Study Quiz For Economics

41 Questions | By Kflute | Updated: Mar 22, 2022 | Attempts: 199

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Just to study. I have a huge exam coming up. . .

Questions and Answers

1.

A rise in the general price level resulting from an excess of total spending (demand)
- A.
  
  Demand-pull inflation
- B.
  
  Cost-push inflation
- C.
  
  Inflation
- D.
  
  Deflation
- E.
  
  Disinflation
2.

COLA stands for
- A.
  
  Cost of living advancement
- B.
  
  Cost of living addition
- C.
  
  Cost of living adjustment
- D.
  
  Cost of living augmentation
3.

The change in consumption resulting from a given change in real disposable income
- A.
  
  Marginal propensity to cost (MPC)
- B.
  
  Marginal propensity to save (MPS)
- C.
  
  Average marginal propensity to save
- D.
  
  Marginal propensity to spend (MPS)
- E.
  
  Marginal propensity to consume (MPC)
4.

The part of disposable income households do not spend for consumer goods and services
- A.
  
  Dissaving
- B.
  
  Spending
- C.
  
  Inflation
- D.
  
  Saving
- E.
  
  Deflation
5.

The theory that supply creates its own demand
- A.
  
  Keynesian Law
- B.
  
  Shay's Law
- C.
  
  Say's Law
- D.
  
  Key's Law
- E.
  
  Keynesien Law
6.

The actual number of dollars received (nominal income) adjusted for changes in the CPI
- A.
  
  Nominal income
- B.
  
  Real income
- C.
  
  Proportional income
- D.
  
  Recessionary income
- E.
  
  Approximate income
7.

The graph or table that shows the amount households spend for goods and services at different levels of disposable income
- A.
  
  Spending function
- B.
  
  Aggregate expenditures function (AE)
- C.
  
  Tax multiplier
- D.
  
  Laffer curve
- E.
  
  Consumption function
8.

a fiscal policy that emphasizes government policies that increase aggregate supply in order to achieve long-run growth in real output, full employment, and a lower price level
- A.
  
  Fiscal policy
- B.
  
  Supply-side fiscal policy
- C.
  
  Demand-push fiscal policy
- D.
  
  Recessionary gap
- E.
  
  Inflationary gap
9.

It is the ratio of the change in real GDP to an initial change in any component of aggregate expenditures, including consumption, investment, government spending, and net exports. As a formula, the spending multiplier equals 1/(1-MPC) or 1/MPS.
- A.
  
  Spending multiplier
- B.
  
  Tax multiplier
- C.
  
  Autonomous expenditure
- D.
  
  Investment demand multiplier
- E.
  
  Budget deficit multiplier
10.

Inflation means an increase in the price of all goods
- A.
  
  True
- B.
  
  False
11.

Inflation is an increase in the general price level of goods and services in the economy
- A.
  
  True
- B.
  
  False
12.

The value of the CPI in the base year is always 100 because the numerator and the denominator of the CPI formula are the same in the base year
- A.
  
  True
- B.
  
  False
13.

Classical economists believed which of the following
- A.
  
  Recessions will naturally cure themselves
- B.
  
  The government should stay active in the economy, especially in a recession or depression
- C.
  
  The price system will automatically restore full employment
- D.
  
  Demand creates its own supply
- E.
  
  Supply creates its own demand
14.

Keynesian theory believes that
- A.
  
  Full employment is not possible
- B.
  
  The price system will automatically restore full employment
- C.
  
  The government should be active and use discretionary fiscal policy to help during a recession or depression
- D.
  
  Supply creates its own demand
- E.
  
  Demand creates its own supply
15.

The use of government spending and taxes to influence the nation’s spending, employment, and price level
- A.
  
  Discretionary fiscal policy
- B.
  
  Supply- side fiscal policy
- C.
  
  Fiscal policy
- D.
  
  Non-fiscal policy
- E.
  
  Economic policy
16.

the change in aggregate demand (total spending) resulting from an initial change in taxes. As a formula, tax multiplier equals 1- spending multiplier
- A.
  
  Economic multiplier
- B.
  
  Fiscal multiplier
- C.
  
  Spending multiplier
- D.
  
  Budget multiplier
- E.
  
  Tax multiplier
17.

A graph depicting the relationship between tax rates and total tax revenues
- A.
  
  Aggregate expenditures output model
- B.
  
  Laffer curve
- C.
  
  Aggregate expenditures function
- D.
  
  Price index numbers
- E.
  
  Wage-price spiral
18.

A reduction in the rate of inflation
- A.
  
  Deflation
- B.
  
  Inflation
- C.
  
  Hyper-inflation
- D.
  
  Disinflation
- E.
  
  Long-term deflation
19.

An increase in the general (average) price level of goods and services in the economy
- A.
  
  Disinflation
- B.
  
  Inflation
- C.
  
  Hyper-inflation
- D.
  
  Deflation
- E.
  
  Wage-spiral
20.

Consumption function is...
- A.
  
  An index that measures changes in the average prices of consumer goods and services
- B.
  
  The graph or table that shows the amount households spend for goods and services at different levels of disposable income
- C.
  
  The curve that shows the amount businesses spend for investment goods at different possible rates of interest
- D.
  
  The model that determines the equilibrium level of real GDP by the intersection of the aggregate expenditures and aggregate output (and income) curves
- E.
  
  The ratio of the change in real GDP to an initial change in any component of aggregate expenditures, including consumption, investment, government spending, and net exports. As a formula, the spending multiplier equals 1/(1-MPC) or 1/MPS.
21.

Federal expenditures and tax revenues that automatically change levels in order to stabilize an economic expansion or contraction; sometimes referred to as nondiscretionary fiscal policy
- A.
  
  Budget surplus
- B.
  
  Spending multiplier
- C.
  
  Automatic stabilizer
- D.
  
  Stabilizer
- E.
  
  Autonomous expenditure
22.

Spending that does not vary with the current level of disposable income
- A.
  
  Autonomous expenditure
- B.
  
  Consumption expenditure
- C.
  
  Imports
- D.
  
  Exports
- E.
  
  Price index
23.

The curve that shows the amount businesses spend for investment goods at different possible rates of interest
- A.
  
  Wage-price spiral
- B.
  
  Consumer price index (CPI)
- C.
  
  Aggregate expenditures function (AE)
- D.
  
  Aggregate expenditures output model
- E.
  
  Investment demand curve
24.

According to the aggregate expenditures model, the economy is said to be in equilibrium..
- A.
  
  At the point where aggregate output and income is greater than aggregate expenditures
- B.
  
  At the point where aggregate expenditures are greater than aggregate output
- C.
  
  At the point where the aggregate expenditures and aggregate output and income curves intersect
- D.
  
  At the point where the economy has full employment of all resources
25.

If the CPI this year is 180 and the CPI last was 175, then the annual rate of inflation is
- A.
  
  3.3%
- B.
  
  3.5%
- C.
  
  2.9%
- D.
  
  5.6%
- E.
  
  4.2%