Macroeconomics

‭Chapter 2: Review Questions‬ ‭1. What is the simple circular flow model in economics?‬

‭A.‬ ‭A model that describes the flow of money out of the economy.‬ ‭B.‬ ‭A model that illustrates the interdependence of households and businesses in the production‬ ‭and consumption of goods and services.‬ ‭C.‬ ‭A model that shows the relationship between inflation and unemployment.‬ ‭D.‬ ‭A model that explains the causes of structural unemployment.‬ ‭2. What are product markets and factor markets?‬ ‭A.‬ ‭Product‬‭markets‬‭are‬‭where‬‭factors‬‭of‬‭production‬‭are‬‭bought‬‭and‬‭sold,‬‭while‬‭factor‬‭markets‬‭are‬ ‭where fnished goods and services are exchanged.‬ ‭B.‬ ‭Product‬ ‭markets‬ ‭are‬ ‭where‬ ‭fnished‬ ‭goods‬ ‭and‬ ‭services‬ ‭are‬ ‭bought‬ ‭and‬ ‭sold,‬ ‭while‬ ‭factor‬ ‭markets are where factors of production are exchanged.‬ ‭C.‬ ‭Both are terms for the same market.‬ ‭D.‬ ‭Neither of them exists in the economic context.‬ ‭3. What is Gross Domestic Product (GDP)?‬ ‭A.‬ ‭The total value of goods and services produced within a country's borders in a specifc time‬ ‭period.‬ ‭B.‬ ‭The total amount of money held by households.‬ ‭C.‬ ‭The total amount of government spending in an economy.‬ ‭D.‬ ‭The total value of imports and exports.‬ ‭4. Which of the following is included in Japan’s GDP?‬

‭A.‬ ‭The market value of shoes made in Italy by Japanese citizens.‬ ‭B.‬ ‭The market value of wine made in France and sold in Japan.‬ ‭C.‬ ‭The value of American stocks bought by Japanese citizens.‬ ‭D.‬ ‭The market value of cars made in Japan by Chinese workers.‬ ‭5. What are the three primary methods of measuring GDP?‬

‭A.‬ ‭The inflation approach, the demand-pull approach, and the cost-push approach.‬ ‭B.‬ ‭The nominal approach, the real approach, and the constant dollar approach.‬ ‭C.‬ ‭The supply approach, the demand approach, and the market equilibrium approach.‬ ‭D.‬ ‭The expenditure approach, the value added approach, and the income approach.‬ ‭6. What is the difference between nominal and real values?‬ ‭A.‬ ‭Nominal values are adjusted for inflation, while real values are not.‬ ‭B.‬ ‭Nominal values are not adjusted for inflation, while real values are adjusted.‬ ‭C.‬ ‭Both nominal and real values are the same.‬ ‭D.‬ ‭Neither nominal nor real values exist in economics.‬

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