Question 1

-You would expect the rate of unemployment to be falling 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 2

Which of the following is an injection into the spending stream, or into the circular flow model?

Accepted Answer

A)  Business taxes. 
B)  Household saving. 
C)  Expenditures on imports. 
D)  Household expenditures from transfer payments. 
A)  Business taxes. 
B)  Household saving. 
C)  Expenditures on imports. 
D)  Household expenditures from transfer payments.

Question 3

The term retained earnings refers to:

Accepted Answer

A)  earned income withheld by the government. 
B)  profits held back by a business for investment or other purposes. 
C)  wages withheld from employees by businesses for Social Security contributions. 
D)  the unspent earnings of all households, businesses, and government units combined. 
A)  earned income withheld by the government. 
B)  profits held back by a business for investment or other purposes. 
C)  wages withheld from employees by businesses for Social Security contributions. 
D)  the unspent earnings of all households, businesses, and government units combined.

Question 4

In terms of leakages and injections, what role do financial institutions play in the macroeconomy?

Accepted Answer

A)  Financial institutions are responsible for the level of transfer payments and retained earnings, an important source of leakages and injections in the economy. 
B)  Financial institutions control the size of the multiplier effect, which indirectly affects the amount of injections and leakages into the economy. 
C)  Financial institutions accept leakages in the form of household and business saving and then channel those funds to household and business borrowers, which creates injections back into the economy. 
D)  Financial institutions are the most important source of nonincome-determined spending in the economy, affecting the size and timing of the injections and leakages. 
A)  Financial institutions are responsible for the level of transfer payments and retained earnings, an important source of leakages and injections in the economy. 
B)  Financial institutions control the size of the multiplier effect, which indirectly affects the amount of injections and leakages into the economy. 
C)  Financial institutions accept leakages in the form of household and business saving and then channel those funds to household and business borrowers, which creates injections back into the economy. 
D)  Financial institutions are the most important source of nonincome-determined spending in the economy, affecting the size and timing of the injections and leakages.

Question 5

You would expect economic activity to decrease if investment spending, spending from borrowing and transfer payments, government purchases, and exports were:

Accepted Answer

A)  equal to saving, taxes, and imports. 
B)  less than saving, taxes, and imports. 
C)  greater than saving, taxes, and imports. 
D)  increasing, and saving, taxes, and imports were decreasing. 
A)  equal to saving, taxes, and imports. 
B)  less than saving, taxes, and imports. 
C)  greater than saving, taxes, and imports. 
D)  increasing, and saving, taxes, and imports were decreasing.

Question 6

Spending by U.S. households on imports is an injection into the economy.

Accepted Answer

A) True 
 B)False

Question 7

If business investment spending increased by $40 billion, and 75 percent of additional income received was spent, the level of economic activity would increase by:

Accepted Answer

A)  $70.0 billion. 
B)  $160.0 billion. 
C)  $190.0 billion. 
D)  $300.0 billion. 
A)  $70.0 billion. 
B)  $160.0 billion. 
C)  $190.0 billion. 
D)  $300.0 billion.

Question 8

Which of following statements about business investment spending is FALSE?

Accepted Answer

A)  It includes spending on new goods, such as machinery, equipment, buildings, and inventories. 
B)  Changes in investment spending are the primary cause of changes in economic activity. 
C)  It is considered to be income-determined spending. 
D)  It is sensitive to changes in expected future profits. 
A)  It includes spending on new goods, such as machinery, equipment, buildings, and inventories. 
B)  Changes in investment spending are the primary cause of changes in economic activity. 
C)  It is considered to be income-determined spending. 
D)  It is sensitive to changes in expected future profits.

Question 9

The purchase by businesses of new machinery, equipment, and such is nonincome-determined spending.

Accepted Answer

A) True 
 B)False

Question 10

Since World War II, the U.S. economy has spent less time in the recession phase of business cycles than in the recovery phase.

Accepted Answer

A) True 
 B)False

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

Which of the following is an injection into the spending stream, or into the circular flow model?

The term retained earnings refers to:

In terms of leakages and injections, what role do financial institutions play in the macroeconomy?

You would expect economic activity to decrease if investment spending, spending from borrowing and transfer payments, government purchases, and exports were:

Spending by U.S. households on imports is an injection into the economy.

If business investment spending increased by $40 billion, and 75 percent of additional income received was spent, the level of economic activity would increase by:

Which of following statements about business investment spending is FALSE?

The purchase by businesses of new machinery, equipment, and such is nonincome-determined spending.

Since World War II, the U.S. economy has spent less time in the recession phase of business cycles than in the recovery phase.

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

Exam 5: Foundations of the Macroeconomy

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

Which of the following is an injection into the spending stream, or into the circular flow model?

The term retained earnings refers to:

In terms of leakages and injections, what role do financial institutions play in the macroeconomy?

You would expect economic activity to decrease if investment spending, spending from borrowing and transfer payments, government purchases, and exports were:

Spending by U.S. households on imports is an injection into the economy.

If business investment spending increased by $40 billion, and 75 percent of additional income received was spent, the level of economic activity would increase by:

Which of following statements about business investment spending is FALSE?

The purchase by businesses of new machinery, equipment, and such is nonincome-determined spending.

Since World War II, the U.S. economy has spent less time in the recession phase of business cycles than in the recovery phase.

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