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University of New South Wales *

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5101

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Economics

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Jun 26, 2024

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docx

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9

Uploaded by CountPigeon2262

Q1. Which of the following best describes the operation of automatic stabilisers? Select one: A. When saving increases, investment increases B. When consumption falls, exports increase. C. Some components of government spending automatically increases when output falls. D. When consumption falls, investment increases E. The economy always tends toward full employment Q2. Suppose that there is an increase in oil price. Which of the following is true? Select one: A. All the listed answers are correct. B. This will lead to a downward shift of the price-setting curve where prices will rise, real wages will fall C. This is a supply shock and it will shift the Phillips curve D. This will result in a positive bargaining gap. E. This will result in higher inflation. Q3. An increase in the policy rate reduces aggregate demand because, Select one: A. lt depresses asset prices and makes people feel less wealthy. B. lt reduces the size of the multiplier. C. lt lowers the value of the domestic currency in terms of overseas currencies, encouraging an increasein net exports. D None of the listed answers is correct. E. lt increases the income earned by savers Q4. Assume that the central bank has an inflation target of 2% per year but inflation is currently running at 4%. The nominal policy (interest) rate is currently 5%. The central bank needs to create a negative bargaining gap and estimates that the real policy rate required to achieve this is 3%. Consequently it needs to set the nominal policy rate at: Select one:
A. 7%. B. None of the answers listed is correct C. 6% D. 8% E. 4% Q5.
Q6. Q7. Suppose that some of the immigrants to the country decide to set up businesses, rather than become employees. in this scenario we expect the
number of firms in the economy would increase and this would raise the level of competition. The mark up, which depends on the level of competition, would ____.This will shift the price-setting curve ____and ____ the equilibrium real wage. Select one: a. decrease, up decrease b. decrease, down, decrease c. increase, up, decrease d. decrease up, increase e. increase, down, increase Q8. A fatter aggregate consumption function, if plotted on a graph with output on the horizontal axis and aggregate consumption on the vertical axis, would indicate which of the following. Select one. A. A larger marginal propensity to consume and a smaller multiplier! B .A smaller marginal propensity to consume and a smaller multiplier. C. A larger marginal propensity to consume and a larger multiplier D .None of the listed answers is correct E. A smaller marginal propensity to consume and a larger multiplier Q9. Which one of the following is correct? Select one: A. In the recession, the best thing the government can do is to reduce the government expenditure in order to keep the balance B. Government expenditure does not induce a multiplier effect because it's independent to the rest of the economy C. Focusing on the demand side, there is some way to maintain the government balance while stimulating economy D. None of the listed statements is correct E. The debt-GDP ratio should be kept 0 in order to keep the government's credibility Q10. A worker's best response function depicts effort per hour (e) as a function of hourly wage (w). lf we plot e in the vertical axis and w in the horizontal axis
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