Question 1

All other things equal, you would expect business investment spending to increase as a result of:

Accepted Answer

A)  improved profit expectations. 
B)  expectations of strengthening consumer demand. 
C)  a decrease in the interest rate for borrowed funds. 
D)  all of the above. 
A)  improved profit expectations. 
B)  expectations of strengthening consumer demand. 
C)  a decrease in the interest rate for borrowed funds. 
D)  all of the above.

Question 2

Total, or aggregate, spending includes spending on newly produced goods and services:

Accepted Answer

A)  and on financial assets such as stocks and bonds. 
B)  by households, businesses, government units, and foreign buyers. 
C)  by households, businesses, and government units, but not foreign buyers. 
D)  that is based on earned income, but not transfer payments, borrowing, and savings. 
A)  and on financial assets such as stocks and bonds. 
B)  by households, businesses, government units, and foreign buyers. 
C)  by households, businesses, and government units, but not foreign buyers. 
D)  that is based on earned income, but not transfer payments, borrowing, and savings.

Question 3

Holding everything else constant, which of the following would cause economic activity to increase?

Accepted Answer

A)  The value of imports is greater than the value of exports. 
B)  Spending from borrowing and investment spending are greater than saving. 
C)  Taxes are greater than spending from transfer payments and government purchases. 
D)  All of the above. 
A)  The value of imports is greater than the value of exports. 
B)  Spending from borrowing and investment spending are greater than saving. 
C)  Taxes are greater than spending from transfer payments and government purchases. 
D)  All of the above.

Question 4

When comparing two business cycles, you should expect:

Accepted Answer

A)  the sequence of phases to be the same in both cycles. 
B)  the amount of time in each phase to be the same in both cycles. 
C)  the intensity of the expansion or contraction to be the same in both cycles. 
D)  none of the above. 
A)  the sequence of phases to be the same in both cycles. 
B)  the amount of time in each phase to be the same in both cycles. 
C)  the intensity of the expansion or contraction to be the same in both cycles. 
D)  none of the above.

Question 5

You would expect the level of investment spending by businesses to increase if:

Accepted Answer

A)  profit expectations decreased. 
B)  injections into the spending stream decreased. 
C)  the rate of interest on borrowed funds decreased. 
D)  the economy moved into the recession phase of the business cycle. 
A)  profit expectations decreased. 
B)  injections into the spending stream decreased. 
C)  the rate of interest on borrowed funds decreased. 
D)  the economy moved into the recession phase of the business cycle.

Question 6

The level of economic activity would increase if government purchases of goods and services increased:

Accepted Answer

A)  and income tax payments decreased. 
B)  by more than income tax payments increased. 
C)  by exactly as much as income tax payments increased. 
D)  all of the above. 
A)  and income tax payments decreased. 
B)  by more than income tax payments increased. 
C)  by exactly as much as income tax payments increased. 
D)  all of the above.

Question 7

Personal consumption expenditures is spending by households:

Accepted Answer

A)  on new goods and services. 
B)  on food and other goods, but not services. 
C)  on new goods and services that originates only with transfer payments. 
D)  plus businesses and the government on food and other nondurable goods. 
A)  on new goods and services. 
B)  on food and other goods, but not services. 
C)  on new goods and services that originates only with transfer payments. 
D)  plus businesses and the government on food and other nondurable goods.

Question 8

The multiplier effect is equal to:

Accepted Answer

A)  .
  
B)  .
  
C)  .
  
D)  .
  
A)  .
  
B)  .
  
C)  .
  
D)  .

Question 9

Which of the following is NOT nonincome-determined spending?

Accepted Answer

A)  Business investment spending. 
B)  Household spending from wages. 
C)  Household spending from transfer payments. 
D)  Government purchases of goods and services. 
A)  Business investment spending. 
B)  Household spending from wages. 
C)  Household spending from transfer payments. 
D)  Government purchases of goods and services.

Question 10

Business cycles are alternating periods of rapid and slow growth in an economy's real GDP.

Accepted Answer

A) True 
 B)False

Question 11

Holding all else equal, you would expect the level of economic activity to decrease if household spending from transfer payments:

Accepted Answer

A)  were less than spending from borrowed funds. 
B)  and borrowed funds were less than saving plus taxes. 
C)  and borrowed funds were less than spending from earned income. 
D)  all of the above. 
A)  were less than spending from borrowed funds. 
B)  and borrowed funds were less than saving plus taxes. 
C)  and borrowed funds were less than spending from earned income. 
D)  all of the above.

Question 12

Assume total output has increased by $80 billion and nonincome-determined spending has increased by $10 billion, what is the percentage of income that is not spent?

Accepted Answer

A)  7.5%. 
B)  12.5%. 
C)  15.0%. 
D)  20.0%. 
A)  7.5%. 
B)  12.5%. 
C)  15.0%. 
D)  20.0%.

Question 13

What are the main injections into and leakages from the spending stream?

Accepted Answer

Government transfer payments a

Question 14

The difference between fiscal and monetary policy is fiscal policy:

Accepted Answer

A)  focuses on government spending and taxing, while monetary policy focuses on saving and borrowing. 
B)  focuses on saving and borrowing, while monetary policy focuses on government spending and taxing. 
C)  is used to stimulate an economy, while monetary policy is used to restrain an economy. 
D)  is used to restrain an economy, while monetary policy is used to stimulate an economy. 
A)  focuses on government spending and taxing, while monetary policy focuses on saving and borrowing. 
B)  focuses on saving and borrowing, while monetary policy focuses on government spending and taxing. 
C)  is used to stimulate an economy, while monetary policy is used to restrain an economy. 
D)  is used to restrain an economy, while monetary policy is used to stimulate an economy.

Question 15

Government purchases of goods and services:

Accepted Answer

A)  are income-determined spending. 
B)  tend to be less stable than investment expenditures. 
C)  are the largest component of total, or aggregate, spending. 
D)  do not include government payments for Social Security and unemployment compensation. 
A)  are income-determined spending. 
B)  tend to be less stable than investment expenditures. 
C)  are the largest component of total, or aggregate, spending. 
D)  do not include government payments for Social Security and unemployment compensation.

Question 16

Business investment spending is:

Accepted Answer

A)  nonincome-determined spending. 
B)  an injection into the spending stream. 
C)  channeled through financial institutions. 
D)  all of the above. 
A)  nonincome-determined spending. 
B)  an injection into the spending stream. 
C)  channeled through financial institutions. 
D)  all of the above.

Question 17

-You would expect the rate of unemployment to be increasing in the economy operating at point:

Accepted Answer

A)  1 in Figure A. 
B)  2 in Figure B. 
C)  3 in Figure C. 
D)  4 in Figure D. 
A)  1 in Figure A. 
B)  2 in Figure B. 
C)  3 in Figure C. 
D)  4 in Figure D.

Question 18

All other things equal, if business saving is greater than investment spending, then injections into the spending stream are:

Accepted Answer

A)  less than leakages, and the economy will expand. 
B)  less than leakages, and the economy will contract. 
C)  greater than leakages, and the economy will expand. 
D)  greater than leakages, and the economy will contract. 
A)  less than leakages, and the economy will expand. 
B)  less than leakages, and the economy will contract. 
C)  greater than leakages, and the economy will expand. 
D)  greater than leakages, and the economy will contract.

Question 19

Saving, taxes, and transfer payments are all leakages from the spending stream.

Accepted Answer

A) True 
 B)False

Question 20

Business investment spending is motivated by the expected profits of its prospective investments which, in turn, is affected by the expected future state of the overall economy.

Accepted Answer

A) True 
 B)False

All other things equal, you would expect business investment spending to increase as a result of:

Total, or aggregate, spending includes spending on newly produced goods and services:

Holding everything else constant, which of the following would cause economic activity to increase?

When comparing two business cycles, you should expect:

You would expect the level of investment spending by businesses to increase if:

The level of economic activity would increase if government purchases of goods and services increased:

Personal consumption expenditures is spending by households:

The multiplier effect is equal to:

Which of the following is NOT nonincome-determined spending?

Business cycles are alternating periods of rapid and slow growth in an economy's real GDP.

Holding all else equal, you would expect the level of economic activity to decrease if household spending from transfer payments:

Assume total output has increased by $80 billion and nonincome-determined spending has increased by $10 billion, what is the percentage of income that is not spent?

What are the main injections into and leakages from the spending stream?

The difference between fiscal and monetary policy is fiscal policy:

Government purchases of goods and services:

Business investment spending is:

-You would expect the rate of unemployment to be increasing in the economy operating at point:

All other things equal, if business saving is greater than investment spending, then injections into the spending stream are:

Saving, taxes, and transfer payments are all leakages from the spending stream.

Business investment spending is motivated by the expected profits of its prospective investments which, in turn, is affected by the expected future state of the overall economy.

Introduction to Economics

Economic Decision Making and Economic Systems

Demand, Supply, and the Determination of Price

Goals and Problems of the Macroeconomy: Employment, Prices and Production

The Role of Government in the Macroeconomy

Money, Financial Institutions, and the Federal Reserve

Money Creation, Monetary Theory, and Monetary Policy

Macroeconomic Viewpoints and Models

Households and Businesses: An Overview

Benefits, Costs, and Maximization

Production and the Costs of Production

Competition and Market Structures

Government and the Markets

Labor Markets, Unions, and the Distribution of Income-A

International Trade

International Finance

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Exam 5: Foundations of the Macroeconomy

All other things equal, you would expect business investment spending to increase as a result of:

Total, or aggregate, spending includes spending on newly produced goods and services:

Holding everything else constant, which of the following would cause economic activity to increase?

When comparing two business cycles, you should expect:

You would expect the level of investment spending by businesses to increase if:

The level of economic activity would increase if government purchases of goods and services increased:

Personal consumption expenditures is spending by households:

The multiplier effect is equal to:

Which of the following is NOT nonincome-determined spending?

Business cycles are alternating periods of rapid and slow growth in an economy's real GDP.

Holding all else equal, you would expect the level of economic activity to decrease if household spending from transfer payments:

Assume total output has increased by $80 billion and nonincome-determined spending has increased by $10 billion, what is the percentage of income that is not spent?

What are the main injections into and leakages from the spending stream?

The difference between fiscal and monetary policy is fiscal policy:

Government purchases of goods and services:

Business investment spending is:

-You would expect the rate of unemployment to be increasing in the economy operating at point:

All other things equal, if business saving is greater than investment spending, then injections into the spending stream are:

Saving, taxes, and transfer payments are all leakages from the spending stream.

Business investment spending is motivated by the expected profits of its prospective investments which, in turn, is affected by the expected future state of the overall economy.

Introduction to Economics

Economic Decision Making and Economic Systems

Demand, Supply, and the Determination of Price

Goals and Problems of the Macroeconomy: Employment, Prices and Production

The Role of Government in the Macroeconomy

Money, Financial Institutions, and the Federal Reserve

Money Creation, Monetary Theory, and Monetary Policy

Macroeconomic Viewpoints and Models

Households and Businesses: An Overview

Benefits, Costs, and Maximization

Production and the Costs of Production

Competition and Market Structures

Government and the Markets

Labor Markets, Unions, and the Distribution of Income-A

International Trade

International Finance

Filters