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ECO 221A Sample Questions I The BEST Answer

This document contains 15 multiple choice questions related to economic concepts like stagflation, potential output, stabilization policies, Okun's Law, and indicators like GDP, CPI, and the GDP deflator. The questions are meant to test understanding of core macroeconomic terms and theories, and identify the most accurate statement among 3 choices for each question.

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50 views2 pages

ECO 221A Sample Questions I The BEST Answer

This document contains 15 multiple choice questions related to economic concepts like stagflation, potential output, stabilization policies, Okun's Law, and indicators like GDP, CPI, and the GDP deflator. The questions are meant to test understanding of core macroeconomic terms and theories, and identify the most accurate statement among 3 choices for each question.

Uploaded by

me hahaha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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ECO 221A

Sample Questions I

√ the BEST answer

1. In stagflation
(a) potential output falls.
(b) the inflation rate declines.
(c) the economy is in recession.

2. At full employment
(a) the economy has zero unemployment rate.
(b) the inflation rate can be positive.
(c) the economy produces trend output.

3. Potential output
(a) is also the full employment output of the economy.
(b) is also the trend output of the economy.
(c) can be less than full employment output.

4. In a cyclical peak
(a) the economy is at full employment.
(b) the economy is booming!
(c) the economy may be above the full employment level.

5. Stabilisation policies
(a) stabilise the long term growth of the economy.
(b) are meant to reach full employment.
(c) involve both reducing and increasing government expenditures.

6. Cyclical macroeconomic theory

(a) assumes given amount of resources and technology.


(b) does not deal with monetary and fiscal policies.
(c) assumes full employment of resources.

7. Okun’s Law
(a) is a relationship between inflation rate and output growth.
(b) says that output growth and unemployment are positively related.
(c) None of the above

8. Classical macroeconomists believe that


(a) government should actively pursue monetary and fiscal policies.
(b) government has some important social responsibilities.
(c) government should not interfere in the matters of the economy.

9. The national income accounting methods


(a) recognise the services rendered in trading activities.
(b) consider output of the self employed.
(c) deduct the value lost due to environmental degradation.

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10. Retained earnings
(a) are included in GDP.
(b) are not a part of the current economic activities.
(c) are excluded from disposable income.

11. Personal disposable income


(a) do not contain interest income.
(b) do not contain dividend income.
(c) contains retained earnings.

12. Transfer Payments


(a) are a part of National Income.
(b) are a part of current economic activities.
(c) are a part of Personal Income.

13. CPI

(a) contains semi-finished goods.


(b) contains raw materials.
(c) contains primary articles.

14. GDP deflator


(a) is a ratio of constant GDP over nominal GDP multiplied by 100.
(b) is a ratio of nominal GDP over constant GDP multiplied by 100.
(c) NOTA

15. CPI
(a) indicates future price changes.
(b) indicates changes in cost of living.
(c) NOTA

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