Exhibit 1A-4 Straight line
Straight line A-D in Exhibit 1A-4 shows
that:
a. increasing value for X will increase the value of Y.
b. increasing value for X will decrease the value of Y.
c. increasing values for X do not affect the value of Y.
d. all of these.
Exhibit 5-10 GDP data (billions of dollars) Indirect business taxes $ 600
Depreciation 950
Change in business inventories 50
Compensation of employees 5,400
Corporate profits 700
Durable goods 600
Exports 100
Social Security taxes 360
Transfer payments 300
Fixed investment 950
Government spending 800
Imports 150
Net interest 500
Nondurable goods 2,000
Personal taxes 1,000
Rental income 200
Services 4,000 In Exhibit 5-10, and using the expenditures approach, compute gross
domestic product (GDP). Which of the following is correct?
a. $8,500 billion.
b. $8,400 billion.
c. $7,400 billion.
d. $8,650 billion.
e. $8,350 billion.
Exhibit 15-5 Balance sheet of Tucker National Bank Assets Liabilities
Required reserves $ Checkable deposits $100,000
Excess reserves 5,000
Loans 70,000
Total $100,000 Total $100,000 The required reserve ratio in Exhibit 15-5 is:
a. 10 percent.
b. 15 percent.
c. 20 percent.
d. 25 percent.
Monetarists argue that the Federal Reserve should allow the money supply to grow:
a. counter to the business cycles.
b. faster than 10 percent annually.
c. only during recessions.
d. at a constant rate.
Which of the following curves show an inverse relationship between a nation’s inflation
and unemployment rates?
a. The aggregate demand curve.
b. The aggregate supply curve.
c. The short-run Phillips curve.
d. The long-run Phillips curve.
Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss
As shown in Exhibit 3A-2, if the quantity
supplied of good X per year is Q1, the result is a deadweight loss represented by area:
a. BEG.
b. CBEFD.
c. EGH.
d. BEF.
Suppose a price ceiling is set by the government below the market equilibrium price.
Which of the following will result?
a. The demand curve will shift to the left.
b. The quantity demanded will exceed the quantity supplied.
c. The quantity supplied will exceed the quantity demanded.
d. There will be a surplus.
Suppose the government imposes a per unit tax on an item whose production process
creates a negative externality. Suppose the tax is exactly the value of the marginal
externality cost. If the government now uses the tax revenue to clean up pollution from
this process, the market will:
a. have internalized all costs and benefits.
b. be inefficient.
c. be destroyed.
d. not have failed.
e. be subject to obligatory controls.
According to the accounting profession, the purpose of financial reporting is to provide
information about a company that investors, lenders, and other creditors can use when
deciding whether to provide resources to the entity.
a. True
b. False
According to the Monetarist view, the impact of expansionary monetary policy will be:
a. the same in the long run as in the short run.
b. the same regardless of whether the effects of the policy are anticipated or
unanticipated.
c. a higher price level (inflation).
d. a decrease in short-run prices and an increase in long-run prices.
One problem with the unemployment rate is that:
a. discouraged workers are included in the calculation.
b. the data includes part-time workers as fully employed.
c. underemployment is measured in the calculation.
d. all of these are problems.
Which of the following will increase investment spending?
a. More optimistic business expectations.
b. An increase in interest rates.
c. An increase in business taxes.
d. A decrease in capacity utilization.
e. All of these.
Other things being equal, a decreased supply of natural resources would be represented
on a production possibilities curve by a(n):
a. movement off the curve to a point inside the curve.
b. movement down along the curve.
c. movement up along the curve.
d. inward shift of the entire curve.
The precautionary demand for holding money is when people hold money:
a. instead of near money.
b. to transact purchases they expect to make.
c. as insurance against unexpected needs.
d. to speculate in the stock market.
e. to take advantage of changes in interest rates.
When per capita real GDP is increasing, real output is growing:
a. more rapidly than prices.
b. more rapidly than population.
c. less rapidly than prices.
d. less rapidly than population.
With the benefits of international trade:
a. there can be increased consumption for all.
b. global production will be increased.
c. world resources will be used more efficiently.
d. all of these are true.
Exhibit 16A-2 Macro AD/AS Models
In Panel (b) of
Exhibit 16A-2, the economy is initially in short-run equilibrium at real GDP level Y1
and price level P2. If the federal government or Fed decides to intervene, it would most
likely:
a. decrease taxes.
b. increase the money supply.
c. increase the level of government spending for goods and services.
d. decrease the level of government spending for goods and services.
The Federal Reserve System was created by act of Congress in 1931 in an effort to end
a wave of bank failures brought on by the Great Depression.
Assume a price floor is set above the equilibrium price. The result is a shortage.
Following Keynesian economics, and assuming a marginal propensity to consume
(MPC) of 0.80, an increase in federal government spending of $100 billion at below full
employment would be expected to shift the aggregate demand curve by $500 billion to
the right.
If more of one good can be produced without producing less of another output, the
economy must have been operating efficiently.
When the official price for goods and services is below the equilibrium price in a
market, prices no longer perform their rationing function efficiently.