introduction to macro economics section 1 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (d)

Speculative demand is the demand for financial assets, such as securities, money or foreign currency that is not dictated by real transactions such as trade, or financing.

The assets demand for money is inversely related to the market interest rate. This is because, at a lower interest rate, more people will expect a rise in interest rate (or a fall in bond prices).

Answer: (c)

Say’s law, or the law of the market is an economic principle of classical economics named after the French businessman and economist Jean-Baptiste Say (1767–1832), who stated that “supply creates its own demand”. “Supply creates its own demand” is the formulation of Say’s law by John Maynard Keynes.

The rejection of this doctrine is a central component of The General Theory of Employment, Interest and Money (1936) and a central tenet of Keynesian economics.

Answer: (b)

Good is any tangible item, whether produced or found naturally and which is available for exchange. A free good is a good that is so abundant in supply that it has no opportunity cost, for example, air.

Intermediary good is a firm’s product that is used as an input into the production process of either the same firm or another.

Answer: (d)

Joint sector industries are owned jointly by the government and private individuals who have contributed to the capital.

In the joint sector, both the public sector and private sector join hands to establish new enterprises. The joint sector is an extension of the concept of a mixed economy.

Answer: (a)

In capitalism, people may sell or lend their property, and other people may buy or borrow them.

In many countries with mixed economies (part capitalism and part socialism), there are laws about what we can buy or sell, or what prices we can charge, or whom we can hire or fire.