Question

9.            Deflation:

               A.can result in an increase in employment.

               B.raises the cost of making purchases.

               C.is caused by changes in interest rates. C is Wrong

               D. encourages people to hold cash rather than invest.

15.         Which of the following causes an outflow of funds from a domestic economy?

               A.household savings

               B.government transfer payments B is Wrong

               C.imports

               D.government tax collections

12.         In the factor markets:

               A.households supply resources.

               B.firms demand goods and services.

               C.households supply goods and services.

               D.firms supply goods and services. D is Wrong

19.         Which of the following is FALSE? Gross domestic product:

               A.grows during an expansion.

               B.is aggregate output.

               C.is the total production of all final and intermediate goods and services.

               D.is the total production of final goods and services. D is Wrong

Answer 1

9.          The deflation means a decrease in the overall price level in the economy.

           Therefore deflation encourages people to hold cash rather than invest because due to deflation, the profitability of the firm decreases, so they cut the production and reduces the investment.

Hence option D is the correct answer.

15.     

When a country imports, then payments are done for it, therefore the fund goes out of the country.   

Hence option C is the correct answer.

12.         In the factor markets households supply its labor to the firms. Therefore it can be said that households supply resources.

Hence option A is the correct answer.

19.       

The GDP can be defined the market value of all goods and services which are produced in the domestic territory of the country in the current financial years.

GDP=C+I+G+X-M

It means GDP does not consider intermediate goods and services.

Hence option C is false about the GDP.

Hence option C is the correct answer.

C.is the total production of all final and intermediate goods and services.