Corporate income is taxed twice.
Unlike social insurance taxes, income taxes are paid on wages only.
When there is imperfect competition, the role of government is to take control of
production.
The actual unemployment rate can be greater than or less than the natural rate of
unemployment.
Today, the average U.S. tariff is 4.6 percent of the value of imported goods, which is
very low by historical standards.
If GDP is ________ potential output, the economy is in a ________ and prices and
wages will tend to decrease.
A) below; recession
B) below; boom
C) above; recession
D) above; boom
Profits earned in the United States by foreign-owned companies are included in the
U.S.:
A) GDP but not GNP.
B) neither GDP nor GNP.
C) GNP but not GDP.
D) both GDP and GNP.
Table 13.2 Refer to Table 13.2. First Charter Bank’s total assets:
A) are $900.
B) are $500.
C) are $700.
D) cannot be determined from this information.
According to the marginal principle, a rational individual should undertake an economic
activity as long as the:
A) marginal benefit exceeds marginal cost.
B) marginal benefit is less than marginal cost.
C) marginal benefit equals marginal cost.
D) total benefit equals total cost.
Recall Application 1, “Beyond Purchasing Treasury Securities,” to answer the following
questions:
According to the application, how did the Fed conduct monetary policy prior to 2008?
A) The Fed only held U.S. Treasury securities as its assets.
B) The Fed took directives regarding monetary policy directly from the U.S. president
only.
C) The Fed allowed the fed funds rate to go below zero.
D) The Fed bought securities directly from individuals.
If Republicans are primarily concerned with controlling inflation and Democrats are
primarily concerned with controlling unemployment, then Republicans would tend to
focus on ________ economic policies and Democrats would tend to focus on ________
economic policies.
A) expansionary; expansionary
B) contractionary; contractionary
C) expansionary; contractionary
D) contractionary; expansionary
Figure 9.4 Refer to Figure 9.4. An increase in aggregate supply is represented by:
A) a movement from Point B to Point A along .
B) a movement from Point C to Point A along .
C) a shift from to .
D) a shift from to .
Recall the Application about the use of fertilizer and its impact on crop yields to
answer the following question(s). The table is taken from this Application. Fertilizer
and Corn Yield
Based on the data in the table, this Application addresses the economic concept of
A) the marginal principle.
B) the principle of voluntary exchange.
C) the principle of diminishing returns.
D) the real-nominal principle.
In a closed economy, crowding out occurs when an increase in government spending
results in:
A) a decrease in net exports.
B) an increase in public saving.
C) a decrease in investment spending.
D) an increase in consumption spending.
In the United States today, economists estimate that the natural rate of unemployment is
between ________ and ________ percent.
A) 3; 5.5
B) 3; 4
C) 5; 6.5
D) 6.5; 7.5
A major league baseball player signs a contract that pays $50 million over five years.
The $50 million is its ________ value.
A) real
B) implicit
C) external
D) nominal
Recall the Application about the link between happiness and GDP to answer the
following question(s). Comparing changes in happiness to changes in per capita
income over the last 30 years, economists at Dartmouth College and Warwick
University have measured levels of happiness in the United States and United
Kingdom based on income levels, ethnicity, age, and gender. This Application
addresses the economic concept of
A) real versus nominal GDP.
B) fluctuations in GDP.
C) GDP as a measure of welfare.
D) measuring a nation’s national income.
Making comparisons of real GDP across countries is difficult because:
A) different countries have different currencies.
B) prices differ sharply across countries.
C) patterns of consumption change from country to country.
D) All of the above are true.
When the economy is not at full employment, which component of GDP adjusts
automatically in the long run to bring the economy back to full employment?
A) investment
B) consumption
C) government spending
D) net exports
Suppose that a product benefits from a successful advertising campaign. The result is
that:
A) the demand for the product increases.
B) the demand for the product decreases.
C) the supply of the product increases.
D) the supply of the product decreases.
Suppose there are three economies with 3 different consumption functions:
Country A: C = 100 + 0.8Y
Country B: C = 200 + 0.75 Y
Country C: C = 75 + 0.9Y In which of these countries is the marginal propensity to
consume the largest?
A) Country B
B) Country A
C) Country C
D) All countries have the same marginal propensity to consume.