1) The two phases of the business cycle are:

a. recession and expansion

b. expansion and trough

c. recession and peak

d. peak and trough

2) A decline in the economy's real GDP that persists for two consecutive quarters is known as a:

a. lag

b. A recession

c. depression

3) If the consumer price index (CPI) in 2017 was 150 and the CPI in 2018 was 225, the rate of inflation was:

a. 20%

b. 0%

c. 50%

d. 35%

4) An increase in the average price level of goods and services is called:

a. Disinflation

b. Hyper inflation

c. Inflation

d. Deflation

5) Which of the following can create demand-pull inflation?

a. Sharply rising oil prices

b. Higher interest rates

c. Higher labour costs

d. Excessive aggregate spending

6) All final goods and services that make up GDP can be expressed in the form:

a. GDP = C + I + G + (X + M)

b. GDP = C + G + (X - M)

c. GDP = C + I + G + (X - M)

d. GDP = C + I + G - M

7) Economic growth is measured by the annual percentage increase in a nation's level of:

a. Economic indicators

b. Real GDP deflator

c. Real GDP

d. Nominal GDP

8) Cyclical unemployment is caused by:

a. Declines in Real GDP

b. growth in real GDP

c. shifts in the job skills required in the economy

d. layoffs due to cyclones

9) The Keynesian cause-and-effect sequence predicts that a decrease in the money supply will cause interest rates to:

a. fall, boosting investment and shifting the AD curve rightward, leading to a decrease in real GDP

b. rise, cutting investment and shifting the AD curve leftward, leading to a decrease in nominal GDP

c. fall, boosting investment and shifting the AD curve rightward, leading to an increase in real GDP

d. rise, cutting investment and shifting the AD curve leftward, leading to a decrease in real GDP

10) Automatic stabilisers tend to stabilise the level of real GDP because:

a. state/territory government expenditures and tax revenues change as the level of real GDP changes

b. federal public servants quickly change spending and tax revenue

c. federal government expenditures and tax revenues change as the level of real GDP changes

d. federal parliament quickly changes spending and tax revenue