the national economy MCQs – Page 2

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

the national economy Mcqs

21. In an economy measuring (1) total value added (2)total spending on final goods and (3)total factor earning gives the result that ?
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A. 3<2<1

B. any measure can be larger or smaller than any other

C. 3>2>1

D. 3=2=1

22. The underground economy consists of ?
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A. the water distribution system

B. part of the rail network

C. legal transactions

D. legal transactions not declared for tax and illegal activities

23. Starting from a balanced budget, for a given tax rate, an increasing in income will cause the government budget to ?
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A. remain unchanged

B. move into deficit

C. move into surplus

D. None of the above above

24. When we refer to the hidden economy we mean unrecorded income owing to ?
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A. the lags between statistical collection and publication

B. poor statistics

C. tax evasion

D. smuggling

25. Real GNP is a crude measure of national welfare because it excludes ?
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A. consumption

B. exports

C. work in the home

D. investment

26. The index used most often to measure inflation is the?
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A. consumer price index

B. wholesale price index (WPI)

C. GDP deflator

D. Producer price index (PPI)

27. Equilibrium in the circular flow of income occurs when ?
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A. There is a Bank Holiday

B. None of these

C. Injections withdrawals

D. Injections = withdrawals

28. If desired spending in the economy exceeds income we would expect ?
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A. households to save more

B. the MPC to change

C. firms to produce more

D. firms to produce less

29. Total injection are made up of?
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A. savings + government expenditure + exports

B. investment + tax + exports

C. investment + government expenditure + imports

D. investment + government expenditure + exports

30. Purchasing power parity exchange rates are used to ?
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A. convert nominal GDP to real GDP

B. pay wages b multinational companies

C. compare living standards of different countries

D. estimate the costs of economic growth

31. In the circular flow we would expect leakages to ___________ injections?
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A. be greater than

B. be less or greater than

C. equal

D. be less than

32. According to the classical economists, the only gainers from growth would be ?
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A. politicians

B. landlords

C. peasants

D. The army

33. An index of prices of all domestically produced goods in the economy is the ?
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A. wholesale price index (WPI)

B. Producer price index (PPI)

C. GDP deflator

D. Consumer price index (CPI)

34. Injection into the circular flow are ______ and __________?
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A. investment government expenditure exports

B. investment exports transfer payments

C. consumption investment exports

D. taxes exports, transfer payments

35. If a result of households wish to save more there is a change in equilibrium income and no change in equilibrium saving this is an example of ?
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A. market failure

B. the paradox of thrift

C. market imperfection

D. the law of diminishing returns

36. In the economy when a steel producer sells steel to car producer it is regarded as ?
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A. an intermediate good

B. a leakage

C. an injection

D. a final good

37. Indicate below what is NOT a main macroeconomic goal ?
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A. Reducing inflation

B. Reducing unemployment

C. Increasing North Sea oil production

D. Achieving a sustainable rate of economic growth

38. The total multiplier for the economy will reflect ?
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A. MPC and MPZ

B. MPT and MPZ

C. MPC and MPT

D. MPC, MPT and MPZ

39. Higher export demand __________ output and a higher MPZ __________ output?
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A. increase, reduces

B. increases, increases

C. reduces, increase

D. reduces, reduces

40. Aggregate demand includes only ?
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A. sumer expenditure and investment

B. consumer expenditure government expenditure and investment

C. consumer expenditure investment government expenditure and exports less imports

D. consumer debt investment debt and government debt

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