econmic

1. An economy's maximum output is reached during the expansion phase of the business cycle.

	1.	True
	2.	False

1 points  

Question 2

1.  

Saving, taxes, and transfer payments are all leakages from the spending stream.

	1.	True
	2.	False

1 points  

Question 3

1.  

All else equal, investment spending would likely decrease following a decrease in the interest rate for borrowed funds.

	1.	True
	2.	False

1 points  

Question 4

1.  

Spending by U.S. households on imports is an injection into the economy.

	1.	True
	2.	False

1 points  

Question 5

1.  

If leakages from, and injections into, the spending stream are equal, the level of economic activity will not change.

	1.	True
	2.	False

1 points  

Question 6

1.  

The multiplier effect refers to the change in total output caused by a smaller change in income-determined spending.

	1.	True
	2.	False

1 points  

Question 7

1.  

The multiplier will increase when saving as a percentage of earned income falls.

	1.	True
	2.	False

1 points  

Question 8

1.  

The multiplier effect is equal to the change in nonincome-determined spending divided by the percentage of additional income that is not spent.

	1.	True
	2.	False

1 points  

Question 9

1.  

Inflationary pressure will intensify when the economy is at full employment if leakages from the spending stream are greater than injections.

	1.	True
	2.	False

1 points  

Question 10

1.  

The expectation of inflation has no effect on the overall level of prices.

	1.	True
	2.	False

1. A person who is voluntarily out of work and seeking work is frictionally unemployed.

	1.	True
	2.	False

1 points  

Question 2

1.  

The labor force includes only people 16 years of age and older who are working.

	1.	True
	2.	False

1 points  

Question 3

1.  

The natural rate of unemployment occurs when only the frictionally and structurally unemployed are out of work.

	1.	True
	2.	False

1 points  

Question 4

1.  

Inflation occurs when there is an increase in the general level of prices and a decrease in the purchasing power of money.

	1.	True
	2.	False

1 points  

Question 5

1.  

Cost-push inflation tends to occur when output grows at a faster rate than the supply of money in the economy.

	1.	True
	2.	False

1 points  

Question 6

1.  

Deflation is a slowing in the rate of inflation.

	1.	True
	2.	False

1 points  

Question 7

1.  

Changes in the level of prices lead to changes in money GDP but not real GDP.

	1.	True
	2.	False

1 points  

Question 8

1.  

An increase in real GDP will always result in an increase in real per capita GDP.

	1.	True
	2.	False

1 points  

Question 9

1.  

Higher wages arising from higher productivity always cause inflationary pressure.

	1.	True
	2.	False

1 points  

Question 10

1.  

It is possible that an economy may not be able to operate with both full employment and stable prices.

	1.	True
	2.	False