QUESTION 1

1.Which of the following statements is most accurate?

A.

Capital is all means of production that are created by people including tools, industrial equipment, and structures.

B.

Capital is all the excess reserves in commercial banks.

C.

Capital consists of the value of bonds and times deposits in commercial banks.

D.

Capital consistsof all the common stocks traded on the stock exchanges.

1 points

QUESTION 2

1.Investment is

A.

a flow concept.

B.

the largest part of GDP.

C.

a fixed variable.

D.

a stock concept.

1 points

QUESTION 3

1.Net investment is

A.

capital that is depreciated.

B.

gross investment plus depreciation.

C.

gross investment minus depreciation.

D.

new investment minus corporate taxes.

1 points

QUESTION 4

1.Which of the following is not capital?

A.

money.

B.

a super computer.

C.

an apartment building.

D.

a machinery.

1 points

QUESTION 5

1.Assume the MPC = 0.9 and a firm has made a new investment of $1,000. As a result of this new investment

A.

income will increase by $10,000.

B.

income will increase by $1,000.

C.

income will decrease by $1,000.

D.

income will increase by $500.

1 points

QUESTION 6

1.The formula to calculate the investment multiplier is

A.

B.

C.

D.

1 points

QUESTION 7

1.Of the components of the GDP

A.

investment is very insignificant.

B.

investment is the largest part.

C.

investment is most stable.

D.

investment fluctuates the most.

1 points

QUESTION 8

1.Capital is

A.

a dummy variable.

B.

the largest part of GDP.

C.

a flow concept.

D.

a stock concept.

1 points

QUESTION 9

1.Assume a two sector economy is at equilibrium with income=$1,000, consumption=$900, investment=$100, and MPC=0.8. What will the new consumption be if investment increases to $200?

A.

$1,500.

B.

$1,100.

C.

$1,000.

D.

$1,300.

1 points

QUESTION 10

1.The wear and tear of capital is

A.

the loss on accounts receivables.

B.

the compounding of interest.

C.

the capital multiplier.

D.

the capital consumption adjustments.

1 points

QUESTION 11

1.Of the components of investment

A.

inventories tend to be very stable.

B.

inventories fluctuate the most.

C.

inventories are always at the planned level.

D.

inventories tend to fall during recessions.

1 points

QUESTION 12

1.Assume that in an economy with the MPC=0.9 there is new investment of $2 billion. As a result of this new investment

A.

income will increase by $5 billion.

B.

income will decrease by $2 billion.

C.

income will increase by $20 billion.

D.

income will increase by $2 billion.

1 points

QUESTION 13

1.Assume that an economy with the MPC=0.8 is in a recession and the policy makers would like to see the economy to grow by $100 billion. How much new investment is necessary to bring about such a growth in income?

A.

$5 billion.

B.

$100 billion.

C.

$10 billion.

D.

$20 billion.

1 points

QUESTION 14

1.Which of the following statements is most accurate?

A.

Capital is a fictitious variable.

B.

Capital does not last for ever.

C.

Variable capital is depreciated.

D.

Unlike consumer goods capital lasts for ever.

1 points

QUESTION 15

1.A new investment

A.

takes resources away from the production of consumer goods.

B.

is normally wasteful.

C.

is unnecessary if the economy is a full employment.

D.

generates new income which in turn generates new consumption and further income.

1 points

QUESTION 16

1.The investment multiplier shows that

A.

a change in investment will cause a greater than itself change in income.

B.

new investment i problematic since that takes resources away from consumption.

C.

savings can multiply due to compounding interest.

D.

new investment is not necessary since the economy can function without it.

1 points

QUESTION 17

1.Why would a city build a new sport stadium?

A.

A new stadium will add to the beauty of the city.

B.

A new stadium is a major investment that will cause income to grow by a larger amount.

C.

A new stadium adds to the prestige of the city.

D.

The city leaders like to have stadiums named after themselves.

1 points

QUESTION 18

1.If MPC = 0.9 then

A.

the investment multiplier is 1.

B.

the investment multiplier is 10.

C.

the investment multiplier is 2.

D.

the investment multiplier is 5.

1 points

QUESTION 19

1.Assume a two sector economy is at equilibrium with income=$1,000, consumption=$900, investment=$100, and MPC=0.8. What will the new equilibrium income be if investment increases to $200?

A.

$1,100.

B.

$1,200.

C.

$1,500.

D.

$900.

1 points

QUESTION 20

1.Variable investment is

A.

the total inventories businesses plan to have.

B.

the amount businesses borrow in a year.

C.QUESTION 1

1.Which of the following statements is most accurate?

A.

Capital is all means of production that are created by people including tools, industrial equipment, and structures.

B.

Capital is all the excess reserves in commercial banks.

C.

Capital consists of the value of bonds and times deposits in commercial banks.

D.

Capital consistsof all the common stocks traded on the stock exchanges.

1 points

QUESTION 2

1.Investment is

A.

a flow concept.

B.

the largest part of GDP.

C.

a fixed variable.

D.

a stock concept.

1 points

QUESTION 3

1.Net investment is

A.

capital that is depreciated.

B.

gross investment plus depreciation.

C.

gross investment minus depreciation.

D.

new investment minus corporate taxes.

1 points

QUESTION 4

1.Which of the following is not capital?

A.

money.

B.

a super computer.

C.

an apartment building.

D.

a machinery.

1 points

QUESTION 5

1.Assume the MPC = 0.9 and a firm has made a new investment of $1,000. As a result of this new investment

A.

income will increase by $10,000.

B.

income will increase by $1,000.

C.

income will decrease by $1,000.

D.

income will increase by $500.

1 points

QUESTION 6

1.The formula to calculate the investment multiplier is

A.

B.

C.

D.

1 points

QUESTION 7

1.Of the components of the GDP

A.

investment is very insignificant.

B.

investment is the largest part.

C.

investment is most stable.

D.

investment fluctuates the most.

1 points

QUESTION 8

1.Capital is

A.

a dummy variable.

B.

the largest part of GDP.

C.

a flow concept.

D.

a stock concept.

1 points

QUESTION 9

1.Assume a two sector economy is at equilibrium with income=$1,000, consumption=$900, investment=$100, and MPC=0.8. What will the new consumption be if investment increases to $200?

A.

$1,500.

B.

$1,100.

C.

$1,000.

D.

$1,300.

1 points

QUESTION 10

1.The wear and tear of capital is

A.

the loss on accounts receivables.

B.

the compounding of interest.

C.

the capital multiplier.

D.

the capital consumption adjustments.

1 points

QUESTION 11

1.Of the components of investment

A.

inventories tend to be very stable.

B.

inventories fluctuate the most.

C.

inventories are always at the planned level.

D.

inventories tend to fall during recessions.

1 points

QUESTION 12

1.Assume that in an economy with the MPC=0.9 there is new investment of $2 billion. As a result of this new investment

A.

income will increase by $5 billion.

B.

income will decrease by $2 billion.

C.

income will increase by $20 billion.

D.

income will increase by $2 billion.

1 points

QUESTION 13

1.Assume that an economy with the MPC=0.8 is in a recession and the policy makers would like to see the economy to grow by $100 billion. How much new investment is necessary to bring about such a growth in income?

A.

$5 billion.

B.

$100 billion.

C.

$10 billion.

D.

$20 billion.

1 points

QUESTION 14

1.Which of the following statements is most accurate?

A.

Capital is a fictitious variable.

B.

Capital does not last for ever.

C.

Variable capital is depreciated.

D.

Unlike consumer goods capital lasts for ever.

1 points

QUESTION 15

1.A new investment

A.

takes resources away from the production of consumer goods.

B.

is normally wasteful.

C.

is unnecessary if the economy is a full employment.

D.

generates new income which in turn generates new consumption and further income.

1 points

QUESTION 16

1.The investment multiplier shows that

A.

a change in investment will cause a greater than itself change in income.

B.

new investment i problematic since that takes resources away from consumption.

C.

savings can multiply due to compounding interest.

D.

new investment is not necessary since the economy can function without it.

1 points

QUESTION 17

1.Why would a city build a new sport stadium?

A.

A new stadium will add to the beauty of the city.

B.

A new stadium is a major investment that will cause income to grow by a larger amount.

C.

A new stadium adds to the prestige of the city.

D.

The city leaders like to have stadiums named after themselves.

1 points

QUESTION 18

1.If MPC = 0.9 then

A.

the investment multiplier is 1.

B.

the investment multiplier is 10.

C.

the investment multiplier is 2.

D.

the investment multiplier is 5.

1 points

QUESTION 19

1.Assume a two sector economy is at equilibrium with income=$1,000, consumption=$900, investment=$100, and MPC=0.8. What will the new equilibrium income be if investment increases to $200?

A.

$1,100.

B.

$1,200.

C.

$1,500.

D.

$900.

1 points

QUESTION 20

1.Variable investment is

A.

the total inventories businesses plan to have.

B.

the amount businesses borrow in a year.

C.

the change in investment from year to year.

D.

the change in business inventories.

the change in investment from year to year.

D.

the change in business inventories.