Business Cycles & the Determination of National Income — Practice

Question 1

The phase of the business cycle in which output, employment and income are at their lowest is

Accepted Answer

C

Question 2

GNP differs from GDP by

Accepted Answer

C

Question 3

Which is included in national income?

Accepted Answer

C

Question 4

If the marginal propensity to consume is 0.75, the value of the investment multiplier is

Accepted Answer

C

Question 5

If income rises from 1,000 to 1,200 and consumption rises from 800 to 940, the marginal propensity to consume is

Accepted Answer

B

Question 6

The problem of double counting in national income measurement is avoided by

Accepted Answer

B

Question 7

An inflationary gap exists when

Accepted Answer

B

Question 8

If GDP at market prices is 1,000, depreciation 100, net factor income from abroad −20, and net indirect taxes 80, then national income is

Accepted Answer

A

Question 9

The paradox of thrift states that if all households attempt to save more

Accepted Answer

B

Question 10

Which is an INTERNAL cause of business cycles?

Accepted Answer

C

Question 11

In the expenditure method, GDP equals

Accepted Answer

C

Question 12

Disposable personal income is obtained from personal income by deducting

Accepted Answer

B

Question 13

Which is a difficulty in measuring national income in a developing economy?

Accepted Answer

A

Question 14

In the Keynesian model, equilibrium national income is determined where

Accepted Answer

B

Question 15

The value of the multiplier is reduced by

Accepted Answer

B

Practice — Business Cycles & the Determination of National Income