Economics Quiz

In the above figure, if the economy initially is at point A and government expenditure increases, in the short run the economy will move to point

• C.

• B.

• A, that is, the equilibrium will NOT change.

• None of the above answers is correct.

When the inflation rate is zero, the

• real interest rate is greater than the nominal interest rate.

• real interest rate is less than the nominal interest rate.

• nominal interest rate is zero.

• real interest rate equals the nominal interest rate.

If personal consumption expenditures are $500 million, net private domestic investment is $100 million, depreciation equals $5 million, imports are $50 million, exports are $55 million, government expenditure on goods and services is $220 million, and government transfer payments are $20 million, then GDP is

• $830 million.

• $790 million.

• $850 million.

• $800 million.

In the table above, what inflation rate belongs in space E?

• 15.4 percent

• 8.3 percent

• 17.0 percent

• 6.8 percent

If an economy has Velocity of 3, then

• nominal GDP is 1/3 the size of the quantity of money.

• the quantity of money is $3 for every dollar of GDP.

• the quantity of money is 3 times real GDP.

• in a year the average dollar is exchanged 3 times to purchase goods and services in GDP.

When economists speak of full employment, they refer to the case in which the sum of frictional and structural unemployment is

• falling over time.

• equal to zero.

• greater than the level of deficient demand unemployment.

• equal to the actual amount of unemployment.

In the short run, a rightward shift of the short-run aggregate supply curve ________ real GDP and ________ the price level.

• decreases; raises

• increases; raises

• increases; lowers

• decreases; lowers

The population of Tiny Town is 100 people and the labor force is made up of 75 people. If 5 of these people are unemployed, the unemployment rate is

• 5/75 × 100.

• 5/100 × 100.

• 5/80 × 100.

• There is not enough information provided to calculate the unemployment rate.

In the national income accounts, the purchase of a new house counts as

• an addition to inventory.

• a transfer payment.

• Personal Consumption Expenditure.

• Gross Private Domestic Investment.

When the monetary base increases by $2 billion, the quantity of money increases by $10 billion. Thus, the money multiplier equals

• 20.0

• 5

• 0.2

• none of the above