ECON 2105 TEST REVIEW

9) In the circular flow diagram, the different payments made by firms to households include A) wages and profits. B) interest and taxes. C) transfer payments and dividends. D) taxes and transfer payments.

A.

8) The diagram that shows the income received and payments made by each sector of the economy is the A) aggregate demand-aggregate supply diagram. B) circular flow diagram. C) income flow diagram. D) income-production diagram.

B

6) A prolonged and deep recession is called A) a business cycle. B) a depression. C) a stagflation. D) hyperinflation.

B. Depression

3) Aggregate behavior is A) the behavior of each household and firm. B) the behavior of each individual. C) the behavior of all households and firms together. D) none of the above.

C) the behavior of all households and firms together.

2) The demand for corn has increased in May without any change in supply. Eight months later there still has been no change in corn prices. This is an example of a A) price floor. B) price control. C) sticky price. D) macroeconomic price.

C. Sticky Prince

5) A period when the economy shrinks is known as A) a recession. B) a contraction. C) a slump. D) all of the above.

D) all of the above.

7) Which of the following statements is false? A) The rate of change in economic activity is used to assess whether an economy is expanding or contracting. B) Short-term ups and downs in the economy are known as business cycles. C) During a recession, output and employment are falling. D) Business cycles are always symmetric—the length of an expansion is the same as the length of a contraction.

D.

1) Which of the following is a topic studied in Macroeconomics? A) the functioning of individual industries B) aggregate behavior of households and industries C) the behavior of individual households D) the decision-making behavior of individual business firms

THE AGGREGATE behavior of H.S and Industries

10) A transfer payment is A) a bonus to get a worker to accept a transfer. B) a cash payment made by the government to people who do not supply goods, services or labor in exchange for the payment. C) a cash payment for transferring a good from one person to another. D) an in kind payment for working "off the books."

b.

11) Welfare payments are an example of A) a tax. B) wages. C) transfer payments. D) interest payments.

c.