One big difference between tariffs and quotas is that tariffs:
a. raise the price of a good while quotas lower it.
b. generate tax revenues while quotas do not.
c. stimulate international trade while quotas inhibit it.
d. hurt domestic producers while quotas help them.
e. give the same outcome as free trade while quotas do not.
The phase in the business cycle in which real GDP declines is called a:
a. trendline.
b. peak.
c. recession.
d. recovery.
e. trough.
Marcos Company reported the following items on its financial statements for the year
ending December 31, 2015:
How much will be reported as retainedearningson Marcos’ balance sheet at December
31, 2015, if this is the
first year of operations?
a. $ 45,000
b. $ 65,000
c. $ 85,000
d. Not enough information is provided.
Which of the following is a partially valid economic argument for restricting free trade?
a. Restrictions on foreign trade will increase employment and permanently reduce
unemployment.
b. Removal of restrictions that have existed for years will initially cause inflation.
c. Infant industries need permanent protection to develop and gain productive
efficiency.
d. A nation needs to protect industries that are vital to national defense in case of future
international conflict.
Which of the following is a public good?
a. An economics lecture.
b. A television set.
c. Higher education.
d. Housing.
e. Clean air
Payments to households not in exchange for goods and services currently produced are:
a. transfer payments. c. consumption expenditures.
b. government purchases. d. investment expenditures.
If the dollar appreciates:
a. imports to the United States become more expensive for foreigners
b. exports from the United States become more expensive for foreigners
c. imports become more expensive for U.S. citizens.
d. exports from the United States become cheaper
e. the dollar will exchange for fewer units of a foreign currency
If aggregate demand increases in the intermediate range of the aggregate supply curve
then the:
a. price level rises and real GDP falls.
b. price level rises and real GDP rises.
c. price level falls and real GDP falls.
d. price level falls and real GDP rises.
Which of the following statements is true?
a. Deflation is an increase in the general level of prices.
b. The consumer price index (CPI) measures changes in the average prices of consumer
goods and services.
c. Disinflation is an increase in the rate of inflation.
d. Real income is the actual number of dollars received over a period of time.
e. The real interest rate equals the nominal rate of interest plus the inflation rate.
Exhibit 4-3 Supply and demand curves
In Exhibit 4-3, which of the following might cause a shift from S2 to S1?
a. A decrease in input prices.
b. An improvement in technology.
c. An increase in input prices.
d. An increase in consumer income.
The natural rate hypothesis implies that the long-run Phillips curve will be:
a. downward-sloping.
b. upward-sloping.
c. vertical.
d. horizontal.
A minimum wage that is set below the equilibrium wage will:
a. cause increased unemployment.
b. have no effect on employment.
c. cause the overall wage to increase.
d. cause the overall wage to decrease.
e. create more jobs.
Scarcity:
a. exists because resources are unlimited while human wants are limited.
b. means we are unable to have as much as we would like to have.
c. will likely be eliminated as technology continues to expand.
d. is not an issue addressed in economics.
The spending multiplier indicates that:
a. changes in investment, government, or consumption spending trigger much larger
changes in real GDP.
b. an autonomous increase in saving will cause output to rise by a multiple of the
additional saving.
c. a market economy will be more stable than classical economists thought.
d. the marginal propensity to consume is greater than one.
Based on the circular flow model, money flows from households to businesses in:
a. factor markets.
b. product markets.
c. neither factor nor product markets.
d. both factor and product markets.
The quantity of money held in response to interest rates is the:
a. transactions motive for holding money.
b. precautionary motive for holding money.
c. speculative motive for holding money.
d. unit-of-account motive for holding money.
Classical economists believe that:
a. velocity is not constant.
b. changes in the money supply affect real GDP.
c. the quantity of money explains prices.
d. the money supply affects velocity.