PART ‘A’ QUESTIONS………..FILL IN THE BLANKS & MULTIPLE CHOICE…….

1. Many economists consider --------------------------------- as the father of Macro Economics.

2. ‘Drain Theory’ was propounded by --------------------.
3. When everyone get increase in income is called --------- of aggregates.
4. More production, less profits is called paradox of -----------------------------.
5. Poverty anywhere is a -------- to prosperity.
6. Classical economists assumed that -------- sector is separate from ------------sector.
7. According to Classical Economists ------------------------ is neutral.
8. Economy has a self --------- mechanism, according to classical economists.
9. In the words of -------------------------- ‘supply creates its own demand’.
10. Money is -------------------- in the classical model.
11. In the classical model ------------------------ equates Savings and Investment.
12. The ratio of ‘C’ expenditure to given level of income is called -------------------.
13. The ratio of Change in ‘C’ to the changes in income is called ---------------- .
14. Non realization of decline in real wages due to increase in prices when wages are
increased is called -------------.
15. Permanent income hypothesis was given by -----------------.
16. The ratio of final change in income to an initial change in investment is called
---------------.
17. When the consumption of a household is influenced by other households it is called
---------------------effect.
18. According to ---------------------------------- consumption is determined by transitory &
permanent incomes.
19. The aggregate net return from an asset during its lifetime is called
-------------------------------.
20. Accelerator principle assumes the capital-output ratio to be -------------.
21. Greater the capital – output ratio, ----------- the increase in investment
22. Greater the life of --------------------- greater the value of accelerator.
23. In a business cycle recession is followed by ----------------.
24. In a business cycle recovery proceeds ----------------------.
25. In a business cycle the opposite of boom is ---------------.

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MULTIPLE CHOICE:

1. An economy is in equilibrium when,

a) Planned consumption exceeds planned savings
b) Planned consumption exceeds planned investment
c) Planned spending equals the value of output
d) Planned spending equals the revenue of the business sector
2) If savings is more than investment, output should,
a) Increase
b) Decrease
c) Remain the same
d) Change in composition
3) When there is an equal increase in taxes and government spending,
a)C+ I+G shifts upward
b) C+ I+G shifts downward
c) C+ I+G doesn’t change
d) None of the above is correct
4) A change in which of the following shifts the short-run aggregate supply curve? except,

A) a change in the price level.

B) a change in the money wage rate.
C) a change in the price of a needed raw material.
D) technological progress.
6) Which of the following increases aggregate demand?
A) A decrease in tax rates.
B) A decrease in foreign income.
C) A decrease in government spending.
D) A decrease in the money supply.

7) One possible result of decreases in aggregate demand coupled with a stable aggregate supply
is
A) a recession.
B) an increase in employment levels.
C) an economic expansion.
D) a rise in the price level.

8) In the short run, a supply shock that shifts the short-run aggregate supply curve leftward
A) Raises the price level and real GDP.
B) Raises the price level and decreases real GDP.
C) Lowers the price level and increases real GDP.
D) Lowers the price level and real GDP.

9) Which one of the following is a subjective factor influencing consumption?

A) Income distribution
B) Speculation in business
C) Windfall fall gains
D) Changes in wage level
10). Net investment is represented by,
A) Replacement of a machine
B) Purchase of Bonds
C) Addition of a new machine
D) Purchase of a new car

PART ‘B’ …….. PARAGRAPH QUESTIONS

1. Explain the circular flow of income of a five sector Economy

2. Explain the goals & instruments of macro economics.

3. What are the difficulties in calculating National Income?
http://www.economicsdiscussion.net/national-income/difficulties-of-measuring-national-
income-4-problems/6173

4. State the basic tenets of Classical theory of employment.

5. What are the Keynesian criticisms of the Classical model?

6. What are the types of unemployment?

7. Explain how Agg. Demand & Agg. Supply determine Effective Demand? (or).
8. Explain aggregate supply price and aggregate demand price.
9. What is meant by consumption function? How it is determined?
10. What are the conditions for the operation of Multiplier?

11. Describe the assumptions and limitations of multiplier.

12. Describe the working of a ‘Complex Multiplier’ (or)
13. Explain ‘Haavelmo Effect’.
14. What is meant by MEC? How it is determined?
15. What are the factors affecting MEC ?

16. Distinguish ‘k’ & ‘a’.

17. Explain, ‘Accelerator’, its assumptions & functioning. (or)
18. What is the significance of Paul Samuelson’s ‘Super Multiplier’.
19. Explain the course of a Business Cycle.

20. What are the different phases of a Business Cycle?

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