Which one of the following items is correct concerning the time element of financial
statements?
a. The balance sheet covers a period of time.
b. The statement of retained earnings explains changes during a particular period.
c. An income statement lists amounts at a specific point in time.
d. Both the income statement and the balance sheet cover a period of time.
When an entity’s revenues exceed its expenses for a period of time, the entity will report
a net loss.
a. True
b. False
In the intermediate range of the aggregate supply curve, higher aggregate demand will
increase:
a. both the price level and real GDP.
b. real GDP without raising the price level.
c. the price level without affecting real GDP.
d. the price level but reduce real GDP.
A tariff can be defined as a:
a. tax on imports.
b. tax on exports.
c. legal limit on imports.
d. legal limit on exports.
Each year, the president must submit a budget proposal to Congress by:
a. January.
b. April.
c. July.
d. October.
If Congress decides to reduce the tax per pack paid by sellers of cigarettes, other things
being equal, the equilibrium price of cigarettes will fall. This fall in the equilibrium
price can be attributed to a(n):
a. upward movement along the supply curve for cigarettes.
b. rightward shift of the supply curve for cigarettes.
c. upward movement along the demand curve for cigarettes.
d. leftward shift of the supply curve for cigarettes.
Exhibit 3A-2 Comparison of Market Efficiency and Deadweight Loss
As shown in Exhibit 3A-2, if the market is in
equilibrium, then ____ represents producer surplus.
a. FEH
b. FEH
c. EGH
d. DFEA
Exhibit 9-1 GDP and consumption data GDP
ConsumptionAggregate ExpendituresUnplanned inventory
$0 $0.5
1 1.0
2 1.5
3 2.0
4 2.5
5 3.0
6 3.5
7 4.0
8 4.5
As shown in Exhibit 9-1, if investment is $0.5 trillion, government spending is $1
trillion, net exports are -$0.5 trillion, and GDP is $2 trillion, then GDP will:
a. remain unchanged.
b. increase by $1 trillion.
c. decrease by $1 trillion.
d. increase by $2 trillion.
e. decrease by $2 trillion.
In a two good, two-country world, a country has a comparative advantage in any good
for which it has a:
a. lower absolute cost than the other country.
b. lower opportunity cost than the other country.
c. higher absolute cost than the other country.
d. higher opportunity cost than the other country.
The Fed can raise the discount rate when it wants to:
a. decrease the money supply.
b. increase the money supply.
c. decrease the budget deficit.
d. increase the budget deficit.
If Congress decides to reduce the tax per pack paid by sellers of cigarettes, other things
being equal, the price of cigarettes will fall. This fall in prices can be attributed a(n):
a. upward movement along the supply curve for cigarettes.
b. rightward shift of the supply curve for cigarettes.
c. downward movement along the demand curve for cigarettes.
d. leftward shift of the supply curve for cigarettes.
According to classical theory, if the aggregate demand curve decreased and the
economy experienced unemployment, then:
a. the economy would remain in this condition indefinitely.
b. the government must increase spending to restore full employment.
c. prices and wages would fall quickly to restore full employment.
d. the supply of money would increase until the economy returned to full employment.
Which of the following is the most frequently used tool the Fed uses to control the
supply of money?
a. The discount rate.
b. The reserve requirements.
c. Open market operations.
d. The 30-year home-mortgage interest rate.
An unfavorable balance of trade occurs when:
a. exports equal imports.
b. the balance of payments balances.
c. the current and capital account in the BOP are equal.
d. the value of the exports of goods exceeds the value of the imports of goods.
e. the value of the exports of goods is less than the value of the imports of goods .
In a system in which all banks have a uniform reserve requirement, the money
multiplier is equal to 1 divided by the prime rate.
An equilibrium price is unaffected by nonprice factors.
The statement “It is better to suffer a little more unemployment than a little lower price”
is an example of normative economic analysis.
Price floors typically improve market efficiency.
If renting videos is an inferior good, demand for this service will rise when consumer
income falls.
An increase in the cost of chicken feed will reduce the supply of eggs.
A decrease in the required reserve ratio will increase banks’ excess reserves and
decrease the money multiplier.
Other things being equal, a fall in the price of orange juice will decrease the quantity
supplied.
State and local property taxes are regressive.
Of all the points on the production possibilities curve, only one point represents an
efficient point.