Question

1.Which of the following about inflation is NOT true?
a. With an unexpectedly high inflation rate, retirees get lower pensions.
b. A low inflation rate band helps reduce volatility.
c. Governments gain from higher inflation rate.
d. With an unexpectedly low inflation rate, lenders lose and borrowers win.
2.Which of the following would NOT cause the AD curve to shift to the right?

a. The U.S. wants to import more iron ore from Australia.

b.Government spending increases.

c. The inflation rate in Australia increases.

d.Australians buy more and save less.

3.In 2009, in response to the global financial crisis, the Labor Government handed out $900 cheques to almost all Australian tax-payers. This was an example of
a. Keynesian policy in action, aimed at speeding recovery through boosting demand.
b. Keynesian policy in action, aimed at speeding recovery through boosting supply.
c. Hayekian policy in action, aimed at speeding recovery through boosting demand.
d. Hayekian policy in action, aimed at speeding recovery through boosting supply.

4.What is NOT true about the Reserve Bank of Australia (RBA)?
a. It can increase the money supply by being Australia's banknote issuing authority.
b. It can decrease the interest rate to boost the housing market in Australia.
c. It stores gold.
d. It uses fiscal policy to maintain the integrity and stability of Australia's financial system.

5.Which of the following does NOT count towards Australia's GDP?

a. The Australian Federal Treasury buys an Australian-made solar panel.

b. Bob in Sydney pays someone to clean his house.

c. Marco stays at home looking after his son.

d.A household in Thailand buys Australia milk powder.

6. A price ceiling set below the equilibrium price will result in a/an
a. surplus due to excess quantity supplied.
b. shortage due to excess quantity demanded.
c. efficient outcome.
d. increase in producer surplus.

7.Suppose a politician proposes that the Government should distribute $100,000 from Australia's richest person to give $1,000 to each of Australia's 100 poorest families. This proposal is
a. an example of positive economic analysis.
b. not a Pareto improvement.
c. going to change Australia's GDP.
d. an example of the free market in action.

8. In the school market for coffee, Mr Mary's cafe and St Jack's cafe

a. each have a Lerner index of roughly 1.

b. each have a Lerner index of roughly 0.

c. are duopolists.

d. are oligopolists.
9.Which of these pairs of goods is most likely to have a negative cross-price elasticity?
a. US Domestic Tuna and Imported Tuna.
b. US Domestic Tuna and Bread.
c. US Domestic Tuna and Minced Meat.
d. US Domestic Tuna and Computer Ink.

10.Homer Simpson's desire to eat unlimited donuts violates the
a. Law of Demand.
b. Law of Diminishing Returns.
c. assumption of Ceteris Paribus.
d. assumption of rational behaviour.

Answer 1

Answer 1:

Option d. All the above options are correct except option d because with an unexpectedly low inflation rate, lenders gain because purchasing power of their money increases and borrowers lose because they have to pay more money in return.

Answer 2:

Option C. If inflation rate in Australia increases, then it will reduce exports of the nation and increase imports of the nation which will reduce net exports and cause the aggregate demand curve to shift to the left.

Answer 3:

Option a. This involves expansionary fiscal policy action aimed at boosting the level of aggregate demand in the economy.

Answer 4:

Option d. The fiscal policy is used by the government and not by the Central bank of the nation.