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In the aggregate expenditures model, a decrease in government spending causes a(n):
a. upward shift in the aggregate expenditures curve.
b. downward shift in the aggregate expenditures curve.
c. shift in the 45-degree line.
d. rightward movement along the aggregate expenditures curve.
e. leftward movement along the aggregate expenditures curve.
Which of the following statements is true about a command economy?
a. Shortages occur because of complexities in the planning process.
b. Planners determine what, how many, and for whom goods and services are to be
produced.
c. Planners often allocate goods and services through a rationing system.
d. The quality of produced goods and services tends to be inferior.
e. All of these are true.
If national real GDP grows at twice the rate of population growth,
a. c and e.
b. eventually there will be too much GDP.
c. per real capita GDP will double each year.
d. per real capita GDP will be reduced by half each year.
e. per real capita GDP growth will double each year.
Which of the following is not a reason for the downward slope of the aggregate demand
curve?
a. Real balances effect
b. Interest-rate effect
c. Net exports effect
d. Government spending effect
Exhibit 3A-1 Comparison of Market Efficiency and Deadweight Loss
As shown in Exhibit 3A-1, if the market price falls from $2.00 to $1.00, then:
a. total surplus increases.
b. deadweight loss increases.
c. overproduction decreases.
d. underproduction decreases.
Decisions to buy or sell securities at the Fed are made by the:
a. Congress.
b. Federal Open Market Committee.
c. Federal Deposit Insurance Corporation.
d. President's Council of Economic Advisors.
Starting from a position of macroeconomic equilibrium at below the full-employment
level of real GDP, an increase in the money supply will:
a. raise interest rates, prices, and reduce real GDP.
b. raise interest rates, lower prices, and leave real GDP unchanged.
c. raise interest rates, lower prices, and leave real GDP unchanged.
d. lower interest rates, raise prices, and increase real GDP.
Which of the following would be classified as a liability for a bank?
a. Required reserves.
b. Excess reserves.
c. Loans.
d. Checkable deposits.
The opportunity cost of an economic decision is:
a. the best alternative that was sacrificed.
b. the amount of money needed to implement the decision.
c. any land, labor, and capital that are wasted.
d. all options that were lost due to scarcity.
Opening trade between two nations would:
a. shift their production possibilities curves outward.
b. shift their production possibilities curves inward.
c. leave the production possibilities unchanged and increase their consumption
possibilities.
d. leave the production possibilities unchanged and decreased their consumption
possibilities.
With time, which one of the following strategies would most likely result in an outward
shift in the production possibilities curve of an economy?
a. passage of legislation reducing the workweek to 30 hours.
b. instituting a tax policy encouraging consumption at the expense of investment.
c. instituting a tax policy encouraging investment at the expense of consumption.
d. an increase in the marginal income tax rate, which would reduce the work effort of
individuals.
A nation's infrastructure includes all of the following except its:
a. market system.
b. educational system.
c. energy system.
d. railroad system.
e. religious system.
The horizontal segment of the aggregate supply curve:
a. shows that real GDP can increase only by affecting the economy's price level.
b. shows that real GDP can increase without affecting the economy's price level.
c. depicts a positive relationship between real GDP and the price level.
d. depicts a negative relationship between real GDP and the price level.
e. marks the full-employment level of real GDP.
Macon Enterprises purchased land for $2,000,000 in 2001. In 2015, an independent
appraiser assessed the value at
$3,400,000. What amount should appear on the financial statements in 2015 with
respect to the land?
a. $2,000,000
b. $1,400,000
c. $3,400,000
d. Whatever amount the company believes is the best indicator of the true value of the
land
Albert and Betty hire Christine and David to play music at their wedding. Elizabeth,
who lives behind the church, cannot study because of the loud music. The third party is:
a. Albert.
b. Betty.
c. Christine.
d. David.
e. Elizabeth.
A country should export the goods in which it has an absolute advantage.
In any year, nominal GDP divided by the GDP chain price index equals real GDP.
A decrease in the discount rate by the Federal Reserve causes the money stock to
expand.
Absolute advantage governs the potential for gains from trade.
Along the Keynesian range of the aggregate supply curve, higher aggregate demand
fails to stimulate output and only causes inflation.
When there is an excess demand for money, individuals and businesses will attempt to
purchase bonds.
The following items are available from the records of Ramos Corporation at the end of
its fiscal year, June 30, 2014:
Required
(1) Prepare a balance sheet.
(2) For each non-balance-sheet item, indicate where it should appear.
An open-market purchase by the Federal Reserve withdraws excess reserves from the
banking system and causes the money supply to contract.
The Keynesian viewpoint is that the investment curve is highly responsive to the
changes in the rate of interest.
Suppose A and B are complementary goods. Other things being equal, the demand
curve for A will shift to the right when the price of B goes down.
