Ceteris paribus, which of the following would cause a decrease in the demand for HD
TVs?
a. decline in the price of HD TVs. c. increase in consumers’ income.
b. increase in the price of HD TVs. d. decrease in consumers’ income.
How is the balance sheet linked to the other financial statements?
a. The amount of retained earnings reported on the balance sheet is equal to net income.
b. Retained earnings is added to total assets and reported on the balance sheet.
c. Net income increases retained earnings on the statement of retained earnings, which
ultimately increases retained earnings on the balance sheet.
d. There is no link between the balance sheet and other statements, as each contains
different accounts and provides different information.
The aggregate supply curve will be vertical when:
a. output can be increased without an increase in the price level.
b. the economy is operating at full-employment capacity.
c. output and price level rise together.
d. the aggregate demand curve is shifting to the left.
e. aggregate demand is absent.
Using a production possibilities curve, a technological advance that increases the
amount of output for the same amount of inputs would be illustrated as a(n):
a. flattening of the curve.
b. movement from one point to another point along the curve.
c. outward shift of the curve.
d. movement from a point on the curve to a point inside the curve.
“An increase in the federal minimum wage will provide a living wage for the working
poor” is:
a. a statement of positive economics. c. a tautology.
b. a fallacy of composition. d. a statement of normative economics.
Which of the following events would increase the supply of tomatoes?
a. The introduction of mechanized tomato pickers, which raises the cost of production.
b. An increase in wages for the tomato pickers.
c. A decrease in the cost of fertilizers for the tomato plants.
d. Unseasonably hot, dry weather in the tomato-growing regions of the nation.
e. A decrease in the price of pasta products.
Which of the following will increase the demand for large automobiles?
a. A fall in the price of small automobiles.
b. A rise in insurance rates for large automobiles.
c. A fall in the price of large automobiles.
d. A rise in buyers’ incomes (assuming large automobiles to be a normal good).
If an increase in the government-imposed minimum wage pushes the price (wage) of
unskilled labor above market equilibrium, which of the following will most likely occur
in the unskilled labor market?
a. An increase in quantity of unskilled labor demanded.
b. A decrease in the quantity of unskilled labor supplied.
c. A shortage of unskilled labor.
d. A surplus of unskilled labor (unemployment).
Foreachstatementprovided,choosetheletteroftheappropriatetermfromthelistthateachstate
mentbestdescribes.Sometermsmaybeusedmorethanonce,whileothersarenotusedatall.
a. Capital stock
b. Asset
c. Owners’ equity
d. Time period
e. Dividends
f. Economic entity concept
g. Expense
h. Retained earnings
i. Cost principle
j. Creditor
k. Liability
l. Revenue
m. Going concern
n. Monetary unit
o. Corporation
The portion of owner’s equity that represents the net income less any dividends paid
over the life of the entity.
Exhibit 5-4 Gross domestic product data National income accountBillions of
dollars
Depreciation $ 800
Net interest 1,500
Compensation of employees 4,000
Profits 1,000
Rental income 100
Indirect business taxes 600
Social Security payments 1,000 As shown in Exhibit 5-4, national income (NI) is:
a. $6,000 billion.
b. $6,600 billion.
c. $7,200 billion.
d. $8,000 billion.
e. none of these is correct.
Exhibit 4-8 Demand and supply curves
In Exhibit 4-8, a movement from A to C is best described as a(n):
a. increase in the quantity supplied and an increase in the demand.
b. decrease in the quantity supplied and a decrease in demand.
c. decrease in the quantity supplied and an increase in demand.
d. decrease in the quantity demanded and a decrease in supply.
e. decrease in both quantity demanded and quantity supplied.
Choose the user group that is most likely to have the need listed below. (Select all that
apply.) The ability of the company to pay its debts as they become due.
a. Stockholder
b. Company management
c. Supplier
d. Banker
e. Internal Revenue Service
f. Securities and Exchange Commission
g. Labor union
Which of the following statements best describes the role played by prices in a
command economy such as the former Soviet Union?
a. Prices were used to allocate resources.
b. Prices played the same role as in a market economy.
c. Prices were used to ration final goods and services but not to allocate resources.
d. None of these statements is descriptive.
If a government imposed price ceiling legally sets the price of beef below market
equilibrium, which of the following will most likely happen?
a. The quantity of beef demanded will decrease.
b. The quantity of beef supplied will increase.
c. There will be a surplus of beef.
d. There will be a shortage of beef.
A positive economic statement simply describes what is.
According to the natural rate hypothesis, the unemployment rate should equal 0 percent
in the long run.
If the investment curve is relatively vertical, the Keynesian conclusion is that the
transmission mechanism has little effect on the economy.
Fixed investment refers to investment in stocks, bonds, and improvements to land.
Discuss the components of GDP using the expenditure approach.
If the yen price of dollars falls, then the dollar price of yen rises.
Other things being equal, a fall in the price of Coca-Cola will increase the quantity of
Coca-Cola demanded.
The nominal rate of interest is equal to the real interest rate plus the inflation rate.
If movies are an inferior good, movie attendance will rise when consumer incomes fall.
The statement “It would be better to put up with price controls than to have continuing
higher medical care prices” is an example of normative economic analysis.