Set 12

Questions 1-3 are based on the following information about an economy:
Consumer price index (2002) = 132
Consumer price index (2001) = 110
Nominal GDP (2002) = $60bn
Nominal GDP (2001) = $50bn
Population (2002) = 7mn
Population (2001) = 6mn
Net factor income from abroad (2002) = +$3bn
Net factor income from abroad (2001) = -$2bn

By how much has real GDP grown from 2001 to 2002?
1. -10%
2. 12.5%
3. 20%
4. 0%
Questions 1-3 are based on the following information about an economy:
Consumer price index (2002) = 132
Consumer price index (2001) = 110
Nominal GDP (2002) = $60bn
Nominal GDP (2001) = $50bn
Population (2002) = 7mn
Population (2001) = 6mn
Net factor income from abroad (2002) = +$3bn
Net factor income from abroad (2001) = -$2bn

By how much has per capita nominal GNP changed from 2001 to 2002?
1. -10%
2. 12.5%
3. 20%
4. 0%
Questions 1-3 are based on the following information about an economy:
Consumer price index (2002) = 132
Consumer price index (2001) = 110
Nominal GDP (2002) = $60bn
Nominal GDP (2001) = $50bn
Population (2002) = 7mn
Population (2001) = 6mn
Net factor income from abroad (2002) = +$3bn
Net factor income from abroad (2001) = -$2bn

Based on the above information, we can say that:
1. Poverty has fallen in the country
2. Per capita real GDP is falling
3. Income inequality has worsened
4. Real growth in the informal sector is 0%
In the circular flow of income, Keynesian equilibrium obtains when
1. All the individual sectors are in equilibrium: S=I, T=G, M=X
2. The aggregate injections equal aggregate withdrawals S+T+M = I+G+X
3. There is no inflation or unemployment
4. The interest rate and exchange rate are at their market clearing levels
Under conditions of Keynesian equilibrium:
1. aggregate demand equals aggregate supply
2. aggregate demand equals national income
3. both A and B
4. none of the above
Which of the following is a determinant of consumption
1. expectations about future prices
2. level of indebtedness of consumers
3. the price level
4. all of the above
Which is the most volatile component of aggregate demand
1. Net exports
2. consumption
3. investment
4. government spending
Which of the following is not an obvious or direct determinant of a country’s imports
1. real exchange rate
2. income
3. tariff rates
4. interest rate
When consumption is 650, income is 750; when consumption is 620, income is 700. Assuming there is no government, I=100, net exports are 10, what is the level of equilibrium income?
1. 500
2. 625
3. 775
4. 850
Which of the following is not true?
1. Starting from no growth, a positive output growth rate would be associated with even higher
  rates of investment (the accelerator effect)
2. Higher investment causes a multiplied increase in income
3. Such increases in income would continue to induce higher investment, which in turn would continue to cause multiplied increases in output.
4. All of the above.
In the equation C = a + bY, which describes the aggregate consumption function, 'a' stands for
1. the amount of consumption when income is zero.
2. the marginal propensity to consume.
3. the amount of consumption when income is Maximum.
4. the average consumption level.
Total consumption divided by total income gives us:
1. the average propensity to consume .
2. the marginal propensity to save.
3. the marginal propensity of expenditure.
4. the marginal propensity to consume.
Disposable income is the part of households' income left after the deduction of
1. pension contributions.
2. income tax and social security payments.
3. income tax.
4. savings.
As the MPS increases, the multiplier will
1. increase.
2. either increase or decrease depending on the size of the change in investment.
3. remain constant.
4. decrease.
The ratio of the change in the equilibrium level of output to a change in some autonomous component of aggregate demand is the
1. elasticity coefficient.
2. multiplier .
3. marginal propensity of the autonomous variable.
4. automatic stabiliser.
Assuming there are no taxes (and no foreign sector), if the MPC is .8, the multiplier is
1. 2.5.
2. 8.
3. 5.
4. 2.
Assuming the net income tax rate is 25% (and there is no foreign sector), if the MPC is 0.8, the multiplier is
1. 2.5.
2. 8.
3. 5.
4. 2.
Assuming there is no foreign sector, if the multiplier is 3, and the net income tax rate is 20%, the MPC is
1. 3/4
2. 4/5
3. 5/6
4. 6/7
Assume there is no government or foreign sector. If the MPC is .75, a E.20 billion decrease in planned investment will cause aggregate output to decrease by
1. E 80 billion.
2. E 20 billion.
3. E 26.67 billion.
4. E 15 billion.
According to the 'paradox of thrift,' increased efforts to save will cause
1. an increase in income and an increase in overall saving.
2. a decrease in income and an overall decrease in saving.
3. a decrease in income but an increase in saving.
4. an increase in income but no overall change in saving.
If injections are less than withdrawals at the full-employment level of national income, there is
1. an inflationary gap.
2. equilibrium.
3. a deflationary gap.
4. hyperinflation.
The accelerator theory of investment says that induced investment is determined by
1. the rate of change of national income.
2. expectations.
3. the level of national income.
4. the level of aggregate demand.
The diagram that shows the mone y received and paid out by each sector of the economy is the
1. income-price diagram.
2. income-expenditures diagram.
3. circular flow diagram.
4. aggregate demand-aggregate supply diagram.

Set 12

Quiz