1)A closed economy can only occur where...

a.X = M

b.X = M = 0

c.X - M = 0

d.NX = 0

2)In region A, people paint their own houses, in region B, people pay others to paint their houses. If the two regions are the same in every other way, we can conclude that...

a.GDP is higher in region B.

b.It is impossible to say where GDP is higher without know how much region B pays the painters.

c.GDP is the same in both regions.

d.GDP is higher in region A.

3)The tax rate is...

a.The change in net taxes divided by the change in income.

b.The change in net taxes divided by the change in disposable income.

c.1 - the marginal propensity to consume.

d.The change in disposable income divided by the change in income.

4)Transitory fluctuations in autonomous expenditure are best dealt with through...

a.Automatic stabilisers.

b.Discretionary fiscal policy.

c.Permanent policy changes.

d.Changing consumer confidence.