1. During inflation, if your nominal income remains the same, your real income w
ID: 1105432 • Letter: 1
Question
1. During inflation, if your nominal income remains the same, your real income will:
A) Fall
B) Rise
C) Stay the same
D) Equal your money income
2. The price level will erode __________ if nominal income remains unchanged.
A) real prices
B) real interest rate
C) unemployment rate and total production
D) real income
3. During inflation:
A) interest rate fall
B) employment generally falls
C) there is a reduced incentive to save
D) the price index generally stop rising
4. In Aggregate Demand & Supply Model, there exists an inverse and direct relationship between which two variables.
A) Unemployment and Real GDP
B) Inflation and interest rate
C) Real GDP and economic growth
D) Real GDP and price level
E) The US and Japan
5. Which is most likely to cause a recession?
A) A balanced budget
B) a decrease in total spending
C) a decrease in interest rate
D) an increase in total spending
E) none of the above
6. In macroeconomic equilibrium:
A) total spending is constant
B) total output exceeds total spending
C) the unemployment rate falls
D) savings exceed investment spending
E) Aggregate demand and aggregate supply are Unequal
7. The expansionary phase of a business cycle is a —
A) Peak
B) Trough (Depression)
C) Business phase
D) Price taker
E) Recovery
8. ———————— increases, reaches its maximum, falls, or reaches minimum during the phases of a business cycle.
A) Real GNP
B) Real GPD
C) Real CPI
D) Real GDP
E) Nominal GDP
9. Which one of the following is not a cause of recovery?
A) Large output
B) Increase in spending
C) decrease in prices
D) Increase in employment
E) Increase in income
10. If savings rise while government spending falls:
A) production will rise
B) economic growth will occur
C) recession will follow
D) unemployment will fall
E) recovery is at hand
11. Uses other than spending from earned income, such as taxes and savings are ——————— from the spending stream,
A) Injections
B) Leakages
C) Investments
D) Retained earnings
E) none of the above
12. Which of the following sectors contributes the most to the US gross domestic product?
A) Households
B) Government
C) Service sector
D) Businesses
E) Financial
13. The economy will faIl into a recession when —-—----- - is greater than
A) Investment/household borrowing/ saving
B) Saving? investment/household spending
C) Income/saving! borrowing
D) Income! total spending! borrowing
E) None of the above
14. With an aggregate supply function that is continually positively sloped (vertical), a reduction in aggregate demand leads to:
A) Rising prices
B) Higher interest rate
C) Falling prices
D) Full employment
15 Suppose households spend 60% of additional income they receive
(MPC is .6) Find the multiplier.
A) 2.6
8) 2.4
C) 2.5
D) 3
E) 2.3
Explanation / Answer
1. Real income = nominal income - inflation
When nominal income remains same and inflation rises, real income will fall.
OPTION A
2. Price level will erode real income if nominal income doesn't change.
OPTION D
3. OPTION B
4. OPTION D
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.