Macroeconomics Test 2
The expected rate of return on a firms addition to investment is measured by its MEI
true\
A "social good" is best described as: A. a good or service not adequately provided by a free market usually provided by the gov't B. A good or service not adequately provided by the gov't and usually provided by the free market C. A good or service that is subject to the exclusion principle D. a good or service that is subject to the investment principle E. a private good or service
A
Aggregate output is the: A. money value of a nations total production B. sum of money income earned by the suppliers of labor, land, capital, and entrepreneurship C. income earned by owners of foreign factors of production less income earned by domestic factors of production D. total value of goods and services purchased by the business sector E. total value of income households have available for discretionary expenditures
A
Aggregate supply is: A. the amount of real aggregate output that will be made available at various national income amounts B. the amount of real aggregate output that will be purchased at various average price levels C. the amount of real aggregate output that will be purchased at various national income levels D. the amount of real aggregate output that will be made available at various average price levels E. the amount of real aggregate output that will be made available at various interest rates
A
As aggregate income increases, consumption: A. and savings increase B. and savings decrease C. decrease and savings increase D. increase and savings decrease E. none of the above
A
Dissaving occurs if: A. consumption is greater than disposable income B. the APC is negative C. the APS is positive D. the MPC is negative E. the MPS is negative
A
During a period of high inflation A. borrowers are better off because they can pay their loans with currency that is worth less B. borrowers are worse off because they have to pay off their loans with currency that is worth more C. lenders are worse off because they cannot find anyone who wants a loan D. lenders are worse off because they are repaid with currency that is worth more E. none of the above
A
GDP measures only the value of FINAL goods and services to: A. Avoid double counting B. Avoid measuring value added C. Include nonproductive transactions D. Exclude productive transactions E. include the value of all intermediate transaction
A
People who are in the process of changing jobs are accounted for by which one of the following unemployment categories: A. frictional unemployment B. involuntary unemployment C. structural unemployment D. cyclical unemployment E. seasonal unemployment
A
The MEI expresses a relationship between: A. consumption and investment B> interest rates and consumption C. interest rates and asavings D. investment and savings E. interest rates and investment
A
The part of a person's income which is not consumed is his or her: A. saving B profit C surplus D. excess E. problem
A
The relationship between income and consumption is expected to be: A. Direct B. inverse C. independent D. Static over time E. none of the above
A
A recessionary gap exists if: A. actual real GDP is less than potential real GDP B. actual real GDP exceeds potential real GDP C. actual real GDP equals potential real GDP D. the actual equilibrium price level is greater than zero E. the actual equilibrium price level is zero
B
An increase in consumption means that, at each level of the economy's income: A. APC has decreased, and APS has increased B. APC has increased, and APShas decreased C. APC and APS have remained the same D. APC and APS have decreased E. APC and APS have increased
B
An inflationary gap occurs if: A. actual real output is less than potential real output B. actual real output is greater than potential real output C. actual real output is equal to potential real output D. unemployment is greater than the natural rate E. unemployment is equal to the natural rate
B
As price level rises: A. the purchasing power of cash holdings rises B. the purchasing power of cash holdings falls C. the purchasing power of cash holdings remains constant D. all of the above E. none of the above
B
Cyclical unemployment consists of people who are unemployed due to: A. discrimination B. business recessions C. temporary changes in jobs D. a mismatch between the location of workers and the location of jobs E. a mismatch between the skills of workers and the skills required by the job market
B
Economist use the term "aggregate expenditure" to mean: A. spending for all final goods and services B. the sum of planned spending for all products and factor services C. household spending for all consumption goods D. business spending for all investment goods E. spending for all products except exports
B
Government expenditure depends to a large extent on: A. the stock of capital B. public needs C. credit conditions D. the structure of taxes E. disposable income
B
In term of the "bathtub theorem" an injection is: A. a leakage from the economy's circular flow of income B. an expenditure that raises the economy's income C. a form of saving D. any variable that reduces the economy's income E. any variable that has a neutral effect on the economy's income
B
Macroeconomics deals with the action of: A. individuals only B. societies only C. atmosphere only D. individuals and societies only E. neither individuals or societies
B
Real GDP measures: A. current output at current prices B. current output at base year prices C. base year output at current prices D. none of the above E. all of the above
B
Suppose during the course of a year an economy produces 11 trillion of consumer goods. 3 trillion in investment goods. 6 trillion in government services, and has 3 trillion of exports and 1 trillion of imports .For this economy, the GDP would be: A. 18 trillion B. 22 trillion C. 23 trillion D. 24 trillion
B
The APC is: A. 1-MPS B. consumption divided by disposable income C. the slope of the propensity-to-consume line D. the proportion of additional disposable income used for consumption E. the change in consumption divided by the change in disposable income
B
The GDP gap is the: A. difference between nominal GDP and real GDP B difference between potential GDP and actual GDP C. ration of nominal GDP to real GDP D. ratio of potential GDP to actual GDP E. ratio of potential GDP to real GDP
B
The aggregate supply curve is: A. downward sloping B. upward sloping C. vertical D. horizontal E. none of the above
B
The economic role of government can be considered to: A. Promotion and regulation of the private sector B. Provision of social goods and services C. Accumulating debts D. None of the above E. "A" and "B" above only
B
The most important factor determining a familys consumption expenditures is likely to be the: A. neighborhood in which it lives B. level of its disposable income C. average age of its members D. size of the family E. general price level
B
"Double counting" would occur in GNP statisticians: A. used market prices without a correction for inflation B. included sales taxes in the market prices of goods and services C. added the costs of wood to the furniture maker along with the final price of the chairs D. added government expenditures on roads, and consumer expenditures on gasoline E. did all of the above
C
A measure of the economy's output in costant dollars is: A. intermediate GDP B. current GDP C. nominal GDP D. real GDP E. inflation
C
A measure of the economy's output in current dollars is: A. deflation B. real GDP C. nominal GDP D. constant GDP E. intermediate GDP
C
A rise in the general price level of goods and services: A. depreciation B. deflation C. inflation D. expectations E. fluctuations
C
In general terms, the economic role of the government includes the broad functions of the: A. provision of private goods and the regulation of social goods B. promotion and regulation of the private sector and the provision of social goods C. promotion and regulation of the private sector and the provision of social goods D. promotion and regulation of the public sector and the provision of quasi-public goods E. reduction of economic efficiency and the maintenance of economic growth
C
In terms of the bathtub theorem, a withdrawal of leakage A. expands the economys income B. has a neutral effect of the economys income C. reduces the economys income D. is a form of investment E. is any variable that stimulates production and employment
C
Suppose that your income increases from $10,000 to 15,000 and your consumption increases from 9000 to 12000. Your APC at 15000 is: A. .4 B. .6 C. .8 D. .9 E. 1.0
C
The MPS is: A. 1- MPS B. saving divided by consumption C. saving divided by disposable income D. the slope of the propensity-to-consume line E. the proportion of additional disposable income used for saving
C
The expression "too much money chasing too few good" best describes the condition called: A. cost-push inflation B. wage-push inflation C. demand-pull inflation D. market-power inflation E. commodity inflation
C
Tom Atoe grows tomatoes for home consumption. This activity is: A. excluded from GDP in order to avoid double counting B. excluded from GDP because an intermediate good is involved C. productive but is excluded from GDP because no market transaction occurs D. Included in GDP because it reflects production
C
Value added is equal to the sum of all: A. wages paid to labor B. income generated from production C. intermediate transactions involved in the production of a good D. intermediate transactions involved in the production of a good, less profit
C
Which of the following is NOT necessarily true? A. C/DI + S/DI = 1 B. APC + APD = 1 C. APC = MPC D. APC + APS = MPC + MPS
C
Which of the following is not a type of unemployment: A. seasonal B. structural C. cost-push D. cyclical E. none of the above
C
Which of the following states that a 3% increase in real GNP will yield a 1% point decrease in the unemployment rate? A. Phillips Curve B. gdp gap C. okuns law D. keynesian rule E. stephens law
C
A recessionary gap occurs if: A. Actual real output is greater than potential real output B. actual real output is equal to potential real output C. unemployment is less than the natural rate D. unemployment is greater than the natural rate E. unemployment is equal to the natural rate
D
An example of an injection in the bathtub theorem is: A. taxes B. saving C. imports D. investment E. employment
D
During recession, gov't tax receipts: A. is unaffected B. overflow C. underestimated D. decrease E. increase
D
Frictional unemployment consists of people who are unemployed due to: A. discrimination B. business recessions C. business depressions D. temporary changes in job E. a mismatch between the skills of works and the skills required by the job market
D
In order to know if differences in GDP is a result of changes in prices or output GDP is expressed in the way of: A. dollars and cents B. nominal C. real D. b and c E. a and c
D
In the expenditure approach to measuring the GDP the following are categories of spending: A. gross private domestic investment B. personal consumption expenditure C. government expenditure D. all of the above E. none of the above
D
Spending by business firms on physical capital is: A. taxes B. savings C. exports D. investment E. consumption
D
The GDP for one year differs from the GDP of another because: A. price changes B. physical output changes C. people are not patriotic D. a and b E. all the above
D
The best reason economists take only final goods and services into account when calculating GDP is: A. this is the way things have always been done B. they want to avoid the problem of final counting C. this is the only way things can be done D. they want to avoid the problem of double counting E. none of the above
D
The lower the market rate of interest, other things being equal: A. the higher the MEI B. the lower the rate of investment C. the lower the MEI D. the higher the rate of investment E. the steeper the MEI
D
The notion that equilibrium occurs when "injections" are equal to "leakage" is termed the: A. water paradox B.Paradox of thrift C. saving theorem D. bathtub theorem E. multiplier affect
D
Aggregate expenditure is the sum of desire or planned spending that: A. occurs only when the economy is in equilibrium B. occurs only when the economy is at full employment C. occurs only when the economy is in equilibrium at full employment D. will be undertaken by the household sector after taxes E. will be undertaken at each aggregate-income level by all sectors of the economy
E
Disposable income includes: A. corporate taxes B. undistributed corporate profits C. depreciation D. allowance given to children by parents E. none of the above
E
GDP measures all goods in units of: A. pounds B. feet C. tons D. acres E. dollars
E
Gross national product is income earned from: A. foreign production B. domestic production C. foreign production less net domestic factor income D. domestic production plus net foreign factor income E. domestic production less net foreign factor income
E
Household spending on goods and services is: A. taxes B. saving C. exports D. investment E. consumption
E
In the bathtub theorem, injections are: A. leakages from total income B. withdrawals that are dependent on income C. withdrawals that are not dependent on income D. expenditures that are dependent on income E. expenditures that are not dependent on income
E
Structural unemployment consists of people who are unemployed due to: A. business recessions B. business depressions C. temporary changes in jobs D. imperfect knowledge of job opportunities E. a mismatch between the skills of workers and the skills required by the job
E
The consumption function expresses the: A. purposes of consumption B. relation between consumption and prices C. relation between consumption and saving D. relation between consumption and taxes E. relation between consumption and income
E
The expected annual rate of return on an additional unit of capital good is the: A. APS B. APC C. MPS D. MPC E. MEI
E
1 + MPS = MPC
False
A business will invest in a project if the MEI is less than the market interest rate
False
A decrease in the interest rate will decrease the amount of business investment
False
A dissatisfied worker is considered unemployed
False
GDP for all nations does not grow at the same rate
False
If profit and wages are both rising during inflation, the inflation must be a cost-push inflation
False
MPC + MEI = 1
False
People who work part time, but desire to work full time, are considered to be officially unemployed
False
The consumer price index is not the best known measure of price changes
False
The slope of the saving schedule measures the size of the multiplier
False
There is no difference between aggregate quantity demanded and aggregate demand
False
1 - MPC = MPS
True
A college graduate using the summer following graduation to search for a job would best be classified as a part of frictional unemployment
True
A firm's MEI curve is its demand curve for investment
True
Aggregate output and aggregate employment tend to be directly related
True
Consumption is the largest component of aggregate expenditure
True
Disposable income is the single most important factor affecting a family's consumption expenditures
True
GDP is the sum of the total market value of all goods and services produced in a nation during a given time period
True
Government expenditures and net foreign expenditures are part of aggregate expenditure.
True
If DI is $275 billion and APC is .8 it can be concluded that saving is $55 billion
True
If personal taxes are added to disposable income, the result obtained is personal income
True
Real GDP is calculated to observe changes in real output that is unaffected by price changes
True
Some frictional unemployment is inevitable in an economy like ours, in which people are free to seek the type of employment they wish.
True
The difference between potential and actual GDP is the GDP gap
True
The expression, "too much money chasing too few goods" best describes the phenomenon of demand-pull inflation than cost-push inflation
True
The ratio of consumption to income is called the MPC
True
The single most important determinant of consumption spending is disposable income
True
Value added can be determined subtracting the purchase price of intermediate products from the value of the sales of final products.
True