A reliable indicator of a healthy economy is an appreciating currency.
In the following index: 2003 = 123.3; 2004 = 143; 2005 = 111.4; 2006 = 100; 2007 =
94.3, what is the rate of change from 2006 to 2007?
a. 5.7%
b. 5%
c. 4.3%
d. 2.5%
e. unable to determine
The term capital, as used by economists, refers to
a. money
b. the physical space in which production occurs
c. the time allocated to producing goods and services
d. financial securities such as stocks and bonds
e. machinery and equipment that is not used up during the production process
The law of demand states that the quantity demanded of a good and
a. the price of a substitute are positively related
b. its price are inversely related
c. its price are positively related if it is an inferior good
d. the wealth of buyers are positively related
e. its price are inversely related if it is a normal good
In the long run,
a. an increase in the federal budget deficit can lower the interest rate and investment
spending.
b. an increase in the federal budget deficit can raise the interest rate and investment
spending.
c. a decrease in the federal budget deficit can lower the interest rate and raise
investment spending.
d. a decrease in the federal budget deficit can raise the interest rate and lower
investment spending.
e. a decrease in the federal budget deficit can lower the interest rate and lower
investment spending.
Technological change moves the economy upward along the existing production
function, thereby increasing productivity and living standards.
Private investment expenditure, adds to the nation’s existing stock of capital.
Which of the following will increase both money supply and money demand in the
short run?
a. An open market sale of bonds by the Fed
b. An open market purchase of bonds by the Fed
c. An increase in government purchases
d. A decrease in taxes
e. An increase in autonomous consumption
What condition must be met in order for total spending to equal total output?
a. The sum of saving and government purchases must equal the sum of planned
investment and net taxes.
b. The sum of saving and net taxes must equal the sum of planned investment and
government purchases.
c. The sum of saving and planned investment must equal the sum of government
purchases and net taxes.
d. Saving must equal net taxes.
e. The sum of saving and net taxes must equal planned investment minus government
purchases.
Net taxes are
a. the total amount of taxes paid to the government
b. total tax revenues of the federal government
c. total tax revenues plus transfer payments
d. total tax revenues minus transfer payments
e. total tax revenues minus taxes paid by firms
If an economic model includes an assumption that there are only two nations in the
world, this would be an example of
a. a critical assumption
b. an implicit assumption
c. a simplifying assumption
d. a concrete assumption
e. a detail assumption
What would happen if the Fed tried to keep employment above the full-employment
level?
a. The long-run aggregate supply curve would shift to the right.
b. The aggregate supply curve would shift downward.
c. Unemployment would increase.
d. The price level would increase.
e. The aggregate demand curve would shift to the left.
If an excise tax is imposed on shoes,
a. government tax revenue will fall
b. the market price of shoes will decrease
c. the supply curve will shift downward
d. the equilibrium quantity demanded will decrease
e. the equilibrium quantity supplied will increase
Economies organize according to the principle of specialization and exchange because
doing so
a. enables the government to exercise greater control than would otherwise be possible
b. forces people to work longer hours than they would do normally
c. eliminates the “law of increasing opportunity costs”
d. enables workers to move up to management in the least amount of time
e. enables greater production and higher standards of living to be realized than would
otherwise be possible