Question

1) Which of the following is not an example of the domestic expenditure multiplier concept?

Select the correct answer below:

a) Len helps his friend move to a new home

b) Lisa goes on vacation in Italy

c) Rose buys a new purse for $100 at a retailer. The retailer uses its revenues to pay wages to its workers.

d) Jane watches her little brother while her parents are at work

2) What effect would higher domestic price levels have on a country's net exports?

Select the correct answer below:

a) net exports would increase, since imports and exports would both increase.

b) net exports would decrease, since exports would decrease and imports would increase.

c) net exports would decrease, since exports and imports would both decrease.

d) net exports would increase, since exports would increase and imports would decrease.

3) Which of the following are components of the Balance Sheet?

Select all that apply:

a) profit

b) loss

c) net worth

d) liabilities

4) Which of the following statements is not true?

Select the correct answer below:

a) According Keynesian economists, recession can be reduced by implementing tax cuts.

b) According Keynesian economists, government intervention in the economy is not necessary as the economy can self-correct out of a recession.

c) According Keynesian economists, recession can be reduced by an increase in government spending.

d) According Keynesian economists, the government should implement policy to help the economy if it is experiencing recession.

5) Neoclassical economists believe that a stable level of output occurs when the economy reaches

Select the correct answer below:

a) zero unemployment

b) the natural level of unemployment

c) low levels of unemployment

d) high levels of unemployment

Answer 1

1) option D is correct

2) option B is best because of increase in domestic price level , foreigners will prefer to spend less on domestic goods and people residing in domestic economy will prefer to import more .

3) Net worth and liabilities are the components of balance sheet . Profit and loss are the components of profit and loss account

4) Option B is not correct because keynesian economists believe fiscal policies are very helpful instrument to fight recession , depression . They focus more on Government intervention to solve economic imbalances .

5) Option B is correct .