When full employment is present in the United States:
a. the rate of unemployment will fall to zero.
b. the actual rate of unemployment will be less than the natural rate of unemployment.
c. approximately 95 percent of the adult population will be employed.
d. approximately 95 percent of the labor force will be employed.
The balanced budget multiplier is always equal to:
a. 0.50.
b. 0.75.
c. 1 / MPC.
d. 1.
When economists say the quantity demanded of a product has increased, they mean the:
a. demand curve has shifted to the left.
b. demand curve has shifted to the right.
c. price of the product has fallen, and consequently, consumers are buying more of it.
d. price of the product has risen, and consequently, consumers are buying less of it.
The balance sheet for a commercial bank shows the bank’s:
a. required reserves as assets and excess reserves as liabilities.
b. loans as assets and required reserves as liabilities.
c. loans as assets and checkable deposits as liabilities.
d. checkable deposits as assets and loans as liabilities.
e. excess reserves as assets and required reserves as liabilities.
Movements along the Phillips curve result in the:
a. savings rate varying inversely with the unemployment rate.
b. inflation rate varying directly with the unemployment rate.
c. inflation rate varying inversely with the unemployment rate.
d. interest rate varying inversely with the unemployment rate.
The Federal Reserve System:
a. was created by and is owned by the government.
b. pursues independent fiscal policy at the behest of Congress.
c. never acts to control inflation.
d. pursues an independent monetary policy which can conflict with the government’s
economic policy.
e. only acts to lower taxes and increase spending when there are recessionary
tendencies in the economy.
If the marginal propensity to consume (MPC) is 0.96, the value of the spending
multiplier is:
a. 25.
b. 40.
c. 96.
d. 100.
Superhighways, public housing facilities, and defense projects are all ways that the
President can:
a. close a recessionary gap
b. close an inflationary gap
c. combat inflation
d. raise unemployment
e. reverse the paradox of thrift
A normal good is a good for which demand increases as:
a. the income of consumers increases.
b. its own price increases.
c. the price of close substitutes decreases.
d. the total number of consumers increases.
e. a reflection of changing consumer tastes.
The second step in the ethical decision-making model is to
a. List alternatives and evaluate the impact of each on those affected
b. Select the best alternative
c. Recognize an ethical dilemma
d. Analyze the key elements in the situation
Externalities get their name from the fact that they are:
a. b and d.
b. unintended.
c. short lived.
d. outside of decisions.
e. outside of marketplace.
If a man marries his hired housekeeper, the value of GDP:
a. rises.
b. falls.
c. is unchanged.
d. rises, but the value of GDP falls.
Which of the following offers theories to explain why the government, like the private
sector, may also “fail”?
a. Social economics.
b. Public choice theory.
c. Rational expectations theory.
d. Keynesian economics.
Read the information for Taryn Corporation. Determine the following amounts for
Taryn Corporation: A) Total revenues for 2014
B) Total expenses for 2014 C) What is the purpose of the income statement?
D) Is Taryn Corp. profitable? Explain your answer.
E) Is this the first year of operations for Taryn Corp.? Explain your answer.
The balanced budget multiplier is equal to one.
If the supply curve decreases while the demand curve remains unchanged, the
equilibrium price would increase.
If aggregate demand equals aggregate supply, macroeconomic equilibrium exists.
A $10 million increase in government spending has the same economic impact as a $10
million tax cut.
An increase in fiscal deficit spending financed by borrowing will increase the national
debt.
The Ceteris paribus assumption is important when building economic models.
The Keynesian view is that the aggregate supply curve is vertical.
Public goods are overproduced in the marketplace.
The most efficient point on the production possibilities curve is the midpoint on the
curve.
The ability-to-pay philosophy of taxation argues for a progressive form of taxation.