Question 1
Higher interest rates tend to:
A.
Shift LRAS right immediately B.
Reduce investment C.
Increase investment always D.
Raise exports only
Question 2
What is meant by gfcf?
A.
Gross fixed capital formation — plant, machinery, buildings. B.
Gross investment minus depreciation. C.
Keynes: unpredictable business confidence affecting I. D.
Spending by firms on capital goods to increase productive capacity.
Question 3
Net investment equals:
A.
C + I + G B.
Gross investment minus depreciation C.
GDP per capita D.
Exports minus imports
Question 4
What is meant by accelerator?
A.
Investment raises capital per worker. B.
Spending by firms on capital goods to increase productive capacity. C.
Gross investment minus depreciation. D.
Investment depends on expected change in demand.
Question 5
What is meant by interest rate effect on i?
A.
Gross fixed capital formation — plant, machinery, buildings. B.
Higher G raises interest rates and may reduce private I. C.
Higher rates raise cost of borrowing → lower I. D.
Keynes: unpredictable business confidence affecting I.
Question 6
Animal spirits describe:
A.
Import quotas B.
Unpredictable business confidence C.
CPI measurement D.
Government tax law
Question 7
Investment in AD refers to:
A.
Exports only B.
Firm spending on capital goods C.
Household food spending D.
Government transfer payments
Question 8
What is meant by productivity link?
A.
Total capital spending before depreciation. B.
Higher rates raise cost of borrowing → lower I. C.
Higher G raises interest rates and may reduce private I. D.
Investment raises capital per worker.
Question 9
What is meant by animal spirits?
A.
Investment raises capital per worker. B.
Higher G raises interest rates and may reduce private I. C.
Keynes: unpredictable business confidence affecting I. D.
Spending by firms on capital goods to increase productive capacity.
Question 10
What is meant by investment (i)?
A.
Total capital spending before depreciation. B.
Keynes: unpredictable business confidence affecting I. C.
Spending by firms on capital goods to increase productive capacity. D.
Shows inverse relationship between interest rate and I.
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