Economics Quiz RK 2

Gross Domestic Investment is:

• investments in fund market

• net investment plus capital consumption

• gross investment plus consumption

• net investment minus consumption

• foreign direct investment

According to the Baumol-Tobin model, demand for money depends on:

• interest rates and transaction frequency

• consumer savings rate

• global inflation

• business investment

• price levels only

The Life Cycle Theory by Modigliani implies:

• consumption is constant through life stages

• individuals save more as they approach retirement

• people do not account for retirement

• income levels rise at a fixed rate

• long-term investments are avoided

Keynesian theory economists argue that:

• unemployment is a permanent condition

• aggregate demand drives economic performance

• markets always self-correct without intervention

• only supply impacts growth

• inflation is self-regulating

Basic macroeconomic indicators include:

• stock market indices

• individual spending habits

• global trade volume

• elasticity of demand

• Gross Domestic Product (GDP)

Components of GDP are:

• only government and business investment

• consumer spending, investment, government spending, net exports

• production costs

• imported goods

• consumer savings only

Open Market Operations (OMO) primarily involve:

• imposing import tariffs

• tax cuts and rebates

• changing wage rates

• regulation of foreign reserves

• buying and selling of government bonds

The main objective of monetary policy is:

• Balancing foreign trade

• Increasing government spending

• Stabilizing employment & inflation

• Subsidizing key industries

• Direct control over fiscal policies

The Marginal Propensity to Consume (MPC) represents:

• Total income divided by consumption

• Total savings multiplied by income

• Tax rate effect on income

• The change in savings given a change in income

• The portion of additional income that is consumed

Nonmarket activities refer to:

• Private sector transactions

• National income

• Government spending on public goods

• Household and volunteer work

• Export activities