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Focused topic practice

the national economy MCQs

Practise focused the national economy questions with marked answers for exam preparation and subject revision.

the national economy Mcqs
1. A linear consumption function with a positive slope less than one means that if income increases consumption will ?
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A. not change

B. increase

C. fall

D. fluctuate

2. The key issues of macroeconomics are ?
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A. All of the above

B. inflation

C. unemployment

D. economic growth

3. It has become conventional classify a recession as a period where national output falls for _________ or more?
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A. a year

B. two years

C. three years

D. six months
4. Real GDP is nominal GDP measured in constant ?
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A. interest rates

B. prices

C. exchange rates

D. taxes

5. If the government increases spending and raises taxes by just enough to finance this increase it will ?
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A. increase the MPC

B. reduce output

C. increase output

D. leave output unchanged

6. Nominal GNP measures income ?
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A. corrected for changes in interest rates

B. At current prices

C. At the present time

D. corrected for tax changes

7. Leakages from the circular flow are _________ and __________?
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A. investment, savings, government expenditure

B. consumption investment government expenditure

C. consumption taxes imports

D. savings, taxes net of subsidies imports
8. Macroeconomics is the branch of economics that deals with ?
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A. imperfectly competitive markets:

B. Only the long run adjustments to equilibrium in the economy

C. The functioning of individual industries and the behavior of individual decision-making units business firms and households

D. the economy as a whole
9. In a macroeconomic model without foreign trade or a government aggregate demand is the sum of ?
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A. personal saving and personal consumption

B. personal consumption and private investment

C. None of the above

D. personal saving and private investment

10. Total withdrawals from the circular flow of income include ?
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A. savings government expenditure and imports

B. consumption savings and taxes

C. savings taxes and imports

D. savings taxes and exports

11. Aggregate demand without a foreign sector is the sum of ?
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A. C + 1

B. I + G

C. C + 1 + G

D. C + G

12. The length of a business cycle would be measured from ?
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A. peak to trough

B. the slump to the expansion

C. peak to peak

D. trough to peak

13. The multiplier is calculated as___________?
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A. 1/MPC

B. 1(1-MPC)

C. a or b

D. 1/MPS

14. When investment is assumed to autonomous the slope of the AD schedule is determined by the ?
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A. marginal propensity to consume

B. disposable incomes

C. average propensity to consume

D. marginal propensity to invest

15. The diagram that shows the income received and payments made by each sector of the economy is the ?
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A. income-expenditures diagram

B. income-price diagram

C. circular flow diagram

D. aggregate demand-aggregate supply diagram

16. Macroeconomic theory that emphasized the theories of Keynes and de-emphasized the classical theory developed as the result of the failure of ?
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A. economic theory to explain the simultaneous increases in inflation and unemployment during the 1970s

B. The classical model to explain the prolonged existence of high unemployment during the Great Depression

C. fine tuning during the 1960s

D. the economy to grow at a rapid rate during the 1950s

17. Short-run equilibrium output means that aggregate demand __________ actual output?
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A. is less than

B. fluctuates around

C. is greater than

D. equals
18. In an Open economy leakage to imports ____________ the value of the multiplier ?
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A. None of the above

B. increase

C. reduce

D. do not change

19. Aggregate supply is the total amount ?
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A. of goods and services produced in an economy

B. produced by the government

C. of labor supplied by all households

D. of products produced by a given industry

20. For given government spending and taxation the government budget deficit will grow in _________ and decline in __________?
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A. recessions, booms

B. booms, booms

C. booms, recessions

D. recession, recession