ee
2 C 21239
7. Ifthe government's anti inflationary policy is not viewed as credible, it results in
(a) Self-fulfilling inflation. (b) Deflation.
(£) Disinflation. (d) Stable prices.
8. Which of the following groups will not be hurt by inflation ?
(a) Individuals on fixed incomes.
(b) Borrowers at fixed interest rates.
(c) Retail store owners.
(d) Lenders at fixed interest rates.
9. Which of the following will be the outcome of stagflation ?
۱ (a) Unemployment goes down.
(b) The price level goes down.
(c) Phillips curve shifts rightward.
(d) Real GDP increases.
10. Which of the following theory of business cycle has been given by Haw trey ?

(a) Purely monetary. (b) Monetary over investment.
(c) Real over investment. (d) Under consumption.

11. Pick out the item not included in. BOPs current account 7
(a) Merchandise. (b) Travel and transportation.
(c) Transfer payments. (d) Foreign investments.

12. Doctrine of sound finance supports.
(a) Deficit budget. (b) Surplus budget.
(c) Balanced budget. (d) Enlarged budget.

(12 x % = 6 marks)
Part B (Very Short Answer Questions)

Answer any ten questions.
Each question carries 2 marks

13. Explain the classical theory of demand for money.
14. Distinguish between demand pull and cost push inflation.
15. Differentiate between money and near money.