1.Which of the following is true about export and imports as function of national income?

A) Both are horizontal lines with imports being positive as it relates to real GDP.

B) Both are horizontal lines with imports being negative as it relates to real GDP.

C) Both are vertical lines with imports being negative as it relates to real GDP.

D) Exports is a horizontal line while imports is a vertical line.

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2.The current economic policy being implemented by the Keynesian economists in government is moving the economy bach toward potential GDP through increased taxation. Knowing this policy, what would you say is the current state of the economy?

A) The economy is experiencing an inflationary gap.

B) The economy is experiencing a recessionary gap.

C) The current GDP is below potential GDP

D) The economy is experiencing natural unemployment at potential GDP.

3.Potential real GDP is defined as ________.

A) the quantity of output that the economy can produce when it is at less than potential employment of its resources.

B) the quantity of output that the economy can produce when it is above the natural rate of unemployment.

C) the quantity of output that the economy can produce when it is at full employment of its labor and physical capital.

D) the macro equilibrium

4.The consumption function is a graphical relationship between ________.

A) unemployment and inflation.

B) income and consumer spending

C) prices and consumer spending.

D) borrowing and interest rates.

5.It is important to remember when calculating the spending multiplier to determine government spending (in order to influencing the economy), the ________ in the income-expenditure model is found at the point where the level of GDP/national income equals aggregate expenditure.

A) optimum price

B) micro equilibrium

C) macro equilibrium

D) formula