Principles of Economics Chapter 23 Quiz
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Questions and Answers

What is the focus of microeconomics?

  • Inflation and unemployment
  • Gross Domestic Product (GDP)
  • Households and firms decision-making (correct)
  • Economy-wide phenomena

What is the main subject of macroeconomics?

  • Inflation and economic growth
  • Market interactions
  • Economy-wide phenomena (correct)
  • Household decision-making

What does GDP stand for?

  • Government Development Program
  • Gross Domestic Product (correct)
  • Gross Domestic Policy
  • Growth Determination Process

What is one of the components of GDP?

<p>Government spending (B)</p> Signup and view all the answers

How is GDP corrected for inflation?

<p>By using the Consumer Price Index (CPI) (B)</p> Signup and view all the answers

Does GDP measure society's well-being?

<p>No, it only measures economic output (B)</p> Signup and view all the answers

What does the Gross Domestic Product (GDP) measure?

<p>Total income of everyone in the economy (B)</p> Signup and view all the answers

Why does income equal expenditure for the economy as a whole?

<p>Because every dollar a buyer spends is a dollar of income for the seller (A)</p> Signup and view all the answers

What happens with total expenditure when Nalah pays James $50 to mow her lawn?

<p>Total expenditure rises by $50 (C)</p> Signup and view all the answers

Who owns the factors of production according to the circular-flow diagram?

<p>Households (A)</p> Signup and view all the answers

What do firms do with the factors of production according to the circular-flow diagram?

<p>Use them to produce goods and services (A)</p> Signup and view all the answers

What do factor payments refer to in the context of the circular-flow diagram?

<p>Payments made by firms for purchasing factors of production (A)</p> Signup and view all the answers

How is GDP depicted in the circular-flow diagram?

<p>As spending and income (B)</p> Signup and view all the answers

What are considered as factors of production in the circular-flow context?

<p>Inputs like labor, land, capital, and natural resources (C)</p> Signup and view all the answers

What is illustrated in the circular-flow diagram?

<p>Spending, revenue, factor payments, and income in the macroeconomy (D)</p> Signup and view all the answers

What does the Circular-Flow Diagram illustrate?

<p>The interaction between businesses and individuals in financial transactions (D)</p> Signup and view all the answers

Which of the following is a characteristic of microeconomics?

<p>Interactions in markets (A)</p> Signup and view all the answers

What does the Circular-Flow Diagram primarily illustrate?

<p>Interactions in markets (B)</p> Signup and view all the answers

How does GDP relate to a nation's total income and spending?

<p>It equals the total value of goods and services produced in the economy (B)</p> Signup and view all the answers

What are considered as factors of production in the circular-flow context?

<p>Land, labor, and capital (D)</p> Signup and view all the answers

Why does income equal expenditure for the economy as a whole?

<p>Because every dollar spent by buyers becomes income to sellers (C)</p> Signup and view all the answers

What is the main subject of macroeconomics?

<p>Inflation, unemployment, and economic growth (C)</p> Signup and view all the answers

What does the Circular-Flow Diagram primarily illustrate?

<p>Spending and revenue in the economy (C)</p> Signup and view all the answers

Why does income equal expenditure for the economy as a whole?

<p>Because every dollar a buyer spends is a dollar of income for the seller (D)</p> Signup and view all the answers

What is the focus of microeconomics?

<p>The behavior of individual consumers and firms (D)</p> Signup and view all the answers

What are considered as factors of production in the circular-flow context?

<p>Inputs like labor, land, capital, and natural resources (A)</p> Signup and view all the answers

How is GDP corrected for inflation?

<p>By using the Consumer Price Index (CPI) (C)</p> Signup and view all the answers

What do factor payments refer to in the context of the circular-flow diagram?

<p>'Payments to the factors of production (e.g., wages, rent)' (D)</p> Signup and view all the answers

What does GDP stand for?

<p>'Gross Domestic Product' (D)</p> Signup and view all the answers

How does GDP relate to a nation's total income and spending?

<p>'GDP reflects both income and spending' (D)</p> Signup and view all the answers

What is the main subject of macroeconomics?

<p>'National income analysis' (A)</p> Signup and view all the answers

What happens with total expenditure when Nalah pays James $50 to mow her lawn?

<p>'Total expenditure rises by $50' (D)</p> Signup and view all the answers

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