The government’s chief forecasting gauge for business cycles is the:
a. unemployment rate.
b. real GDP.
c. personal income index.
d. index of leading indicators.
The largest component of GDP is:
a. personal consumption expenditures.
b. government spending.
c. durable goods.
d. net exports.
e. gross private domestic investment.
Two goods are considered substitutes only if a(n):
a. decrease in the demand for one leads to a decrease in the supply of the other.
b. increase in the demand for one leads to a decrease in the supply of the other.
c. increase in the price of one leads to an increase in the demand for the other.
d. decrease in the price of one leads to an increase in the demand for the other.
e. decrease in the supply of one leads producers to switch to production of the other.
If your disposable income increases from $30,000 to $35,000 and your consumption
increases from $11,000 to $12,000, your marginal propensity to consume (MPC) is:
a. 0.2.
b. 0.4.
c. 0.5.
d. 0.8.
e. 1.0.
What shape is the production possibilities curve usually expected to exhibit?
a. Upward-sloping.
b. Bowed out.
c. Bowed in.
d. Straight line.
e. U-shaped.
Most of the U.S. national debt is owed to ____. Thus a rising national debt implies that
there will be a future redistribution of income and wealth in favor of ____.
a. foreigners; foreigners
b. other U.S. citizens; bondholders
c. foreigners; those needing government services
d. other U.S. citizens; those needing government services
Each point on the Phillips curve represents a combination of the:
a. prime rate and the savings rate.
b. savings rate and the unemployment rate.
c. inflation rate and the unemployment rate.
d. consumption rate and the inflation rate.
According to Say’s law, there cannot be overproduction of goods and services because:
a. planned aggregate expenditures sometimes fall short of total output.
b. prices and wages are ‘sticky” or inflexible in the downward direction.
c. demand creates its own supply.
d. supply creates its own demand.
In which of the following countries are taxes (measured as a percentage of GDP) the
lowest?
a. Canada.
b. France.
c. Sweden.
d. The United States.
Human wants:
a. are unfilled only in the poorer countries of the world.
b. can be completely satisfied by advancing technology.
c. can never be fully satisfied.
d. only apply to necessities.
e. exist only if we are selfish.
Exhibit 3-3 Demand curves
Which of the graphs in Exhibit 3-3 depicts the effect of a decrease in the price of pizza
on the demand curve for pizza?
a. Graph A.
b. Graph B
c. Graph C.
d. Graph D.
Assume the marginal propensity to save is 0.10. Firms become optimistic and increase
investment spending by $10 billion. Other things being equal, real GDP will:
a. increase by $1 billion.
b. not change.
c. increase by $10 billion.
d. increase by $100 billion.
Tina Eckstrom and her husband bought a deferred annuity that started paying them
$700 a month in retirement benefits. They, along with millions of other people who live
on fixed incomes, are examples of:
a. those who are responsible for inflation.
b. the big winners from inflation.
c. the big losers from inflation.
d. the paradox of thrift.
e. stock market losers.
Consider an economy with only two goods: bread and wine. In 1982, the typical family
bought 4 loaves of bread at 50¢ per loaf and 2 bottles of wine for $9 per bottle. In
Year X, bread cost 75¢ per loaf and wine cost $10 per bottle. The CPI for Year X
(using a 1982 base year) is:
a. 100.
b. 115.
c. 126.
d. 130.
Other things being equal, the effect of a decrease in the price of DVDs on the market
for DVD players is a(n):
a. leftward shift in the demand curve for DVD players.
b. upward movement along the demand curve for DVD players.
c. rightward shift in the demand curve for DVD players.
d. downward movement along the demand curve for DVD players.
An increase in the expected future price of a good will cause the current demand for the
good to:
a. decrease, which is a shift to the left of the demand curve.
b. decrease, which is a shift to the right of the demand curve.
c. increase, which is a shift to the left of the demand curve.
d. increase, which is a shift to the right of the demand curve.
Harbor City Corporation’s endÂofÂyear balance sheet consisted of the following
amounts:
What is Harbor City’s retainedearningsbalance at the end of the current year?
a. $10,000
b. $110,000
c. $160,000
d. $170,000
According to Keynesian economics, fiscal policy should be coordinated to create a
surplus during economic expansions.
In Karl Marx’s view, people under the ideal state of communism would be motivated by
the principle “from each according to his ability, to each according to his enterprise.”
Other things being equal, an increase in U.S. interest rates would be likely to cause an
increase in the capital account surplus or a decrease in the capital account deficit.
The vicious circle of poverty is the trap that parents with low education tend to have
children with low education.
The United States has a much higher national debt as a percentage of GDP compared to
other industrialized nations.
Waste systems and highways are part of a nation’s infrastructure.
In a simplified banking system, the money multiplier falls as the required reserve ratio
decreases.
Karl Marx’s massive work, titled Das Kapital, was published in 1848.
Discuss the three basic types of economic systems.
Ais a certificate that represents a corporation’s promise to repay a certain amount of
money and interest in the future.