Which of the following is not a characteristic of a public good?
a. It is scarce.
b. It is not diminished in amount as additional people consume the product.
c. Its benefits cannot be withheld from anyone.
d. It is free.
e. It yields widespread benefits.
The view that individuals weigh all available evidence when they formulate their
expectations about economic events (including information concerning the probable
effects of current and future economic policy) is called:
a. the adaptive expectations hypothesis.
b. the permanent income hypothesis.
c. the rational expectations hypothesis.
d. the Phillips curve.
The members of the Federal Reserve Board of Governors serve:
a. 6-year terms.
b. 4-year terms.
c. 10-year terms.
d. 14-year terms.
e. 2-year terms.
In the United States, the purchasing power of money is determined by:
a. the underlying precious metals that back each unit of currency.
b. the value of U.S. treasury bonds that back each unit of currency.
c. its acceptability.
d. Congress, which controls the money supply.
The national debt is:
a. the difference between a nation’s exports and imports of goods and services.
b. the sum of the personal debt of all citizens in the United States.
c. the cumulative effect of all past budget deficits and surpluses of the federal
government.
d. equal to the current size of the budget deficit.
Exhibit 17-3 Aggregate demand and aggregate supply curves
As shown in Exhibit 17-3, if people
behave according to adaptive expectations theory, an increase in the aggregate demand
curve from AD1 to AD2 will cause the price level to move:
a. from 100 to 110 initially and then eventually move back to 100.
b. directly from 100 to 110 and then remain at 110.
c. directly from 100 to 120 and then remain at 120.
d. from 100 to 110 initially and then eventually move to 120.
Your purchase of a Gucci purse made in Italy would be classified as:
a. both c and d
b. an investment good.
c. a durable good.
d. an import.
e. an export.
Which of the following organizations is responsible for setting auditing standards
followed by public accounting firms in conducting independent audits of financial
statements?
a. Financial Accounting Standards Board (FASB)
b. Securities and Exchange Commission (SEC)
c. Public Company Accounting Oversight Board (PCAOB)
d. International Accounting Standards Board (IASB)
If an economy were experiencing a high rate of unemployment as the result of
insufficient aggregate demand, a Keynesian economist would favor:
a. a reduction in taxes coupled with a reduction in government expenditures of equal
size.
b. an increase in government expenditures coupled with an increase in taxes of equal
size.
c. a reduction in taxes, without any offsetting reduction in government expenditures.
d. maintenance of a balanced budget.
According to the income approach, the largest component of national income is:
a. government spending.
b. proprietor’s income.
c. net interest.
d. personal consumption expenditures.
e. compensation of employees.
Which of the following statements is false?
a. Round stones with holes in the center can serve as money.
b. Money eases the process of exchanging goods and services in a modern economy.
c. Money serves as a measure of value only when it is backed by gold or silver.
d. Money is used as a measure of the relative value of goods and services in an
economy.