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Which of the following would not be classified as a capital resource?
a. The Empire State Building.
b. A Caterpillar bulldozer.
c. A Macintosh computer.
d. 100 shares of stock in General Motors.
Collusive action among producers creates higher prices for consumers because it:
a. causes overproduction and inefficiency.
b. creates negative externalities.
c. forces producers to be more competitive.
d. allows producers to artificially restrict their supply.
The quantity theory of money assumes that the velocity of money:
a. is constant.
b. will rise if the money supply rises and fall if the money supply falls.
c. will rise if the money supply rises, but it will not change if the money supply falls.
d. will fall if the money supply rises, and it will rise if the money supply falls.
e. will fall if the money supply rises, but it will not change if the money supply falls.
If Japan gives up ten bushels of rice to produce one bicycle, while the United States
gives up five bushels of rice to produce one bicycle, then:
a. the opportunity cost of producing bicycles in the United States is higher than in
Japan.
b. Japan has a comparative advantage in the production of bicycles.
c. the United States has an absolute advantage in the production of rice.
d. total output will be highest if the United States specializes in rice and Japan
specializes in bicycles.
e. total output will be highest if Japan specializes in rice and the United States
specializes in bicycles.
If there is a surplus in the oil market, then the price of oil will:
a. rise.
b. fall.
c. remain unchanged.
d. react unpredictably.
Assume the economy is in recession, the MPC is 0.80, and an increase of $200 billion
in spending is needed in order to reach full employment. The target can be reached if
government spending is increased by:
a. $20 billion.
b. $200 billion.
c. $80 billion.
d. $40 billion.
Deflation means a decrease in:
a. the rate of inflation.
b. the prices of all products in the economy.
c. homes, autos, and basic resources.
d. the general level of prices in the economy.
Which of the following is a valid concern about federal budget deficits?
a. The welfare of future generations will be directly related to the per-capita size of the
national debt that they inherit.
b. Growth of the national debt will eventually lead to the bankruptcy of the government.
c. When the debt comes due, future generations may be unable to pay it off.
d. If the increases in the national debt reduce private expenditures on capital formation,
aggregate demand is reduced.
Which of the following groups believes that the economy can achieve full employment
without inflation through tax reductions, lower resource prices, and deregulation?
a. Classical school.
b. Keynesian school.
c. Neo-Keynesian school.
d. Rational expectations school.
e. Supply-side school.
A favorable balance of trade occurs when:
a. exports equal imports.
b. the balance of payments balances.
c. the current and capital account in the BOP are equal.
d. the value of the exports of goods exceeds the value of the imports of goods.
e. the value of the exports of goods is less than the value of the imports of goods .
Stockholders' equity is owners' equity in a corporation.
a. True
b. False
Matchthefollowingbusinessformswiththeircharacteristicsbelow.
a. Sole proprietorship
b. Partnership
c. Corporation
Owned by two or more individuals
