Question 26

National Income is obtained by

Select one:

a.

subtracting capital consumption allowance from GDP.

b.

adding all the earnings of productive resources in a given period.

c.

subtracting personal taxes from personal income.

d.

adding personal savings and personal consumption expenditures.

Question 27

In national income accounting, grain fed to a hog at a commercial hog farm is consid-ered a(n)

Select one:

a.

final good.

b.

intermediate good.

c.

consumer good.

d.

capital consumption allowance.

Question 28

Social costs are associated with

Select one:

a.

entertainment expenses for business clients.

b.

government programs for the disadvantaged.

c.

deterioration of the natural environment.

d.

the high price of popularity.

Question 29

Because of the value of things produced in households,

Select one:

a.

the GDP value is adjusted upward.

b.

the GDP value is adjusted downward.

c.

GDP is probably somewhat smaller than true total output.

d.

GDP is probably somewhat larger than true total output.

Question 30

The best measure of a change in the standard of living is the change in

Select one:

a.

nominal GDP.

b.

real GDP.

c.

real per capita disposable income.

d.

net national product.

Question 31

As the economy moves into the trough of the business cycle, there is a sizable reduc-tion in the output of capital goods.

Select one:

a.

true

b.

false

Question 32

The roughly coincident indicators have their upward and downward turning points prior to the upward and downward turning points of real GDP.

Select one:

a.

true

b.

false

Question 33

An example of an external force in business fluctuations is

Select one:

a.

falling interest rates due to lagging demand in a contraction.

b.

a devaluation in the nation's currency.

c.

variations in inventories.

d.

the lag between price changes and cost changes.

Question 34

Economic indexes whose upward and downward turning points generally precede the peaks and troughs of general business activity are known as

Select one:

a.

causal indicators.

b.

leading indicators.

c.

roughly preceding indicators.

d.

primary indicators.

Question 35

Which of the following categories of business cycle theories includes the theory of "real business cycles"?

Select one:

a.

physical

b.

monetary

c.

psychological

d.

spending and saving

Question 36

In the Keynesian analysis, government spending

Select one:

a.

refers to spending by federal, state, and local governments.

b.

is much less important than consumption or planned investment.

c.

is usually the most unstable component of aggregate expenditure.

d.

None of these.

Question 37

The multiplier is the reciprocal of the marginal propensity to consume.

Select one:

a.

true

b.

false

Question 38

"A given change in business investment will cause a larger change in equilibrium output." This statement describes an important Keynesian concept called the

Select one:

a.

multiplier effect.

b.

marginal propensity to consume.

c.

marginal propensity to invest.

d.

consumption function.

Question 39

Increasing worker productivity by creating economic incentives is an example of

Select one:

a.

laissez faire.

b.

supply-side economics.

c.

pump priming.

d.

Say's Law.

Question 40

In the Keynesian model, if planned saving is greater than planned investment,

Select one:

a.

the economy will expand.

b.

unemployment will rise.

c.

the marginal propensity to consume will decline.

d.

the rate of interest will rise.