Question # 1

The measured of GDP includes

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Non market goods such as home making and child rearing

The benefits of clean air and water

Estimated values of activity in the underground economy

Purchases and sales of goods produced in previous periods

The expected real interest rate minus expected inflation rate.

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Nominal interest rate minus inflation rate

Nominal interest rate minus expected inflation rate.

Expected nominal interest rate minus inflation rate

Nominal interest rate plus expected inflation rate.

Which of the following macro economic variables is the most seasonally pro cyclical.

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Expenditure on services

The unemployment rate

Expenditure on durable goods

The real wage

Which of the following is not a primary cause of business cycle fluctuations according to real business cycle theory.

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A change in the production function

A change in the size of the labor force

A change in the money supply

A change in the real quantity of government purchases

Classical economics believe that in the short run.

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Money neutrality exists and prices adjust rapidly

Money neutrality does not exist and prices adjust rapidly

Money neutrality exists and prices do not adjust rapidly.

The Root Mean square Error for the actual sales and sales forecast for 1985 and 1986 is.

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20.2

19.9

14.7

17.2

The value of a household's assets minus the value of its liabilities is called.

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Income

Debt

Stock

Wealth

An increase in the expected real interest rate tends to.

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Raise desired saving only

Raise desired investment only

Raise both desired savings and desired investment

Raise desired savings, but lower desired investment.

The reduction of the inflation rate is called

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Deflation

Disinflation

Inflation

Reflation

In the long run an increase in government purchases of military equipment would cause output to _________ and the aggregate price level to

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Stay constant fall

fall ; fall

fall ; stay constant

stay constant ; rise

The efficiency wage model can be modified to allow real wages to vary over the business cycle by assuming that.

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Workers effort may depend on the unemployment rate and the real wage

During a recession labor supply will decrease reducing the efficiency wage

During a recession productivity wil fall causing a reduction in the efficiency wage

During a boom labor demand will increase, causing the efficiency wage to rise

The through of a business cycle occurs when ______ hits its lowest point.

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Inflation

The money supply

Aggregate economic activity

The unemployment rate

According to Keynesian macro economics price adjust _____ to shocks, so the government should.

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Slowly ; do little

Rapidly ; do little

Rapidly ; fight recessions

Slowly ; fight recessions

The Keynesian theory is consistent with the business cycle fact that inflation is

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Procyclical and leading

Procyclical and lagging

Countercyclical and leading

All of these

The term household production refers to

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Output produced by forcing children to work

Output produced by workers who are telecommuting

Services provided directly to households such as lawn mowing by landscape companies.

Output produced at home

The low point in the business cycle is referred to as the

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Expansion

Boom

Trough

Peak

Using the Keynesian model the effect of a government imposed celling on interest rates paid on personal checking accounts that is lower than the current market interest rate would be to cause._ in the real interest rate and _ in input out in the short sun.

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A decrease ; a decrease

A decrease ; no change

A decrease ; an increase

An increase ; a decrease

The aggregate demand curve

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Is vertical

Slopes upward

Is horizontal

Slopes downward

Net National product equals.

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Gross national product minus indirect business taxes

Gross national product minus depreciation

National income minus indirect business taxes

National income pluses depreciation

Ahmed regression model yields a Durbin Watson d statistic whose value is 0.002. The results indicate.

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Positive serial correlation

the presence of multicollinearity

No serial correlation

Negative serial correlation

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