I. Select the most correct response to these multiple-choice questions. 1. To make the income approach to the measurement of national output equal to the expenditure approach A) indirect taxes are added, and subsidies subtracted B) any unintended increase in inventories is subtracted from the sum of other expenditures C) indirect taxes are subtracted, and subsidies added. D) The wages and salaries paid to the defence forces are added to the other income components. 2. Which of the following is correct concerning the business cycle? A) A contraction is a period during which real GDP increases or aggregate economic activity increases. B) An expansion is a period during which real GDP decreases or aggregate economic activity decreases. C) A severe contraction, in which economic growth as measured by real GDP is negative for at least two quarters, is called a Recession. D) A peak is reached just after the economy reaches a contraction of activity 3. Which of the following is incorrect? A) Aggregate Demand is the demand for and hence money spent on all goods and services by all the sectors in the economy. B) Aggregate demand is the same as (planned) aggregate expenditure. C) Aggregate Supply is the supply of all goods and services by all the firms in the economy. D) Aggregate supply depends on changes in interest rate but not on changes in exchange rates 4. The following schedule provides data for the country of Haha land. Year GDP (% change) Unemployment rate (%) 2016 8.1 2017 -1.25 2018 -2.25 12 2019 2 5 2020 1 Based on the data given in the table above, it can be observed that between was most likely to be in the expansionary phase of the business cycle. A) 2016 and 2017 B) 2019 only C) 2017 and 2018 Hahaland D) 2019 and 2020

Branch of economics that analyzes the behavior and performance of an economy as a whole. It focuses on the study of aggregates and evaluates changes related to unemployment, gross domestic product, inflation, monetary and fiscal policies of the government.