Economic Finals

Real GDP equals

• (A) The sum of all the current-year quantities times their base-year prices.

• (B) GDP divided by the CPI

• (C) GDP divided by the chain-weighted price index times 100

• (D) GDP times the chain-weighted price index divided by 100

• (E) Both (A) and (C)

In income approach, the formula to calculate national income is the sum of compensation of employees, proprietors' income, rental income, and net interest. True or False?

• True.

• False, since data on indirect business taxes are missing.

• False, since data on corporate profits are missing.

• False, since data on the capital consumption allowance is missing.

What is the proper sequence of the phases of a business cycle?

• Peak, Contraction, Trough, Expansion, Recovery

• Peak, Contraction, Recovery, Trough, Expansion

• Peak, Contraction, Trough, Recovery, Expansion

• Recovery, Trough, Peak, Expansion, Contraction

In the business cycle, what is the difference between the recovery phase and the expansion phase?

• The expansion phase occurs in the rising portion of the business cycle, while the recovery phase occurs in the falling portion of the business cycle.

• The expansion phase occurs in the falling portion of the business cycle, while the recovery phase occurs in the rising portion of the business cycle.

• The expansion phase is the period when REAL GDP increases beyond the recovery phase.

• The expansion phase must always precede the recovery phase

One measure of the inflation rate is the

• sum of the CPIs of adjacent years.

• percentage change in the CPI of adjacent years

• percentage change in the Real GDP of adjacent years

• GDP minus the Real GDP in a year

What are the types of inflation?

• Demand-pull and cost-pull

• Demand-pull and cost-push

• Demand-push and cost-pull

• Demand-push and cost-push

What's the effect on equilibrium price level and real GDP of Malaysia when RM appreciates?

• Both equilibrium price level and equilibrium real GDP drop

• Both equilibrium price level and equilibrium real GDP increase

• Equilibrium price level increases and equilibrium real GDP drops

• Equilibrium price level drops and equilibrium real GDP increases.

What's the effect on equilibrium price level and real GDP of Malaysia when firms are optimistic about the future sales?

• Both equilibrium price level and equilibrium real GDP drop

• Both equilibrium price level and equilibrium real GDP increase

• Equilibrium price level increases and equilibrium real GDP drops

• Equilibrium price level drops and equilibrium real GDP increases

Suppose a drop in stock prices makes people less wealthy. This would cause _______ the economy's AD curve.

• movement down along

• movement up along

• a rightward shift of

• a leftward shift of

Suppose the economy's short-run equilibrium point is greater than the Natural Real GDP. Which of the following is true?

• The economy is in an inflationary gap.

• The economy is in a recessionary gap.

• The economy is in long-run equilibrium.

• This situation is actually impossible.