NOUN TMA Questions and Answers: ECO718 - Macro-Economic Theory I

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Q1 Financial theory of investment argues that profits depend ____________on national income and____________ on capital

Positively and negativ ely

Q2 How many propositions did duesenberry used as the basis of the theory?

3

Q3 The financial theory of investment integrates profits theory and acceleration theory and emphasizes that the_________ is the main determinant of investment

Disaggregated cash plan

Q4 According to the profit theory of investment where profits vary directly with income for any level of profits, the higher the interest rate, the_____________will be the_____________and vice versa.

Smaller and optimal capital stock

Q5 When retained earnings are of great importance to small and large firms

When capital market is perfect

Q6 Undistributed profits are regarded as source of internal funds for financing investment, the theory of profit posts that if total income and total profit are high ?????.of firm also??

Distributed pro fit and high

Q7 The flexible accelerator theory imtroduces ---------------in the adjustment process

Lags

Q8 The accelerator principle states that an increase in the rate of output of a firm will require a?? ??in its capital state

Proportionate increase

Q9 The MEI schedule which has a negative slow indicating the amount of investment demanded of various rate of interest is called???????..

Investment demand schedule or curv e

Q10 The marginal efficiency of capital (MEC) is the ????.from an additional unit of capital asset over it cost

Expected rate

Q11 Investment will be made in new capital only when the ??????..is higher than interest rate

Expected rate of return

Q12 What two major factors determine planned investment

Anticipated rate of return and real interest rate

Q13 Autonomous investment is argued to be income in elastic and therefore????? ??.income

Independent

Q14 The marginal propensity to invest is the ratio of change in income denoted mathematically as?

??I/??Y

Q15 Real investment may be induced investment when it is ???????.or? ?????..motivated

Profit or incom e

Q16 Keynes who did not automatically tend towards full employment believed that the resulting under employment could be curved by _____ or ______prices.

Fixed or monetary

Q17 Posthechnological change is a force that can shift MEI to???????? ?.

Right onl y

Q18 Investment is the production or acquisition of real capital assets during any period and is inversely related to interest rate and low interest will lead to high investment, vice versa known as___

Marginal efficiency of investment (M EI)

Q19 Capital is regarded as any previously produced input that can be used in

the__________to__________other goods

Production; produce

Q20 What is financial investment and real investment?

Addition to capital equipment and buying of shares

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## NOUN TMA Questions and Answers: ECO718 - Macro-Economic Theory I

### Re: NOUN TMA Questions and Answers: ECO718 - Macro-Economic Theory I

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Q21 What is required to address a deflationary economy?

Policies that can shift AD upwards

Q22 What can be done to remove an economy from an inflationary gap?

Policies that move AD downwa rds

Q23 What is another name for deflationary gap in a full employment position

Recessionary gap

Q24 When aggregate demand falls short of aggregate supply at the full employment equilibrium position it is known as__________

Deflationary gap

Q25 What do you understand by an inflationary gap?

Aggregate demand is more than aggregate suppl y

Q26 Which of these concepts can be used to explain full employment equilibrium, less than full employment equilibrium, more than full employment equilibrium?

Inflationary and deflationary gaps

Q27 The concept of multiplier analysis the_______ effect of change in leakage or injection an equilibrium level of income

Magnifying

Q28 How many factors apart from real interest rate determine induced investment

1 0

Q29 In the withdraw-injection approach equilibrium is achieved when is equal to ________i.e. when what is withdrawn is offset by what is injected

Planned savings is equal to planned invest ment

Q30 What are variables that can be considered as injection into the income- expenditure stream.

Investment expenditure and inco me from exports

Q31 In the withdraw ??injection approach some of the variables that take away from the income expenditure stream include____

Savings, imports and taxation

Q32 An equilibrium in the Keynesian model is when___________________

AS=AD

Q33 A country??s net national product is the value of all goods and services produced by the citizens of a country minus__________

Depreciation or capital con sumption

Q34 Gross domestic product is the value final output produce in economy regardless of __________ of produce, where as cross national product is the value of goods and services produced by the ____________ of country.

Nationa lity and citizenry of a country

Q35 The classical economist believed in minimal or zero___________ intervention in business activities , the Keynesian believed in intervention during troughs that the supply needs a bail out and the only way out was for_______ to be involved in the economic activities.

Governmen t

Q36 Keynes who did not automatically tend towards full employment believed that the resulting under employment could be curved by _____ or ______prices.

Fixed or monetary

Q37 The classical believed that supply (aggregate production) determines _____ and ______

Income and full employ ment

Q38 According to Say??s law, supply creates it own demand as prices move to balance______ and_________

Demand an d aggregate supply

Q39 The classical economy thought believed that individual self interest and ________ determine prices and rewards for factors of____________

Competition and p roduction

Q40 The models for aggregate expenditure include the following except___

An island economy

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Q21 What is required to address a deflationary economy?

Policies that can shift AD upwards

Q22 What can be done to remove an economy from an inflationary gap?

Policies that move AD downwa rds

Q23 What is another name for deflationary gap in a full employment position

Recessionary gap

Q24 When aggregate demand falls short of aggregate supply at the full employment equilibrium position it is known as__________

Deflationary gap

Q25 What do you understand by an inflationary gap?

Aggregate demand is more than aggregate suppl y

Q26 Which of these concepts can be used to explain full employment equilibrium, less than full employment equilibrium, more than full employment equilibrium?

Inflationary and deflationary gaps

Q27 The concept of multiplier analysis the_______ effect of change in leakage or injection an equilibrium level of income

Magnifying

Q28 How many factors apart from real interest rate determine induced investment

1 0

Q29 In the withdraw-injection approach equilibrium is achieved when is equal to ________i.e. when what is withdrawn is offset by what is injected

Planned savings is equal to planned invest ment

Q30 What are variables that can be considered as injection into the income- expenditure stream.

Investment expenditure and inco me from exports

Q31 In the withdraw ??injection approach some of the variables that take away from the income expenditure stream include____

Savings, imports and taxation

Q32 An equilibrium in the Keynesian model is when___________________

AS=AD

Q33 A country??s net national product is the value of all goods and services produced by the citizens of a country minus__________

Depreciation or capital con sumption

Q34 Gross domestic product is the value final output produce in economy regardless of __________ of produce, where as cross national product is the value of goods and services produced by the ____________ of country.

Nationa lity and citizenry of a country

Q35 The classical economist believed in minimal or zero___________ intervention in business activities , the Keynesian believed in intervention during troughs that the supply needs a bail out and the only way out was for_______ to be involved in the economic activities.

Governmen t

Q36 Keynes who did not automatically tend towards full employment believed that the resulting under employment could be curved by _____ or ______prices.

Fixed or monetary

Q37 The classical believed that supply (aggregate production) determines _____ and ______

Income and full employ ment

Q38 According to Say??s law, supply creates it own demand as prices move to balance______ and_________

Demand an d aggregate supply

Q39 The classical economy thought believed that individual self interest and ________ determine prices and rewards for factors of____________

Competition and p roduction

Q40 The models for aggregate expenditure include the following except___

An island economy

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Q41 The equilibrium of between is and LM curves provide a____solution

determinate

Q42 What do the curve and LM curve represent?

Flow of variable of loanable funds formulation preference and flam variable of liquidity p refence formulation

Q43 What is the liquidity preference function of total money is denoted by m, the fransadia plus pre counting by MI and the superlative motive M2 1.e M=M1+M2 M1= LI(CY) and M2=L2(Y)

M=L(Yr)MI (100)

Q44 The loanable funds theory believes that the rate of interest is the__________which is determined by the demand and supply of credit. Or saving plans. The increase in the amount of many in a period

Price of credit

Q45 The demand for capital is_____ related to the rate of increase. And the demand schedule for capital or investment curve slope demand from left to right

Inversely

Q46 According to the classical theory achieve governs the seceded demand of capital

Time preface and e xpected productively of capital

Q47 The loanable fund theory is after theory that determines the interest rate by____

Demand and supply of loa nable fund

Q48 Which theory emphases that the rate of interest is a purely monetary phenomena

Keynesian liquidity p reference theory

Q49 The life cycle hypothesis believes that the aim of a consumer is to _____over his life time

Maximize his utility

Q50 The permanent income hypothesis respect. The use of carrel income as the determined of consumption explanation and divided both consumption income into___

permanent and transition component

Q51 The relative income hypothesis believes that a rich person will have _____and the poor person a_____

Lower APC and higher APC

Q52 By the social character of consumption pattern we mean the tendency for human beings to_____but also to _____

Keep with the johnses and b ypass

Q53 The________hypothesis states that when income increase, consumption also increase but less than the increase income vice-versa

Absolute income

Q54 According to Keynes consumption function when income increase (decrease) but________

Not proportion ally

Q55 Given a consumption function C=20+0.7 yd and S=y-c derived a consumption fund

S=-20+0.3y

Q56 Given that C=F(Y) and S=F(Y) saving, consumption and investment- are jointly influence by the level of income, both on ___

Aggregate and individual level

Q57 In a given consumption function C=a+b yd ??a? is___and ??b? is ___

Autonomous and marginal propensity to consume

Q58 Saving is regarded as___of disposal income kept aside for future use or to generate additional wealth (interest). S=F (YD).

A part or frac tion

Q59 We express consumption mathmetically as a function of disposable income C=F(YD) where disposable period income ___

Less income tax

Q60 Consumption is majorly determined by_____

Level of income

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Whatsapp: 08155572788

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Q41 The equilibrium of between is and LM curves provide a____solution

determinate

Q42 What do the curve and LM curve represent?

Flow of variable of loanable funds formulation preference and flam variable of liquidity p refence formulation

Q43 What is the liquidity preference function of total money is denoted by m, the fransadia plus pre counting by MI and the superlative motive M2 1.e M=M1+M2 M1= LI(CY) and M2=L2(Y)

M=L(Yr)MI (100)

Q44 The loanable funds theory believes that the rate of interest is the__________which is determined by the demand and supply of credit. Or saving plans. The increase in the amount of many in a period

Price of credit

Q45 The demand for capital is_____ related to the rate of increase. And the demand schedule for capital or investment curve slope demand from left to right

Inversely

Q46 According to the classical theory achieve governs the seceded demand of capital

Time preface and e xpected productively of capital

Q47 The loanable fund theory is after theory that determines the interest rate by____

Demand and supply of loa nable fund

Q48 Which theory emphases that the rate of interest is a purely monetary phenomena

Keynesian liquidity p reference theory

Q49 The life cycle hypothesis believes that the aim of a consumer is to _____over his life time

Maximize his utility

Q50 The permanent income hypothesis respect. The use of carrel income as the determined of consumption explanation and divided both consumption income into___

permanent and transition component

Q51 The relative income hypothesis believes that a rich person will have _____and the poor person a_____

Lower APC and higher APC

Q52 By the social character of consumption pattern we mean the tendency for human beings to_____but also to _____

Keep with the johnses and b ypass

Q53 The________hypothesis states that when income increase, consumption also increase but less than the increase income vice-versa

Absolute income

Q54 According to Keynes consumption function when income increase (decrease) but________

Not proportion ally

Q55 Given a consumption function C=20+0.7 yd and S=y-c derived a consumption fund

S=-20+0.3y

Q56 Given that C=F(Y) and S=F(Y) saving, consumption and investment- are jointly influence by the level of income, both on ___

Aggregate and individual level

Q57 In a given consumption function C=a+b yd ??a? is___and ??b? is ___

Autonomous and marginal propensity to consume

Q58 Saving is regarded as___of disposal income kept aside for future use or to generate additional wealth (interest). S=F (YD).

A part or frac tion

Q59 We express consumption mathmetically as a function of disposable income C=F(YD) where disposable period income ___

Less income tax

Q60 Consumption is majorly determined by_____

Level of income

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### Re: NOUN TMA Questions and Answers: ECO718 - Macro-Economic Theory I

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Q61 Comparative static is the method of economic analysis where___________________

Different equilibrium situation are compared

Q62 Economy dynamic is concerned with __________________

Time-lags rate of change

Q63 In economy analysis of dynamic study the economy may change in two ways namely_________and

Without change in pattern and by changing its pattern through ti me

Q64 The study of economic dynamics is considered as the study of__________________

Change acceleration and decelerati on

Q65 -----------------------is the appropriate technique to show which still picture of an economy

Macro static method

Q66 Static economy is timeless economy where ________________occur and it is necessary in equilibrium

No Changes

Q67 Economic static is the study of relationships between variables??????? ?where as economic dynamic is the relationship of economic variable?????

At a point of time and through time

Q68 When Y which is a function of x increases x increases, it is called.............?

Increasing function

Q69 Given a fundamental relationship Q =f (x) what is Q and X in terms variables.

Dependent and independent variables

Q70 The variables that are assigned values are called .............and the variable whose values are determined by the independent variable is..............?

Independent and dependent variabl e

Q71 What are the types of variables in economic analysis?

Continuous and discrete variable

Q72 What is the algebraic presentation of demand curve,

Qd = f (c p

Q73 Graphs are to provide clear picture of relationship between two economic variables because of.............................

Visual appeal

Q74 When retained earnings are of great importance to small and large firms

When capital market is perfect

Q75 Which of the following tools is not included in macroeconomic tools of analysis

Connog raphy

Q76 Macroeconomic analysis is assumed to suffer from the following number of limitations.

5

Q77 Both.............and...............are in impartial for economic analysis which is regarded as necessary apparatus of theory life.

Macroeconomics and microeco nomics

Q78 Microeconomics deals with..........................of an economy.

Specific segment of t he economy

Q79 The characteristics of Macroeconomics among others include the following;

General price level, unemployment, natural income according to popul ation and demographic issues, trade

Q80 Macroeconomic can be define as........................in an economy.

Aggregate Varia bles

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Whatsapp: 08155572788

Whatsapp: 08155572788

Q61 Comparative static is the method of economic analysis where___________________

Different equilibrium situation are compared

Q62 Economy dynamic is concerned with __________________

Time-lags rate of change

Q63 In economy analysis of dynamic study the economy may change in two ways namely_________and

Without change in pattern and by changing its pattern through ti me

Q64 The study of economic dynamics is considered as the study of__________________

Change acceleration and decelerati on

Q65 -----------------------is the appropriate technique to show which still picture of an economy

Macro static method

Q66 Static economy is timeless economy where ________________occur and it is necessary in equilibrium

No Changes

Q67 Economic static is the study of relationships between variables??????? ?where as economic dynamic is the relationship of economic variable?????

At a point of time and through time

Q68 When Y which is a function of x increases x increases, it is called.............?

Increasing function

Q69 Given a fundamental relationship Q =f (x) what is Q and X in terms variables.

Dependent and independent variables

Q70 The variables that are assigned values are called .............and the variable whose values are determined by the independent variable is..............?

Independent and dependent variabl e

Q71 What are the types of variables in economic analysis?

Continuous and discrete variable

Q72 What is the algebraic presentation of demand curve,

Qd = f (c p

Q73 Graphs are to provide clear picture of relationship between two economic variables because of.............................

Visual appeal

Q74 When retained earnings are of great importance to small and large firms

When capital market is perfect

Q75 Which of the following tools is not included in macroeconomic tools of analysis

Connog raphy

Q76 Macroeconomic analysis is assumed to suffer from the following number of limitations.

5

Q77 Both.............and...............are in impartial for economic analysis which is regarded as necessary apparatus of theory life.

Macroeconomics and microeco nomics

Q78 Microeconomics deals with..........................of an economy.

Specific segment of t he economy

Q79 The characteristics of Macroeconomics among others include the following;

General price level, unemployment, natural income according to popul ation and demographic issues, trade

Q80 Macroeconomic can be define as........................in an economy.

Aggregate Varia bles

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Whatsapp: 08155572788

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