ECS1601_EXAM_PACK.

STUDY UNIT 1 (CH 3) Multiple Choice Questions: 1.1 Which of the following statements are correct? a. A flow variable is measured over a specific period. b. Wealth, assets, liabilities and profit are all stock variables. c. Stocks can change as a result of flows. [1] All the statements are correct. [2] a and b [3] a and c [4] b and c [5] a 1.2 Which one of the following statements explains the difference between stocks and flows? [1] Stocks have a time dimension and flows are measured at a point in time. [2] There is no clear difference between stocks and flows. [3] Flows have a time dimension and stocks are measured at a point in time. 1.3 In the circular flow of income and spending [1] investment results in a decrease in the volume of the income flow. [2] taxes result in an increase in the volume of the income flow. [3] imports result in an increase in the volume of the income flow. [4] savings result in a decrease in the volume of the income flow. The diagram below shows the circular flow of income and spending between households and firms