Home Economics Lecturer Economics Public Goods, Human Capital, Economical Problems, GDP, Capital, Firm Theories, Asymmetric Inflation, Trade Policies, Balance and National Economy MCQs

Public Goods, Human Capital, Economical Problems, GDP, Capital, Firm Theories, Asymmetric Inflation, Trade Policies, Balance and National Economy MCQs

1 - Trade creation takes place when ?

economic integration results in a movement in product origin to a lower-cost member country

2 - When imports from a higher-cost supplier within a customs union replace imports from a lower-cost supplier outside the custom union, there exists ?

trade diversion

3 - Suppose that tomatoes from Mexico face a 20 percent tariff in the United States and a 25 percent tariff in Canada. If the United States and Canada maintain free trade between each other, the these two countries belong to a ?

free-trade area

4 - Which level of economic integration best applies to the U.S economy ?

monetary union

5 - A ____ is a regional trading bloc in Which member countries eliminate internal trade barriers but maintain existing barriers against countries that are not member ?

free trade area

6 - The European Monetary Union is an example of a ?

monetary union

7 - If A forms a customs union with B, A will import ?

400 units from B

8 - If a person can be prevented from using a good, the good is said to be ?

excludable

9 - Which of the following is an example of a common resource ?

a national park

10 - A negative externality affect market efficiency in a manner similar to ?

a common resource

11 - A positive externality affects market efficiency in a manner similar to a ?

public good

12 - A free rider is a person who ?

receives the benefits of a good but avoids paying for it.

13 - Public goods are difficult for a private market to provide due to ?

The free-rider problem.

14 - A good produced by a natural monopoly is ?

not rival but excludable

15 - A public good is ?

neither rival nor excludable

16 - A person who regularly watches BBC television programs in the UK but fails to pay their TV licence fee is known as ?

a free rider

17 - A congested toll road is ?

a private good

18 - When markets fail to allocate resources efficiently, the ultimate source of the problem is usually ?

that property rights have not been well established

19 - Which of the following are potential solutions to the problem of air pollution?

all of these answers

20 - The Tragedy of the Commons is a parable that illustrates why?

common resources are overconsumed

21 - When government employ cost-benefit analysis to help them decide whether to provide a public good, measuring benefits is difficult because ?

respondents to naires have little incentive to tell the truth.

22 - Suppose that requiring motorcycle riders to wear helmets reduces the probability of a motorcycle fatality from 0.3 percent to 0.2 percent over the lifetime of a motorcycle rider and that the cost of lifetime supply of helmets is Rs5000. It is efficient fo

Rs 500,000 or more

23 - Which of the following is an example of a public good ?

national defense

24 - Suppose each of 20 neighbours on street values street repairs at €3000 the cost of the street repair is €40,000 which of the following statements is true ?

it is efficient for the government to tax the resident €2,000 each and repair the road

25 - A common resource is ?

rival but not excludable

26 - A private good is ?

both rival excludable

27 - If one person's consumption of a good diminishes other people's use of the good, the good is said to be ?

rival

28 - According to the human capital view of education ?

increases human capital and the wages of workers

29 - According to the signaling view of the education ?

only helps firms sort workers into high ability and low-ability workers

30 - If two jobs require the same amount of skills and experience the job that pays the most is most likely to be the one that is ?

unpleasant

31 - Which of the following is true regarding the earning of attractive versus unattractive workers ?

Attractive people tend to earn more because they may actually have a larger value of marginal product

32 - Which of the following professionals is most likely to be able to generate the income of a superstar ?

the best writer

33 - In order for a market to support superstars it must have which of the following characteristics ?

Every customer must want the good supplied by the best producer and the technology must exist for the best producer to supply every customer at low cost

34 - Competitive markets tend to ?

reduce labour market discrimination because non-discrimination firms will employ cheaper labour earn more profits and drive discriminating firms out of the market

35 - Which of the following is not a reason why some workers are paid above the equilibrium wage ?

beauty

36 - Which of the following explanations of wage differentials is not likely to be true ?

Employers in competitive markets are bigots

37 - A profit-maximizing firm will hire labour until _____ equals the _______?

marginal cost of labor, marginal revenue product

38 - Top footballers tend to earn more than lecturers because ?

top footballers are relatively scarce in relation to lecturers

39 - Skilled labor is relatively scarce because ?

it is costly to acquire human capital

40 - By restricting labor supply a trade union can _____ and _______?

increase the wage, lower employment

41 - Involuntary unemployment exists if workers ?

would work at the going wage but can't find jobs

42 - The difference between gross investment and net investment is ?

depreciation of the existing capital stock

43 - The value of an asset depends upon ?

the present value of the future stream of income it can earn

44 - If workers get a real wage increase this will likely ____ and _____?

encourage the use of less capital reduce demand for all inputs

45 - Different capital intensity in different industries is mainly explained by _______ and ________?

technology, the ease of factor substitution

46 - The functional distribution of income shows how national income is divided between ?

the factors of production

47 - Land will be allocated between competing uses so that ?

the equilibrium rental rate equilibrium total demand with supply

48 - In the short run, the supply of capital is ________ and in the long run will depend on _______?

fixed, rental rate of capital

49 - The marginal revenue product of capital is the ?

additional value of output from using more capital

50 - the cost of using capital services is the ?

rental rate for capital

51 - Efficiency wages are ____ that raise _____?

high wages, productivity

52 - In the West Women and non-whites on average receive lower incomes than white men because ?

all of the above

53 - The most important source of wage differentials are ?

skills

54 - Unions achieve a higher wage differential the more _____ and the more ______?

inelastic the demand for labour, they can restrict the supply of labour

55 - The opportunity cost of acquiring education is ?

the earnings foregone

56 - Human capital can be described as ?

the stock of expertise accumulated by a worker

57 - The participation rate in the labour force is affected by ?

all of the above

58 - The downward sloping marginal physical product of labor is the firm's ?

Short-run demand curve for labor

59 - The substitution effect of a rise in the price of labour will ____ the quantity of labour and the output, effect will ____ it

reduce; reduce

60 - Which of the following is likely to generate a compensating differential ?

One employee is willing to work the nightshift while another is not.

61 - A wage differential among groups may not by itself be evidence of discrimination in the labour market because different groups have ?

all of these answers are correct

62 - Which of the following statements regarding discrimination is true ?

Discrimination can only persist in a competitive labour market it customers are willing to pay to maintain the discriminatory practice or the government requires discrimination

63 - It is not considered discrimination when an employer offers different opportunities to individuals that differ only by them ?

productivity

64 - Economists have hypothesized that the widening gap between the wages of unskilled workers and skilled workers may be due to ?

decrease in the demand for unskilled workers because of increases in technology and increases in international trade

65 - Which of the following could result in women being paid less than men ?

all of these answers

66 - In a competitive market, which of the following is least, likely to be the source of a persistent discriminatory wage differential ?

the employer

67 - All of the following would tend to increase a worker's wage except ?

doing a job that is fun

68 -

69 - Which of the following is not part of a worker's human capital ?

effort

70 - If a person who works in coal mine gets paid more than a person with a similar background and skills who works in a safer job, then ?

we have observed a compensating differential

71 - An agreement between a borrower country and the International Monetary Fund in which the country agrees to revamp its economic policies to provide incentives for higher export earnings and lower imports is a ?

debt rescheduling agreement

72 - Structuralist economists who study developing countries focus their attention on ?

specific barriers to development and how to overcome them

73 - Which of the following is NOT one of the problems facing most developing nations ?

Labor shortages

74 - The policy that has been the most successful in increasing agricultural output in developing countries is ?

land reform

75 - One of the benefits of putting resources into agricultural projects is that ?

agricultural projects usually have low import requirements

76 - Which of the following factors has been suggest as an explanation for the lack of economic growth in many poor nations ?

The constraints imposed by dependency on the already-developed nations

77 - Many developing countries instituted import substitution policies because ?

their terms of trade were deteriorating

78 - The developed nations have only about 15% of the world's population, but they are estimated to consume _______ of the world's output ?

0.8

79 - Developing countries, if compared with other countries, have ?

a smaller percentage of the labor force in urban areas

80 - When economists talk about developing countries experiencing flight of capital they mean?

people investing money abroad rather than in their own country

81 - Debt-re-scheduling is ?

a change in debt repayment due to inability to pay

82 - Most of the Third World/Fourth World debt was incurred in ?

most debt was incurred during the oil shocks of the 1970s

83 - When economists say that developing countries have a dualistic economy the 2 parts referred to are ?

modern sector and traditional sector

84 - The main reason why land reform increase agricultural output is that is ?

makes farmers owners of the land instead of tenants and owners' farmers are more productive than tenant farmers

85 - Low agricultural productivity in developing countries is mainly caused by ?

shortages of inputs including land

86 - Experiences over the last three decades has suggested that in order for economic development to occur, it is necessary for an economy to ?

use a balanced strategy that promotes both agricultural and industrial development

87 - The idea that suggests that poverty is self-perpetuating because poor nations are unable to save and invest enough to accumulate the capital stock that would help them grow is ?

the vicious circle of poverty hypothesis

88 - A policy of developing local industries that can compete with imports is referred to as ?

import substitution

89 - 85% of the world's population lives in developing countries and receives about _____ of the world's income?

0.2

90 - The term Fourth World has been coined to describe ?

countries that have fallen far behind the economic advances of the rest of the world

91 - The term Fourth World has been coined to describe ?

countries that have fallen far behind the economic advances of the rest of the world

92 - If in Pakistan real GDP/person in 2004 is Rs18,073 and real GDP/person is 2005 is Rs18,635 What is the growth rate of real output per person over this period ?

3.1 percent

93 - Which of the following government policies is least likely to increase likely to increase growth in Africa ?

increase restrictions on the importing of American tractors and electronics

94 - Our standards of living is most closely related to ?

our productivity because our income is equal to what we produce

95 - Which of the following best describes the rate of growth in productivity in the United states over the last fifty years ?

Productivity grew quickly in the 1950s and 1960s more slowly from the early 1970s through 1995 and then quickly again

96 - Which of the following statements regarding the impact of population growth on productivity is true ?

All of these answers

97 - If a production function exhibits constant returns to scale ?

doubling all of the input's doubles output

98 - For a given level of technology, we should expect an increase in productivity within a nation when there is an increase in each of the following except ?

labor

99 - Once a country is wealthy ?

it may be harder for it to grow quickly because of the diminishing returns to capital

100 - Many East Asian countries are growing very quickly because ?

They save and invest an unusually high percentage of their GDP

101 - To increase growth, governments should do all of the following except ?

nationalize major industries

102 - Which of the following expenditures to enhance productivity is most likely to emit a positive externality ?

Naila pays her university tuition fees.

103 - If Toyota builds a new plant in the north of England ?

once the plant starts producing cars UK GDP will rise more than UK GNP

104 - Which of the following is an example of foreign portfolio investment ?

EDF of France buys shares in Scottish & Southern Energy of the UK, and Scottish & Southern Energy uses the Proceeds to build a new hydro-electric power station in Scotland

105 - Which of the following describes an increase in technological knowledge ?

A farmer discovers that it is better to plant in the spring rather than in the fall

106 - Thomas Malthus argued that ?

an ever-increasing population is constrained only by the food supply resulting in chronic faminies

107 - Copper is an example of ?

a non-renewable natural resource

108 - Which of the following statements is true ?

Countries have great variance in both the level and growth rate of GDP/person thus poor countries can become relatively rich over time

109 - The opportunity cost of growth is ?

a reduction in current consumption

110 - When a national has very little GDP per person ?

it has the potential to grow relatively quickly due to the "catch-up-effect"

111 - A reasonable measure of the standard of living in a country is ?

real GDP per person

112 - In the 1980s economists studying the source of growth observed no positive relationship between information and communications technology (ICT) investments and productivity This is known as ?

productivity paradox

113 - Market price adjusted to consider differences between social cost-benefit and private cost-benefit calculations are ?

shadow prices

114 - An example of external diseconomies is ?

environmental pollution

115 - Vaccinating people for measles, rubella, polio and cholera to substantially increase net social benefits by improving the health and productivity of the population is an example of ?

external economies

116 - Which of the following is True is LDCs ?

Labor is often underemployed, having a low alternative cost

117 - Which of the following is not True ?

In 2001 internet users per 1000 people in middle income countries were greater than high income countries

118 - Lack of absorptive capacity in developing countries results from ?

All of the above are correct

119 - You can see the computer age everywhere but, in the productivity, statistics is a attributed to which economist ?

Robert Solow

120 - In the long run, expanding educational and training facilities, transportation and communication and other infrastructure in LDCs should increase ?

absorptive capacity

121 - A case when internal economies of scale bring about a continuously falling average cost curve that makes having more than one firm in an industry inefficient is illustrative of ?

a natural monopoly

122 - Which of the following is not a nature public monopoly ?

mobile phone

123 - Suppose a project results in a net stream of $200 per year for 4 years, but nothing thereafter, Assume that the discount rate is 5 percent. The discounted value of the total income stream over the 4-year period is ?

more than zero but less than 800

124 - The efficiency wage is the ?

Wage rate divided by the productivity of labor

125 - Canada France, Germany, Italy, Japan, The United Kingdom and United States are ?

G-7 countries

126 - When firm build in Organizational slack they do this in order to ?

both options one and three

127 - Which of the following is NOT a common reason for a merger?

To increase competition

128 - Identify below those who are not stakeholders in a company ?

None of the above

129 - The merger of two clothing firms would be a ____ merger?

horizontal

130 - The merger of fiber producer and a clothing firm would be _____ merger?

vertical

131 - Sales maximization is likely to take place in markets that are ?

oligopolistic

132 - If firms satisfice this means that ?

objectives such as profit are not maximized

133 - Firms that engage in satisficing behavior are likely to be ?

Like other firms in their industry.

134 - Galbraith's idea that firms are controlled by a technostructure supports _________ theories?

Williamson's

135 - Behavioral theories of the firm concentrate on the _______ interests of _______?

conflicting; different parts of the firm

136 - Fear to take-overs will lead firms to maximize ?

profits.

137 - The merger of a clothing firm and a software producer would be a _______ merger?

conglomerate

138 - Growth maximization is the same as ?

maximization the growth of sales revenue.

139 - A sale maximizing firm will produce where ?

sales revenue is maximized

140 - The divorce of owner ship and control causes a problem usually referred to by economists as ?

principal-agent problem.

141 - Williamson suggests that managers might NOT try to achieve ?

maximum profits.

142 - A firm may be unable to maximize profits because it ?

The first and third option

143 - The divorce of ownership and control tends to occur in ?

public limited companies

144 - Public limited companies may not maximize their profits because ?

shareholders have little control over managers.

145 - The traditional profit-maximizing theory of the firm has been criticized by some economists because ?

Both the first and second option

146 - Which of the following help explain why firms pay bonuses to workers during particularly profitable years to prevent workers from becoming disgruntled ?

People care about fairness

147 - Which of the following is not true about how people make decisions ?

People are always rational maximizers

148 - Suppose that 40 percent of the voting population wish to spent Rs1,000 for artwork in City Hall, 25 percent wish to spent Rs20,000 and 35 percent wish to spend Rs 22,000 What is the median preferred outcome, the average preferred outcome and the modal pre

Rs20,000; Rs13,100; Rs1,000

149 - Which of the following best demonstrates the problem of moral hazard ?

Enzo drives more recklessly after he buys car insurance

150 - Which of the following must be true about a signal that is used to reveal private information in order for the signal to be effective ?

It must be costly to the signaling party but less costly to the party with higher-quality product

151 - Nicole wants to avoid buying a car that is a lemon. She takes a car she would like to buy to her mechanic before she purchases it. This is known as ?

screening

152 - Which of the following is a response to People's inconsistent behavior over time ?

forced contributions to a retirement plan

153 - Jamil's friend dies of a sudden heart attack. Jamil rushes to his doctor for an expensive physical examination. This response demonstrates that ?

People give too much weight to a small number of vivid observations

154 - In the ultimatum game, what split would be rational for both the person proposing the split and the person who must accept or reject the split ?

99/1

155 - Which of the following is true under pairwise majority rule if people vote for the outcome closest to their most preferred outcome ?

The outcome preferred by the median voter wins

156 - hich of the following is not a property required of a perfect voting system ?

The median voter always wins

157 - Refer to Figure 1 What percent of the population vote for A when the choice is between A and B ?

60 percent

158 - A life insurance company forces Enzo to have a medical examination prior to selling him insurance ?

transitivity

159 - Which of the following is not a method firms use to avoid the moral hazard problem in the employment relationship ?

They buy life insurance on their workers

160 - Which of the following is an example of a signal that is used to reveal private information ?

All of these answers are correct

161 - Markus is a travelling salesman for an apparel company. In this employment relationship, Markus is the ?

agent

162 - Jamil's car is in need of repair, so John decides to sell it avoid the repair bill. Unaware of the problem, Shahab buys the car. This is an example of ?

hidden actions

163 - Suppose that the firms collude and become a cartel The best level of output for the cartel as a whole is ___________ the price equals __________ and profits total __________?

4 million barrels per day, $80, $160 million

164 - Poor developing countries typically impose __________ tariffs than rich advanced nations on imports?

higher

165 - Membership in the World Trade Organization for china ?

has been opposed by a number of labor and human rights organizations in other countries

166 - The pattern of economic growth describes the phenomenon of countries moving up in technological development by following the patterns of countries ahead of them in the development process ?

flying geese

167 - Developing countries that concentrate production in agricultural products or raw materials may face a long-run decline in their international terms of trade because of ?

All of the above

168 - An export quota agreement to stabilize the price of bauxite tends to be more successful when the member producer countries as a percentage of the world's producer countries is __________ and the _________ it is for the member producer countries to store/s

relatively large; easier

169 - Suppose that the demand curve for tin is highly inelastic. If the supply curve of tin decrease and increase cyclically along the demand curve for tin then in this market the size of the price fluctuation will be __________ the size of the quantity fluctua

relatively greater then

170 - In the Px = export price index, Pm = import price index, Qx = export quantity index,and Qm = import quantity index. Developing countries tend to maintain that their commodity term of trade have declined over the long run suggesting that _________ has decl

Px/Pm

171 - _________ policies attempt to foster industrialization by establishing high barriers to imports of foreign goods to promote local production ?

import substitution

172 - Export-led growth strategies tend to emphasize ?

resource allocation based on the principle of comparative advantage

173 - Import substitution is an example of ?

an inward-looking growth strategy

174 - Because supply and demand conditions for primary products are very price inelastic their prices ?

tend to be very unstable from year to year

175 - Which of the following strategies have developing countries not used to deal with the problem of unstable export markets ?

tariff-rates quotas

176 - The ability of the Organization of Petroleum Exporting Countries (OPEC) to maximize profits is hampered by ?

economic recession for oil importing nations

177 - All of the following are trade problems of developing countries except?

improving terms of trade

178 - To be considered a good candidate for export cartel, a commodity should ?

have a low price elasticity of supply

179 - Hong Kong and South Korea are examples of developing nations that have recently pursued ________ industrialization policies?

export promotion

180 - For the oil-importing countries, the increase in oil prices in 1970s and early 2000s contributed to all of the following except ?

improving terms of trade

181 - A widely used indicator to differentiate developed countries from developing countries is ?

real income per capital

182 - Instead, assume that global economic expansion causes the quantity of tin demanded to increase by 4 million pounds at each price To maintain price of tin at the target price you would ?

sell 4 million pounds of tin

183 - Assume that global recession causes the quantity of tin demanded to decrease by 4 million pounds at each price To maintain the price of tin at the target price you would ?

buy 4 million pounds of tin

184 - Assume That the firms operate as purely competitive sellers (a purely competitive industry) In the long run, equilibrium price equals _________ quantity equals _________ and profits total _________?

$40, 8 million barrels per day, $0 million

185 - Which of the following organizations primarily provides long-term loans to developing countries to help them develop their infrastructure such as schools hospitals and roads ?

World Bank

186 - The People's Republic of China ?

has significantly increased its openness to international trade and foreign investment in recent decades

187 - The OPEC oil cartel ?

has had a level of success in raising oil prices that other developing countries are unlikely to achieve with other primary commodities

188 - Economic growth occurs because ?

All of the above

189 - Suppose that the supply curve of tin is highly inelastic. If the demand curve of tin decrease and increase cyclically along the supply curve of tin, then in this market the size of the quantity fluctuation will bathe size of the price fluctuations ?

relatively less than

190 - Suppose that the world price of tin is above the target (ceiling) price that is defined by an international commodity agreement. To move the world price toward the target price, a buffer stock agreement would require its buffer stock manager to ____ tin a

sell; increase

191 - The Generalized System of Preferences (GSP) program allows ?

developing country export to advanced countries to receive preferential tariff treatment

192 - Developing countries that emphasize the production of raw materials or agricultural goods may realize a long-run deterioration in the international terms of trade because of ?

sluggish demand for these products in advanced countries

193 - Tariff levels in advanced countries tend to be __________ tariff levels in developing countries?

lower than

194 - Most of developing-country exports consist of ?

primary products such as tin and bauxite

195 - Concerning tariff policy, the United States does not charge?

identical tariff rates in products from all countries of the world

196 - Among the institutions and policies that have been created to support developing countries are?

All of the above

197 - To stabilize the prices of primary products international commodity agreements have utilized all of the following except ?

tariff-rate quotas applied to imported goods

198 - To help developing nations strengthen their international competitiveness many industrial nations have granted non-reciprocal tariff reductions to developing nations under the ?

generalized system of preferences program

199 - To be considered a a good candidate for an export cartel, a commodity should ?

have a low price elasticity of demand

200 - The arrangement where goods imported from trading partners in the developing world are subject to lower tariff rates than goods from other countries is referred to as ?

Generalized System of Preferences

201 - Concerning the hypothesis that there has occurred a long run deterioration in the developing countries terms of trade empirical studies provide ?

mixed evidence that does not substantiate the deterioration hypothesis

202 - Which industrialization policy have developing countries used which places emphasis on the comparative advantage principle as a guide to resource allocation ?

export promotion

203 - Which of the following statements is correct ?

The overall sum of all entries in the balance of payments must be zero

204 - The differences between a country's merchandise exports and its merchandise imports is the ?

balance of trade

205 - _______ is needed to balancell the balance of payments statements?

statistical discrepancy

206 - The balance of trade is a record of ?

the value of merchandise exports minus imports

207 - Historically countries at early stages of rapid economic development have tender to experience ?

trade deficit and an excess of investment over domestic saving

208 - When a country has a trade deficit it ?

purchases more goods from the rest of the world than it sells

209 - A current account surplus implies that ?

the country is a net lender to the rest of the world

210 - A nation will a current account deficit will be ?

going further into debt with other nations

211 - The difference between a country's balance of payments and its balance of international indebtedness?

reflects the difference between flow and stock concepts

212 - In the balance of payments travels and tourism are included in the category of ?

services account

213 - The U.S balance of payments is constructed by ?

the U.S Department of commerce

214 - The role of _______ is to direct one nation's savings into investments of another nation?

capital flows

215 - All of the following are debit items in the balance of payments except ?

merchandise exports

216 - A country's transactions with the rest of the world are recorded in the ?

balance of payments

217 - When all of the debit or credit items in the balance of payments are combined ?

the total surplus or deficit equals zero

218 - Credit (+) items in the balance of payments correspond to anything that ?

involves receipts from foreigners

219 - For the first time since World War I, in the mid-1980s the United States became a net international ?

debtor

220 - The difference between the balance on current account and the balance on capital account is the ?

statistical discrepancy

221 - Which of the following statements is True ?

If the current account is in surplus the capital account must be in deficit

222 - The balance of payments is divided into two major accounts the ?

current account the capital account

223 - The record of a country's transactions in goods, services and assets with the rest of the world is its ?

balance of payments

224 - Direct investment and security purchases are classified as ?

capital account transactions

225 - The argument that U.S current account deficits cause net job losses for Americans ?

fails to recognize that a current account deficit is matched by an equal inflow of foreign funds which finances employment increasing investment spending

226 - In balance of payments accounting tourism and travel are classified in the ?

services account

227 - Purchases of government securities in the United States by foreigners is ?

a credit item in the capital account

228 - In the calculation of gross domestic product net exports are ?

the sum of merchandise trade and services

229 - A nation wishing to reduce its current account deficit would be advised to ?

decrease domestic consumption

230 - Current account deficit are offset by______________?

capital/financial account surpluses

231 - Debit entries on the balance of payments are the entries that would ?

mean a loss of foreign exchange

232 - The current account includes ?

All of the above

233 - A capital account surplus might be expected to cause a current account deficit because the associated ?

capital inflow would cause the nation's currency to appreciate contributing to a trade deficit

234 - All of the following are credit items in the balance of payments except ?

private gives to foreign residents

235 - In the balance of payments the statistical discrepancy is used to ?

insure that the sum of all debits matches the sum of all credits

236 - Credit (-) items in the balance of payments correspond to anything that ?

involves payments to foreigners

237 - A country that is a net international debtor initially experiences a (an) ?

larger savings pool available to finance domestic spending

238 - Referring to the above table, the U.S balance of international indebtedness suggests that the U.S is a net ?

creditor

239 - In an Open economy leakage to imports ____________ the value of the multiplier ?

reduce

240 - The total multiplier for the economy will reflect ?

MPC, MPT and MPZ

241 - For given government spending and taxation the government budget deficit will grow in _________ and decline in __________?

recessions, booms

242 - If the government increases spending and raises taxes by just enough to finance this increase it will ?

increase output

243 - If a result of households wish to save more there is a change in equilibrium income and no change in equilibrium saving this is an example of ?

the paradox of thrift

244 - The multiplier is calculated as___________?

a or b

245 - When investment is assumed to autonomous the slope of the AD schedule is determined by the ?

marginal propensity to consume

246 - Short-run equilibrium output means that aggregate demand __________ actual output?

equals

247 - When we refer to the hidden economy we mean unrecorded income owing to ?

tax evasion

248 - Real GNP measures income ?

adjusted for inflation

249 - In the circular flow we would expect leakages to ___________ injections?

equal

250 - Leakages from the circular flow are _________ and __________?

savings, taxes net of subsidies imports

251 - In an economy measuring (1) total value added (2)total spending on final goods and (3)total factor earning gives the result that ?

3=2=1

252 - Aggregate supply is the total amount ?

of goods and services produced in an economy

253 - Two of the major factors contributing to growth are ?

resources and efficiency

254 - The underground economy consists of ?

legal transactions not declared for tax and illegal activities

255 - Equilibrium in the circular flow of income occurs when ?

Injections = withdrawals

256 - Total withdrawals from the circular flow of income include ?

savings taxes and imports

257 - According to the classical economists, the only gainers from growth would be ?

landlords

258 - Indicate below what is NOT a main macroeconomic goal ?

Reducing unemployment

259 - It has become conventional classify a recession as a period where national output falls for _________ or more?

six months

260 - The index used most often to measure inflation is the?

consumer price index

261 - The percentage of the labor force that is unemployed is the ?

unemployment rate

262 - The diagram that shows the income received and payments made by each sector of the economy is the ?

circular flow diagram

263 - Higher export demand __________ output and a higher MPZ __________ output?

increase, reduces

264 - when the level of income _________ there will be a tendency for the trade balance to improve as imports?

falls, fall

265 - Aggregate demand in an economy trading internationally with a government sector can be written as ?

AD = C + I + G + X – Z

266 - Starting from a balanced budget, for a given tax rate, an increasing in income will cause the government budget to ?

move into surplus

267 - Aggregate demand without a foreign sector is the sum of ?

C + 1 + G

268 - If the MPC is 0.5 the multiplier is ?

2

269 - The multiplier tells us how much __________ changes after a shift in ____________?

output aggregate demand

270 - If desired spending in the economy exceeds income we would expect ?

firms to produce more

271 - A linear consumption function with a positive slope less than one means that if income increases consumption will ?

increase

272 - In a macroeconomic model without foreign trade or a government aggregate demand is the sum of ?

personal consumption and private investment

273 - Real GNP is a crude measure of national welfare because it excludes ?

work in the home

274 - Nominal GNP measures income ?

At current prices

275 - Injection into the circular flow are ______ and __________?

investment government expenditure exports

276 - In the economy when a steel producer sells steel to car producer it is regarded as ?

an intermediate good

277 - The key issues of macroeconomics are ?

All of the above

278 - Purchasing power parity exchange rates are used to ?

compare living standards of different countries

279 - Real GDP is nominal GDP measured in constant ?

prices

280 - Total injection are made up of?

investment + government expenditure + exports

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