221 Merged

11/28/21, 2:28 PM ECO221A: Macroeconomics I
ECO221A: Macroeconomics I
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Quiz 1

Q.1
In classical model
Max. score: 1; Neg. score: 0; Your score: 1

unemployment can only be frictional.

economy may or may not be at full employment.

economy is always at full employment.

aggregate supply curve is always vertical.
Q.2
In the short run

economy is supply-determined.

is neither demand nor supply-determined.

economy is demand-determined.
Q.3
Phillips curve is a relationship
b t
https://hello.iitk.ac.in/eco221a21/#/result/7 t t th d l t t 1/5

between output growth and unemployment rate.
ECO221A:
between
Macroeconomics I
inflation and change in unemployment rate.
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between inflation and unemployment rate.

between change in inflation rate and change in unemployment rate.
Q.4
Classical macroeconomists believe in

downward sloping Phillips curve.

horizontal Phillips curve.

vertical Phillips curve.

non-existence of Phillips curve.
Q.5
Which one (s) of the following is (are) macroeconomic issues?

Informal sector

Infrastructure

Agricultural prices

Automobile industry

Inflation

Balance of payments
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ECO221A: Macroeconomics
Q.6
Aggregate supply curve I
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is upward sloping in the classical model.

does not exist in the classical model.

is horizontal in the long run.

is vertical in the short run.

None of the options are correct.
Q.7
In stagflation

output is falling.

prices are increasing.

prices decline.

both output and prices are falling.
Q.8
In recession

both demand and supply management policies can be effective.

supply management policies can be effective.

only demand-management policies can be effective.

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Q.9
In recession

exchange rate is depreciating.

economy is in depression.

prices are falling.

aggregate output is shrinking.

unemployment is increasing.

exports fall.
Q.10
In socialist economies

prices are state controlled.

prices are demand-supply determined.

production is state controlled.

employment is state controlled.

industry output is decided by firms.
Score: 8
Score: 8
ECO221A:

Macroeconomics I
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Quiz 2

Q.1
Under "expenditure approach"


export earnings are ignored.

Replacement Investment expenditures are ignored.

expenditures on intermediary goods are ignored.

import expenditures are not considered.

all goods and services are measured at market prices.
Q.2
GDP at market prices


avoid trading activities.

avoid services of owner occupied houses.

avoid considering inventories.

avoid considering services rendered in trading activities.
ECO221A:
avoid considering defence goods.
Macroeconomics I
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Q.3
Transfer payments

are included in National Income.


are considered as current economic activities.

are not included in Personal Income.
Q.4
Government expenditures

are valued at factor cost.


are not included in GDP.

are valued at market prices.
Q.5
Imputed method is used

in GDP measurement.
None of the options are correct


ECO221A:
when
Macroeconomics I in the market.
a good or service is sold
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:1

in case of owner occupied residences.
Q.6
National Income


ignores income from underground economic activities.

variables are gross incomes before tax.

variables are "net of taxes".

does not include rental earnings.
Q.7
Capital gains from share trade

are not considered in GDP.


are considered as profits.

are never taxed.
Q.8
Nontax payments

a . sco e: ; eg. sco e: 0; ou sco e: 0

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are deducted from National Income to arrive at Personal Disposable Income.

are like indirect taxes on goods and services.

are like "direct" taxes.

are deducted from National Income to arrive at Disposable Income.
Q.9
GNP at market prices

considers output of both domestic and foreign factors of production.


value all goods and services at market prices.

does not avoid double counting of intermediary goods.
Q.10
If GDP of a country is more than its GNP


the value of Net factor Income from Abroad is negative.

foreigners are earning less inside a country than its residents are earning abroad.

more foreigners are earning inside a country than its residents are earning abroad.

the value of Net factor Income from Abroad is positive.
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Score: 3
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Quiz 3

Q.1
Quantity Theory of Money

NOTO

assumes that output is at full employment level.

says that prices are proportional to output.

assumes a constant velocity of money.
Q.2
WPI

NOTO

has the same basket of goods and services as that of CPI.

has a wider basket of goods and services in comparison to CPI.

has a time-dependent basket of goods and services.
Q.3
In Classical model

ECO221A:
NOTO
Macroeconomics I
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aggregate supply curve determines prices.

aggregate demand curve determines prices.

goods market determines employment.
Q.4
Labour force includes

unemployed workers.

naturally unemployed workers.

retired workers.

discouraged workers.

part-time employed workers.

NOTO
Q.5
Cost of living is best measured by

NOTO

CPI.

WPI.
GDP deflator

GDP deflator
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Q.6
Inflation : 1 cannot be obtained from

NOTO

WPI.

CPI.

GDP deflator.
Q.7
New goods are

NOTO

not included in WPI.

not included in CPI.

are not included in GDP deflator.
Q.8
CPI

NOTO

has a time-dependent basket of goods and services.

has a fixed basket of goods and services.

has the same basket of goods and services as that of WPI.
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Q.9
Indication of future price movements

NOTO

can be obtained from WPI.

can be obtained from CPI.

can be obtained from GDP deflator.
Q.10
WPI

NOTO

does not contain consumer goods in its basket.

has a fixed basket of goods and services.

has some semi-finished goods in its basket.
Score: 7
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Quiz 4

Q.1
At Break Even income, S+T-T f < I+G.
Max. score: 1; Neg. score: 0.25; Your score: 1

false

true
Q.2
At Break Even income with government, income is equal to Disposable Income.

false

true
Q.3
If Taxes are equal to Transfer Payments, Y and disposable income are the same.

false

true
Q 4 Th B l
https://hello.iitk.ac.in/eco221a21/#/result/105 dB d t lti li i l th 1/3
Q.4
The Balanced Budget multiplier is less than one.
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false

true
Q.5
Higher the tax rate, stronger is the expenditure multiplier.

false

true
Q.6
At Break Even income, Y is less than equal to equilibrium Y.

false

true
Q.7
The strength of the tax rate multiplier positively depends upon c. (ignore minus sign)

false

true
Q.8
When S+T-T f = 0, Y=C. I
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false

true
Q.9
The tax rate multiplier is \({dY}/{dt} = {-cY_1 /1-c(1-t_0)}\)

false

true
Q.10
The intercept of the S+T-T f line is S0 - cTf.
Max. score: 1; Neg. score: 0.25; Your score: -0.25

false

true
Score: 8.75
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Quiz 5

Q.1
The short run price in residential investment market determines long run supply of residences.

false

true
Q.2
Net investment is always positive.

false

true
Q.3
In the upswing of a business cycle, intended investment is expected to be positive.

false

true
Q 4 Construction industry output is classified as Business Fixed Investment

Q.4
Construction industry output is classified as Business Fixed Investment.
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false

true
Q.5
Replacement investment is always positive.

false

true
Q.6
Below LM curve, supply of money is less than demand for money.

false

true
Q.7
Below IS curve, supply is less than demand.

false

true
ECO221A:
Q.8
ExcessMacroeconomics I supply of goods cannot co-exist.
demand for money and excess
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false

true
Q.9
The short run supply curve in residential investment market is upward sloping.

false

true
Q.10
In an upswing of a business cycle, unintended investments are expected to be negative.

false

true
Score: 10
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Quiz 6

Q.1
Government expenditure multiplier is the same in Keynesian Cross model and IS-LM model if
investment is insensitive to r.

false

true
Q.2
Under government expenditure policy with no restrictive assumptions, there will not be any
crowding out of private investment.

false

true
Q.3
Balanced budget multiplier in IS-LM model is less than one.

false

true
Q.4
If there is excess demand in goods and money market, both Y and r will increase.
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false

true
Q.5
Under bond-financing of government expenditure, fiscal policy will not crowd out private
investment.

false

true
Q.6
If r is held constant the two endogenous variables are Y and M.

false

true
Q.7
Government expenditure multiplier is the same in Keynesian Cross model and IS-LM model in
liquidity trap.

false

true
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Q.8
IS LM model is stable if determinant and trace are positive.

false

true
Q.9
In liquidity trap monetary policy is very effective.

false

true
Q.10
If speculative demand for money is insensitive to r, fiscal policy will be ineffective.

false

true
Score: 8.75

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Quiz 7

Q.1
In case of fiscal policy, price does not change in VPK model.

false

true
Q.2
Real wage is assumed fixed in VPK model.

false

true
Q.3
If money wage increases in VPK model, aggregate demand shifts.

false

true
Q 4 There is involuntary unemployment in VPK model

Q.4
There is involuntary unemployment in VPK model.
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false

true
Q.5
In case of monetary policy, price does not change in VPK model.

false

true
Q.6
If money wage increases, aggregate supply shifts in VPK model.

false

true
Q.7
There is excess supply of labour in VPK model.

false

true
Q.8
There is no money illusion in VPKI model.
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false

true
Q.9
If money wage increases in VPK model, LM also shifts.

false

true
Q.10
If there is technological improvement in VPK model, aggregate supply curve shifts.

false

true
Score: 7.5
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Quiz 8

Q.1
Foreign Direct Investment is recorded in the Transfer Payments account.

false

true
Q.2
The supply side model has a classical demand side.

false

true
Q.3
The supply side model has a Keynesian supply side.

false

true
Q 4 There is only voluntary unemployment in the SS model

Q.4
There is only voluntary unemployment in the SS model.
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false

true
Q.5
Exports of goods and services are recorded in the Trade account.

false

true
Q.6
BOP account has two sub-accounts: Trade account and Capital account.

false

true
Q.7
If taxes are cut in the SS model, only aggregate demand will be affected.

false

true
ECO221A:
Q.8
If taxesMacroeconomics I supply is affected.
are cut in the SS model, labour
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false

true
Q.9
If government expenditure policy is initiated in the SS model, output will not change.

false

true
Q.10
Aggregate supply curve in SS model is upward sloping.

false

true
Score: 10
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End Semester Examination

Q.1
If foreigners residing in India send back more money than Indians working abroad send back home

it will depreciate exchange rate, ceteris paribus.

it will adversely affect Current account, ceteris paribus.

NOTO

it will adversely affect Capital account, ceteris paribus.

it will appreciate exchange rate, ceteris paribus.
Q.2
Under expansionary monetary policy in IS-LM model

transaction demand for money will increase.

there is no crowding out effect.

private investment can still crowd out.

speculative demand for money will increase.
Q.3
Under flexible exchange rate system, an increase in e
Max. score:Macroeconomics
ECO221A: 1; Neg. score: 0; Your score:
I 1
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is known as Devaluation.

is known as Revaluation

can be caused by an increase in imports, ceteris paribus.

is known as Appreciation.

is known as Depreciation.
Q.4
Inventory investments are determined by

NOTO

business cycles.

trend output.

market conditions.
Q.5
In VPK model

marginal product of labour is constant.

there is involuntary unemployment.

there is excess supply of labour.
real wage is a variable


real wage is a variable.
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Q.6
If : 1rate depreciates
exchange

exports will improve.

LM curve will be affected.

NOTO

BP line will become flatter.

imports will fall.
Q.7
In SS model, if taxes are cut

NOTO

output will increase.

real wage will decline.

price will decline.
Q.8
Gross investment

NOTO

is always greater than net investment.

is always positive.
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is positive but net investment can be negative.
Q.9
Under money-financed government expenditure policy

NOTO

the expenditure multiplier is the same as under bond-financing.

the expenditure multiplier is bigger than under tax-financing.

the expenditure multiplier is bigger than under bond financing.
Q.10
Under bond-financed government expenditure policy in the IS-LM model

the expenditure multiplier is bigger than under Keynesian Cross model.

private investment will crowd out partially.

speculative demand for money will increase.

transaction demand for money will increase.
Q.11
In SS model (assume no tax policy is adopted)
ECO221A:

Macroeconomics

demand I
curve determines price.
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: 1side determines output.

supply

NOTO

demand curve determines output.

supply curve determines price.
Q.12
If demand increases in Keynesian Cross model

savings also increases.

output also increases.

NOTO

the expenditure multiplier also increases.

there will negative unintended inventory changes.
Q.13
Stock of houses

NOTO

determine flow of houses in the long run.

determine short run rent of residences.

determine long run investments in residences.
Q.14
If interest rate policy is pursued in the IS-LM model
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IS-LM model becomes recursive.

Y and G become the two endogenous variables.

Y and M become the two endogenous variables.

IS curve alone determines Y.
Q.15
Under Flexible Exchange Rate system,

NOTO

monetary policy will be effective.

money supply multiplier will be the same as in Quantity Theory of Money if λ=∞.

monetary policy will be totally ineffective if there is no international capital
movement.
Q.16
Under Flexible Exchange Rate system if government expenditure increases

effect on exchange rate will depend upon relative slopes of LM and BP functions.

exchange rate will depreciate.
ECO221A:
exchange rate will appreciate.
Macroeconomics I
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effect on exchange rate is uncertain.
Q.17
Investment includes

expenditures on plant and machinery.

expenditures on labour.

NOTO

expenditures on residential buildings.

inventory of raw materials and finished goods.
Q.18
In VPK model, if technology improves

involuntary unemployment increases.

labour demand curve shifts.

labour supply curve shifts.

price falls.
Q.19 In SS model if technology improves,

Q.19
In SS model if technology improves,
ECO221A:
Max. score:Macroeconomics I 1
1; Neg. score: 0; Your score:
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money wage will increase.

real wage will increase.

output will increase.

price will fall.
Q.20
In VPK model

there cannot be any voluntary unemployment.

economy can reach full employment.

NOTO

aggregate supply curve can become vertical.

there can be voluntary unemployment.
Q.21
Under tax-financed government expenditure in the IS-LM model

the expenditure multiplier is known as balanced budget multiplier.

slope of IS curve changes.

slope of LM curve changes.

the expenditure multiplier is bigger than under bond-financing.
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Q.22
Business fixed investment

NOTO

may proceed with target output.

depends upon costs of other factors of production.

is determined by demand for capital function.
Q.23
Keynesian Cross model

assumes price to be constant.

has no role of government.

NOTO

is a supply-determined model.

assumes excess capacity in the economy.
Q.24
In Keynesian Cross model

the intercept of the savings function is -C0 without government.
ECO221A:
theMacroeconomics
intercept of the savings Ifunction is -C0 +cTf with government.
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NOTO:1
Q.25

NOTO

balanced budget multiplier is one.

at break-even income, Y=C.

at break-even income, S+T-T f = 0.
Q.26
In Keynesian Cross model if government expenditure increases

aggregate demand line will shift.

S+T-T f line will shift.

NOTO

savings line will shift.

consumption line will shift.
Q.27
If investment is also a positive function of output beside being inversely related to interest rate

ECO221A:
NOTO
Macroeconomics I
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IS-LM model can become unstable.

IS-LM model is still stable.

the determinant condition of stability can fail.
Q.28
Under Flexible Exchange Rate system, if foreign interest rate increases

domestic output will increase.

domestic output will fall.

there will be no effect on domestic output.
Q.29
Under money-financed government expenditure policy in the IS-LM model

NOTO

private investment will crowd out.

interest rate will fall.

output may or may not increase.
Q.30
In IS-LM model, fiscal policy is most effective
M
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1 N 0 Y 0 11/12
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NOTO

when investment is insensitive to r, that is Ir=0.

when speculative demand for money is insensitive to r, that is lr=0

when economy is in a liquidity trap.
Score: 17
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Midsemester Examination

Q.1
In classical model

goods market does not affect output.

there can be involuntary unemployment.

there can be voluntary unemployment.

NOTO
Q.2

both demand and supply determine output.

NOTO

there is full employment in the economy.

demand determines output.

there is excess capacity in the economy.
Q.3
At Break Even income
Max. score:Macroeconomics
ECO221A: 1; Neg. score: 0; Your score:
I 1
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Y=C

NOTO

C=0

S=0

S = I.
Q.4
Public sector

cannot sell its output in the market.

produces only public goods and services.

can produce private goods.

NOTO
Q.5
Output gap

is negative in recession.

is negative above full employment.

is positive above full employment.
NOTO

NOTO
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Q.6
Mixed :1
economies

cannot have a sizeable private sector.

NOTO

are entirely market based.

have a sizeable public sector.

are entirely state controlled.
Q.7
Classical labour market determines

interest rate.

NOTO

real wage.

output.

money wage.
Q.8
Unemployment rate

contains workers who have left the wrokforce.

contains discouraged workers.
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contains part-time employeds.

NOTO
Q.9
Inventories of final goods

are included in next period's GDP.

are excluded from GDP.

are valued at current market prices.

NOTO
Q.10
Inflation rate is obtained using

using GDP deflator only.

CPI only.

WPI only.

NOTO
Q.11
Keynesian models

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are supply

NOTO

discuss long term output.

do not advocate stabilisation policies.

discuss counter-cyclical policies.
Q.12
Downward sloping Phillips curve

justify supply-managed policies.

justify classical position.

justify Keynesian policies.

NOTO
Q.13
Technology is assumed to be given

in Growth models.

in Classical model.

in Keynesian models.

NOTO
Q.14
Unintended inventory changes
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are negative if D>S.

NOTO

are negative if S>D.

are positive if S>D.

are positive if D>S.
Q.15
Classical dichotomy

NOTO

says that real variables cannot affect nominal variables.

says that real variables affect some nominal variables.

says that nominal variables cannot affect real variables.

says that nominal variables affect real variables.
Q.16
Personal Income
contains Interest Income


contains Interest Income.
ECO221A:
contains
Macroeconomics
Retained EarningsI
Users Online : 1 Contributions to Social Insurance.

contains

NOTO
Q.17
The strength of the expenditure multiplier

depends upon interest rate.

NOTO

depends inversely on MPS.

depends positively on autonomous investment.

depends positively on MPC.
Q.18
Disposable Income

is net of Contributions to Social Insurance.

is net of Retained Earnings

is net of Property Tax.

NOTO
Q.19
Classical demand function
ECO221A:
Max. score:Macroeconomics I 1
1; Neg. score: 0; Your score:
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determines output.

NOTO

is obtained from money market.

determines price.

is a rectangular hyperbola.
Q.20
In cyclical boom

there can still be non-zero natural unemployment.

output can be above full employment.

natural rate of unemployment is zero.

NOTO
Q.21
Stabilisation policies

contain only monetary policies.

do not advocate demand-management policies.

contain only fiscal policies.
NOTO

NOTO
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Q.22
Multipliers

are the links between output and employment.

connect two static points of equilibrium.

are obtained from comparative-static exercises.

NOTO
Q.23
Classical money market determines

money supply.

NOTO

price.

velocity of money.

output.
Q.24
Imputed method is used

to obtain value of services of maids.

NOTO

to obtain
Users Online : 1 value of rented housing services enjoyed by the tenants.

to obtain value of output of housewives.

to obtain value of government output.
Q.25
CPI

contains only goods and not services.

does not include imported goods.

does not include capital goods.

NOTO
Q.26
Natural rate of unemployment

can change in the presence of Covid infection in the country.

does not change with time.

can change with structural change in the economy like number of working hours.

NOTO
Q.27
GDP at factor cost is obtained by

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:1

by deducting Surpluses of Public Enterprises form GDP at market prices.

deducting Subsidies from GDP at market prices.

adding Indirect Taxes to GDP at market prices.

NOTO
Q.28
GDP

considers output of the underground economy.

NOTO

values all goods and services at market prices.

does not consider the services rendered in trading activities.

is GNP minus Net Factor Income from Abroad.
Q.29
GDP deflator

does not include 'new' goods.

NOTO

has constant weights.

does not include exported goods.
ECO221A:

Macroeconomics

has variable weights. I
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Q.30
National Income

have all variables 'net of tax'.

NOTO

have all variables as gross income.

does not consider capital gains income.

includes income from ownership businesses.

does not include 'royalty income'.
Score: 20

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11/28/21, 2:28 PM ECO221A: Macroeconomics I

Max. score: 1; Neg. score: 0; Your score: 1

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None of the options are correct

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Q 4 Construction industry output is classified as Business Fixed Investment

Max. score: 1; Neg. score: 0.25; Your score: 1

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