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EC0403 Quiz 02 Fall 2013 ( 10-12-2013 t0 12-12-2013)

EC0403 Quiz 02 Fall 2013
An increase in the costs of production of commodity “X” will:
Shift demand outwards
Shift demand inwards
Shift supply outwards
Shift supply inwards.
2. If a producer buys leather for Rs.100 and thread for Rs.50 and uses them to produce and sell Rs500 worth of bag to consumer, the contribution to GDP is:
3. Investment includes:
Business Fixed Investment.
Residential Fixed Investment.
Inventory Investment.
All of the given options.
4. If the gov of a small open economy increases personal income taxes, then that country's:
Net exports increases
Investment increases
Equilibrium real exchange rate rises
Consumption rises
5. You bought stock of a company at Rs. 10,000and sold it after one year at Rs. 12,000. Your nominal capital gain is
6. Which of the following is not included in M1?
Deposits in checking accounts
Deposits in checking accounts that pay interest
Currency held by the public
None of the given option
7. An increase of 10% in nominal GDP indicates that:
Real output has increased by 10%
The aggregate price level has increased by 10%
Real output and price level has increased by 5% each
It is possible that all of the increase was caused by an increase in the price level

8.Barter economies require
The use of fiat money
The use of commodity money
A double coincidence of wants
Money to serve as a store of value but not as a medium of exchange
9. Which of the following is NOT a function of money? 
A medium of exchange
A unit of account
A shelter against inflation
A store of value
10. If the nominal interest rate is 8% and the inflation rate is 5%, then the real rate of interest is: 
11. According to the Fisher effect, a higher inflation rate leads to higher -----------
Real money balances.
Nominal interest rate.
Real interest rate.
Real interest & money balance.
12. If M = 2, P = 3, and Y = 40, then the velocity equals to;
(3 * 2)/40
(3 * 40)/2
(2 * 40)/3
(3 * 2 *40)/2
(2 * 40)/3
13. The short-run is the time period in which: 
Firms can purchase new capital.
Potential output is fixed.
Price does not change very much.
Government spending fixed.
14. An asset that is included in M3 but not in M2 is: 
Checkable deposits.
Small-denomination certificates of deposit.
Large-denomination certificates of deposit.
15.GDP deflator is equal to:
Nominal GDP/Real GDP *100
Real GDP/Nominal GDP * 100
Nominal GDP/Price index *100
Inflation rate/Real GDP *100
16. GNP is $750 billion and depreciation is $200 billion, then net national product:
Is $550 billion.
Is $640 billion.
Is $950 billion.
Cannot be determined from this information.
17. The demand for money represents the idea that there is: 
A +ve relationship between the interest rate and the quantity of money demanded
A -e relationship between the level of aggregate output and the quantity of money demanded
A -e relationship between the interest rate and the quantity of money demanded
A -e relationship between the price level and the quantity of money demanded
18. Which one of following is correct equation?
Y = C + I + G + NX
Y = C + S + I + NX
Y = C + T + G + NX
Y = C + T + I + G + NX 

19. The ---------refers to the separation of ------and ----------- variables.
Classical dichotomy; real; nominal
Keynes dichotomy; dependent; independent
Classical dichotomy; exogenous; endogenous
Classical dichotomy; real wages; real 

20. The relative price of domestic -------- in terms of foreign-------- is known as real exchange rate
Goods; goods
Currency; currency
Goods; currency
Currency; goods

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