Keynes' law advocates an increase in taxes in order to

	fight inflation.
	increase consumer spending.
	shift aggregate demand (AD) to the right.
	decrease government spending.

Question

Which of the following is a significant weakness of gross domestic product (GDP) as a measure of the nation's economic performance?

	GDP excludes the secondhand good market because it is impossible to obtain an estimate of the amount sold.
	GDP excludes the value of the buying and selling of securities.
	GDP considers product and factor markets but not services.
	GDP excludes nonmarket production, such as black market activities.

Question

The consumption portion of GDP in the United States is approximately ____________ of total GDP.

	10%
	33%
	68%
	90%

Question

To shift the economy out of an economic downturn, Keynes' law encourages

	an increase in government spending and/or an increase in taxation.
	a decrease in government spending and/or a decrease in taxation.
	an increase in government spending and/or a decrease in taxation.
	a decrease in government spending and/or an increase in taxation.

Question

The difference between nominal GDP and real GDP is

	nominal GDP measures actual productivity.
	nominal GDP adjusts for inflation.
	real GDP adjusts for inflation.
	real GDP excludes imports and exports.

Question

When looking at Say's law, which of the following is true?

	The focus is on the short run.
	Every sale represents income.
	It is demand driven.
	Supply creates its own supply.

Question

Government expenditure in the United States is close to 20% of GDP and includes spending by all three levels of government: federal, state, and local.

	True
	False

Question

When there is a shift in the aggregate demand (AD) curve in the Keynesian zone of the aggregate supply curve (AS), the following will occur:

	There will be significant change in price.
	There will be a supply shock.
	There will be minimal change in price.
	There will be a neoclassical shift.

Question

The spending approach (demand) for measuring gross domestic product (GDP) adds together:

	wages and salaries, rent, interest, and profit.
	consumption, investment, government purchases, and trade balance.
	consumption, government purchases, wages and salaries, and trade balance.
	consumption, interest, government purchases, and trade balance.