1. GDP is not a perfect measure of well-being because:

a. it leaves out leisure.

B. all of the answers are correct.

C.it excludes the value of services.

d. none of the answers are correct.

e. it leaves out the value of intermediate goods.

A government can increase long-run economic growth by

3. increasing the taxation of capital.

a.,all of the other answers are correct.

b. encouraging saving.

c.encouraging education and training of labor.

d. reducing restrictions on international trade.

4.In terms of encouraging economic development, the important institutions in a society

a.are found entirely in the public sector.

b. should be changed on a regular basis in response to political pressure.

c,are rarely affected by government policy.

d.None of the other answers are correct.

e.are found entirely in the private sector.

5.According to the loanable funds framework, if the government passes tax incentives to encourage saving,

a.Interest rates will increase and the total quantity of borrowing and lending will increase.

b.Interest rates will decrease.

c. Interest rates will increase.

d. The total quantity of borrowing and lending will increase.

e. Interest rates will decrease and the total quantity of borrowing and lending will increase.

6.Holding other factors constant, the "real" interest rate will decrease if

a.Expected inflation increases.

b.Bothof these are correct: Expected inflation increases, and expected inflation decreases.

c. None of the other answers are true.

d. Expected inflation decreases.

e."Nominal" interest rates increase.

7.Which of the following is an incorrect statement?

a. Both of the following are incorrect:During a period of inflation, prices are always rising. AND:When inflation is decreasing, prices are always falling.

b. Both of the following are incorrect:When inflation is decreasing, prices are always falling. AND:

If inflation is constant, prices are neither rising nor falling.

c. If inflation is constant, prices are neither rising nor falling.

d.When inflation is decreasing, prices are always falling.

e. During a period of inflation, prices are always rising.