11.Investment in residential construction tends to vary

a. inversely with changes in average income, directly with interest rates.

b. directly with changes in average income, inversely with interest rates.

c. directly with both average income and interest rates.

d. inversely with both average income and interest rates.

12.The largest component of GNP in the flow of expenditures approach is:

a. personal consumption expenditures

b. gross private domestic investment

c. government spending on goods and services

d. net exports.

13.Which of the following items is not a part of gross private domestic investment?

a. purchase of a share of IBM stock

b. purchase of a new house

c. net additions to inventory

d. equipment for a new wing on a factory

14.A cause of inflation characterized by an excess demand over supply is

a. cost-push

b. demand-pull

c. quantity theory of money

d. none of the above

15.The flow of earnings approach to GNP consists of:

a. all national income accounts.

b. all national income accounts plus depreciation and indirect bussiness taxes.

c. all national income accounts as well as government,businesses, and personal transfer payments.

d. all national product except for net interest payments and indirect business taxes.