11.

When prices rise at an extraordinarily fast rate, it is calledRequired to answer. Single choice.

hypo inflation

deflation

hyperinflation

12.

Theory of consumption function explains relationship between...........Required to answer. Single choice.

consumption and investment

consumption & saving

consumption & income

13.

When there is unemployment caused by a lack of consumer spending, we classify this type of unemployment as?Required to answer. Single choice.

Seasonal

Cyclical

Wait

14.

Used goods are not included in the ______________Required to answer. Single choice.

calculation of GNP

calculation of GDP

15.

The negative relationship between unemployment and GDP is calledRequired to answer. Single choice.

natural law

Okun's law

universal law

16.

The labor-force participation rate is the percentage of the adult population who are in theRequired to answer. Single choice.

population

labor force.

18.

Stagflation occurs when the economy experiencesRequired to answer. Single choice.

falling prices and falling output

rising prices and rising output

rising prices and high unemployment

19.

an increase in the price of goods bought only by firms or the government will show up in the_______ , but not in the______.Required to answer. Single choice.

CPI,GDP deflator

GDP deflator, CPI

20.

In the long run, inflation is caused by Required to answer. Single choice.

governments that raise taxes so high that it increases the cost of doing business and, hence, raises prices

banks that have market power and refuse to lend money

governments that print too much money

21.

One of the most important objectives of monetary

policy in in recent years has been the............Required to answer. Single choice.

economic stability

political stability

The money supply, government purchases, and taxation

rapid economic growth

22.

Economic growth is defined as "the process where

by the--------------of a country

increases over a long period of timeRequired to answer. Single choice.

real income

real per capita income

GNP

23.

If the nominal interest rate is 6 per cent and the inflation rate is 3 per cent, the real interest rate isRequired to answer. Single choice.

3 per cent

18 per cent

9 per cent

24.

Real interest rate is equal to the nominal interest rate minus inflationRequired to answer. Single choice.

False

True

25.

6% inflation rate means that an average basket of goods you purchased this year is ________________Required to answer. Single choice.

12% more expensive

6% more expensive

26.

The difference between the nominal and real interest rate is the key factor:Required to answer. Single choice.

inflation

none of both

deflation

27.

If the price level of goods doubledRequired to answer. Single choice.

the value of money has been cut by half

none of these answers

the quantity demanded of money falls by half

28.

If Japan exports more than it importsRequired to answer. Single choice.

Japan's net capital outflow must be positive

Japan is running a trade deficit

Japan's net exports are negative

29.

If the marginal propensity to consume MPC is 1, the value of the MPS isRequired to answer. Single choice.

0.75

zero

5

30.

government spending and taxation at different government levels are the tools of .................Required to answer. Single choice.

fiscal policy

Monetary policy

31.

Gross Domestic Product is the sum of the market value of theRequired to answer. Single choice.

final goods and services

intermediate goods

inferior goods and services