Question

1. Banks and mutual funds are examples of financial markets.

   True

   False

2. Nominal GDP uses constant base-year prices to place a value on the economy’s production of goods and services, while real GDP uses current prices to place a value on the economy’s production of goods and services.
   True
   False

3. For an economy as a whole, income must exceed expenditure.

   True

   False

4. International data on real GDP per person gives us a sense of how standards of living vary across countries.

   True

   False

5. Advocates of government-run employment agencies and public training programs believe they make job search more efficient.

   True

   False

6. A minimum wage that is below the equilibrium wage rate does not raise unemployment.

   True

   False

7. A decrease in taxes on interest income would increase the interest rate.

   True

   False

Answer 1

Q) Banks and mutual funds are examples of financial markets : False

Banks are financial institutions while mutual funds is an investment techinique. Financial market are your stock markets, capital markets etc.

Q) Nominal GDP uses constant base-year prices to place a value on the economy’s production of goods and services, while real GDP uses current prices to place a value on the economy’s production of goods and services. : False.

Its the reverse. Nominal GDP uses current year prices and real GDP uses base year prices.

Q) For an economy as a whole, income must exceed expenditure : False.

In equilibrium, Income is equal to expenditure.

Q) International data on real GDP per person gives us a sense of how standards of living vary across countries: True

Real GDP per capita removes the effects of inflation or price increases. Real GDP is a better measure of the standard of living than nominal GDP.

Q) Advocates of government-run employment agencies and public training programs believe they make job search more efficient : True

Efficiency is the main argument used by the advocates of government-run employment agencies and public training programs.

Q) A minimum wage that is below the equilibrium wage rate does not raise unemployment : True

A minimum wage rate must be greater than equilibrium rate as otherwise it will have no effect on the market equilibrium and labor employed won't change.

Q) A decrease in taxes on interest income would increase the interest rate: False

A decrease in taxes on interest income would decrease the interest rate. The decrease in tax would lead to increase in the benefit of saving, which will increase the supply of loanable funds, and decrease the equilibrium interest rate.