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Economics

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1.

1 Let’s consider a hypothetical economy where this year’s money supply is Tk.100, nominal GDP is

Tk. 40000 and real GDP is Tk. 5000.

a) What does the quantity theory of money say?   

b) Calculate the price level.

c) Calculate the velocity of money.

d) Suppose the central bank changes the money supply so that the new money supply is Tk. 500, calculate the new price level.

e) Show stages b and d on a graph.

2. What is productivity? Describe the factors of productivity.

2.If in a competitive market there are both positive externalities on the consumer side and negative externalities on the production side, then

	a.	MSB > P = MPC < MSC
	b.	MSB = P = MPC = MSC
	c.	MSB = P = MPC < MSC
	d.	MSB > P = MPC = MSC
	e.	MSB = P > MPC = MSC

 

3.

If the paint on your house was eaten away by the fumes from a factory nearby and you hired a lawyer to sue the polluting firm, what you have to pay your lawyer would be considered a(n):

	a.	External cost
	b.	transaction cost
	c.	marginal benefit
	d.	social cost of the pollution
	e.	social benefit of the pollution

 

4.The price of automobiles rises. Discuss the effect of this on the demand curve for petrol (gasoline or fuel). To be specific: