Exhibit 5-1
Use the information below to answer the following question(s). National income
accountBillions of
dollars
Personal consumption expenditures $900
Personal taxes 180
Government consumption and gross investment 300
Interest income 60
Exports 40
Imports 75
Depreciation 60
Gross investment 200
Refer to Exhibit 5-1. What is this country’s net exports?
a. $35.
b. -$35.
c. $379.
d. -$379.
If the underground economy is sizable, then GDP will:
a. understate the economy’s performance.
b. overstate the economy’s performance.
c. fluctuate unpredictably.
d. accurately reflect this subterranean activity.
In contrast with nominal GDP, real GDP refers to nominal GDP:
a. minus exports.
b. minus personal income taxes.
c. corrected for price changes.
d. corrected for depreciation.
The belief that the government can do absolutely nothing in either the short run or the
long run to reduce the unemployment rate, because people will anticipate the
government’s actions, is held by the:
a. rational expectations school.
b. neo-Keynesian school.
c. classical school.
d. supply-side school.
e. Keynesian school.
Suppose real GDP is $800 billion when the MPC is 0.80, and people decide to increase
their saving by $30 billion. Before this change, the economy was in equilibrium with
people intending to save $100 billion and producers intending to invest $100 billion.
The new equilibrium level of real GDP is:
a. $600 billion.
b. $650 billion.
c. $680 billion.
d. $730 billion.
e. $800 billion.
Which of the following is a statement of positive economics?
a. I hope unemployment comes down soon.
b. President X’s way of dealing with unemployment is better than President Y’s.
c. I think everyone should sacrifice to reduce the deficit.
d. If taxes are reduced, unemployment will drop.
When price level in the United States rises,
a. there is a increased demand for borrowed money.
b. producers’ demand for new machinery increases, contributing to an increase in
aggregate demand.
c. Americans tend to buy more foreign goods and services.
d. the French, Canadians, and Japanese would find our exports more attractive.
e. to replenish the value of your real wealth, you would save less and consume more.
The income approach to measuring GDP includes:
a. compensation for employees, net interest, rent, net profits, and indirect business taxes
and depreciation.
b. compensation for employees, net interest, rent, corporate profit, and transfer
payments.
c. compensation for employees, net interest, rent, and indirect business taxes.
d. compensation for employees, net interest, rent, corporate profits, and capital
depreciation.
e. compensation for employees, rent, corporate profits, proprietors’ income, and transfer
payments.
Exhibit 1A-3 Straight line
In Exhibit 1A-3, the slope of straight line AB
is:
a. positive.
b. zero.
c. negative.
d. variable.
Within the simple Keynesian Cross model, equilibrium takes place:
a. at full employment.
b. when aggregate spending equals real disposable income.
c. when the money interest rate and real interest rate are equal.
d. when actual and expected rates of inflation are equal.
Which of the following is a range on the eclectic or general view of the aggregate
supply curve?
a. Keynesian range.
b. Intermediate range.
c. Classical range.
d. All of these.
The amount of a good that must be given up to produce another good is the concept of:
a. scarcity.
b. specialization.
c. trade.
d. efficiency.
e. opportunity cost.