ECON A 178 Quiz 3

subject Type Homework Help
subject Pages 7
subject Words 800
subject Authors Irvin B. Tucker

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Some cities finance their airports with a departure tax: every person leaving the city by
plane is charged a small fixed dollar amount that is used to help pay for building and
running the airport. The departure tax follows the:
a. benefits-received principle.
b. ability-to-pay principle.
c. flat-rate taxation principle.
d. public-choice principle.
A liability is a future economic benefit to a business.
a. True
b. False
Which of the following would cause the investment demand curve to shift?
a. Animal spirits (expectations).
b. Technological change.
c. Change in business taxes.
d. All of these.
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A long and deep recession in the business cycle is:
a. unemployment.
b. a trough.
c. a recession.
d. a depression
e. unavoidable.
The law of demand says that the lower the price charged for a good, ceteris paribus,
the:
a. greater the quantity demanded per period of time.
b. greater the demand for the good per period of time.
c. smaller the demand for the good per period of time.
d. smaller the quantity demanded per period of time.
e. larger the supply of the good per period of time.
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Structural unemployment is frequently caused by:
a. technological changes that make certain job skills obsolete.
b. temporary layoffs in industries such as construction.
c. the impact of recessions on employment.
d. none of these.
Monetarists and classical economists:
a. assume that stimulative monetary policy will create high levels of GDP without
inflation.
b. assume that stimulative monetary policy will create high levels of GDP and slightly
high prices.
c. assume the economy operates at full employment and stimulative monetary policy
will only cause the price level to rise.
d. assume that the economy operates at full employment and stimulative monetary
policy will increase both aggregate supply and aggregate demand.
e. assume that the Keynesian description of monetary policy underestimates the true
stimulative effect of an increase in the money supply.
Currently, total government expenditures in the United States have totaled about:
a. one-tenth of GDP.
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b. one-fifth of GDP.
c. 40 percent of GDP.
d. one-half of GDP.
Which of the following is true about inflation?
a. Inflation promotes social harmony by uniting people against the government.
b. Inflation is more damaging if it is anticipated.
c. Accurate anticipation of inflation is possible for everyone who is well informed about
economic events.
d. Those who lend money at a rate below the rate of inflation suffer economic losses.
e. If people accurately anticipate inflation, their actions will prevent it.
Exhibit 4-6 Demand and supply curves
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In Exhibit 4-6, the demand curve has
shifted from D1 to D2 and, simultaneously, the supply curve has shifted from S1 to S2.
Describe these actions in this market.
a. Market supply has decreased, and market demand has increased.
b. Market supply has increased, and market demand has decreased.
c. Market supply has decreased, and market demand has decreased.
d. The quantity supplied has decreased, and the quantity demanded has increased.
e. Market supply has increased, and market demand has increased.
Exhibit 16-5 Money, investment and product markets
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In Exhibit 16-5, if the interest rate falls from i1 to i2, investment spending will:
a. increase, and aggregate demand will shift from AD1 to AD2.
b. decrease, and aggregate demand will shift from AD2 to AD1.
c. remain the same, and aggregate demand will shift from AD2 to AD3.
d. increase, and aggregate demand will shift from AD2 to AD1.
e. decrease, and aggregate demand will shift from AD1 to AD2.
If the fiscal year begins without a budget and Congress fails to pass continuing
resolution, then:
a. the president has the right to raise the debt ceiling.
b. federal agencies operate on the basis of the previous year's budget.
c. the interest rate paid on the national debt automatically increases.
d. the federal government shuts down.
Exhibit 4-4 Supply and demand curves for good X
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An
increase in buyers' income, assuming good X is a normal good, combined with an
increase in the wage rate paid to workers producing good X would be represented by
which of the following changes in equilibrium shown in Graph C of Exhibit 4-4?
a. E1 to E2.
b. E1 to E3.
c. E3 to E2.
d. E1 to E3.
e. E4 to E1.

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