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</p> Signup and view all the answers

    How is GDP corrected for inflation?

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

    Does GDP measure society's well-being?

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

    What does the Gross Domestic Product (GDP) measure?

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

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

    <p>Households</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</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</p> Signup and view all the answers

    How is GDP depicted in the circular-flow diagram?

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

    What does the Circular-Flow Diagram illustrate?

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

    Which of the following is a characteristic of microeconomics?

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

    What does the Circular-Flow Diagram primarily illustrate?

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

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

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

    What is the main subject of macroeconomics?

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

    What does the Circular-Flow Diagram primarily illustrate?

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

    What is the focus of microeconomics?

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

    How is GDP corrected for inflation?

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

    What does GDP stand for?

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

    What is the main subject of macroeconomics?

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

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