If Y = $500 billion, autonomous consumption = $300 billion, and the marginal
propensity to save = 0.20, then saving will equal:
a. -$200 billion.
b. $200 billion.
c. -$100 billion.
d. $100 billion.
e. $40 billion.
The sum of consumption (C), investment (I), government spending (G), and net exports
(X-M) is called:
a. autonomous spending.
b. aggregate expenditures.
c. Keynesian income
d. wealth.
Which of the following is an appropriate monetary policy if the Fed wants to increase
the money supply?
a. An increase in the required reserve ratio.
b. An increase in the discount rate.
c. Purchases of bonds in open market operations.
d. Higher taxes on interest income.
Sales and excise taxes are:
a. progressive.
b. proportional.
c. regressive.
d. fixed-revenue.
If a chemical factory causes noxious fumes to be emitted in the neighborhood, a third
party would be:
a. workers at the factory.
b. factory managers.
c. chemical customers.
d. local homeowners.
e. owners of the factory.
Gross domestic product (GDP) does not include:
a. used goods sold in the current time period.
b. foreign produced goods.
c. intermediate as well as final goods.
d. None of these would be included.
Which of the following would not be included in the government consumption
expenditures and gross investment (G) category of GDP?
a. The payments made to Social Security recipients.
b. The expenditures made to repair a highway.
c. The spending for professors at state universities.
d. The purchase of new china for White House functions.
At the point where the disposable income line intersects the consumption function,
saving:
a. equals consumption.
b. equals disposable income.
c. is less than zero.
d. is equal to zero.
One of the assumptions underlying the production possibilities curve for any given
economy is that:
a. the state of technology changes.
b. there is an unlimited supply of resources.
c. there is full employment of resources when the economy is on the curve.
d. goods can be produced outside the curve.
Which of the following statements is correct?
a. Total surplus is the sum of consumer and producer surplus.
b. Deadweight loss is the net loss of both consumer and producer surplus resulting from
underproduction or overproduction of a product.
c. Deadweight loss is a measure of market inefficiency.
d. All of these.
Profits from operating activities distributed to business owners are called dividends.
a. True
b. False
Why is the time period assumption required?
a. Inflation exists.
b. External users of financial statements want statements that accurately reflect net
income or earnings for a specific time period.
c. The dollar is the monetary unit in the United States.
d. The federal government requires it.
Good quality information should be bothand present a.