Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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Which of the following is a stock variable?
a. | business spending on capital equipment | b. | consumer spending | c. | business inventories
(the amount of goods businesses have on-hand to sell) | d. | the federal government's budget deficit:
the difference between government spending and government taxes | e. | GDP |
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2.
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Which of the following is the best example of investment as defined by
economists in the circular flow?
a. | a household's purchase of 100 shares of Apple computer stock | b. | a firm's
purchase of 100 shares of General Electric stock | c. | a firm's purchase of a bond issued by
General Mills | d. | a firm's purchase of a U.S. savings bond | e. | a firm buying
personal computers for its secretarial staff |
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3.
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Consumer spending in GDP measurement includes
a. | spending by businesses on labor resources | b. | spending by
government on office buildings | c. | spending by individual households on
automobiles and washing machines | d. | changes in business
inventories | e. | a firm's purchase of a radio made in Taiwan |
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4.
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If an economy produces final output (GDP) worth $5 trillion, then the amount of
gross income (national income) generated by that production (assume an economy at
equilibrium):
a. | is $5 trillion | b. | is more than $5 trillion | c. | is $5 trillion minus
taxes | d. | would be $5 trillion if profits were zero | e. | would be $5 trillion
if costs of production were zero |
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5.
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The economy is in equilibrium and no new money is being created. But the
government is borrowing money. Private savings by households are equal to firm borrowings from
financial markets, which are equal to business investment spending. According to the circular flow
model, capital inflows from ROW are ________ than capital outflows to ROW, and imports are ________
than exports.
a. | less; greater | b. | greater; greater | c. | less;
less | d. | greater; less | e. | same as; same as | f. | impossible to
tell |
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6.
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Economic aggregates are:
a. | valuable minerals. | b. | measures that summarize data across
markets. | c. | economic data from a particular market. | d. | data from a
particular firm. |
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7.
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Efficiency in the use of available productive resources is the focus of
__________.
a. | macroeconomics | b. | fiscal policy | c. | monetary
policy | d. | microeconomics |
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8.
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According to the circular flow diagram, which of the following economic agents
engages in consumer
spending?
a. | firms | b. | households | c. | factor
markets | d. | financial markets |
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9.
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In the circular flow model, households:
a. | receive transfer payments from the government. | b. | buy resources in the
factor markets. | c. | sell products in the market for goods and services. | d. | issue stocks and
bonds to raise capital. |
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10.
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The money spent on domestically produced final goods and services:
a. | is the GDP. | b. | appears as income to
someone. | c. | appears in the circular flow model. | d. | is all of the
above. |
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