Economics (Inflation and Long Run Growth)

A final capital good is

a good intended for final use by a household

a good that will be used to produce other goods by a business.

a financial instrument used to buy goods.

a business good that will be further transformed in production

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Question 21 pts
Nonresidential investment is defined as

government purchases of new homes.

a financial instrument used to finance the purchase of capital goods.

summer homes used for vacation.

purchases by businesses of new plants, equipment, and office buildings.

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Question 31 pts
Aggregate demand is defined as

C + I + G + Exports + Imports

C + I + G + Exports + Inventory change

C + I + G + Exports – Imports

C + I + G + Exports – inventory change

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Question 41 pts
Gross private domestic investment includes newly
produced

cars, houses, government bonds

plants, equipment, houses,

plants, equipment, government bonds

plants, houses, personal automobiles

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Question 51 pts
The largest component of aggregate demand for the U.S. is

government spending

plant and equipment spending

consumer durables

consumer services

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Question 61 pts
Real GDP changes in a given year because of

changes in prices of domestically produced goods and services.

changes in prices of goods and services produced abroad.

changes in quantities of domestically produced goods and services..

changes in prices or quantities of domestically produced goods and services.

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Question 71 pts
Suppose that, in a given year, US imports have increased. Which of the following is true?

US GDP increased.

US GDP fell.

US GDP remained the same.

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Question 81 pts
Potential real GDP is

the largest amount of output an economy can possibly produce.

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the level of GDP when the economy reached full employment of the labor force.

the amount of output an economy produces when all its resources are fully utilized.

the amount of output produced during recessions.

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Question 91 pts
If aggregate demand falls short of aggregate income in an economy,

the interest rate must rise to bring aggregate demand up and achieve equilibrium.

the interest rate must fall to bring aggregate demand up and achieve equilibrium.

changes in the interest rate can do nothing to correct the situation.

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Question 101 pts
If this year the Chinese economy grew by about 10% and Chinese consumers increased spending on imports from the US by about 10%, then the impact on US aggregate demand curve would most likely be shown by

a rightward shift

a leftward shift

no large shift in either direction

the night shift

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Question 111 pts
The newspaper announced that the nation’s output decreased. This implies that

nominal GDP rose proportionately less than the GDP deflator

nominal GDP rose proportionately more than the GDP deflator

nominal GDP rose proportionally the same as the GDP deflator

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Question 121 pts
Suppose that nominal GDP increased by 3 percent, but the real GDP increased by only 1 percent during that same period. Which of the following best explains the phenomenon?

Prices increased by approximately 1 percent

Prices increased by approximately 2 percent

Prices increased by approximately 3 percent

Prices increased by approximately 4 percent

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Question 131 pts
Which of the following is not counted in our calculations of GDP?

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the purchase of a Microsoft Windows CD

the purchase of new, domestically-produced tires for your old foreign car.

the purchase of 100 shares of Microsoft.

a haircut from a Mexican hair dresser received and paid for at a beauty salon in LA.

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Question 141 pts
As net incomes of businesses increase, which component of aggregate demand would be most likely to be affected directly the most

Personal consumption expenditures

Imports of goods and services

Fixed nonresidential investment

Fixed residential investment

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Question 151 pts
If stock prices fall and the prices of goods and services rise, one would expect consumer spending to __________ and the aggregate demand curve to shift ________.

increase, rightward

increase, leftward

decrease, leftward

decrease, rightward

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Question 161 pts
When the output gap is positive, there is not enough aggregate demand in the economy.

True

False

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Question 171 pts
Which of the following policies would be likely if aggregate demand seems too weak?

An increase income tax rates.

A cut in income tax rates.

A cut in government spending on goods and services.

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Question 181 pts
The implicit GDP price deflator is a measure of

welfare in the country.

the prices of all goods produced in the country.

the prices of all goods and services consumed in the country.

the prices of all goods and services produced in the country.

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Question 191 pts
When the price level rises, aggregate demand falls, because with higher prices people in the economy have less purchasing power.

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True

False

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Question 201 pts
If the interest rate falls,

consumer spending and investment will increase and the AD curve will shift to the right.

consumer spending and investment will increase and the AD curve shift to the left.

consumer spending and investment will increase and the AD curve will shift to the left.