1) Gross domestic product is the total market value of all

a. final goods and services produced in a time period within a country.

b. goods but not services produced in a time period within a country.

c. final goods and services produced in a time period by citizens of a country, both within the country and by its citizens working overseas.

d. intermediate and final goods and services produced in a time period within a country.

2) When would 'structural unemployment' increase?

a. When discouraged workers drop out of the work force

b. When the economy enters a recession

c. When the number of individuals who quit their job to find another increases

d. When workers are replaced by machines and the workers do not have the skills to perform new jobs

3) What is the unemployment rate when the labour market is considered to be at 'full employment'?

a. The unemployment rate is the sum of structural and cyclical unemployment.

b. The unemployment rate is the natural rate of unemployment

c. The unemployment rate is the amount of cyclical unemployment.

d. The unemployment rate is zero.

4) An 'economic contraction' begins with a/an ___ in spending by firms on capital goods and a/an ___ in spending on durable goods by households.

a. decrease; increase

b. increase; decrease

c. decrease; decrease

d. increase; increase

5) The beginning of an economic contraction coincides with a/an ___ while during an economic expansion ___.

a. decrease in government spending; government spending increases

b. increase in government spending; investment decreases

c. decrease in investment; investment increases

d. decrease in government spending; investment increases

6) If the Reserve Bank of Australia wants to increase interest rates, it will

a. increase the exchange rate.

b. buy financial securities.

c. decrease the exchange rate.

d. sell financial securities.

7) An expansionary monetary policy would be more effective if it caused

a. interest rates to decrease, leading to an exchange rate appreciation and a fall in net exports.

b. interest rates to increase, leading to an exchange rate appreciation and a fall in net exports.

c. interest rates to decrease, leading to an exchange rate depreciation and a rise in net exports.

d. interest rates to increase, leading to an exchange rate depreciation and a rise in net exports.

8) A deliberate policy change in taxes and government spending to influence the level of aggregate demand is called ____.

a. discretionary fiscal policy

b. a fiscal surplus

c. an automatic stabiliser

d. a fiscal deficit

9) A contractionary fiscal policy would cause the ___.

a. aggregate demand curve to the right

b. short-run aggregate supply curve to the right

c. aggregate demand curve to the left

d. short-run aggregate supply curve to the left

10) What are domestically produced goods and services sold to other countries?

a. Exports

b. Consumption

c. Investment

d. Imports