Top 350+ Solved Micro Economics 1 MCQ Questions Answer
Q. The perfectly elastic segment of the LM curve is:
a. Keynesian range
b. Classical range
c. Intermediate range
d. None of these
Q. Which policy is effective in the Classical range?
a. Monetary policy
b. Fiscal policy
c. Incomes policy
d. None of these
Q. Which policy is effective in the Keynesian range?
a. Monetary policy
b. Fiscal policy
c. Incomes policy
d. None of these
Q. Which policy is effective in the intermediate range?
a. Monetary policy
b. Fiscal policy
c. Both policies
d. None of these
Q. Frictional unemployment exists:
a. When there is a decrease in real GDP
b. Because it takes time to find a job when one is first entering the labour force
c. As a result of technological change
d. When an individual retires
Q. The natural rate of unemployment equals the sum of those who are:
a. Frictionally and structurally unemployed
b. Frictionally and cyclically unemployed
c. Structurally and cyclically unemployed
d. Frictionally structurally and cyclically unemployed
Q. The marginal productivity of labour:
a. Increases when the price of the good sold increases, ceteris paribus
b. Decreases when there is an adverse supply shock, ceteris paribus
c. Increase when more workers are hired, ceteris paribus
d. Decreases when there is an increase in the quantity of capital, ceteris paribus
Q. When saving is greater than investment in a two-sector model,
a. Output should increase
b. Output should decrease
c. Output should not change
d. None of these
Q. When output exceeds spending:
a. There is unsold output, and level of output will fall
b. There is unsold output, and level of output will rise
c. There is unsold output, and level of spending will rise
d. There is no unsold output since the level of spending will rise
Q. When investment is negatively related to the rate of interest, equilibrium output in the goods market:
a. Is unrelated to the rate of interest
b. Is inversely related to the rate of interest
c. Is positively related to the rate of interest
d. Falls as the rate of interest decreases
Q. Simultaneous equilibrium in the money (LM) and goods (IS) market exists:
a. At an unlimited number of output levels and rates of interest
b. At only one output level and rate of interest
c. At an unlimited number of output levels and only one rate of interest
d. At only one output level and an unlimited number of rates of interest
Q. In which of the following situations will an increase in the money supply have no effect upon output?
a. LM is steeply sloped and IS is steeply sloped
b. LM is vertical and IS is steeply sloped
c. LM is steeply sloped and IS is vertical
d. LM is relatively flat as is IS
Q. Policy Neutrality is the main proposition of:
a. Supply Side Economics.
b. Keynesian Economics
c. Monetarism
d. Rational expectations hypothesis