In a socialistic system, most economic decisions are made by:
a. firms.
b. consumers.
c. stockholders.
d. government planners.
In Marx’s ideal communist society, the state:
a. actively promotes income incentives.
b. follows the doctrine of laissez faire.
c. owns resources and conducts planning.
d. does not exist.
The Federal Deposit Insurance Corporation (FDIC):
a. insures all demand deposit accounts up to $10 million in banks choosing FDIC
protection.
b. was created as a government-owned corporation following the creation of the World
Bank and the International Monetary Fund after World War II.
c. rarely evaluates bank performance to detect weaknesses in operation.
d. creates monetary policy in conjunction with the Federal Reserve Board.
e. was created to reduce the risk of banking by compensating depositors and keeping
bank failures from spreading.
Assuming that soybeans and tobacco can both be grown on the same land, a decrease in
the price of tobacco, other things being equal, causes a(n):
a. rightward shift of the supply curve for tobacco.
b. upward movement along the supply curve for soybeans.
c. rightward shift in the supply curve for soybeans.
d. leftward shift in the supply curve for soybeans.
Exhibit 16A-1 Policy Alternatives
In Panel (b) of Exhibit 16A-1, the economy is initially in short-run equilibrium at real
GDP level Y1 and price level P2. If the federal government decides to intervene, it
would most likely:
a. increase taxes.
b. decrease the money supply.
c. increase the level of government spending for goods and services.
d. decrease the level of government spending for goods and services.
Under adaptive expectations theory, an increase in the short-run aggregate demand
curve ____ the inflation rate and ____ the unemployment rate.
a. increases; increases
b. increases; decreases
c. increases; does not change
d. decreases; increases
What type of economic system is commonly described as being controlled by an
“invisible hand”?
a. A traditional economy.
b. A command economy.
c. A market economy.
d. A communist economy.
The law of supply states that:
a. there is a negative relationship between the price of a good and the quantity of it
purchased by suppliers.
b. there is a positive relationship between the price of a good and the quantity that
buyers choose to purchase.
c. there is a positive relationship between the price of a good and the quantity of it
offered for sale by suppliers.
d. at a lower price, a greater quantity will be supplied.
Exhibit 16A-3 Macro AD/AS Models
As shown in Exhibit 16A-3, assume
the marginal propensity to consume MPC equals 0.80. Using discretionary fiscal policy,
federal government spending should be ____ in order to restore the economy from E1 to
full employment.
a. increased by $2 trillion
b. decreased by $2 trillion
c. decreased by $.40 trillion
d. increased by $.40 trillion
e. increased by $.80 trillion
Suppose that the economy experiences an increase in the inflation rate at the same time
that the unemployment rate decreases. This situation indicates a:
a. shift in the Phillips curve.
b. movement along a vertical Phillips curve.
c. movement along a horizontal Phillips curve.
d. movement along a positively-sloped Phillips curve.
e. movement along a negatively-sloped Phillips curve.
Which phrase(s) is (are) associated with normative statements?
a. c and e.
b. Has been shown.
c. Should be.
d. Can be.
e. More than.
Exhibit 2-10 Production possibilities curve data A B C D E
Capital goods 0 1 2 3 4
Consumption goods 25 23 19 13 0 Suppose an economy is faced with the production
possibilities table shown in Exhibit 2-10. The first unit of capital goods will cost the
economy ____ units of consumption goods.
a. 25
b. 2
c. 1
d. 23
e. 11
Which one of the following is notone of the three activities included in the definition of
accounting?
a. Communicating
b. Identifying
c. Measuring
d. Operating
In the view of the classical school, unemployment:
a. is a permanent condition.
b. disappears when everyone who is willing to work at the equilibrium wage finds
employment.
c. exists because people do not interfere with the competitive process.
d. is only temporary because all wages and prices are rigid.
e. is necessary and good for the economy.