NSU school of Business and Economics, SUM 2021

ECO104 SEC: 9 Marks: 15 time: 20minutes

Highlight right answer with yellow colour . Faculty: Humaira Husain

NAME:_______Naeem ahmed ______________ ID NO:________2011913630 __________

Q1. The Aggregate demand curve is rectangular hyperbola because

a) Aggregate price and quantity of output demanded are positively related

b) Aggregate price and quantity of output demanded are inversely proportional
c) Aggregate price and quantity of output demanded are negatively proportional
d) Aggregate price and quantity of output demanded are not co-related.

Q2. Monetary policy is effective in increasing or decreasing output in short-run because,

a) Price is flexible, output is constant

b) Price is rigid and output is also constant
c) Price is sticky, output is flexible
d) Price is sticky and output may change

Q3. In the quantity equation, MV=PY, M stands for

a) Quantity of output
b) Quantity of money stock in the current period
c) Price per unit of output
d) Quantity of money stock in future

Q4. Which of the followings is reason for price rigidity in the short run?

a) Firms face menu cost

b) Labour market is not elastic
c) Price may respond to change in supply and demand
d) Output is constant at natural level

Q5. AD curve is derived from quantity equation where

a) Price and output are constants

 b) Only Velocity is constant
c) Quantity of money and velocity are constants
d) Only money stock is constant

Q6. If government declines Money supply in the long run in AD-AS model

a) Output may decline and Price is unchanged

b) Output is constant at natural level, and price falls.
c) Output is constant at natural level, and price rises.
d) Output and price both may decline

Q7. If government raises money supply

a) AD curve shifts to right

b) AD curve does not shift
c) SRAS curve shifts upward
d) AD curve shifts to left