Question 1

How can the expectation of a recession lead to a recession?

Accepted Answer

If people expect a recession,

Question 2

Leakages are earned income that is:

Accepted Answer

A)  spent, which leads to a decrease in output, employment, and income. 
B)  spent, which leads to an increase in output, employment, and income. 
C)  not spent, which leads to a decrease in output, employment, and income. 
D)  not spent, which leads to an increase in output, employment, and income. 
A)  spent, which leads to a decrease in output, employment, and income. 
B)  spent, which leads to an increase in output, employment, and income. 
C)  not spent, which leads to a decrease in output, employment, and income. 
D)  not spent, which leads to an increase in output, employment, and income.

Question 3

Households spend:

Accepted Answer

A)  less on new goods and services than either businesses or government units. 
B)  more on new goods and services than government units, but less than businesses. 
C)  more on new goods and services than businesses, but less than government units. 
D)  more on new goods and services than businesses and government units combined. 
A)  less on new goods and services than either businesses or government units. 
B)  more on new goods and services than government units, but less than businesses. 
C)  more on new goods and services than businesses, but less than government units. 
D)  more on new goods and services than businesses and government units combined.

Question 4

Fiscal policy involves changes in all of the following EXCEPT:

Accepted Answer

A)  taxes. 
B)  transfer payments. 
C)  the money supply. 
D)  government purchases. 
A)  taxes. 
B)  transfer payments. 
C)  the money supply. 
D)  government purchases.

Question 5

Spending that comes from a source other than household earned income is:

Accepted Answer

A)  secondary spending. 
B)  nonincome-determined spending. 
C)  a leakage from the spending stream. 
D)  not included in calculations of total spending. 
A)  secondary spending. 
B)  nonincome-determined spending. 
C)  a leakage from the spending stream. 
D)  not included in calculations of total spending.

Question 6

Which of the following is an injection into the spending stream?

Accepted Answer

A)  Increases in retained earnings by businesses. 
B)  Spending from earned income by households. 
C)  Payments by the government for defense-related goods. 
D)  Purchases by U.S. buyers of foreign-produced goods and services. 
A)  Increases in retained earnings by businesses. 
B)  Spending from earned income by households. 
C)  Payments by the government for defense-related goods. 
D)  Purchases by U.S. buyers of foreign-produced goods and services.

Question 7

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

Accepted Answer

A)  jobs. 
B)  output. 
C)  ability to spend. 
D)  all of the above. 
A)  jobs. 
B)  output. 
C)  ability to spend. 
D)  all of the above.

Question 8

Monetary policy involves all of the following, EXCEPT:

Accepted Answer

A)  interest rates. 
B)  the level of taxes. 
C)  the money supply. 
D)  the amount of loans. 
A)  interest rates. 
B)  the level of taxes. 
C)  the money supply. 
D)  the amount of loans.

Question 9

If, holding all else equal, the level of household saving and the level of business investment spending both increased, the level of economic activity would:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  either increase or decrease, depending on which change was larger. 
A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  either increase or decrease, depending on which change was larger.

Question 10

If leakages from the spending stream are greater than injections into the spending stream, the economy will expand.

Accepted Answer

A) True 
 B)False

Question 11

The multiplier effect is the change in:

Accepted Answer

A)  income-determined spending generated by a change in total output. 
B)  total output generated by a change in income-determined spending. 
C)  total output generated by a change in nonincome-determined spending. 
D)  nonincome-determined spending generated by a change in total output. 
A)  income-determined spending generated by a change in total output. 
B)  total output generated by a change in income-determined spending. 
C)  total output generated by a change in nonincome-determined spending. 
D)  nonincome-determined spending generated by a change in total output.

Question 12

Why can saving be potentially harmful to the economy?

Accepted Answer

Saving is a leakage from the s

Question 13

If the levels of output, income, and employment have increased, there has been:

Accepted Answer

A)  nothing leaked from, or injected into, the spending stream. 
B)  less leaked from the spending stream than has been injected. 
C)  more leaked from the spending stream than has been injected. 
D)  as much leaked from the spending stream as has been injected. 
A)  nothing leaked from, or injected into, the spending stream. 
B)  less leaked from the spending stream than has been injected. 
C)  more leaked from the spending stream than has been injected. 
D)  as much leaked from the spending stream as has been injected.

Question 14

Which of the following is an injection into the spending stream?

Accepted Answer

A)  saving by households and businesses. 
B)  government spending. 
C)  paying taxes by households and businesses. 
D)  importing foreign goods and services. 
A)  saving by households and businesses. 
B)  government spending. 
C)  paying taxes by households and businesses. 
D)  importing foreign goods and services.

Question 15

Which of the following statements is FALSE?

Accepted Answer

A)  Business cycles are recurring periods of growth and decline in an economy's real GDP. 
B)  All business cycles go through the same sequence of phases. 
C)  The length of time in each phase differs from business cycle to business cycle. 
D)  After World War II the recession phases of business cycles became deeper and longer than previously. 
A)  Business cycles are recurring periods of growth and decline in an economy's real GDP. 
B)  All business cycles go through the same sequence of phases. 
C)  The length of time in each phase differs from business cycle to business cycle. 
D)  After World War II the recession phases of business cycles became deeper and longer than previously.

Question 16

Injections will stimulate an economy:

Accepted Answer

A)  at no time during the business cycle. 
B)  during all phases of the business cycle. 
C)  during the recovery phase of the business cycle. 
D)  during the recessionary phase of the business cycle. 
A)  at no time during the business cycle. 
B)  during all phases of the business cycle. 
C)  during the recovery phase of the business cycle. 
D)  during the recessionary phase of the business cycle.

Question 17

If 12.5 percent of additional income is not spent on new goods and services, an increase of $50 billion in nonincome-determined spending will cause economic activity to increase by:

Accepted Answer

A)  $12.5 billion. 
B)  $62.5 billion. 
C)  $400.0 billion. 
D)  $625.0 billion. 
A)  $12.5 billion. 
B)  $62.5 billion. 
C)  $400.0 billion. 
D)  $625.0 billion.

Question 18

Expectations about future price levels and future output and employment conditions:

Accepted Answer

A)  have no effect on people's spending behavior. 
B)  have never been a matter of concern for economic policy makers. 
C)  can turn fears of inflation or recession into self-fulfilling prophecies. 
D)  simplify the job of stabilizing the economy by ensuring that everyone sees the future in exactly the same way. 
A)  have no effect on people's spending behavior. 
B)  have never been a matter of concern for economic policy makers. 
C)  can turn fears of inflation or recession into self-fulfilling prophecies. 
D)  simplify the job of stabilizing the economy by ensuring that everyone sees the future in exactly the same way.

Question 19

Which of the following is an injection into the spending stream from the household sector?

Accepted Answer

A)  Income-determined spending. 
B)  Savings from earned income. 
C)  Spending based on borrowing. 
D)  The payment of personal taxes to the government. 
A)  Income-determined spending. 
B)  Savings from earned income. 
C)  Spending based on borrowing. 
D)  The payment of personal taxes to the government.

Question 20

A review of prior business cycles allows us to conclude that the phases of different business cycles are of:

Accepted Answer

A)  uniform duration, and equal intensity. 
B)  uniform duration, but unequal intensity. 
C)  non-uniform duration, but equal intensity. 
D)  non-uniform duration, and unequal intensity. 
A)  uniform duration, and equal intensity. 
B)  uniform duration, but unequal intensity. 
C)  non-uniform duration, but equal intensity. 
D)  non-uniform duration, and unequal intensity.

How can the expectation of a recession lead to a recession?

Leakages are earned income that is:

Households spend:

Fiscal policy involves changes in all of the following EXCEPT:

Spending that comes from a source other than household earned income is:

Which of the following is an injection into the spending stream?

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

Monetary policy involves all of the following, EXCEPT:

If, holding all else equal, the level of household saving and the level of business investment spending both increased, the level of economic activity would:

If leakages from the spending stream are greater than injections into the spending stream, the economy will expand.

The multiplier effect is the change in:

Why can saving be potentially harmful to the economy?

If the levels of output, income, and employment have increased, there has been:

Which of the following is an injection into the spending stream?

Which of the following statements is FALSE?

Injections will stimulate an economy:

If 12.5 percent of additional income is not spent on new goods and services, an increase of $50 billion in nonincome-determined spending will cause economic activity to increase by:

Expectations about future price levels and future output and employment conditions:

Which of the following is an injection into the spending stream from the household sector?

A review of prior business cycles allows us to conclude that the phases of different business cycles are of:

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

How can the expectation of a recession lead to a recession?

Leakages are earned income that is:

Households spend:

Fiscal policy involves changes in all of the following EXCEPT:

Spending that comes from a source other than household earned income is:

Which of the following is an injection into the spending stream?

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

Monetary policy involves all of the following, EXCEPT:

If, holding all else equal, the level of household saving and the level of business investment spending both increased, the level of economic activity would:

If leakages from the spending stream are greater than injections into the spending stream, the economy will expand.

The multiplier effect is the change in:

Why can saving be potentially harmful to the economy?

If the levels of output, income, and employment have increased, there has been:

Which of the following is an injection into the spending stream?

Which of the following statements is FALSE?

Injections will stimulate an economy:

If 12.5 percent of additional income is not spent on new goods and services, an increase of $50 billion in nonincome-determined spending will cause economic activity to increase by:

Expectations about future price levels and future output and employment conditions:

Which of the following is an injection into the spending stream from the household sector?

A review of prior business cycles allows us to conclude that the phases of different business cycles are of:

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