Which of the following is a reason why real GDP per capita is not a good measure of standards of living? Select one: A. It doesn't take account of population size B. GDP includes imported goods C. It ignores externalities D. It ignores inflation The relationship between investment as a proportion of national income (i) and the potential rate of economic growth (gp) is given by the formula: Select one: A. gp = MEC/i B. gp = MEC-i C. gp = i-MEC D. gp = ixMEC Demand deficient unemployment is the result of: Select one: A. Changes in the pattern of demand in the economy B. Workers and employers being ill-informed about the labour market C. The economy entering the recessionary phase of the business cycle D. The introduction of new technology Prices that do not adjust rapidly to changes in supply and demand are called: Select one: A. Fixed prices B. Sticky prices C. Equilibrium prices D. Market prices What is meant by the term marginal propensity to consume? Select one: A. The proportion of incomes spent on consumption B. The proportion of a rise in national income that is spent on consumption C. The proportion of income saved D. The proportion of a rise in income that is saved Which of the following is a not a key assumption of the Keynesian school of macroeconomics? Select one: A. Prices and wages are relatively inflexible B. Expectations are relatively slow to adjust C. Demand management can be used to smooth the business cycle D. The main role of government policy should be to remove impediments to free markets The direct exchange of goods and services for other goods and services is: Select one: A. A unit of account exchange B. Legal tender exchange C. A fiat exchange D. Barter The data below show that as national income rises from 400m to 650m the mpcd is: National Income (bn) 400 450 500 550 600 650 Consumption of Domestically Produced Goods and Services (bn) 400 430 460 490 520 550 Select one: A. Rising and withdrawals are rising B. Constant and withdrawals are falling C. Constant and withdrawals are rising D. Rising and withdrawals are falling Which of the following are aspects of fiscal policy? Select one: A. An increase in corporation tax B. An increase in spending on education C. A cut in interest rates D. A and B only Given the following data (in bn), what will happen to equilibrium national income? C = 100, I = 20, M = 30, X = 25, S = 18, T = 28, G = 26 Select one: A. Increase B. Decrease C. Stay the same D. Do not have enough information to say One problem with fiscal policy is that it can lead to crowding out. Crowding out is defined as: Select one: A. That part of public expenditure financed from borrowing B. Increased taxes pushing up interest rates C. Increased demand for money pushing up interest rates resulting in lower C and I D. Increased public spending feeding through to adverse exchange rate movements The multiplier can be defined as: Select one: A. The ratio of the rise in national income to the rise in injections that caused it B. The ratio of the rise in government expenditure to the resulting rise in national income C. The ratio of a rise in investment to the resulting rise in withdrawals D. The ratio of a change in injections to a change in withdrawals Fiscal stance refers to: Select one: A. A government that takes a tough stance when it comes to running the country's finances B. A government that is running a budget deficit C. A government that is running a budget surplus D. Whether a government is pursuing an expansionary or contractionary fiscal policy A tight monetary policy that involves high interest rates may lead to a number of related problems. Which of the following is not likely to be a consequence of such a policy? Select one: A. Higher cost for producers B. Cost-push inflationary pressures C. Increased costs for government D. Reduced investment The diagram that shows the income received and payments made by each sector of the economy is the: Select one: A. Income-expenditure diagram B. Income-price diagram C. Circular flow diagram D. Aggregate supply-aggregate demand diagram The idea that some economic changes are difficult to reverse is called: Select one: A. Stagflation B. Deflation C. The expectations-augmented Phillips curve D. Hysteresis