Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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1.
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1. In an open economy, if total (private plus
government) saving exceeds total investment expenditure, then
a. | imports must exceed exports. | b. | exports must exceed
imports. | c. | the government must be borrowing from abroad. | d. | GDP is bigger than
the sum of total consumption, investment, government spending and net
exports. |
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2.
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The price of a 'representative' basket of various commodities in a
certain year as a proportion of the price of the same basket of commodities in a previous year
measures
a. | the inflation rate. | c. | teal GDP. | b. | a price index. | d. | nominal GDP. |
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3.
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Gross National Product (GNP) is
a. | Gross Domestic Product (GDP) minus
depreciation. | b. | Net National
Product (NNP) plus depreciation. | c. | National income
discounted by the GDP deflator. | d. | Income from
foreign investments. |
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4.
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If C = Consumption, S = Saving, I = Investment, G =
Government Spending, T = Taxes, X = Exports and M = Imports; then injections to, and leakages from,
the circular flow of income are ALWAYS equal when:
a. | C+S+I+G+T+X+M = 0 | c. | S+T+M
= I+G+X | b. | (S-G)=(I-T) = M-X | d. | C+I+G+X=M+T+S |
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5.
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Which of the following is not a leakage in the circular flow of income?
a. | Savings | c. | Exports | b. | Taxes | d. | Imports |
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6.
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Which one of the following would be included in
GNP?
a. | Social security payments | c. | An insurance payment for fire damage | b. | A gambler’s winnings | d. | The earnings of a
policeman |
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7.
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Which of the following is not an injection into the circular flow of
income?
a. | Consumption | c. | Investment | b. | Government spending | d. | Exports |
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8.
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Which of the following is not one of the three approaches to measuring
GDP?
a. | Expenditure method | c. | Output method | b. | Value added method | d. | Income method |
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9.
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The total value of all income earned by
residents of a country is equal to
a. | national income. | c. | GNP at
factor cost. | b. | personal
disposable income. | d. | GDP at factor
cost |
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10.
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Which one of the following is an injection into the
circular flow of income?
a. | Investment | c. | Consumption | b. | Taxation | d. | Saving |
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