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.Management Sciences
Category: The National Economy
A linear consumption function with a positive slope less than one means that if income increases consumption will ?
A. fall
B. not change
C. fluctuate
D. increase
Macroeconomic theory that emphasized the theories of Keynes and de-emphasized the classical theory developed as the result of the failure of ?
A. economic theory to explain the simultaneous increases in inflation and unemployment during the 1970s
B. The classical model to explain the prolonged existence of high unemployment during the Great Depression
C. fine tuning during the 1960s
D. the economy to grow at a rapid rate during the 1950s
The length of a business cycle would be measured from ?
A. the slump to the expansion
B. peak to peak
C. peak to trough
D. trough to peak
Real GNP is a crude measure of national welfare because it excludes ?
A. consumption
B. investment
C. exports
D. work in the home
Real GNP measures income ?
A. including non-market activities
B. adjusted for inflation
C. including externalities
D. including tax evasion
Aggregate demand in an economy trading internationally with a government sector can be written as ?
A. AD = C + I
B. AD = C + I + G
C. AD = C + I + G + X + Z
D. AD = C + I + G + X – Z
According to the classical economists, the only gainers from growth would be ?
A. landlords
B. peasants
C. The army
D. politicians
Starting from a balanced budget, for a given tax rate, an increasing in income will cause the government budget to ?
A. move into surplus
B. move into deficit
C. remain unchanged
D. None of the above above
Short-run equilibrium output means that aggregate demand __________ actual output?
A. is less than
B. equals
C. is greater than
D. fluctuates around
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