31.

32.

33.

34.

Adaptive Expectation concludes that:

0

Gi)
(iii)
Gv)

There is long-run trade-off between unemployment and a steady rate of inflation

A short-run trade-off does not exist as unemployment falls when inflation accelerates
There is no long-run trade-off between unemployment and a steady rate of inflation
A short-run trade-off exists as unemployment falls when inflation accelerates

(^) Only (ii) and (iv) (B) Only (1) ೩೧4 (611)

(0). ೦೫7 60,11) ೩೧4 (1) (D) Only (i) and (ii)

In the explanation of Dual Decision Hypothesis:

@

൬

[

Gv)

The income is considered as an endogenous variable and the household’s notional
consumption function is a function of the real wage rate.

The optimal choice will occur at the consumption level and labour hours for which the
marginal rate of substitution of consumption for leisure equals the nominal wage rate

The income is considered as an exogenous variable and the household’s notional
consumption function is a function of the real wage rate.

The optimal choice will occur at the consumption level and labour hours for which the
marginal rate of substitution of consumption for leisure equals the real wage rate.

(^) Only (ii) and (iv) (B) Only (j) and (iv)
(C) Only (ii) and (iii) (D) Only (iii) and (iv)

Repressed Inflation in Labour Market is a case where:

(A) Money wage rate rises in response to excess demand for labour
(B) Money wage does fall in response to excess demand for labour

(C) Money wage does not rise in response to excess demand for labour
(D) None of these

In Lucas Labour supply function, the supply of labour in the current period is a function of:

(A) _ The ratio of real wage rate in the long run to normal expected wage rate.

(B) The ratio of money wage rate in the short run to the supply of labour in the
long run.

(C) The ratio of real wage rate in the current period to the supply of labour in the
long run.

(D) The ratio of real wage rate in the current period to the normal expected real
wage rate.

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[P.T.0.]