Business Economics and Business and Commercial Knowledge - 2 mtp MTP

1. Which of the following activities is excluded from GDP, causing GDP to understate a nation's well-being? (a) the services of used-car dealers (b) the child-care services provided by stay-at-home parents (c) the construction of new houses (d) government expenditures on military equipment

2. Which of the following is a final good or service? (a) diesel fuel bought for a delivery truck (b) fertilizer purchased by a farm supplier (c) ahaircut (d) Chevrolet windows purchased by a General Motors assembly plant

(a) private investment minus public investment. (b) net investment plus replacement investment. (c) net investment after it has been "inflated" for changes in the price level. (d) net investment plus net exports.

4. Which of the economists below most likely advocated activist government policies? (a) Milton Friedman (b) John Maynard Keynes (c) Robert Lucas (d) Thomas Sargent

5. Increases in unwanted business inventories are counted as: (a) adecrease in the capital stock (b) anincrease in consumption (c) anincrease in investment (d) anincrease in depreciation

6. If the inflation rate starts to increase, a central bank most likely will: (a) try to stimulate aggregate supply through open market purchases (b) change short-term interest rates through open market sales (c) increase short-term interest rates by buying government bonds 332 10. 11. 12. 13. (d) send signals to financial markets about upcoming open market purchases What is the similarity between the Subprime Crisis and Greece Crisis? (a) High Financial Leverage (b) Low-Interest Rate (c) Credit Expansion (d)…