The interest-rate effect is the impact on real GDP caused by the direct relationship between the interest rate and the:
a. price level.
b. exports.
c. consumption.
d. investment.
QUESTION 2National income is equal to gross domestic product minus:
a. indirect business taxes.
b. depreciation.
c. personal taxes.
d. retained earnings.
e. consumption spending.
QUESTION 3When the supply of credit is fixed, an increase in the price level stimulates the demand for credit, which in turn reduces consumption and investment spending. This argument is called the:
a. real balances effect.
b. interest-rate effect.
c. net exports effect.
d. substitution effect.
QUESTION 4National income:
a. represents total wages and salaries in an economy.
b. equals GDP minus indirect business taxes.
c. equals GDP minus depreciation.
d. equals C + I + G + (X M).
e. is the value of existing capital stock used up in making goods.
QUESTION 5The interest-rate effect is the impact on real GDP caused by the ____ relationship between the price level and the interest rate.
a. direct
b. independent
c. linear
d. inverse
QUESTION 6National income is derived from gross domestic product by subtracting:
a. transfer payments.
b. profits.
c. an allowance for depreciation of capital equipment.
d. net exports.