[~ 6 നി

2 C 1380

5. The natural rate of unemployment is the rate of unemployment :
(a) Consistent with both the wage-setting and price-setting equations.
(b) Where the markup of prices over costs is zero.
(c) Where the markup of prices over costs is equal to its historical value.

(d) That occurs when the money market is in equilibrium.
6. In the IS-LM model, a decrease in output would be the result of a (an):
(a) Increase in money demand.
(b) Decrease in taxes.
(c) Increase in the money supply.
(d) Increase in government purchases.
7. In India, which of the following is the correct formula for calculating the Broad money M3 ?
(a) Currency with the public+ demand deposit with the bank+ other deposit with RBI.
(b) M3 + All deposits with post office savings bank.
(c) M1 + time deposit with the banking system.
(d) M1 + saving deposit of post office savings bank.
8. The situation of liquidity trap refers to :
(a) A floor level of price when people buy goods.
(b) people want to hold cash because there is too much liquidity.
(c) There is an excess foreign exchange reserve in the economy.

(d) The rate of interest is so low that no one wants to hold interest bearing asset and people
wants to hold cash.
9. Classicals view on full employment is best explained as :
(a) Economy will always have a great deal of unemployment.
| (9) Economy will usually have a great deal of unemployment.

(c) Economy will occasionally have some unemployment, but move automatically toward full
employment.

(d) Economy will never have full employment.