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08. In order to reduce the money supply in the economy, the Central
bank of the country, through its monetary policy:
a) Purchases the government bonds and treasury bills through the open
market
b) Reduces the discount rate
c) Sells the government bonds and treasury bills in the open
market
d) All of the above
10. Economic system in which public and private sectors exist side
by side is known as:
a) Capitalism
b) Socialism
c) Mixed economy
d) Islamic economic system
11. If all inputs are increased by 100% and the result is 120%
increase in output, this would:
a) Illustrate the law of increasing returns
b) Illustrate the law of diminishing returns
c) Illustrate the increasing returns to scale
d) Contradict the principle of increasing returns to scale
21. Short run is distinguished from long run by the assumption that
in short run:
a) All costs are fixed
b) All costs are variable
c) At least one factor input is fixed
d) All factor inputs are variable
22. Which one of the following do you consider would be the most
appropriate government action to deal with a situation of high
structural unemployment?
a) Increasing aggregate demand
b) A general increase in tariffs
c) Restraining wage increases
d) Financial incentives for new industries