2 : D 40199
6. At the natural rate of unemployment, Phillips curve becomes :
` (8) Vertical (b) Downward sloping flat

(c) Horizontal (d) Downward sloping steep
7. Components of Demand for money for Active Cash Balance is, demand for money for :

(a) ‘Transaction motive and Speculative motive.

(b) Transaction motive and Precautionary motive.

(c) Speculative motive and Precautionary motive.

8. Under a fixed exchange rate system, when domestic currency is it is moved to a lower parity in
terms of vehicle currency is :

(a) Appreciation. ~ (൯) Depreciation.
(c) Devaluation. (d) Revaluation.
9. Who is the author of the book, ‘A Treatise on Money’ ?

(a) Milton Friedman. (b) J. M. Keynes.
(c) C.P. Kindleberger. (d) A.C. Pigou.

10. Persistent rise in the general level of prices and fall in the value of money is referred to as :
(a) Inflation. (b) Deflation.
(c) Stagnation. (d) Stagflation..

11. Which of the following is typically caused by a recession ?
(a) An increase in structural unemployment.
(b) An increase in frictional unemployment. ச
(€) An increase in cyclical unemployment.
(d) Decrease in natural rate of unemployment.
12. Which of the following group will not be hurt by inflation ?
(a) - Individuals on fixed income. (b) Borrowers at fixed interest rates.
(c) Lenders at fixed interest rates. (d) All the above.
(12 x 4% =6 marks)
Part B (Very Short Answer Questions)

Answer any ten questions.
Each question carries’ 2 marks.

13. What are the types of money ?
14. Define Liquidity trap.