Economics Quiz

'The multiplier' usually refers to how an initial increase in investment, government spending or exports leads to a larger increase in the level of

• prices.

• interest rates.

• unemployment.

• income.

The accelerator principle illustrates the relationship between investment and the rate of change of

• unemployment.

• prices.

• government spending.

• national income.

The multiplier can refer to the effect of a change in the level of

• aggregate demand upon imports.

• national income upon aggregate demand.

• saving upon investment.

• investment upon national income.

According to the accelerator theory, investment is most likely to increase when

• the level of national income is high.

• the rate of growth of national income is increasing.

• interest rates are falling.

• there is spare capacity in the economy.

The relationship between the growth of national income and the resulting increase in investment is termed the

• accelerator.

• output gap.

• economic cycle.

• multiplier.

Which one of the following best illustrates the accelerator process?

• A change in one of the components of aggregate demand leading to a much greater increase in national income

• An increase in national income resulting in a proportionately larger rise in investment

• Government subsidies to firms for research and development helping to increase the rate of innovation

• An increase in government spending during a recession helping to stimulate investment

All other things being equal, when an increase in exports leads to a larger increase in national income, this illustrates

• an improvement in the balance of payments.

• demand-pull inflation.

• an increase in long-run aggregate supply.

• the operation of the multiplier.

The relationship between the growth of national income and the resulting increase in investment is known as the

• accelerator.

• output gap.

• economic cycle.

• multiplier.

The multiplier effect of an increase in investment in an economy is

• an increase in productive capacity.

• a larger increase in national income than in investment.

• an increase in the underlying trend rate of growth.

• the movement of the economy from recession to boom.

Which one of the following best illustrates the accelerator process?

• A change in one of the components of aggregate demand leading to a much greater increase in national income.

• An increase in national income resulting in a proportionately larger rise in investment.

• Government subsidies to firms for research and development helping to increase the rate of innovation.

• An increase in government spending during a recession helping to stimulate investment.