Download Quiz # 2 ECO403

Quiz # 2
ECO403
Total Marks: 10
Highlight the correct option.
1. The consumption function specifies that consumption spending is:
A.
B.
C.
D.
negatively related to the level of disposable income,
positively related to the level of disposable income,
negatively related to the rate of interest,
positively related to the rate of interest,
2. The value of final goods and services measured at current prices is
called:
A.
B.
C.
D.
real GDP,
nominal GDP,
real GNP,
nominal GNP,
3. The simple circular flow model shows that:
A. Firms demand resources and supply outputs.
B. Households demand outputs and supply resources.
C. Firms generate the income necessary for households to consume.
D. Households generate the revenue necessary for firms to produce.
4. When taxes are greater than government spending then there is:
A.
B.
C.
D.
Balanced budget.
Budget surplus.
Budget deficit.
None of given options.
5. Inflation is a situation in which:
A. There is a decrease in the purchasing power of the monetary unit
B. There is a decrease in the price level
C. A given quantity of money purchases a larger quantity of goods and
services
D. Increase in the price level exceed increase in the nominal wage
6. When interest rate is high money demand will:
A.
B.
C.
D.
Decrease.
Increase.
Constant.
None of given options.
Money as a measure of value provides:
A.
B.
C.
D.
It’s holder with perfect liquidity.
A common denominator for measuring value.
A mechanism for allocating resources and distributing output.
A medium for exchanging final output.
7. In the rigid version of the quantity theory of money:
A. Changes in nominal GDP are proportional to changes in the money
supply.
B. Changes in nominal GDP are proportional to changes in velocity.
C. Changes in velocity are proportional to changes in the money supply.
D. Changes in the price level are proportional to changes in the money
supply.
8. Personal income
A.
B.
C.
D.
Is income received by individuals during a given year
Is the income individual have available for spending during a given year
Equals national income less indirect taxes
Is the sum of wages plus interest received by individual during a given
year
9. Gross investment in the national income accounts includes:
A.
B.
C.
D.
Residential and nonresidential construction
Spending on producers’ durable goods
Changes in business inventories
All of the above
10. Which statement(s) below is/are true about the difference(s) between
GDP and GNP?
A. GNP measures output produced by factors of production owned by U.S.
citizens within the United States.
B. When a Japanese company earns profits in the United States, those
profits are counted as part of Japanese GDP, but not as part of Japanese
GNP.
C. The wages paid to U.S. workers working in a Japanese factory in the
United States are counted as part of U.S. GNP, but the profits from
the factory are not.
D. All of the above