EXPLAIN EACH ANSWER

61.During the recessionary phase of a business

cycle

a. The purchasing power of money is likely to

decline rapidly.

b. The natural rate of unemployment will increase

dramatically.

c. Potential national income will exceed actual

national

income.

d. Actual national income will exceed potential

national

income.

62.For a given level of tax collections, prices, and

interest rates, a decrease in governmental

purchases will result in a(n)

a. Increase in aggregate demand.

b. Increase in aggregate supply.

c. Decrease in aggregate demand.

d. Decrease in aggregate supply.

63.In national income terms, aggregate demand

is the

a. Demand for money by the community in a

period of full employment.

b. Total expenditure on capital goods by

entrepreneurs during a period of full employment.

c. Demand that is needed if a country's economy

is to operate at optimum level and the level of

investment is to be raised.

d. Total expenditures on consumer goods and

investment, including government and foreign

expenditures, during a given period.

*64.Which one of the following would not be

included in the computation in gross domestic

product (GDP)?

a. Purchase of a new home.

b. An automotive worker's wages.

c. A doctor's fee.

d. Purchase of common stock.

65. An upturn in economic activity is indicated by

all of the following, except

a. Increased housing starts.

b. Reduction in the quantity of unemployment

claims.

c. Increase in personal travel.

d. Reduction in the amount of luxury purchases.

66. Which of the following may provide a leading

indicator of a future increase in gross domestic

product

a. A reduction in the money supply.

b. A decrease in the issuance of building permits.

c. An increase in the timeliness of delivery by

vendors.

d. An increase in the average hours worked per

week of production workers.

67.Disposable income is calculated as

a. Gross domestic product minus the capital cost

allowance.

b. Net domestic product minus indirect business

taxes plus net income earned abroad.

c. Personal income minus transfer payments.

d. Personal income minus personal taxes.

68.The primary reason for allowing legal

immigration into industrial nations is the

immigrants' potential for

a. Reducing a trade deficit.

b. Fulfilling a trade agreement.

c. Contributing to economic growth.

d. Fulfilling a political agreement.

69.Some economic indicators lead the economy

into a recovery or recession, and some lag it. An

example of a lagging indicator is

a. Chronic unemployment.

b. Orders for consumer and producer goods.

c. Housing starts.

d. Consumer expectations.

70.Government borrowing to finance large deficits

increases the demand for lendable funds and

a. Increases the supply of lendable funds.

b. Exerts downward pressure on interest rates.

c. Has no impact on interest rates.

d. Puts upward pressure on interest rates