North South University, Department of Economics, ECO104
FALL 2021 FINAL EXAMINATION , Marks: 40 Date: 13th January,2022
Time allowed: one hour 20 minutes. Faculty: Humaira Husain
Name: ID: Sec:
Answer all following questions: Identify the correct answer (by highlighting with yellow color) (1 times
10 = 10 Marks)
Q1. In the Keynesian model of national income, In case of G m(by highlighting with yellow color)
ultiplier if △G = 3.55 Million BDT , MPC = 0.75
△Y =
a) 12 Million BDT
b) 10 Million BDT
c) 14.2 Million BDT
d) 2 Million BDT
Q2. In the Keynesian model of national income, The smaller the value of MPC
a) The smaller the value of G multiplier c) The larger the value of G multiplier
b) The value of G multiplier is unaffected d) Value of G multiplier may increase or decrease
Q3. In the Keynesian model of national income, The sign of ‘tax’ multiplier is negative because
a) Increase in equilibrium income is related to decrease in tax collection
b) Increase in equilibrium income is related to increase in tax collection
c) Increase in equilibrium income is not related to reduction in tax collection
d) Increase in equilibrium income is associated with increase in government purchase
Q4. In self the regulating economy if the current output is smaller than natural level of output
a) Current unemployment rate = natural unemployment rate
b) Current unemployment rate > natural unemployment rate
c) Current unemployment rate < natural unemployment rate
d) Current unemployment rate may greater than natural unemployment rate
Q5. In Keynesian model of national income If MPC value rises the planned expenditure line becomes
a) Flatter
b) Steeper
c) Neither steeper nor flatter
d) None of the above
Q6. In case of fractional reserve banking system
a) Commercial Banks are indifferent to play roles in money creation
b) Commercial Banks do not contribute to money creation
c) Commercial Banks contribute to play roles in money creation
d) Commercial Banks do not have ability to play roles in money creation
This study source was downloaded by 100000853497421 from CourseHero.com on 06-19-2023 07:31:42 GMT -05:00
https://www.coursehero.com/file/129948292/ECO-104-Final-Exam-1docx/
, Q7. In the model of money supply, if the money multiplier is constant, there is
a) Directly proportional relationship between money supply and monetary base
b) No relationship between liquidity preference of the public and money supply
c) Relationship between reserve requirement ratio and monetary base
d) Inversely proportional relationship between reserve requirement ratio & liquidity preference
of the public
Q8. In Neoclassical growth theory,
a) Capital deepening expedites economic growth
b) Technological upgradation promotes economic growth
c) Good governance promotes growth
d) Sound property right structure intensifies economic growth
Q9. In new growth theory
a) Skilled labour enhances economic growth
b) Research and development promote economic growth within economic system
c) Physical capital expedites growth process
d) Property right structure promotes growth within economic system.
Q10. If the base money is constant, greater the value of money multiplier
a) Greater the amount of money supply
b) Smaller the amount of money supply
c) Amount of money supply is unaffected
d) Amount of money supply may be affected
Q11. Answer any five of following questions (Add Picture in your answer if needed) (4 times 6= 30
Marks) (Maintain the order please) Do NOT elaborate your answer unnecessarily. To answer all
questions, USE at best 10 to 11 sentences.
a) Derive the expression for tax multiplier in Keynesian model. If the value of tax multiplier = 2.55
How do you interpret this?
b) Develop the following model of money supply: Money supply = Money multiplier × Monetary
Base. If Base money = 5 million BDT and reserve requirement ratio = 10% and currency deposit
ratio = 15%, calculate Money supply of the economy.
c) Explain the following two cases of self- regulating economy: Inflationary gap and recessionary
gap. Discuss the Govt policy implication for each case.
d) What are basic differences between neoclassical growth theory and New growth theory?
e) How does adjustment in inventory investment by firm help reach equilibrium output in Keynesian
Model.
f) Discuss briefly the sources of economic growth.
Thank you.
This study source was downloaded by 100000853497421 from CourseHero.com on 06-19-2023 07:31:42 GMT -05:00
https://www.coursehero.com/file/129948292/ECO-104-Final-Exam-1docx/
FALL 2021 FINAL EXAMINATION , Marks: 40 Date: 13th January,2022
Time allowed: one hour 20 minutes. Faculty: Humaira Husain
Name: ID: Sec:
Answer all following questions: Identify the correct answer (by highlighting with yellow color) (1 times
10 = 10 Marks)
Q1. In the Keynesian model of national income, In case of G m(by highlighting with yellow color)
ultiplier if △G = 3.55 Million BDT , MPC = 0.75
△Y =
a) 12 Million BDT
b) 10 Million BDT
c) 14.2 Million BDT
d) 2 Million BDT
Q2. In the Keynesian model of national income, The smaller the value of MPC
a) The smaller the value of G multiplier c) The larger the value of G multiplier
b) The value of G multiplier is unaffected d) Value of G multiplier may increase or decrease
Q3. In the Keynesian model of national income, The sign of ‘tax’ multiplier is negative because
a) Increase in equilibrium income is related to decrease in tax collection
b) Increase in equilibrium income is related to increase in tax collection
c) Increase in equilibrium income is not related to reduction in tax collection
d) Increase in equilibrium income is associated with increase in government purchase
Q4. In self the regulating economy if the current output is smaller than natural level of output
a) Current unemployment rate = natural unemployment rate
b) Current unemployment rate > natural unemployment rate
c) Current unemployment rate < natural unemployment rate
d) Current unemployment rate may greater than natural unemployment rate
Q5. In Keynesian model of national income If MPC value rises the planned expenditure line becomes
a) Flatter
b) Steeper
c) Neither steeper nor flatter
d) None of the above
Q6. In case of fractional reserve banking system
a) Commercial Banks are indifferent to play roles in money creation
b) Commercial Banks do not contribute to money creation
c) Commercial Banks contribute to play roles in money creation
d) Commercial Banks do not have ability to play roles in money creation
This study source was downloaded by 100000853497421 from CourseHero.com on 06-19-2023 07:31:42 GMT -05:00
https://www.coursehero.com/file/129948292/ECO-104-Final-Exam-1docx/
, Q7. In the model of money supply, if the money multiplier is constant, there is
a) Directly proportional relationship between money supply and monetary base
b) No relationship between liquidity preference of the public and money supply
c) Relationship between reserve requirement ratio and monetary base
d) Inversely proportional relationship between reserve requirement ratio & liquidity preference
of the public
Q8. In Neoclassical growth theory,
a) Capital deepening expedites economic growth
b) Technological upgradation promotes economic growth
c) Good governance promotes growth
d) Sound property right structure intensifies economic growth
Q9. In new growth theory
a) Skilled labour enhances economic growth
b) Research and development promote economic growth within economic system
c) Physical capital expedites growth process
d) Property right structure promotes growth within economic system.
Q10. If the base money is constant, greater the value of money multiplier
a) Greater the amount of money supply
b) Smaller the amount of money supply
c) Amount of money supply is unaffected
d) Amount of money supply may be affected
Q11. Answer any five of following questions (Add Picture in your answer if needed) (4 times 6= 30
Marks) (Maintain the order please) Do NOT elaborate your answer unnecessarily. To answer all
questions, USE at best 10 to 11 sentences.
a) Derive the expression for tax multiplier in Keynesian model. If the value of tax multiplier = 2.55
How do you interpret this?
b) Develop the following model of money supply: Money supply = Money multiplier × Monetary
Base. If Base money = 5 million BDT and reserve requirement ratio = 10% and currency deposit
ratio = 15%, calculate Money supply of the economy.
c) Explain the following two cases of self- regulating economy: Inflationary gap and recessionary
gap. Discuss the Govt policy implication for each case.
d) What are basic differences between neoclassical growth theory and New growth theory?
e) How does adjustment in inventory investment by firm help reach equilibrium output in Keynesian
Model.
f) Discuss briefly the sources of economic growth.
Thank you.
This study source was downloaded by 100000853497421 from CourseHero.com on 06-19-2023 07:31:42 GMT -05:00
https://www.coursehero.com/file/129948292/ECO-104-Final-Exam-1docx/
