ECO203 Week 2 Quiz

Question 1

Cyclical unemployment is a function of

Correct!

a decline in total output.

new entrants into the labor force.

unemployment compensation.

mismatch of workers and jobs.

search costs.

Question 2

A very important fact about national income accounting is that

government expenditures plus transfer payments will always equal corporate, income taxes plus personal income taxes plus indirect business taxes.

total output is equal to net national product minus capital consumption allowances.

inventories in the economy.

the value of total saving in the economy will always equal the sum of desired plus undesired

Correct!

the value of final output produced will always equal total spending for that output.

Question 3

Policies to reduce fluctuations in output and employment are called

recession policies.

production policies.

incomes policies.

Correct!

stabilization policies.

intergovernmental policies.

Question 4

Which of the following rise(s) during a recession and fall(s) during the expansionary phase of the business cycle?

input

interest rates

output

Correct!

unemployment

prices

Question 5

The term “recession” refers to a

prolonged period of falling prices.

fall in the rate of increase of real per capita GDP.

fall in the CPI.

fall in the general level of real wages.

Correct!

period of decline in real output.

Question 6

The curve that shows quantities of total real output that will be offered for sale at various price levels is called the

aggregate demand curve.

real gross domestic investment curve.

Correct!

aggregate supply curve.

yield curve.

aggregate individual demand curve.

Question 7

Who is most likely to be a winner during inflationary times?

Correct!

a person who owes a lot on her mortgage

a retired person living on a pension

a person who owns a lot of government bonds

a savings and loan association

Question 8

In the circular flow model, how can households use their income?

taxes, investment, and hoarding

expenditures, taxes, investment, and borrowing

Correct!

expenditures, saving, taxes, and spending on imports

borrowing, investment, taxes, and saving

expenditures, investment, borrowing, and spending on imports

Question 9

The aggregate supply curve

Correct!

relates real output to the price level.

relates nominal output to the price level.

relates real output to the level of consumer spending.

is the sum of all market supply curves.

is not related to real output.

Question 10

A country is in a recession if

the Dow Jones Index declines by more than 10 percent.

the price level falls in two successive quarters.

unemployment rises in two successive quarters.

Correct!

real output declines for two successive quarters.

nominal output declines for two successive quarters.