Choose the correct statement.

Question 1 options:

• The lower the MPC, the lower is government spending multiplier, the lower the change in real GDP.

• The lower the MPS, the lower is government spending multiplier, the lower the change in real GDP.

• The higher the MPC, the lower is government spending multiplier, the lower the change in real GDP.

• The lower the MPC, the lower is government spending multiplier, the higher the change in real GDP.

According to the Philips Curve,

Question 2 options:

	there is a negative relationship between unemployment and inflation.
	there is a positive relationship between unemployment and inflation.
	there is a close relationship between unemployment and inflation.
	there is a positive relationship between employment and inflation

NNP (Net National Product) equals

Question 3 options:

	GNP - Depreciation
	GNP - NFIA
	GDP + Depreciation
	GDP - Depreciation

If MPC = 0.8, the government spending multiplier is

Question 4 options:

	-5
	1.25
	-1.25
	5

An expansionary fiscal policy entails

Question 5 options:

	a decrease in taxes and a decrease in government spending.
	a decrease in taxes and an increase in government spending.
	an increase in taxes and a decrease in government spending.
	an increase in taxes and an increase in government spending.

GNP (Gross National Product) equals

Question 6 options:

	GDP - Depreciation
	GDP + NFIA
	NDP - NFIA
	GDP - NFIA

GDP Deflator is

Question 7 options:

	(Real GDP / Nominal GDP) *100
	(Real GDP / Inflation) *100
	(Nominal GDP / Real GDP) *100
	(Nominal GDP / Inflation) *100

Choose the correct statement.

Question 8 options:

	There is a positive relationship between the reserve requirement ratio and money supply.
	There is a positive relationship between money supply and money multiplier.
	There is a positive relationship between the reserve requirement ratio and money multiplier.
	There is an inverse relationship between the reserve requirement ratio and money multiplier.

An increase in money supply is a result of

Question 9 options:

	a contractionary fiscal policy.
	an expansionary monetary policy.
	a contractionary fiscal policy.
	an expansionary fiscal policy.

If MPC = 0.4, MPS =

Question 10 options:

	0.4
	0.6
	0.2
	0.5

If nominal GDP = $100 million and real GDP = $75 million, GDP deflator is equal to

Question 11 options:

	100.33
	133.33
	55.33
	93.33

A contractionary fiscal policy entails

Question 12 options:

	an increase in government spending and a decrease in consumption.
	a decrease in government spending and a decrease in taxes.
	an increase in taxes and an increase in government spending.
	an increase in taxes and a decrease in government spending.

If MPC = 0.8 and MPS = 0.2, tax multiplier is

Question 13 options:

	4
	5
	0.25
	-4

Real GDP is

Question 14 options:

	market value of all final goods and services produced outside a country in a given period of time.
	market value of all intermediate goods and services produced outside a country in a given period of time.
	market value of all intermediate goods and services produced within a country in a given period of time.
	market value of all final goods and services produced within a country in a given period of time.

In the labour market,

Question 15 options:

	households supply labour and firms demand labour.
	households sell goods and services and firms purchase labour.
	households purchase goods and services and firms demand goods and services.
	households demand labour and firms supply labour.

GDP under the expenditure approach includes the following variables:

Question 16 options:

	consumption, investment, inflation and exports.
	consumption, investment, government spending and imports.
	consumption, investment, government spending and net exports.
	consumption, investment, imports and exports.

An inflationary gap is characterized by

Question 17 options:

	actual output = national output.
	potential output greater than actual output.
	actual output greater than potential output.
	potential output = national output.

The functions of money are

Question 18 options:

	means of exchange and store of value.
	means of exchange, measure of account, and store of value.
	means of exchange, store of account and measure of value.
	means of exchange, store of value and measure of value.

When there is a mismatch between a labor demand and labor supply, it is a characteristic of

Question 19 options:

	frictional unemployment.
	seasonal unemployment.
	structural unemployment.
	cyclical unemployment.

___________ is used to measure inflation.

Question 20 options:

	CPI
	nominal product
	real GDP
	productivity