Theories in Macroeconomics (AP Economics) Online Test

Which of the following are the assumptions of the Ricardian Theory of Competitive Advantage?
There are two countries, two commodities and one factor
Labour is the only factor of Production
There are no Transportation Costs
Costs of Production are constant
All of the above
The advancement over the Classical Theory, known as the Heckscher-Ohlin Theory explains how: I Nations produce commodities by using their resources II Nations benefit from International Trade III the nation’s factor prices and distribution of Income are affected by International Trade
I only
II only
III only
I and II
I, II and III
The Loanable Fund Theory of Interest was not propounded by:
B.Ohlin
K. Wicksell
Marshall
G.Myrdal
All of the above
The Innovation Theory of Profit has been propounded by:
F.H. Knights
Keynes
F.B. Hawley
Kent
Joesph Schumpeter
The four factors which determine the Rate of Interest under the Neo-Keynesian Theory are:
Consumption, Transactions, Savings and Bond Prices
Bond Prices, Precautionary Demand, Savings and Investment
Investment, Consumption, Speculative Demand and Supply of Money
Demand for Money, Supply of Money, Savings and Investment
Income, consumption, Transactions and Precautionary Demand
The Classical Theory states that Savings is a function of:
Rate of Interest
Households
Investment
Income
Production
The Life Cycle Hypothesis was criticized by Gardner Ackley because:
The Hypothesis is based on the unrealistic assumption that the household has full knowledge of future: the family’s size, income of each member, credit available and emergencies.
It assumes the households have a definite and conscious vision about Consumption
The Hypothesis does not consider the importance of liquidity constraints while estimating the effect of Income on Consumption
All of the above
None of the above
The term ‘Transitory Income’ was propounded under which Theory?
Duessenberry’s Relative Income Theory
Wicksell’s Loanable Funds Theory of Interest
Modigliani and Ando’s Life Cycle Theory
Friedman’s Permanent Income Theory
Keynes Liquidity Preference Theory of Interest
Who propounded the theory relating to the ‘Demonstration Effect’?
Marshall
Keynes
Modigliani & Ando
Friedman
Duessenberry
Which theory of Money assumes that T (the total volume of Transactions of goods and services during a given period of time) and V (Velocity of circulation of money) remain constant during the short period?
Marshall’s Cash Balance Equation
A. C. Pigou’s Cambridge Cash-Balance Equation
Irving Fisher’s Transactions Approach of the Quantity Theory of Money
The Pooled Fund Approach
The Asset Allocation Approach
Description:

Macroeconomics centres around various Theories. These relate to Money, Interest, Profit and other similar concepts of the Classical, Keynesian and Neo-Classical Theories. Here is a 7-minute short Multiple Choice questions test relating to Theories in Macroeconomics. While taking this test, go through all the options very carefully and then, mark your answers.

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