Started on Friday, 4 February 2022, 9:20 PM

State Finished
Completed on Friday, 4 February 2022, 10:10 PM
Time taken 50 mins 1 sec
Grade 10.50 out of 15.00 (70%)

Question 1

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Oligopolists are more sensitive to the pricing and output policies of their rivals when

Select one:
a. there is freedom of entry and exit
b. their products are highly differentiated
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c. there are barriers to entry
d. all firms produce identical products
Question 2

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It is harder to explain the behavior of firms in oligopoly than in other market structures because in oligopoly

Select one:
a. only differentiated products are produced
b. firms base their decisions on what their rivals do
c. only homogeneous products are produced
d. the firms act independently of each other

Question 3 
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In both monopolistic competition and non-price-discriminating monopoly,

Select one:
a. the marginal revenue curve lies above the demand curve
b. the marginal revenue curve lies below the demand curve
c. marginal revenue is equal to average revenue
d. the marginal revenue curve lies above the average revenue curve
Question 4

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Which of the following is true about inflation?

Select one:
a. If people accurately anticipate inflation, their actions will prevent it.
b. Inflation is more damaging if it is unanticipated.
c. Inflation promotes social harmony by uniting people against the government.
d. Accurate anticipation of inflation is possible for everyone who is well informed about economic events.

Question 5 
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For firms in an oligopoly to be interdependent,

Select one:
a. firms must be small in size and selling differentiated goods
b. goods must be undifferentiated and many sellers
c. goods can be either undifferentiated or differentiated and there are few firms large in size
d. goods must be differentiated and few sellers
Question 6

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A change in autonomous net taxes affects the equilibrium quantity of GDP demanded

Select one:
a. in the same way as a change in autonomous planned investment
b. only indirectly, by first changing the level of disposable income
c. in the same way as a change in autonomous government purchases
d. in the same way as a change in autonomous net exports

Question 7 
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A decrease in autonomous net taxes

Select one:
a. changes GDP in an unpredictable manner
b. increases GDP less than an equal increase in government purchases
c. decreases GDP more than an equal decrease in government purchases
d. increases GDP as much as an equal decrease in government purchases
Question 8

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Which of the following assumptions is usually made about government purchases?

Select one:
a. They are autonomous.
b. They vary directly with the level of income.
c. They vary directly with the interest rate.
d. They equal the level of net taxes in equilibrium.

Question 9 
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Suppose inflation is expected to be 4% next year, and your employer agrees to a 6% increase in your nominal wage. You expect your real
wage to:

Select one:
a. Increase by 4%
b. Decrease by 10%
c. Increase by 2%
d. Increase by 6%
Question 10

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Which of the following, other things constant, will shift the money demand curve to the left?

Select one:
a. a decrease in real GDP
b. an increase in the interest rate
c. an increase in real GDP
d. a decrease in the interest rate

Question 11 
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If the MPC equals 0.75 and Government expenditure increases by $100, real GDP demanded will increase by

Select one:
a. 50
b. 75 percent
c. 400
d. 25 percent
Question 12

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Gross Domestic Product equals the

Select one:
a. total output of all goods and services produced by resources located in a country
b. value added to the economy by intermediate goods and services minus original cost
c. market value of all goods and services produced by resources located in a country
d. market value of all final goods and services produced by resources located in a country.

Question 13 
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Which of the following would be included in this year's GDP?

Select one:
a. one hundred shares of IBM stock that Tony Hanks bought this Year
b. the used car Tracey sold to Justin
c. that bucket of Kentucky Fried Chicken you bought this Year
d. George Garcia's purchase of a fishing rod and reel at a garage sale
Question 14

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Which of the following is most likely produced in a monopolistically competitive market?

Select one:
a. firewood
b. computer chips
c. detergents
d. motorcycles

Question 15 
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If Ford raises the price of its automobiles, the demand curve for GM automobiles

Select one:
a. becomes more elastic
b. is unaffected
c. shifts to the right
d. shifts to the left
Question 16

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If the economy experiences a contractionary gap and the RBI buys government securities in the open-market, then:

Select one:
a. Money supply decreases, the interest rate decreases, and the aggregate demand falls
b. Money supply increases, the interest rate increases, and the aggregate demand increases
c. Money supply decreases, the investment decreases, and the aggregate demand increases
d. Money supply increases, investment increases, aggregate demand increases

Question 17 
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In deciding how much money to hold, you should compare the

Select one:
a. disadvantage of liquidity with the advantage of earning more interest
b. advantage of liquidity with the disadvantage of losing interest
c. disadvantage of storing wealth with the advantage of having a medium of exchange
d. advantage of storing wealth with the advantage of having a medium of exchange
Question 18

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Which of the following would lead to the most inflation?

Select one:
a. Both aggregate demand and aggregate supply decrease.
b. Aggregate demand increases and aggregate supply increases.
c. Aggregate demand increases and aggregate supply decreases.
d. Both aggregate demand and aggregate supply increase.

Question 19 
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A firm could differentiate its product by all of the following means except one. Which is the exception?

Select one:
a. making the product available at a number of different locations
b. using packaging or advertising to create a special subjective image of the product in the consumer's mind
c. emphasizing that the product provides the same benefits to consumers as the others on the market, even when it is really physically
different
d. increasing the number of services that accompany the product
Question 20

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Which of the following is not true about Gross Domestic Product?

Select one:
a. It includes only final goods and services.
b. It reflects production in a particular year.
c. It includes transfer payments.
d. Intermediate goods and services are excluded to prevent double counting.

Question 21 
Complete
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Fiscal policy

Select one:
a. uses the Union government's powers of spending and taxation to affect employment, the price level, and GDP
b. can affect employment and prices, but not the level of GDP
c. uses the Union government's powers over the money supply and interest rates to affect employment, the price level, and GDP
d. can affect employment and the level of GDP, but not the price level
Question 22

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Gross Domestic Product includes final goods and services, but not intermediate goods because

Select one:
a. intermediate goods are only produced by government
b. the value of the intermediate goods is already included in the value of the final goods
c. the value of the intermediate goods is already included as inventory investment
d. intermediate goods are not part of investment spending

Question 23 
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A movement upward and to the left along the money demand curve is caused by

Select one:
a. a decrease in real GDP
b. a decrease in the interest rate
c. an increase in the interest rate
d. an increase in real GDP
Question 24

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In which market structure(s) might firms produce an undifferentiated product?

Select one:
a. monopolistic competition only
b. monopoly only
c. perfect competition only
d. perfect competition and homogenous oligopoly

Question 25 
Complete
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Suppose that storage costs increase, so that firms decide to hold less output in inventory, other things constant. Which of the following is
true?

Select one:
a. investment will decrease
b. investment will increase
c. consumption spending will increase
d. consumption spending will decrease
Question 26

Not answered
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If a monopolistically competitive firm can earn a profit, it will adjust production until

Select one:
a. MC > MR
b. MR = MC
c. MR > AVC
d. MR = ATC

Question 27 
Complete
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Monopolistically competitive firms ignore the effect of their decisions upon other firms in the industry because

Select one:
a. there are few sellers in the market
b. there is only one seller in the market
c. each firm is large relative to the market
d. each firm is small relative to the market
Question 28

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What is the opportunity cost of holding money rather than some other financial asset?

Select one:
a. the forgone leisure
b. the forgone interest income
c. the forgone utility
d. time

Question 29 
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Which of the following would cause a downward movement along the money demand curve?

Select one:
a. a decrease in the interest rate
b. a decrease in real GDP
c. an increase in the interest rate
d. an increase in real GDP
Question 30

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An oligopoly is characterized by

Select one:
a. a large number of firms and no barriers to entry
b. a single firm and no barriers to entry
c. many firms and some barriers to entry
d. few firms, which have control over market price

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