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1 | |
The key issues of macroeconomics are |
| | A) | unemployment |
| | B) | inflation |
| | C) | economic growth |
| | D) | all of the above |
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2 | |
In an economy, measuring (1)total value added, (2)total spending on final goods and (3)total factor earnings gives the result that |
| | A) | 3>2>1 |
| | B) | 3=2=1 |
| | C) | 3<2<1 |
| | D) | any measure can be larger or smaller than any other |
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3 | |
In the circular flow of income, saving is an injection and investment is a leakage |
| | A) | TRUE |
| | B) | FALSE |
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4 | |
In the economy when a steel producer sells steel to car producer, it is regarded as ________ |
| | A) | a final good |
| | B) | an intermediate good |
| | C) | an injection |
| | D) | a leakage |
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5 | |
Leakages from the circular flow are ____________, ____________ and ____________ |
| | A) | investment, savings, government expenditure |
| | B) | savings, taxes net of subsidies, imports |
| | C) | consumption, investment, government expenditure |
| | D) | consumption, taxes, imports |
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6 | |
Injections into the circular flow are ___________, _____________ and _____________ |
| | A) | consumption, investment, exports |
| | B) | investment, exports, transfer payments |
| | C) | investment, government expenditure, exports |
| | D) | taxes, exports, transfer payments |
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7 | |
In the circular flow we would expect leakages to ____________ injections |
| | A) | equal |
| | B) | be less than |
| | C) | be greater than |
| | D) | be less or greater than |
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8 | |
Gross national product adjusts GDP for net property income from abroad |
| | A) | TRUE |
| | B) | FALSE |
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9 | |
Nominal GNP measures income ____________ |
| | A) | At the present time |
| | B) | Corrected for tax changes |
| | C) | Corrected for changes in interest rates |
| | D) | At current prices |
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10 | |
Real GNP measures income _____________ |
| | A) | including non-market activities |
| | B) | adjusted for inflation |
| | C) | including externalities |
| | D) | including tax evasion |
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11 | |
Real GNP is a crude measure of national welfare because it excludes |
| | A) | consumption |
| | B) | investment |
| | C) | exports |
| | D) | work in the home |
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12 | |
When we refer to the hidden economy we mean unrecorded income owing to _________ |
| | A) | tax evasion |
| | B) | poor statistics |
| | C) | the lags between statistical collection and publication |
| | D) | smuggling |
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13 | |
In a macroeconomic model without foreign trade or a government, aggregate demand is the sum of |
| | A) | personal saving and private investment |
| | B) | personal saving and personal consumption |
| | C) | personal consumption and private investment |
| | D) | none of the above |
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14 | |
The sum of the MPS and MPC is 1 |
| | A) | TRUE |
| | B) | FALSE |
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15 | |
A linear consumption function with a positive slope less than one means that if income increases, consumption will ___________ |
| | A) | fall |
| | B) | not change |
| | C) | fluctuate |
| | D) | increase |
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16 | |
Short-run equilibrium output means that aggregate demand _________ actual output |
| | A) | is less than |
| | B) | equals |
| | C) | is greater than |
| | D) | fluctuates around |
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17 | |
If desired spending in the economy exceeds income we would expect _________ |
| | A) | households to save more |
| | B) | firms to produce less |
| | C) | firms to produce more |
| | D) | the MPC to change |
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18 | |
In equilibrium savings exceed investment |
| | A) | TRUE |
| | B) | FALSE |
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19 | |
When investment is assumed to autonomous the slope of the AD schedule is determined by the _______________ |
| | A) | marginal propensity to invest |
| | B) | disposable incomes |
| | C) | marginal propensity to consume |
| | D) | average propensity to consume |
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20 | |
The multiplier tells us how much ____________ changes after a shift in ________________ |
| | A) | consumption, income |
| | B) | investment, output |
| | C) | savings, investment |
| | D) | output, aggregate demand |
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21 | |
The multiplier is calculated as |
| | A) | 1/(1 - MPC) |
| | B) | 1/MPS |
| | C) | 1/MPC |
| | D) | a or b |
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22 | |
If the MPC is 0.5, the multiplier is ________ |
| | A) | 2 |
| | B) | 1/2 |
| | C) | 0.2 |
| | D) | 20 |
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23 | |
If as a result of households' wish to save more, there is a change in equilibrium income and no change in equilibrium saving, this is an example of ___________ |
| | A) | market imperfection |
| | B) | the law of diminishing returns |
| | C) | the paradox of thrift |
| | D) | market failure |
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24 | |
Aggregate demand without a foreign sector is the sum of |
| | A) | C + I |
| | B) | C + G |
| | C) | I + G |
| | D) | C + I + G |
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25 | |
If the government increases spending and raises taxes by just enough to finance this increase it will ________ |
| | A) | leave output unchanged |
| | B) | increase output |
| | C) | reduce output |
| | D) | increase the MPC |
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26 | |
Starting from a balanced budget, for a given tax rate, an increase in income will cause the government budget to |
| | A) | move into surplus |
| | B) | move into deficit |
| | C) | remain unchanged |
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27 | |
For given government spending and taxation, the government budget deficit will grow in __________ and decline in ___________ |
| | A) | booms, booms |
| | B) | recession, recession |
| | C) | booms, recessions |
| | D) | recessions, booms |
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28 | |
The government budget is a good indicator of fiscal stance |
| | A) | TRUE |
| | B) | FALSE |
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29 | |
Aggregate demand in an economy trading internationally with a government sector can be written as _______________ |
| | A) | AD = C + I |
| | B) | AD = C + I + G |
| | C) | AD = C + I + G + X + Z |
| | D) | AD + C + I + G + X - Z |
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30 | |
The total multiplier for the economy will reflect _________ |
| | A) | MPC and MPT |
| | B) | MPT and MPZ |
| | C) | MPC and MPZ |
| | D) | MPC, MPT and MPZ |
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31 | |
When the level of income _________ there will be a tendency for the trade balance to improve as imports __________ |
| | A) | increases, increase |
| | B) | falls, increase |
| | C) | falls, fall |
| | D) | increase, fall |
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32 | |
When an open economy is in equilibrium it means that the trade deficit is zero |
| | A) | TRUE |
| | B) | FALSE |
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33 | |
In an open economy leakages to imports ___________ the value of the multiplier |
| | A) | reduce |
| | B) | increase |
| | C) | do not change |
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34 | |
Higher export demand _____________ output and a higher MPZ __________ output |
| | A) | reduces, reduces |
| | B) | reduces, increases |
| | C) | increases, reduces |
| | D) | increases, increases |
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2003 A McGraw-Hill Online Learning Centre