Bcom Bachelor of Commerce Bachelor of Commerce: Economics 4

Question 1

According to the quantity theory of money (MV = PQ), if the velocity of money and real output are constant, doubling the money supply will:

Accepted Answer

Double the price level

Answer

With V and Q fixed, any increase in M must be fully absorbed by a proportional rise in P.

Question 2

A price floor set below the market equilibrium price will:

Accepted Answer

Have no effect on the market

Answer

A price floor below equilibrium is non-binding because the market price already clears the market above that floor.

Question 3

The income effect of a wage increase states that:

Accepted Answer

Higher wages may reduce hours worked as workers can achieve target income with fewer hours

Answer

The income effect suggests that as wages rise, workers may choose more leisure, potentially bending the labor supply curve backward.

Question 4

In game theory, a Nash Equilibrium occurs when:

Accepted Answer

Each player's strategy is the best response to the other players' strategies

Answer

A Nash Equilibrium is a stable state where no player can improve their payoff by unilaterally changing their strategy.

Question 5

Which of the following is NOT included in the calculation of GDP using the expenditure approach?

Accepted Answer

Transfer payments

Answer

Transfer payments (e.g., Social Security, unemployment benefits) are excluded from GDP because they do not represent payment for new goods or services.

Bcom Bachelor of Commerce Practice Test

Bcom Bachelor of Commerce Practice Test

Bcom Bachelor of Commerce Bachelor of Commerce: Economics 4