hamilton
C)friedman
D)j b say

Accepted Answer

Keynes argued that interest is not primarily a monetary phenomenon, but rather a reflection of the underlying real factors in the economy, such as the level of investment and saving.

Question 8

Which one the following economists is the chief advocate of supply side economics
A)arther laffer
B)robert lucas
C)neil wallace
D)both a and c

Accepted Answer

Arthur Laffer is best known for his advocacy of supply-side economics, particularly the concept of the Laffer Curve, which suggests there is an optimal tax rate that maximizes revenue without discouraging productivity and work.

Question 9

Advocates of New classical Economics are
A)robert lucas
B)neil wallace
C)thomas surgent
D)all of the above

Accepted Answer

All of the listed individuals, Robert Lucas, Neil Wallace, and Thomas Sargent (correctly spelled as Sargent, not Surgent), are prominent figures in the New Classical Economics school of thought. This approach emphasizes rational expectations and market-clearing models.

Question 10

The Laffer curve is associated with
A)new classical economics
B)supply side economics
C)keynesian economics
D)new keynesian economics

Accepted Answer

The Laffer curve is primarily associated with supply-side economics. It illustrates the concept that there is an optimal tax rate that maximizes government revenue, suggesting that both very high and very low tax rates can lead to decreased revenue.

Question 11

The doctrine of Policy ineffectiveness postulate is associated with
A)new classical economics
B)supply side economics
C)new keynesian economics
D)monetarism

Accepted Answer

The doctrine of Policy ineffectiveness postulate is associated with new classical economics. It argues that anticipated policy actions, particularly in the realm of monetary policy, have no real effects on the economy because individuals adjust their expectations and behaviors accordingly.

Question 12

The concept of Rational expectation is associated with
A)natural rate of unemployment hypothesis
B)new classical hypothesis
C)both a and b
D)none of these

Accepted Answer

The answer of The concept of Rational expectation is associated...

Question 13

The idea of Adaptive expectation is associated with
A)natural unemployment rate hypothesis
B)new classical economics
C)both a and b
D)none of these

Accepted Answer

The answer of The idea of Adaptive expectation is associated...

Question 14

The idea of rational expectation first given by
A)john muth
B)robert lucas
C)neil wallace
D)thomas surgent

Accepted Answer

John Muth is credited with first proposing the concept of rational expectations in the early 1960s. His work laid the foundation for later developments in macroeconomic theory, particularly in the context of understanding how expectations are formed in economic models.

Question 15

New classical Economics is consistent with
A)policy ineffectiveness postulate
B)policy effectiveness postulate
C)both a and b
D)none of these

Accepted Answer

New classical economics is consistent with the policy ineffectiveness postulate, which argues that systematic monetary and fiscal policy have no predictable effect on real variables such as output and employment. This is because individuals form rational expectations and adjust their behavior accordingly, neutralizing the intended effects of policy actions.

Question 16

New Classical Economics is based on
A)rational expectation
B)adaptive expectation
C)backward looking expectation
D)all the above

Accepted Answer

New Classical Economics is primarily based on the concept of rational expectations, which suggests that individuals make forecasts about the future based on all available information, rather than relying on past trends or making adjustments based on past errors.

Question 17

Supply side Economics was emerged against the background of
A)1930's great depression
B)2008 global financial crisis
C)1970's stagflation
D)none of these

Accepted Answer

Supply-side economics emerged in the 1970s as a response to stagflation, which is a combination of stagnant economic growth and high inflation.

Question 18

The dual decision hypothesis was given by
A)clower
B)crowther
C)robert lucas
D)wallras

Accepted Answer

The dual decision hypothesis was given by Robert W. Clower as a way to integrate monetary constraints into Keynesian economics, emphasizing the role of income in determining expenditure.

Question 19

The book Elements of Pure Economics was authored by
A)walras
B)clower
C)robert lucas
D)kaldor

Accepted Answer

"Elements of Pure Economics" was authored by Léon Walras, a French mathematical economist, and is considered a foundational work in the field of economics.

Question 20

The Neo Keynesian quantity constrained model is associated with the work of
A)robert j barro
B)robert m clower
C)leonwalrs
D)none of these

Accepted Answer

The Neo-Keynesian quantity constrained model is primarily associated with the work of Robert M. Clower. Clower introduced the idea of "dual decision hypothesis," which incorporates the concept of quantity constraints into Keynesian economics, influencing the development of Neo-Keynesian economics.

Quiz 1: Macroeconomic Theory and Concepts

According to Keynes, there is

The concepts of inside money and outside money is given by

Assertion (A) : Long-run Philips curve is a vertical line at the NAIRU Reason (R) : Non-accelerating inflation raise of unemployment, more or less, stands accepted

The quantity theory of money first propounded in 1588 by an Italian Economist

Which among the followings is not the feature of monetarism?

According to Keynes Investment is a function of

"Interest is poorly a monetary phenomenon "is a very famous statement made by

Which one the following economists is the chief advocate of supply side economics

Advocates of New classical Economics are

The Laffer curve is associated with

The doctrine of Policy ineffectiveness postulate is associated with

The concept of Rational expectation is associated with

The idea of Adaptive expectation is associated with

The idea of rational expectation first given by

New classical Economics is consistent with

New Classical Economics is based on

Supply side Economics was emerged against the background of

The dual decision hypothesis was given by

The book Elements of Pure Economics was authored by

The Neo Keynesian quantity constrained model is associated with the work of