Question 1

The circular flow of income model shows that output, income and expenditure are equal to one another.

Accepted Answer

A) True 
 B)False  True

Question 2

If demand in the economy is too high there is an inflationary gap.

Accepted Answer

A) True 
 B)False  True

Question 3

Injections are assumed to be ____________ to the level of income

Accepted Answer

A)  Endogenous 
B)  Inversely related 
C)  Proportional 
D)  Exogenous 
A)  Endogenous 
B)  Inversely related 
C)  Proportional 
D)  Exogenous D

Question 4

Withdrawals from the economy do not include:

Accepted Answer

A)  Savings 
B)  Imports 
C)  Taxation revenue 
D)  Export spending 
A)  Savings 
B)  Imports 
C)  Taxation revenue 
D)  Export spending

Question 5

Equilibrium in the economy occurs when:

Accepted Answer

A)  Aggregate demand equals withdrawals. 
B)  Aggregate supply equals injections. 
C)  Planned injections equal planned withdrawals. 
D)  Aggregate demand equals investment. 
A)  Aggregate demand equals withdrawals. 
B)  Aggregate supply equals injections. 
C)  Planned injections equal planned withdrawals. 
D)  Aggregate demand equals investment.

Question 6

Which of the following is a reflationary (expansionist) policy?

Accepted Answer

A)  A cut in income tax 
B)  An increase in interest rates 
C)  A cut in government spending 
D)  An increase in tax on company profits 
A)  A cut in income tax 
B)  An increase in interest rates 
C)  A cut in government spending 
D)  An increase in tax on company profits

Question 7

If aggregate demand is lower than the level required for full employment, this means there is a ____________ gap.

Accepted Answer

The answer of If aggregate demand is lower than the...

Question 8

If planned injections are greater than planned withdrawals:

Accepted Answer

A)  Aggregate demand is higher than the existing output. 
B)  Aggregate demand is too low. 
C)  The economy is in equilibrium. 
D)  There is too little spending in the economy. 
A)  Aggregate demand is higher than the existing output. 
B)  Aggregate demand is too low. 
C)  The economy is in equilibrium. 
D)  There is too little spending in the economy.

Question 9

In the circular flow of income model injections into the economy:

Accepted Answer

A)  Reduce aggregate demand. 
B)  Are assumed not to be linked to the level of income. 
C)  Represent money leaving the circular flow. 
D)  Are a function of income. 
A)  Reduce aggregate demand. 
B)  Are assumed not to be linked to the level of income. 
C)  Represent money leaving the circular flow. 
D)  Are a function of income.

Question 10

Injections into the economy represent:

Accepted Answer

A)  Spending on services in addition to consumption expenditure. 
B)  Spending on goods in addition to consumption expenditure. 
C)  Spending on goods and services in addition to consumption expenditure. 
D)  None of the above. 
A)  Spending on services in addition to consumption expenditure. 
B)  Spending on goods in addition to consumption expenditure. 
C)  Spending on goods and services in addition to consumption expenditure. 
D)  None of the above.

Question 11

Investment spending does not include expenditure on:

Accepted Answer

A)  New equipment and machinery 
B)  Education 
C)  Stocks 
D)  None of the above 
A)  New equipment and machinery 
B)  Education 
C)  Stocks 
D)  None of the above

Question 12

Aggregate demand = C+ I + G + M - X

Accepted Answer

A) True 
 B)False

Question 13

For an economy to be in equilibrium:

Accepted Answer

A)  Savings must equal investment. 
B)  Actual injections must equal actual withdrawals. 
C)  Planned injections equal planned withdrawals. 
D)  The government's budget must balance. 
A)  Savings must equal investment. 
B)  Actual injections must equal actual withdrawals. 
C)  Planned injections equal planned withdrawals. 
D)  The government's budget must balance.

Question 14

In the circular flow of income, factor services are:

Accepted Answer

A)  Wages 
B)  Rental income from land and capital goods 
C)  Profit 
D)  Wages, rental income from land and capital goods or profit 
A)  Wages 
B)  Rental income from land and capital goods 
C)  Profit 
D)  Wages, rental income from land and capital goods or profit

Question 15

Injections into the economy do not include:

Accepted Answer

A)  Investment 
B)  Savings 
C)  Government spending 
D)  Exports 
A)  Investment 
B)  Savings 
C)  Government spending 
D)  Exports

Exam 18: Equilibrium in the Economy

The circular flow of income model shows that output, income and expenditure are equal to one another.

If demand in the economy is too high there is an inflationary gap.

Injections are assumed to be ____________ to the level of income

Withdrawals from the economy do not include:

Equilibrium in the economy occurs when:

Which of the following is a reflationary (expansionist) policy?

If aggregate demand is lower than the level required for full employment, this means there is a ____________ gap.

If planned injections are greater than planned withdrawals:

In the circular flow of income model injections into the economy:

Injections into the economy represent:

Investment spending does not include expenditure on:

Aggregate demand = C+ I + G + M - X

For an economy to be in equilibrium:

In the circular flow of income, factor services are:

Injections into the economy do not include:

What Is Economics

The Production Possibility Frontier PPF

Demand

Behavioural Economics

The Elasticity of Demand

Supply

Market Equilibrium

The Free Market System

Intervening in the Market System

Costs: Short Run and Long Run

Revenues, Costs, and Profits

Perfect Competition

Monopoly

Oligopoly

Monopolistic Competition and Non-Price Competition

The Labour Market

Introduction to Macroeconomics

National Income and the Standard of Living

Demand Side and Supply Side Policies

Influences on Aggregate Demand: Consumption

Influences on Aggregate Demand: Investment

Influences on Aggregate Demand: Government Revenues and Taxation

Influences on Aggregate Demand: International Trade, Globalization, and Exchange Rates

Government Objectives: Economic Growth and the Economic Cycle

Unemployment

Money

Government Objectives: Managing Inflation

Government Objectives: Achieving a Favourable Trade Position

Filters