ECO2013 Test 2 TCC Viegbesie - Assignment Essays

question

In the short run, the aggregate supply curve is:
a. horizontal.
b. negatively sloped.
c. positively sloped
d. vertical.

answer

C. Positively Sloped

question

The simple circular flow diagram shows that economic aggregates can be calculated either by the _____________ flows in the product market or by the ______________ flowing to households in the resource market.
a. spending; income
b. income; spending
c. output; spending
d. spending; output

answer

A. Spending; Income

question

In terms of the "bathtub theorem," a withdrawal of leakage:
a. expands the economy's income
b. has a neutral effect on the economy's income
c. reduces the economy's income
d. is a form of investment
e. is any variable that stimulates production and employment

answer

C. Reduces the economy's income

question

In Figure 8.1 above, an increase in government spending, ceteris paribus, is best represented as a movement from point
a) A to point B.
b) C to point A.
c) B to point C.
d) A to point C.

answer

A. Point A to Point B

question

Which of the following factors is NOT a component of aggregate demand?
a. consumption
b. investment
c. income
d. net export

answer

C. Income

question

During recession, government tax receipts (revenue):
a. is unaffected
b. overflow
c. underestimated
d. decrease
e. increase

answer

D. Decrease

question

A business cycle is:
a. the periodic fluctuation of economic activity.
b. the engine of economic growth.
c. a period lasting about 50 years.
d. identical to the consumption life cycle.

answer

A. the periodic fluctuation of economic activity.

question

A rise in general price level of goods and services is:
a. depreciation
b. deflation
c. inflation
d. expectations
e. fluctuations

answer

C. Inflation

question

Diagram Above
Equilibrium output is ________ and the equilibrium price level is ________.
a. 2,000; 130
b. 5,000; 160
c. 3,000; 100
d. 100; 3,000
e. Cannot be determined from the information provided

answer

C. 3,000; 100

question

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

answer

A. Spending on all final goods and services

question

In order to know if differences in GDP is a result of changes in prices or output GDP is
a. dollars and cents
b. nominal
c. real
d. only b and c above
e. only a and c above

answer

D. Only B and C above

question

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

answer

D. All of the Above

question

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

answer

A. actual real GDP is less than potential real GDP

question

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

answer

D. domestic production plus net foreign factor income

question

In terms 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 saving
d. any variable that reduces the economy's income
e. any variable that has a neutral effect on the
economy's income

answer

B. an expenditure that raises the economy's income

question

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

answer

C. Nominal GDP

question

Which of the following is not necessarily true?
a. C/DI+S/DI=1
b. APC+APS=1
c. APC = MPC
d. APC+APS=MPC+MPS
e. MPC+MPS=1

answer

C. APC= MPC

question

Which of the following is not a type of unemployment?
a. seasonal
b. structural
c. cost-push
d. cyclical
e. none of the above

answer

C. cost-push

question

The aggregate supply curve is:
a. downward-sloping
b. upward-sloping
c. vertical
d. horizontal
e. none of the above

answer

B. Upward sloping

question

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.
e) all of the above

answer

C. productive but is excluded from GDP because no market transaction occurs

question

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

answer

B. public needs

question

GDP measures all goods in units of:
a. pounds
b. feet
c. tons
d. acres
e. dollars

answer

e. dollars

question

During a period of high inflation:
a. borrowers are better off because they can pay off their loans with currency that is worth less
b. borrowers are worse off because thy 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

answer

a. borrowers are better off because they can pay off their loans with currency that is worth less

question

Suppose the total market value of all final goods and services produced in a particular country in 2006 is $500 billion and the total market value of final goods and services sold is $450 billion. We can conclude that:
A) GDP in 2006 is $450 billion.
B) NDP in 2006 is $950 billion
C) GDP in 2006 is $500 billion.
D) Inventories in 2006 fell by $50
billion.
E) None of the above

answer

C. GDP in 2006 is $500 billion

question

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

answer

E. ''a'' and ''b'' above only

question

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

answer

A. Avoid double counting

question

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

answer

D. Intermediate transactions involved in the production, less profit

question

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 private 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

answer

C. Promotion and regulation of the public sector and the provision of social goods

question

Aggregate output is the:
a. money value of a nation's 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

answer

A. money value of a nation's total production

question

A "social good" is best described as:
a. A good or service not adequately provided by a free market usually provided by the government
b. A good or service not adequately provided by the government and usually provided by a 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

answer

A. A good or service not adequately provided by a free market usually provided by the government

question

A measure of the economy's output in constant dollars is
a. intermediate GDP
b. current GDP
c. nominal GDP
d. real GDP
e. inflation

answer

D. real GDP

question

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. Okun's law
d. Keynesian Rule
e. Stephen's Law

answer

C. Okun's law

question

Disposable income includes:
a. corporate taxes
b. undistributed corporate profits
c. depreciation
d. allowance given to children by parents
e. none of the above

answer

E. None of the above

question

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. only "a" and "b" above
e. all of the above

answer

D. Only A and B above

question

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

answer

D. the higher the rate of investment

question

Spending by business firms on physical capital is:
a. taxes
b. saving
c. exports
d. investment
e. consumption

answer

D. Investment

question

The expected annual rate of return on an additional unit of a capital good is the:
a. APS
b. APC
c. MPS
d. MPC
e. MEI

answer

E. MEI

question

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 effect

answer

D. bathtub theorem

question

An example of an "injection" in the bathtub theorem is:
a. taxes
b. saving
c. imports
d. investment
e. employment

answer

E. Employment

question

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

answer

D. Unemployment is greater than the natural rate

question

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

answer

A. Direct

question

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.

answer

D. The amount of real aggregate output that will be made available at various average price levels

question

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

answer

D. they want to avoid the problem of double counting

question

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

answer

b. Actual real output is greater than potential real output

question

People who are in the process of changing jobs are accounted for by which of the following unemployment categories?
a. frictional unemployment
b. involuntary unemployment
c. structural unemployment
d. cyclical unemployment
e. seasonal unemployment

answer

A. Frictional unemployment

question

"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

answer

c. added the costs of the wood to the furniture maker along with the final price of the chairs

question

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

answer

E. will be undertaken at each aggregate income level by all sectors of the economy

question

Household spending on goods and services is:
a. taxes
b. saving
c. exports
d. investment
e. consumption

answer

E. consumption

question

The most important factor determining a family's 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

answer

B. level of it's disposable income

question

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

answer

D. Expenditures that are dependent on income

question

The consumption function expresses the:
a. purposes of consumption
b. relation between consumption and prices
c. relation between consumption and saving
d. difference between consumption and taxes
e. relation between consumption and income

answer

E. relation between consumption and income

question

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

answer

A. consumption is greater than income

question

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

answer

B. Consumption divided by disposable income

question

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 remain constant
d. all of the above
e. none of the above

answer

B. the purchasing power of cash holdings fall

question

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 APS has decreased
c. APC and APS have increased
d. APC and APS have decreased
e. APC and APS have remained the same

answer

B. APC has increased and APS has decreased

question

Suppose that your income increases form $10,000 to $15,000 and your consumption increase from $9,000 to $12,000. Your APC at $15,000 is:
a. 0.4
b. 0.6
c. 0.8
d. 0.9
e. 1.0

answer

C. 0.8

question

Frictional unemployment consists of people who are unemployed due to:
a. discrimination
b. business recessions
c. business depressions
d. temporary changes in jobs
e. a mismatch between the skills of workers and the skills required by the job market

answer

D. temporary changes in jobs

question

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

answer

B. business recessions

question

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 market

answer

E. a mismatch between the skills of workers and the skills required by the job market

question

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

answer

C. savings divided by disposable income

question

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

answer

B. Difference between potential GDP and actual GDP

question

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

answer

C. demand-pull inflation

question

Macroeconomics deals with the action of:
a. individuals only
b. societies only
c. atmosphere only
d. both individuals and societies
e. neither individuals nor societies

answer

B. societies only

question

As aggregate income increases, consumption:
a. and saving both increase
b. and saving both decrease
c. decrease and saving increase
d. increase and saving decrease
e. none of the above

answer

A. and saving both increase

question

That part of a person's income which is not consumed is his or her:
a. saving
b. profit
c. surplus
d. excess
e. problem

answer

A. saving

question

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

answer

B. current output at base year prices

question

Suppose during the course of a year an economy produces $11 trillion of consumer goods, $3 trillion of investment goods, $6 trillion in government services, and has $3 trillion of exports and $1 trillion of imports. For this economy, GDP would be:
a) $18 trillion.
b) $22 trillion.
c) $23 trillion.
d) $24 trillion.

answer

B. $22 trillion

question

The MEI expresses a relationship between:
a. consumption and investment
b. interest rates and consumption
c. interest rates and savings
d. investment and savings
e. interest rates and investment

answer

E. interest rates and investment

question

Diagram above
If the government raises taxes or increases regulations, the short-run aggregate supply curve will shift from SRAS0 to _____ and the price level will be at _____.in the figure above
a. SRAS1; P0
b. SRAS1; P1
c. SRAS2; P1
d. SRAS2; P2

answer

D. SRAS2; P2

question

Jennifer just got news that she is getting a 5% raise. However, the Bureau of Labor Statistics just reported that prices are rising by 7%.
a. Jennifer is ahead by 2%.
b. Jennifer is losing purchasing power by 2%.
c. Inflation has no impact on purchasing power.
d. Jennifer's purchasing power is rising by 7%.

answer

B. Jennifer is losing purchasing power by 2%

question

Diagram Above
If there are advances in technology, the short-run aggregate supply curve will shift from SRAS0 to _____ and the price level will become _____.
a. SRAS1; P0
b. SRAS1; P1
c. SRAS2; P1
d. SRAS2; P2

answer

B. SRAS1; P1

question

Diagram above
What economic event is represented if full employment GDP occurs at point (a)?
a. a recession
b. demand-pull inflation
c. cost-push inflation
d. deflation
e. Cannot determine due to lack of adequate information

answer

C. Cost-push inflation

1 of 72

question

In the short run, the aggregate supply curve is:
a. horizontal.
b. negatively sloped.
c. positively sloped
d. vertical.

answer

C. Positively Sloped

question

answer

A. Spending; Income

question

answer

C. Reduces the economy's income

question

In Figure 8.1 above, an increase in government spending, ceteris paribus, is best represented as a movement from point
a) A to point B.
b) C to point A.
c) B to point C.
d) A to point C.

answer

A. Point A to Point B

question

Which of the following factors is NOT a component of aggregate demand?
a. consumption
b. investment
c. income
d. net export

answer

C. Income

question

During recession, government tax receipts (revenue):
a. is unaffected
b. overflow
c. underestimated
d. decrease
e. increase

answer

D. Decrease

question

A business cycle is:
a. the periodic fluctuation of economic activity.
b. the engine of economic growth.
c. a period lasting about 50 years.
d. identical to the consumption life cycle.

answer

A. the periodic fluctuation of economic activity.

question

A rise in general price level of goods and services is:
a. depreciation
b. deflation
c. inflation
d. expectations
e. fluctuations

answer

C. Inflation

question

Diagram Above
Equilibrium output is ________ and the equilibrium price level is ________.
a. 2,000; 130
b. 5,000; 160
c. 3,000; 100
d. 100; 3,000
e. Cannot be determined from the information provided

answer

C. 3,000; 100

question

answer

A. Spending on all final goods and services

question

In order to know if differences in GDP is a result of changes in prices or output GDP is
a. dollars and cents
b. nominal
c. real
d. only b and c above
e. only a and c above

answer

D. Only B and C above

question

answer

D. All of the Above

question

answer

A. actual real GDP is less than potential real GDP

question

answer

D. domestic production plus net foreign factor income

question

answer

B. an expenditure that raises the economy's income

question

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

answer

C. Nominal GDP

question

Which of the following is not necessarily true?
a. C/DI+S/DI=1
b. APC+APS=1
c. APC = MPC
d. APC+APS=MPC+MPS
e. MPC+MPS=1

answer

C. APC= MPC

question

Which of the following is not a type of unemployment?
a. seasonal
b. structural
c. cost-push
d. cyclical
e. none of the above

answer

C. cost-push

question

The aggregate supply curve is:
a. downward-sloping
b. upward-sloping
c. vertical
d. horizontal
e. none of the above

answer

B. Upward sloping

question

answer

C. productive but is excluded from GDP because no market transaction occurs

question

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

answer

B. public needs

question

GDP measures all goods in units of:
a. pounds
b. feet
c. tons
d. acres
e. dollars

answer

e. dollars

question

answer

a. borrowers are better off because they can pay off their loans with currency that is worth less

question

answer

C. GDP in 2006 is $500 billion

question

answer

E. ''a'' and ''b'' above only

question

answer

A. Avoid double counting

question

answer

D. Intermediate transactions involved in the production, less profit

question

answer

C. Promotion and regulation of the public sector and the provision of social goods

question

answer

A. money value of a nation's total production

question

answer

A. A good or service not adequately provided by a free market usually provided by the government

question

A measure of the economy's output in constant dollars is
a. intermediate GDP
b. current GDP
c. nominal GDP
d. real GDP
e. inflation

answer

D. real GDP

question

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. Okun's law
d. Keynesian Rule
e. Stephen's Law

answer

C. Okun's law

question

Disposable income includes:
a. corporate taxes
b. undistributed corporate profits
c. depreciation
d. allowance given to children by parents
e. none of the above

answer

E. None of the above

question

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. only "a" and "b" above
e. all of the above

answer

D. Only A and B above

question

answer

D. the higher the rate of investment

question

Spending by business firms on physical capital is:
a. taxes
b. saving
c. exports
d. investment
e. consumption

answer

D. Investment

question

The expected annual rate of return on an additional unit of a capital good is the:
a. APS
b. APC
c. MPS
d. MPC
e. MEI

answer

E. MEI

question

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 effect

answer

D. bathtub theorem

question

An example of an "injection" in the bathtub theorem is:
a. taxes
b. saving
c. imports
d. investment
e. employment

answer

E. Employment

question

answer

D. Unemployment is greater than the natural rate

question

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

answer

A. Direct

question

answer

D. The amount of real aggregate output that will be made available at various average price levels

question

answer

D. they want to avoid the problem of double counting

question

answer

b. Actual real output is greater than potential real output

question

answer

A. Frictional unemployment

question

answer

c. added the costs of the wood to the furniture maker along with the final price of the chairs

question

answer

E. will be undertaken at each aggregate income level by all sectors of the economy

question

Household spending on goods and services is:
a. taxes
b. saving
c. exports
d. investment
e. consumption

answer

E. consumption

question

answer

B. level of it's disposable income

question

answer

D. Expenditures that are dependent on income

question

answer

E. relation between consumption and income

question

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

answer

A. consumption is greater than income

question

answer

B. Consumption divided by disposable income

question

answer

B. the purchasing power of cash holdings fall

question

answer

B. APC has increased and APS has decreased

question

Suppose that your income increases form $10,000 to $15,000 and your consumption increase from $9,000 to $12,000. Your APC at $15,000 is:
a. 0.4
b. 0.6
c. 0.8
d. 0.9
e. 1.0

answer

C. 0.8

question

answer

D. temporary changes in jobs

question

answer

B. business recessions

question

answer

E. a mismatch between the skills of workers and the skills required by the job market

question

answer

C. savings divided by disposable income

question

answer

B. Difference between potential GDP and actual GDP

question

answer

C. demand-pull inflation

question

Macroeconomics deals with the action of:
a. individuals only
b. societies only
c. atmosphere only
d. both individuals and societies
e. neither individuals nor societies

answer

B. societies only

question

As aggregate income increases, consumption:
a. and saving both increase
b. and saving both decrease
c. decrease and saving increase
d. increase and saving decrease
e. none of the above

answer

A. and saving both increase

question

That part of a person's income which is not consumed is his or her:
a. saving
b. profit
c. surplus
d. excess
e. problem

answer

A. saving

question

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

answer

B. current output at base year prices

question

answer

B. $22 trillion

question

The MEI expresses a relationship between:
a. consumption and investment
b. interest rates and consumption
c. interest rates and savings
d. investment and savings
e. interest rates and investment

answer

E. interest rates and investment

question

answer

D. SRAS2; P2

question

answer

B. Jennifer is losing purchasing power by 2%

question

answer

B. SRAS1; P1

question

answer

C. Cost-push inflation

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