Answer Happy

1. If output is described by the production function Y = AKO-220, then the production function has A. Constant Returns to Scale B. Diminishing returns to Scale C. Increasing returns to scale D. A degree of returns to scale that cannot be determined 2. An increase in the trade surplus of the a small open economy could be the result of A. A domestic tax cut. B. An increase in government spending. C. An increase in the world interest rate. D. The implementation of an investment tax-credit provision. 3. Which of the following statements would be true of an economy that can be characterized as being to the left of the IS curve? A. There will be a tendency for the level of output to decrease. B. There will be a tendency for interest rates to fall. C. There is an excess demand for commodities at the existing interest rate. D. There is an excess supply of commodities at the existing interest rate. 4. Fiscal policy loses its effectiveness in all of the following situations EXCEPT A. When the IS curve is vertical. B. When the IS curve is horizontal C. When the country runs full capital controls. D. None of the above. 5. Which of the following not part of the balance of payment? A. Financial Account. Page 2 of 7 B. Treasury Single account. C. Current Account. D. Capital Account. 6. A fiscal expansion coupled with a monetary expansion must always cause A. Output to rise B. Output to fall C. Interest rates to rise D. Interest rates to fall 7. Autonomous consumption is A. a function of disposable income B. a function of national income
4. Fiscal policy loses its effectiveness in all of the following situations EXCEPT A. When the IS curve is vertical. B. When the IS curve is horizontal. C. When the country runs full capital controls. D. None of the above. 5. Which of the following not part of the balance of payment? A. Financial Account. Page 2 of 7 B. Treasury Single account. C. Current Account. D. Capital Account. 6. A fiscal expansion coupled with a monetary expansion must always cause A. Output to rise B. Output to fall C. Interest rates to rise D. Interest rates to fall 7. Autonomous consumption is A. a function of disposable income B. a function of national income C. a function of GDP D. independent of the level of income 8. Monetary policy loses its effectiveness in all of the following situations EXCEPT A. When the IS curve is vertical. B. When the LM curve is nearly horizontal. C. When interest rate controlled by the Fed reaches zero. D. When the IS curve is horizontal. 9. In a small open economy, if the government adopts a policy that lowers imports then that policy: A raises the real exchange rate and increases net exports. B. raises the real exchange rate and does not change net exports C. raises the real exchange and decreases net exports D. lowers the real exchange rate 10. An increase in the trade surplus of the a small open economy could be the result of A. a domestic tax cut. B. an increase in government spending.