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1.MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. (1 point each,40 points total)
1)
Which of the following are parts of the business cycles?
1)
_______
A)
inflation and recession
B)
peak and potential GDP
C)
real GDP and potential GDP
D)
recession and expansion
2)
Macroeconomic policy tools include
2)
_______
A)
unemployment policy and inflation policy.
B)
monetary policy and fiscal policy.
C)
monetary policy and unemployment policy.
D)
fiscal policy and unemployment policy.
3)
Fiscal policy involves
3)
_______
A)
the use of interest rates to influence the level of GDP.
B)
the use of tax and money policies by government to influence the level of interest rates.
C)
the use of tax and spending policies by the government.
D)
decreasing the role of the Federal Reserve in the everyday life of the economy.
4)
Fiscal policy might be used to increase long-term growth in real GDP by
4)
_______
A)
motivating an increase in investment.
B)
encouraging saving.
C)
reducing unemployment.
D)
Both answers A and B are correct.
5)
When U.S. imports exceed U.S. exports, the United States experiences
5)
_______
A)
a decrease in potential GDP.
B)
a government budget deficit.
C)
inflation.
D)
an international deficit.
6)
The largest component of income is
6)
_______
A)
proprietors income.
B)
corporate profits.
C)
compensation of employees.
D)
net interest.
7)
Which of the following transfer payments is included in GDP?
7)
_______
A)
veterans benefits
B)
welfare payments
C)
Social Security payments
D)
none of the above
8)
Net domestic product equals gross domestic product minus
8)
_______
A)
depreciation.
B)
net exports.
C)
inflation.
D)
investment.
9)
U.S. investment is financed from
9)
_______
A)
private saving, government budg
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