Re: Gokhale sample paper 3 discussion

Posted by neha:) on Jun 07, 2014; 1:04pm
URL: http://discussion-forum.276.s1.nabble.com/Gokhale-sample-paper-3-discussion-tp7591759p7591803.html

12. The real balance effect results from
a) the fact that using money rather than barter raises the economy’s wealth.
b) an increase in wealth resulting from lower interest rates.
c) any increase in the amount of bonds owned by the average person.
d) none of the above.

35. Which of the following statements would a macroeconomist who embraces the rational
expectations/neoliberal paradigm accept as an appropriate assumption?
 a) The whole is exactly equal to the sum of its parts.
 b) A macroeconomic model must be based on a logical set of microfoundations.
 c) Investors and innovators always behave rationally.
 d) All are right.

25. An increase in the use of quotas is expected to:
 a) reduce the country’s current account
balance, if other governments do not
retaliate.
 b) increase the country’s current account
balance, if other governments do not
retaliate.
c) have no impact on the country’s current
account balance unless other
governments retaliate.
d) increase the volume of a country’s export
with other countries.

19. Last year a ₤400 million tax increase was accompanied by a ₤600 million decrease in
consumer spending. One reason why spending decreased by more than taxes were increased
is that:
 a) the tax increase raised interest rates
which in turn depressed consumer
borrowing.
 b) the tax increase induced fewer transfer
payments which in turn deterred
consumer spending.
c) reduced spending by those with lower
take-home pay led to decreased income
and spending by others.
d) higher taxes required higher government
spending which in turn discouraged
private spending.