Figure 24-1
Ceteris paribus, an increase in the growth rate of domestic GDP relative to the growth
rate of foreign GDP would be represented by a movement from
A) AD1 to AD2.
B) AD2 to AD1.
C) point A to point B.
D) point B to point A.
Part of the spending on the Caldecott Tunnel project in northern California came from
the American Reinvestment and Recovery Act, which is an example of discretionary
fiscal policy aimed at increasing
A) real GDP and employment.
B) tax revenues and the federal budget surplus.
C) disposable income and interest rates.
D) the money supply and money demand.
Assume you set up a sole proprietorship and your lawyer tells you that as the owner,
you could stand to lose your personal wealth if the business goes bankrupt. This means
a sole proprietorship
A) faces limited liability.
B) faces unlimited liability.
C) has little chance of succeeding.
D) is not a good type of business to set up.
In 2011, ________ of the uninsured were younger than age 34.
A) 10%
B) 27%
C) 54%
D) 83%
What impact might an increase in the budget deficit have on interest rates and exchange
rates?
A) Interest rates and exchange rates increase.
B) Interest rates increase and exchange rates decrease.
C) Interest rates decrease and exchange rates increase.
D) Interest rates and exchange rates decrease.
Economists believe the most persuasive argument for protectionism is to
A) save jobs.
B) protect high wages.
C) protect national security.
D) protect infant industries.
Mortgages issued to borrowers who fail to document that their incomes are high enough
to afford their mortgage payments are known as ________ mortgages.
A) subprime
B) Alt-A
C) gray market
D) reciprocal
The leader of the monetarist school and major proponent of a monetary growth rule was
A) Ben Bernanke.
B) Milton Friedman.
C) Alan Greenspan.
D) Paul Volcker.
The circular flow model demonstrates
A) the role of the government in overseeing the market system.
B) the roles played by households and firms in the market system.
C) how shortages and surpluses are eliminated in a market.
D) how demand and supply for goods and services are brought into equilibrium.
In economics, an organization that produces a good or service is called a
A) firm.
B) company.
C) business.
D) All of the above are correct.
When a competitive equilibrium is achieved in a market,
A) all individuals are better off than they would be if a price ceiling or price floor was
imposed by government.
B) the total net benefit to society is maximized.
C) the total benefits to consumers are equal to the total benefits to producers.
D) economic surplus equals the deadweight loss.
Tax reduction and simplification should ________ long-run aggregate supply and
________ aggregate demand.
A) increase; increase
B) increase; decrease
C) decrease; increase
D) decrease; decrease
When a competitive equilibrium is achieved in a market
A) all individuals are better off than they would be if a price ceiling or price floor was
imposed by government.
B) the total net benefit to society is maximized.
C) the total benefits to consumers are equal to the total benefits to producers.
D) economic surplus equals the deadweight loss.