Question:* What is "crowding out"?
Answer: • When government spending replaces private sector spending
Question:* The formula for which of the following quantities contains a term for "Planned Investment?"
Answer: • Aggregate expenditure
Question:* A complement good has what kind of elasticity?
Answer: • Negative cross elasticity of demand
Question:* What does GDP stand for?
Answer: • Gross Domestic Product
Question:* GNP and GDP differ because:
Answer: • GNP represents all goods and services produced/provided by the residents of a country while GDP represents all goods and services produced/provided within a country's physical borders
Question:* Which of the following choices relates to the decision made by congress and the president to lower taxes or increase government purchases?
Answer: • Expansionary Fiscal Policy
Question:* True or False: It's impossible to have falling inflation and falling unemployment at the same time.
Answer: • False
Question:* If the national output in one year is measured at $300 billion and a year later it is measured at $315 billion, then the rate of growth in that year is?
Answer: • 5%
Question:* What does "ceteris paribus" mean?
Answer: • Holding everything else constant
Question:* Keynesian theory is related to:
Answer: • Government intervention in the market place for economic growth and stability
Question:* The final value of goods and services produced in a year within the geographical boundaries of a country is known as
Answer: • Gross Domestic Product
Question:* What relationship does the Phillips Curve specifically address?
Answer: • Relationship between the inflation rate and the unemployment rate
Question:* What is the slope of the consumption function called?
Answer: • Marginal Propensity to Consume
Question:* What is pegging?
Answer: • A country keeping the exchange rate between its currency and another currency fixed
Question:* A printer and a printer cartridge is an example of a:
Answer: • Complementary goods
Question:* What is not a major goal of macroeconomics?
Answer: • Capping supply
Question:* The use of government spending and taxation to influence the economy is the definition of which of the following terms:
Answer: • Fiscal policy
Question:* What is an inferior good?
Answer: • A good in which there is an inverse relationship between income and the demand for the good
Question:* Economists use this term to denote an ongoing rise in the general level of prices quoted in units of money.
Answer: • Inflation
Question:* Macroeconomics can be defined as:
Answer: • The study of the behavior of the economy at the aggregate level
Question:* What is recession?
Answer: • Two consecutive quarters of Real GDP decline
Question:* As a recession begins, unemployment
Answer: • unemployment rises and production falls
Question:* True or False: The official measure of GDP understates the true level of national income because of the existance of the "shadow" or informal economy.
Answer: • True
Question:* Which of these is a liability?
Answer: • Utility bill
Question:* When is the economy in macroeconomic equilibrium?
Answer: • Aggregate expenditure = GDP
Question:* Which country best approximates a closed economy?
Answer: • North Korea
Question:* What is the central bank of the United States?
Answer: • The Federal Reserve
Question:* What is Macroeconomics?
Answer: • The branch of economics that focuses on the national and global economy
Question:* When does a shortage occur?
Answer: • Quantity Demanded is greater than quantity supplied
Question:* GDP stands for
Answer: • Gross Domestic Product
Question:* What would be an example of Foreign Direct Investment (FDI)?
Answer: • A corporation buying a factory in a foreign country
Question:* Which of these are a way of measuring production?
Answer: • Net Domestic Product
Question:* True or False: Full employment is zero unemployment.
Answer: • False
Question:* What does purchasing power parity do?
Answer: • Determines relative value of currencies
Question:* A good for which an increase in income leads to a decrease in demand is a:
Answer: • Inferior good
Question:* According to Keynes, if government earns £1 as tax revenue and spends it as public expenditure what will be the net effect on national income?
Answer: • National income will rise by £1
Question:* The relationship between an economy's unemployment rate and its gross national product (GNP)
Answer: • Okun's Law
Question:* Periods of very high inflation rates
Answer: • most often are caused by sharp increases in aggregate demand
Question:* What does PPF stand for in Economics?
Answer: • Production Possibility Frontier
Question:* The government classification of a recession is:
Answer: • Two consecutive quarters of Real GDP decline
Question:* What does raising interest rates and reducing the supply of money do?
Answer: • Reduce inflation
Question:* Can the unemployment rate go below the natural rate of unemployment?
Answer: • Yes. The unemployment rate can go below the natural rate of unemployment in the short term
Question:* Which of the following would switch the aggregate demand curve to the right?
Answer: • Monetary policy lowers interest rates
Question:* What is the unemployment rate when the economy is at potential GDP?
Answer: • It is equal to the natural rate of unemployment
Question:* What is it called when injections of cash in private banks by a central bank fail to lower interest rates?
Answer: • Liquidity trap
Question:* The ratio of the change in national income to the change in government spending is called:
Answer: • Fiscal multiplier
Question:* Negative income elasticity of demand is related to ?
Answer: • Inferior goods
Question:* The multiplier’s value can be found by using this formula.
Answer: • 1/MPS = 1/(1-MPC)
Question:* The term “Balance of Payments” means:
Answer: • A record of a country’s monetary transactions with the rest of the world
Question:* The aggregate demand and aggregate supply model explains the relationship of
Answer: • real GDP and price level
Question:* Which is not a reason why the aggregate demand curve is downward sloping?
Answer: • Positive Technological Change
Question:* If we look at the behavior of the U.S. CPI over the last four decades we realize that inflation
Answer: • was at its highest in the early 1980s
Question:* If money growth does not affect real GDP, and velocity is stable, an increase in the money supply creates a proportional increase in
Answer: • The price level and Nominal GDP
Question:* If price level increases the LM curve will shift to
Answer: • The left
Question:* Income elasticity of demand of a good is less than 1 if it is a:
Answer: • Necessity good
Question:* Which scenario is related to an unplanned decrease in inventories?
Answer: • Aggregate Expenditure > GDP and the economy is in an expansion phase
Question:* In the long run Philips' curve becomes
Answer: • vertical
Question:* The term “aggregate-supply curve,” describes which of the following?
Answer: • the relationship between price levels and the quantity of output that firms are willing to provide.
Question:* In the very short run
Answer: • the position of the AD-curve determines the level of output
Question:* Which of the following is NOT a characteristic of Monopolistic Competition?
Answer: • Many barriers to entry and exit
Question:* What is the interest rate stated on a loan that does not account for inflation or compounding?
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