Exam 5: Foundations of the Macroeconomy

If the level of economic activity were increasing, you would expect leakages from the spending stream to be less than injections.

Briefly explain how the cyclical behavior of the U.S. economy after World War II differs from its behavior before World War II.

Normally, one would expect the rate of unemployment to fall during the ____________ phase of the business cycle.

Holding all else equal, you would expect the level of economic activity to increase if household:

Which of the following is NOT an injection into the spending stream, or into the circular flow model?

Government intervention during the recovery phase of a business cycle is designed to minimize the effects of:

The multiplier effect is equal to:

The main determinant of total household spending is the neighborhood where the household is located.

If 20 percent of additional income is not spent and business investment spending decreases by $10 billion at the same time that government purchases increase by $20 billion, total output and income will:

If government purchases increased by $60 billion while investment spending decreased by $45 billion, by how much would the level of economic activity change if 80 percent of additional income received was spent?

Which of the following statements is FALSE?

Businesses will undertake more investment spending at higher interest rates than at lower interest rates.

Considering only household saving and business investment spending, if injections into the spending stream are less than leakages, saving must be:

A business cycle is:

The main determinant of an economy's level of total output, employment, and income is the level of total spending.

Spending from borrowing, and saving from income are:

A decrease in nonincome-determined spending leads to:

The sector of the economy that purchases the most goods and services is the:

Which of the following statements about business cycles is FALSE?

How are all business cycles alike, and how do they differ?