1)Real GDP is ____________ and real AD is _______________.

sales, production

production, sales

capacity, capacity utilization

none of the above

2)Which of these in NOT true about the initial values of variables in the full macro model?

Real GDP = 40 trillion USD/year

labor productivity = $160,000/year/person employment = 125 million persons

all of the above are true

none of the above are true

3)The 'inventory adjustment' hypothesis is that production will sometimes be more than real AD and sometimes less, due to the need to adjust production to achieve desired inventory levels.

True

False

4)If the model economy is growing rapidly, real GDP will be slightly higher than real AD because of

the propensity to consume.

the tax rate on business firms' profits.

the inventory adjustment hypothesis

all of the above

none of the above

5)If the model economy is growing rapidly, that might cause ____________ . But if real AD suddenly slows down, that might cause ______________.

a recession, inflation

inflation, a recession

stable prices, unstable prices

decrease in civilian adult population, increase in civilian adult population

6)Which of these is a behavioral equation?

AD = C + I + G + NX

real GDP = production capacity x capacity utilization

indicated production = real AD + inventory adjustment rate

all are behavioral equations

none are behavioral equations

7)The justification for the behavioral hypothesis that capacity utilization influences prices is that

production costs tend to rise when capacity utilization rises.

the profit mark-up will rise if production costs rise.

the profit mark-up may rise because of higher-than-normal customer demand.

all of the above

none of the above

8)The hiring of employees occurs immediately in the model, as soon as firms decide how many they want to hire.

true

false

9)Another behavioral hypothesis: When the unemployment rate ______ , the labor force participation rate tends to _______.

rises, rise

falls, fall

rises, fall

falls, rise

Both (a) and (b)

both c and d

10)If the employment adjustment time increases, that will cause

employment growth to slow down.

production capacity growth to slow down.

capacity utilization to rise.

higher inflation.

all of the above

none of the above