1. Which of the following represents the relationship between Disposable income (DI), consumption (C), and saving (S)?

1. Which of the following represents the relationship between Disposable income (DI), consumption (C), and saving (S)?

DI + C = S

DI = C * S

DI = C – S

DI = C + S

2. Which of the following is NOT a method for promoting global Economic growth?

Count on the world’s governments to develop policies that promote economic growth in developing nations.

Reliance on private markets to direct capital goods toward their best use.

Encourage population growth so that developing nations’ labor supply increases.

Market based approach.

3. In the classical model, an increase in aggregate demand will cause

a decrease in price level.

an increase in actual output, or Gross Domestic Product (GDP).

an increase in price level.

a decrease in actual output, or Gross Domestic Product (GDP).

4. Of the relationships below, which is the least stable?

Consumption

Net exports

Investment

Saving

5. When investment occurs in developing nations

investors hope to gain significant returns on their investment and residents gain higher rates of economic growth.

Significant levels of pollution usually occur.

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