1) Imports are leakages from the circular flow of income and expenditure model.

T or F

2) Which of the following is true about the consumer price index (CPI) and the GDP price index?

A) Both CPI and the GDP price index underestimate changes in the price level in an economy.

B) CPI includes products that are widely used, while the GDP price index includes all goods and services. C) The CPI measures changes in relative prices of goods, while the GDP price index measures changes in the absolute price level of a fixed basket of goods and services.

D)Both yield identical numbers for price level changes for any two years.

E) Both measures weigh prices by quantities consumed in some base year.

3 Political business cycles result _____

A) from the economic fluctuations that occur when discretionary policy is manipulated for political gain

B) when the spending multiplier is manipulated for political gain

C) from the expansionary gap that occurs when output exceeds the economy's potential.

D)

from the recessionary gap that occurs when output falls short of the economy's potential.

E)

.	from the economic fluctuations that occur when automatic stabilizers are manipulated for political gain