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Multiplechoicequestions
StudentResources

Chapter9:Nationalincomedetermination

Multiplechoicequestions

Multiplechoicequestions

Trythemultiplechoicequestionsbelowtotestyourknowledgeofthischapter.Onceyouhavecompletedthe
test,clickon'SubmitAnswersforGrading'togetyourresults.

Thisactivitycontains20questions.

Whichtwoofthefollowingarelikelytoraisethevalueofnational
output/income?

Riseinwithdrawalsexceedingtheriseininjections

Riseinwithdrawalsmatchingtheriseininjections

Riseinthecombinedvalueofsavings,taxesandimports,injectionsunchanged.

Riseinwithdrawalsfallingshortoftheriseininjections

Riseinthecombinedvalueofinvestment,publicexpenditureandexports,withdrawals
unchanged

Whichtwoofthefollowingarelikelytoreducethevalueofnational
output/income?

Riseinwithdrawalsfallingshortoftheriseininjections

Riseinthecombinedvalueofsavings,taxesandimports,injectionsunchanged.

Riseinwithdrawalsmatchingtheriseininjections

Riseinthecombinedvalueofinvestment,publicexpenditureandexports,withdrawals
unchanged
Riseinwithdrawalsexceedingtheriseininjections

Thevalueofnationaloutputproducedbyresidentslocatedwithinthecountry,
beforedepreciationandincludingtheinfluenceoftaxesandsubsidies,isknown
as:

NNPatfactorcost.
GDPatfactorcost
GDPatmarketprices
GNPatfactorcost
GNPatmarketprices

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Multiplechoicequestions

Thevalueofnationaloutputproducedbyresidentsofacountry,whether
locatedathomeoroverseas,afterdepreciationandexcludingtheinfluenceof
taxesandsubsidies,isknownas:

GNPatmarketprices
GDPatmarketprices
NNPatfactorcost.
GDPatfactorcost
GNPatfactorcost

WhichofthefollowingrepresentsthedifferencebetweenGNPatmarketprices
andGDPatmarketprices?

Thevalueofdepreciation
Netpropertyincomefromabroad.
Imports
Thevalueoftaxesandsubsidies
Exports

Whichofthefollowingisawidelyusedmeasureofthestandardofliving?

Nominaloutput(income)perheadofpopulation
Realoutput(income)perunitofcapital.
Realoutput(income)perheadofpopulation
Nominaloutput(income)peremployedperson
Realoutput(income)peremployedperson

Whichtwoofthefollowingsituationsarelikelytoincreasetherateofinflation
whentheeconomyisalreadyatfullcapacity?

Anincreaseinconsumerspending
Anincreaseinsavings
Areductioninratesofincometax
Areductioningovernmentspending.
Anincreaseinratesofincometax

Increasesinwhichtwoofthefollowingwouldbelikelypoliciesfora
governmenttryingtoclosea'deflationary'gap?

Consumerspending

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Multiplechoicequestions

Governmentspending.
Taxes
Imports
Savings

Increasesinwhichtwoofthefollowingwouldbelikelypoliciesfora
governmenttryingtoeliminatean'inflationarygap'?

Savings
Investment
Governmentspending
Exports
Taxes.

Whichoneofthefollowingwillmakethevalueofthenationalincomemultiplier
equal4?

mps=0.2,mpt=0.1,mpm=0.2
mps=0.1,mpt=0.1,mpm=0.05
mps=0.15,mpt=0.2,mpm=0.05
mps=0.2,mpt=0.1,mpm=0.1
mps=0.1,mpt=0.1,mpm=0.1

Ifnationalincomerisesby10bnafteraninjectionof2bn,thenthe'national
incomemultiplier'isonefifth.

True
False

Ifeveryonesavesmore,then(otherthingsequal)withdrawalsfromthecircular
flowwillincreaseandnationalincomewillfall.

True
False

Ifinjectionsexceedwithdrawalsatthe'fullcapacity'levelofnationalincome,
thenwehavea'deflationarygap'.

True
False

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Multiplechoicequestions

Ifwithdrawalsfallshortofinjectionsatthe'fullcapacity'levelofnational
income,thenwehavean'inflationarygap'.

True
False

AnincreaseinpensionrelatedincomeswillincreaseGDP.

True
False

Weuse'valueadded'intheoutputmethodtoavoiddoublecounting.

True
False

Measuringnationalincomeat'factorcost'meansthatwehavetakenaccount
ofthedistortionscausedbytaxesandsubsidiesonproductprices.

True
False

Anincreaseintheaveragepropensitytowithdrawwill,otherthingsequal,
reducetheequilibriumlevelofnationalincome.

True
False

Adecreaseintheaveragepropensitytoconsumewill,otherthingsequal,
increasetheequilibriumlevelofnationalincome.

True
False

Anincreaseingovernmentexpenditurewill,otherthingsequal,increasethe
equilibriumlevelofnationalincome.

True
False

Somequestionsinthisexercisemayhavemorethanonecorrectanswer.Toanswersuchquestionscorrectly,you
mustselectallthecorrectanswers.Alsonotethatanswerchoicesinthisexerciseappearinadifferentordereach
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Multiplechoicequestions

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