Chapter 5

Alternating periods of macroeconomic expansion and contraction are known as:

business cycles

One important reason economists track business investment is that:

business investment is an excellent proxy for government investment

The largest component of GDP is:

consumption expenditure

Which of the following is NOT an investment in human capital?

researching automated production techniques

Company DEF produces gizmos. One particular batch cost $50,000 to produce. Because market conditions were bad at the time of sale, they were sold at a loss for $40,000. The value of the gizmos included in the GDP is:

$40,000

The economy is probably heading into a recession when the National Activity Index equals:

-0.94

In a simple circular flow diagram, total spending on goods and services in the product market:

equals the total income earned in the resource market

Which of the following items is NOT included in gross private domestic investment?

purchases of common stock

Which of the following two things can people do with money received as disposable personal income?

spend money or put it into savings