Econ quiz 5

Which of the following factors will likely cause investment spending to decrease?

expectations that total spending will decline

Which of the following is an injection into the spending stream?

government spending

The sector that purchases the most goods and services in the U.S. economy is the ________________ sector.

household

Total spending is the combined spending of all:

households, governments, businesses, and foreign buyers.

Household spending is a(n) ___________ into the spending stream.

injection

Normally, one would expect the rate of unemployment to fall during the ____________ phase of the business cycle.

recovery

The four phases of a business cycle, in correct order, are:

recovery, peak, recession, trough

If leakages from the spending stream equal injections into the spending stream the level of economic activity will:

stay the same

Money from the government for which no direct work is performed in return is called a ____________ __________.

transfer payment

Business investment spending and government purchases of goods and services are examples of leakages out of the spending stream.

False

If leakages from the spending stream are greater than injections into the spending stream, then the economy will expand.

False

Saving and paying taxes are injections into the spending stream.

False

The main determinant of total household spending is the neighborhood in which the household is located.

False

Which of the following statements about businesses' investment spending is FALSE?

None of these statements is false. It is business spending on new goods, such as machinery, equipment, buildings, and inventories. Changes in investment spending are the primary cause of changes in economic activity. It is considered to be nonincome determined spending.

Borrowing and export expenditures are examples of injections into spending stream.

True

Expectations on the part of both households and businesses play an important role in determining the level of economic activity.

True

The main determinant of an economy's level of total output, employment, and income is the level of total spending.

True

The phase of the business cycle where real output (GDP) is falling is called the recession.

True

Which of the following would not be considered a transfer payment?

Aunt Lil's paycheck from her job at the Veterans' hospital

Recurring periods of expansion and contraction in an economy's real output are called __________ __________.

business cycles