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1. 

   AYESHA MUMTAZ on February 8, 2019 at 8:14 pm

   Question No: 1 ( Marks: 1 ) – Please choose one
   The determinants of demand curve include:
   ► Income, tastes, and the price of the good. ► Income and tastes. ► Tastes and the price of other goods. ► Income, tastes, preferences and the price of other goods. Question No: 2 ( Marks: 1 ) – Please choose one
   Which of the following is TRUE about the measurement of nominal Gross
   Domestic Product?
   ► It is measured in current dollars. ► It is measured in fixed dollars. ► It is measured at a constant output level. ► It is measured as the difference between the current year’s GDP and last
   year’s GDP. Question No: 3 ( Marks: 1 ) – Please choose one
   Which of the following plays the most important role in increasing the rate of
   growth in real GDP per capita over time?
   ► Increases in labor productivity
   ► Increases in the money supply
   ► Decreases in the level of inflation
   ► Increases in the real rate of interest
   Question No: 4 ( Marks: 1 ) – Please choose one
   Refrigerators are examples of which of the following?
   ► Transfer products
   ► Non-durable goods
   ► Services
   ► Durable goods
   Question No: 5 ( Marks: 1 ) – Please choose one
   Which of the following is NOT a factor of production?
   ► Land
   ► Labor
   ► Capital
   ► Investment
   Question No: 6 ( Marks: 1 ) – Please choose one
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   In a macroeconomic model without foreign trade or government spending, aggregate demand is the sum of:
   ► Personal saving and private investment. ► Personal saving and personal consumption. ► Personal consumption and personal income. ► Personal consumption and private investment. Question No: 7 ( Marks: 1 ) – Please choose one
   Which of the following appears in M2 but NOT in M1?
   ► Checking account balances
   ► Currency
   ► Travelers’ checks
   ► Money market mutual funds
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2. 

   AYESHA MUMTAZ on February 8, 2019 at 8:15 pm

   Question No: 23 ( Marks: 1 ) – Please choose one
   If a consumer faces a borrowing constraint then:
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   ► He will be unable to consume anything in the second period. ► He may or may not be less satisfied than if he was able to borrow. ► Consumption in the first period must be less than consumption in the second
   period. ► All of the given options. Question No: 24 ( Marks: 1 ) – Please choose one
   According to Permanent Income hypothesis, when income < permanent income
   then:
   ► Average Propensity to Consume rises. ► Average Propensity to Consume falls. ► Average Propensity to Consume remains constant. ► Average Propensity to Consume first falls then rises.
   Question No: 41 ( Marks: 1 ) – Please choose one
   Suppose there is recession in the economy that is expected to be short in duration. The banking system, however, decides to curtail lending, so that the corporate
   sector faces binding financing constraints. This causes:
   ► Tobin's q and investment both to fall only slightly. ► Tobin's q and investment both to fall considerably. ► Tobin's q to go down considerably, while investment is only slightly affected. ► Tobin's q to be only slightly affected, while investment goes down
   considerably. Question No: 42 ( Marks: 1 ) – Please choose one
   Consider the following balance sheet of a bank:
   Assets Liabilities
   Reserves $1,000 Deposits $1,000
   This bank is obviously engaged in:
   ► Fractional reserve banking. ► 100-percent-reserve banking. ► Central banking. ► Financial intermediation. Question No: 43 ( Marks: 3 )
   Assume that the economy is at full employment level. The government decides to
   cut taxes to give the economy an extra boost. Describe the short run and long run
   impact of this tax cut in the IS-LM framework. (Describe theoretically, diagram is NOT required)
   Question No: 44 ( Marks: 3 )
   Discuss the basic idea behind the random walk theory of Robert Hall.
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   Question No: 45 ( Marks: 3 )
   What is the main difference between 100% reserve banking system and fractional
   reserve banking system?
   Question No: 46 ( Marks: 5 )
   The sticky-wage model is based upon the assumption that nominal wages are
   designated by long-term contracts. If workers stopped signing long term contracts, how would this change the aggregate supply curve?
   Question No: 47 ( Marks: 5 )
   In 1979, budget deficit was $20 billion, government debt was $495 billion and
   inflation was 8%. By using this information, calculate by how much amount, the
   budget deficit was overstated? What is the amount of surplus budget deficit?
   Question No: 48 ( Marks: 5 )
   Suppose that monetary base (B)= $1000, the reserve deposit ratio (rr) = 0.5 and
   currency deposit ratio (cr) = 0.5. By using this information, CALCULATE:
   a) Money multiplier
   b) Total Money supply
   c) If monetary base increased to $1500, what will be the total money
   supply now?
   (Marks: 2+2+1)

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