Which of the following best represents the effects of an increase in the price of coffee,
other things being equal?
a. A leftward shift in the demand curve for coffee.
b. A downward movement along the demand curve for coffee.
c. A rightward shift in the demand curve for coffee.
d. An upward movement along the demand curve for coffee.
We can find the market demand for pears by:
a. adding up all the prices people are willing to pay for pears.
b. multiplying the number of people times the price of pears.
c. adding up the number of pears that producers are willing to sell.
d. multiplying the number of pears by the price of pears.
e. adding up all the individual demand curves for pears.
The government would use production taxes to remedy the problem of substantial:
a. internal benefits of production.
b. external benefits of production.
c. external costs of production.
d. external benefits of consumption
e. external costs of consumption.
Ceteris paribus means:
a. an association of variables.
b. all other things remain constant.
c. a cause and effect relationship.
d. considering the influences of other variables.
Exhibit 2-4 Production possibilities curve data ABCDE
Capital goods 0 10 20 30 40
Consumer goods 200 180 140 80 0 According to the data in Exhibit 2-4, a total output
of 140 units of consumer goods and 10 units of capital goods would:
a. be unobtainable in this economy.
b. be an efficient way of using the economy’s scarce resources.
c. result in the maximum use of the economy’s labor force.
d. result in a less than maximum rate of growth for this economy.
Which of the following is true if all the national debt were owned internally?
a. The federal government would not need to refinance the national debt.
b. The federal government would not need to worry about raising taxes to pay interest
on the national debt.
c. We would still be concerned about the effect on the distribution of income from
interest payments on the national debt.
d. All of these are true.
“He who pays a tax should receive the benefit from the expenditure financed by the
tax.” This statement reflects which of the following principles for a tax?
a. Fairness of contribution.
b. Ability-to-pay.
c. Benefits-received.
d. Inexperience-to-collect.
The Phillips curve illustrates the relationship between:
a. change in the money supply and change in unemployment.
b. tax rates and tax revenues.
c. the equilibrium level of income and the employment rate.
d. inflation and unemployment.
In the Keynesian aggregate consumption-income graph, the vertical distance between
the consumption function and the 45-degree line shows the:
a. amount of savings (or dissavings) at that level of disposable income.
b. amount of disposable income at that level of consumption.
c. increase in planned business investment at each level of inflation.
d. increase in income that causes each change in real GDP.
Exhibit 8-2 Consumption function
As shown in Exhibit 8-2, the marginal
propensity to consume (MPC) is:
a. 0.25.
b. 0.50.
c. 0.75.
d. 0.90.
The economic system that answers the What, How and For Whom questions the way
they have always been answered is a:
a. market economy.
b. command economy
c. soviet economy.
d. traditional economy.
A shortage occurs when the quantity demanded exceeds the quantity supplied.
Taryn Corporation The accountant for Taryn Corporation prepared the following list of
account balances from the company’s records for the year ended December 31, 2014:
Read the information for Taryn Corporation. Prepare an income statement for Taryn
Corporation in good form.
Cost-push inflation is caused by too much money chasing too few goods.
Inflation occurs when there is an increase in the purchasing power of money.
A command system uses a group of planners or central authority to make basic
economic decisions.