- Crowding out occurs when deficit spending
increases interest rates.
decreases interest rates.
increases consumer spending.
decreases consumer spending.
increases investment spending.
2. The elimination of cyclical and structural unemployment as a result of flexible prices and wages correcting themselves would be
Keynesian.
classical.
monetarism.
supply-side.
rational expectations.
3. An increase in savings by consumers is seen as a(n)
decrease in investment spending in the economy
increase in government spending in the economy.
decrease in exports in the economy.
increase in imports in the economy.
leakage in spending in the economy.
4. If nominal GDP equals $125 billion and the CPI is 125, then real GDP equals
$1,000 billion.
$156.25 billion.
$100 billion.
$15.62 billion.
$10 billion.
5. Which of the following will be counted in GDP?
Cameron purchased his best friend’s I-Pod Nano®.
Maggie bought some beads she will use to make necklaces to sell at the local flea market.
Matt agreed to clean Ryan’s pool for $10 cash each week.
Laura purchased a backpack for her trip to Europe.
Pratheek received a $10,000 scholarship from the Department of Education.
6. If changes in the stock market cause an increase in consumer wealth, we would expect to see a/an
increase in consumer indebtedness.
increase in consumer card balances.
increase in consumer spending.
decrease in investment spending.
decrease in imports.
7. All of the following would be included in the calculation of unemployment except
people who are working part-time while they are looking for a full-time job.
people who are laid off because they lack the skills for their current job.
people voluntarily moving from one job to another.
people graduating from college or a technical school.
people whose job moved to another location while they stayed in their old location.
8. Transfer payments are not counted in GDP because transfer payments are
sent as aid to foreign nations.
movements of money between checking and savings accounts.
payments for which no good or service is exchanged.
made in the foreign exchange market.
payments for imports and exports.
9. A college graduate who is searching for his first job illustrates the concept of
cyclical unemployment.
frictional unemployment.
structural unemployment.
an employed individual.
a discouraged worker.
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