Which of the following is an example of a public good?

• A) Private healthcare
• B) National defense
• C) Cable television subscription
• D) Fast food restaurant

According to Classical economists, the aggregate demand is:

• A) Upward sloping.
• B) Vertical.
• C) Downward sloping.
• D) Horizontal.

According to classical economics, what is the role of government in the economy?

• A) It should control the production and distribution of goods and services.
• B) It should avoid intervention and allow the market to self-adjust.
• C) It should intervene to stabilize prices.
• D) It should actively manage the economy to achieve full employment.

Unemployment due to changing job or due to movement around the country is known as:

• A) Structural unemployment.
• B) Seasonal unemployment.
• C) Cyclical unemployment.
• D) Frictional unemployment.

Let the marginal propensity to consume equals 0.75. The value of multiplier in this case is:

• A) 1.33.
• B) 4.
• C) 0.25.
• D) 2.33.

Suppose the overall production of goods and services increases in a country because of technological improvement. This will shift:

• A) Aggregate supply curve to the left.
• B) Aggregate demand curve to the right.
• C) Aggregate supply curve to the right.
• D) Aggregate demand curve to the left.

The method which sums up all the incomes earned by all factors of production in the economy is known as:

• A) The spending method
• B) The value added method
• C) The expenditure method
• D) The factor income method

In Keynesian economics, a deflationary gap occurs when aggregate expenditures are:

• A) Less than aggregate production.
• B) Equal to aggregate production.
• C) Greater than aggregate production.
• D) Undetermined.

In Keynesian economics, if aggregate expenditures are less than aggregate output then:

• A) Aggregate output increases.
• B) Employment decreases.
• C) The price level rises.
• D) Inventories decrease.

Naima has just finished school and is waiting to report to his new job at the beginning of the month. Naima is considered to be:

• A) Cyclically unemployed.
• B) Structurally unemployed.
• C) Employed.
• D) Frictionally unemployed.

The relationship between saving and income is known as the:

• A) Saving function.
• B) 45-degree line.
• C) Consumption function.
• D) Disposable income.

Final goods are:

• A) For Direct use by the consumers.
• B) For further processing.
• C) Perishable goods only.
• D) Inferior goods only.

The investment demand curve shows the relationship between the levels of:

• A) Investment and interest rate.
• B) Investment and consumption.
• C) Consumption and interest rate.
• D) Investment and saving.

Rising inflation means that price level is rising at a(n):

• A) Fluctuating rate.
• B) Increasing rate.
• C) Constant Rate.
• D) Decreasing rate.

The theory regarding to the tradeoff between unemployment and inflation is established by:

• A) John Maynard Keynes
• B) Joseph Schumpeter
• C) Milton Friedman
• D) W.A. Phillips

Counting a product more than once in National income measurement is known as:

• A) Double counting.
• B) Counting error.
• C) Statistical error.
• D) Mathematical bias.

The saving function is:

• A) The ratio of a change in planned saving to a change in disposable income.
• B) The level of planned saving at different levels of disposable income.
• C) The level of planned saving for every change in disposable income.
• D) The ratio of total saving to total disposable income.

A reason why some economists basically ignore the short run is because they believe that the economy:

• A) Can only be graphed with a horizontal curve.
• B) Can only be graphed with a vertical curve.
• C) Has self-correcting mechanisms.
• D) Never needs correction.

In Keynesian economics, an inflationary gap results if aggregate expenditures are:

• A) Equal to aggregate production.
• B) Undetermined.
• C) Less than aggregate production.
• D) Greater than aggregate production.

The most commonly used index to calculate the inflation is:

• A) Producer Price Index (PPI)
• B) Consumer Price Index (CPI)
• C) GDP Deflator
• D) Wholesale Price Index (WPI)