# Bonus Quiz For Econtwo K37, T1, Ay2010-2011

45 Questions | Total Attempts: 75  Settings  This is the bonus exam for the ECONTWO K37 (MW, T1, AY2010-2011).

• 1.
Nominal GDP is gross domestic product measured…
• A.

In the prices of a base year

• B.

In current pesos

• C.

At a constant output level at base year prices

• D.

As the difference between current year GDP and the previous year’s GDP

• 2.
If real GDP in 2009 using 2000 prices is lower than nominal GDP of 2009, then…
• A.

Prices in 2000 are lower than prices in 2009

• B.

2009 nominal GDP = 2000 nominal GDP

• C.

Prices in 2009 are higher than prices in 2000

• D.

2009 real GDP > 2000 real GDP

• 3.
“GDP deflator” is the ratio of nominal to real GDP. Getting the percentage change in the GDP deflator is another way of measuring changes in the overall price level. If the GDP deflator in year 2 is 110 and the GDP deflator in year 3 is 118, the rate of inflation between years 2 and 3 is…
• A.

7.27%

• B.

4.55%

• C.

8%

• D.

18%

• 4.
All economic activities are included in GDP.
• A.

True

• B.

False

• C.

It depends

• 5.
If the number of people classified as unemployed and employed is 20,000 and 620,000, respectively, then the unemployment rate is…
• A.

3.1%

• B.

10.6%

• C.

1.6%

• D.

632%

• 6.
If there are 200 million people at least 15 years old, the labor force participation rate is 75%, and there are 15 million unemployed, then the employment rate is…
• A.

75%

• B.

25%

• C.

10%

• D.

90%

• 7.
The number of unemployed people equals…
• A.

The labor force less the number of employed

• B.

The labor force plus the number of employed

• C.

The number of employed minus the labor force

• D.

The number of unemployed divided by the labor force

• 8.
Aggregate demand is downward-sloping when graphically depicted because…
• A.

It is simply an aggregation of individual market demand curves

• B.

Higher overall price levels increase overall spending

• C.

Higher overall price levels increase demand for money, raising interest rates and negatively affecting aggregate spending

• D.

None of the above

• 9.
Aggregate supply is upward-sloping because…
• A.

It is simply an aggregation of individual market supply curves

• B.

Higher overall price levels increase overall spending

• C.

Firms maximize profit by producing more at higher price levels

• D.

Costs, particularly wages, do not adjust immediately to increases in the overall price level

• 10.
An increase in aggregate demand when the economy is operating at full capacity is likely to result in…
• A.

An increase in both output and overall price level

• B.

An increase in output but no increase in the overall price level

• C.

An increase in the overall price level but no increase in output

• D.

No increase in either output or the overall price level

• 11.
When the economy is producing at full capacity, the aggregate supply curve becomes…
• A.

Vertical

• B.

Upward sloping

• C.

Horizontal

• D.

Downward sloping

• 12.
If input prices (wages and rent/cost of capital) changed at exactly the same rate as output prices (product prices), the aggregate supply curve would be…
• A.

Vertical

• B.

Upward sloping

• C.

Horizontal

• D.

Downward sloping

• 13.
The interest rate is determined…
• A.

In the money market, and has no influence in the goods market

• B.

In the money market, and influences investment and thus the goods market

• C.

In the goods market, and has no influence in the money market

• D.

In the goods market, and influences investment and thus the money market

• 14.
Fiscal policy affects the goods market through…
• A.

Changes in inflation

• B.

Changes in interest rate

• C.

Changes in taxes and government spending

• D.

Changes in money supply

• 15.
Which among the following statements describes Keynesian macroeconomics?
• A.

Fiscal and monetary policies are ineffective

• B.

Managing aggregate supply is key to economic stability

• C.

The government has a role to play in fighting unemployment

• D.

The economy is stable and self-correcting

• 16.
Which among the following statements does not describe Classical macroeconomics?
• A.

Wages and prices are fully flexible in the economy, both in the short and long run

• B.

Aggregate income and output in an economy is determined by the amount of labor, capital, and the level of technology

• C.

Aggregate demand does not affect output, which is completely supply-oriented

• D.

Managing aggregate demand is essential to economic stability

• 17.
In Keynesian macroeconomic equilibrium…
• A.

Aggregate expenditure is greater than aggregate output

• B.

Actual and intended firm spending can be different

• C.

The sum of saving and taxes matches total firm and government spending

• D.

All of the above

• 18.
An increase in government spending…
• A.

Can be offset by a matching reduction in private investment

• B.

Always increases aggregate income and output by its total amount

• C.

Results in the same change in equilibrium income and output as a reduction in taxes

• D.

All of the above

• 19.
The larger the marginal propensity to consume, the larger the multiplier is.
• A.

True

• B.

False

• C.

It depends

• 20.
All government expenditures are included in the computation of GDP. (Or part of “G” in Y=C+I+G.)
• A.

True

• B.

False

• C.

It depends

• 21.
When aggregate expenditure exceeds aggregate output…
• A.

Firms have positive inventory

• B.

There is downward pressure on aggregate output

• C.

Planned investment exceeds actual investment

• D.

All of the above

• E.

None of the above

• 22.
When aggregate expenditure is less than aggregate output…
• A.

Firms have positive inventory

• B.

There is downward pressure on aggregate output

• C.

Planned investment exceeds actual investment

• D.

All of the above

• E.

None of the above

• 23.
Increased investment…
• A.

Leads to an increase in equilibrium output by the amount of the additional investment

• B.

Sets off successive rounds of spending, with increases in income resulting in more consumption and investment

• C.

Results in successive rounds of progressively more saving and hence less consumption

• D.

Any of the above

• 24.
Which of the following is a reason for the barter system to be inefficient?
• A.

The cost of transaction is too low

• B.

It requires a double coincidence of wants

• C.

It requires high liquidity

• D.

Banks are required as intermediaries (middle men)

• 25.
When you deposit to a savings account, you are using money as…
• A.

Consumption good

• B.

Unit of account

• C.

Means of exchange

• D.

Store of value

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