Which of the following is not evidence of the lower standard of living among
less-developed countries?
a. High per capita real GDP.
b. High percentage of households headed by females.
c. High infant mortality rate.
d. Low life expectancy.
e. High birth rate.
Along a production possibilities curve showing capital and consumption goods
production, which of the following pairs are being held fixed?
a. Unemployment and capital goods production.
b. Number of resources and consumption goods production.
c. Composition of the economy’s output and number of resources.
d. Capital and consumption goods production.
e. Technology and number of resources.
Monetarists argue that fiscal policy is ineffective because:
a. the velocity of money is predictable.
b. the crowding-out effect reduces investment.
c. prices and wages are sticky in the short run.
d. it causes the value of the dollar to depreciate.
Exhibit 8-9 Consumption function
In Exhibit 8-9, the value of the
marginal propensity to consume is:
a. .75.
b. .80.
c. .50.
d. .25.
e. .20.
During the Reagan administration, the Laffer curve was used to ague that:
a. the supply-side effects of tax cuts are relatively small.
b. discretionary tax cuts are unwise because they create stagflation.
c. lower income tax rates could increase tax revenues.
d. a “flat tax” would simplify the tax code and stimulate economic growth.
The going concern assumption infers that a company will continue to operate
indefinitely.
a. True
b. False
An appreciation in the U.S. dollar benefits which of the following groups of people?
a. All people living in the United States
b. U.S. producers who export farm equipment to other countries
c. U.S. consumers who buy imported automobiles
d. Foreigners who wish to travel to the United States
e. U.S. consumers who buy only goods made entirely in the United States
Economic models are of limited use since they cannot be tested empirically with actual
data.
Exhibit 16-2 Money market demand and supply curves
Starting from an equilibrium at E1 in
Exhibit 16-2, a rightward shift of the money supply curve from MS1 to MS2 would
cause an excess:
a. demand for money, leading people to sell bonds.
b. supply of money, leading people to buy bonds.
c. supply of money, leading people to sell bonds.
d. demand for money, leading people to buy bonds.
A demand curve:
a. has a positive slope.
b. illustrates the negative relationship between price and quantity demanded.
c. illustrates the positive relationship between price and quantity demanded.
d. is based on the assumption of a stable supply curve.
e. shifts about in a random fashion.
Supply-siders’ policy recommendations include:
a. lower tax rates, spending cuts, and increased government regulation.
b. lower tax rates, lower resource prices, and decreased government regulation.
c. lower tax rates, spending increases, and decreased government regulation.
d. lower tax rates, spending increases, and increased government regulation.
e. higher tax rates, spending cuts, and decreased government regulation.
In order to compute national income from GDP,
a. national income is first calculated, and then depreciation of capital and indirect
business taxes are subtracted from it to get GDP.
b. GDP is first calculated, and then gross private domestic investment is subtracted
from it to get national income.
c. GDP is first calculated, and then capital depreciation and proprietors’ income are
subtracted from it to get national income.
d. GDP is first calculated, and then depreciation of capital is subtracted from it to get
national income.
If the MPC equals 0.80 then:
a. the MPS equals 1.20.
b. the multiplier equals 0.20.
c. the multiplier equals 1 divided by 0.80.
d. the multiplier equals 5.
e. none of these.
A depreciation in the value of the U.S. dollar would:
a. encourage foreigners to travel on American owned airlines.
b. make U.S. goods more expensive to foreign consumers.
c. decrease the number of dollars it takes to buy a Swiss franc.
d. make it more expensive for U.S. citizens to travel abroad.