MCQ

1. In a given year, suppose a company spends $100 million on intermediate goods and $200 million on wages, with no other expenses. Also assume that its total sales are $800 million. The value added by this company equals:

a. $200 million.

b. $300 million.

c. $500 million.

d. $700 million.

e. $800 million.

2.An individual is said to be a discouraged worker if he or she

a. is working, but prefers not to work.

b. is working part time, but would prefer a full time job.

c. is working in jobs she/he is not suited for.

d. wants to work, and is actively searching for a job.

e. wants to work, but has given up searching for a job.

3. Disposable income equals:

a. income minus saving.

b. income minus both saving and taxes.

c. consumption minus taxes.

d. the sum of consumption and saving

e. none of the above.

4. Suppose the consumption equation is represented by the following: C = 250 + .75YD. The multiplier in this economy is

a. .25

b. .75

c. 1

d. 4

e. 5

5. Equilibrium in the goods market requires that

a. production equals income.

b. production equals demand.

c. consumption equals saving.

d. consumption equals income.

e. government spending equals taxes minus transfers.

6. An economy is in equilibrium when which of the following conditions is satisfied?

a. consumption equals saving.

b. output equals consumption.

c. total saving equals zero.

d. total saving equals investment.

e. all of the above.