Module 10-13 AP Macro MCQs

The Circular-flow diagram is a simple model of the macroeconomy in which

• The flow of money into each market or sector exceeds the flow of money coming out of that market or sector.

• The value of stocks equals the value of bonds.

• Households own the factors of production.

• There is only one household and one firm.

• Goods and services are sold in factor markets.

Which of the following leaks out of the circular flow in the expanded circular-flow model?

• Investment Spending.

• Government Borrowing.

• Private Savings.

• The value of exports.

• Government spending.

Which of the following is injected into the circular flow in the expanded circular-flow model?

• The value of imports.

• Government transfer payments.

• Taxes.

• Private savings.

• Factor payments.

GDP is equal to

• The total value of all final goods and services produced in an economy during a given period.

• C + I + G + M

• The total value of intermediate goods plus final goods.

• The total income received by producers of final goods and services.

• The total of all goods and services sold during a year.

Which of the following is included in GDP?

• Changes to inventories.

• Intermediate goods.

• Used goods.

• Financial assets (Stocks and Bonds).

• Foreign-produced goods.

Which of the following is NOT included in GDP?

• Capital goods such as machinery.

• Imports.

• The value of domestically produces services.

• Government purchases of goods and services.

• The construction of structures.

Which of the following components makes up the largest percentage of GDP measured by aggregate spending?

• Consumer spending.

• Investment spending.

• Government purchases of goods and services.

• Exports.

• Imports.

Where are factors of production (land, labor, etc) exchanged in the circular flow model?

• Resource Market

• Product Market

• Firms

• Individuals

Which of the following is true of real GDP?

• It is adjusted for changes in prices.

• It is always equal to nominal GDP.

• It decreases whenever aggregate output increases.

• It is equal to nominal GDP minus the inflation rate.

• All answers are true.

The best measure for comparing a country's aggregate output over time is

• Nominal GDP.

• Real GDP.

• Nominal GDP per capita.

• Real GDP per capita.

• Average GDP per capita.