Macro Economics MCQ (GK Set-1) with Answers

Macro Economics MCQ (GK Set-1) with Answers

61) Assuming both the price level and the interest rate are constant and government spending increases from G to G, the government spending multiplier is equal to

Answer is:

the difference (Y-Y) divided by the difference (G- G).

62) The Taylor rule shows combinations of (A) and (B) which characterize (C) _ of the central bank.

Answer is:

(A) real GDP; (B) interest rates; (C) the monetary policy

63) When only such disturbances as changes in technology/tastes or in public spending and taxes can affect economic growth and employment, whereas changes in the money supply would have no effect upon economic growth and employment, we have

Answer is:

the classical dichotomy

64) Instead of relying on the price mechanism to match the supply and demand for goods, the Keynesian approach assumes

Answer is:

output adjusts to demand

65) Monetary policy set according to a Taylor rule under the Keynesian assumption of sticky prices could be characterized as a compromise between the polar cases of (A) and (B)____.

(A) a completely flexible interest rate policy; (B) a completely flexible money supply policy

a completely flexible interest rate policy; (B) a rule for the money supply to grow at the underlying trend growth rate of output

a constant interest rate policy rule; (B) a completely flexible money supply policy

a constant interest rate policy rule; (B) a rule for the money supply to grow at the underlying trend growth rate of output

Answer is:

a constant interest rate policy rule; (B) a rule for the money supply to grow at the underlying trend growth rate of output

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