Figur
e 15.3 Refer to Figure 15.3 If this economy is initially in a recession, the change in
price level which would bring the economy back to full employment would lead to a
change in money demand, which is reflected by the movement from
A) f to e.
B) 1 to 0.
C) AS1 to AS0.
D) Md
0 to Md
1.
Recall the Application about the size of Wal-Mart to answer the following
question(s). During 2008, Wal-Mart’s sales were approximately $374 billion, or
roughly 2.6 percent of U.S. GDP, and its cost of sales was $286 billion.
In listing both the amount and cost of Wal-Mart’s 2008 sales, this Application is
addressing the economic concept of
A) real versus nominal GDP.
B) GDP as a measure of welfare.
C) chain-weighted indexes.
D) value added.
Recall Application 1, “Falling Home Prices, the Wealth Effect, and Decreased
Consumer Spending,” to answer the following questions:
According to the application, wealth holding in the stock market is generally
concentrated among those in:
A) the highest income brackets.
B) the lowest income brackets.
C) the federal government.
D) the technology sector.
Recall the Application about European soccer stars choosing to play for clubs in
countries with lower tax rates to reduce their taxes to answer the following question(s).
A study conducted by economists Henrik Jacobsen Kleven, Camille Landais,and
Emmanuel Saez found that top tax rates and tax breaks do matter when soccer stars
choose where to locate.
Recall the Application. If country A has a lower overall income tax rate than country B,
and labor can freely and easily move between the two countries, ________ in country A
will tend to ________.
A) labor supply; increase
B) labor supply; decrease
C) labor demand; increase
D) labor demand; decrease
Social insurance taxes are:
A) taxes levied on personal income to pay for mandatory federal life insurance.
B) taxes levied on personal income to pay for Social Security and Medicare.
C) voluntary taxes to pay for selected social programs.
D) taxes levied on income from investment to pay for Social Security and Medicare.
Procyclical variables ________ during expansions and ________ during recessions.
A) fall; fall
B) rise; rise
C) fall; rise
D) rise; fall
Recall Application 2, “Increased Political Independence for the Bank of England
Lowered Inflation Expectations,” to answer the following questions:
According to the application, if the bonds that were not adjusted for inflation and the
inflation adjusted bonds had the same yield after the Bank of England’s announced its
increased political independence, then:
A) people expect that the Bank of England’s independence will result in zero inflation.
B) people expect that the Bank of England’s independence will result in the elimination
of inflation adjusted bonds.
C) people expect that the Bank of England’s independence has no effect on inflation.
D) people expect that the Bank of England’s independence will allow inflation equal to
the current bond yield.
Economic growth is severely impeded in economies
A) with a lack of clear property rights.
B) with a strong market system.
C) with high rates of convergence.
D) which encourage induced innovation.
Suppose nation A produces only two goods, apples and oranges. If nation A produces
only apples, it can make 12 apples per day. If nation A produces only oranges, it can
make 36 oranges per day. If the country has a constant production trade-off between
apples and oranges, then the opportunity cost of one orange in nation A is:
A) 0.33 apples.
B) 3 apples.
C) 36 apples.
D) 12 apples.
Figure 1A.1
Refer to Figure 1A.1. If the hours worked per week is 30, the income per week is
A) 50.
B) 100.
C) 150.
D) 200.
If an economy produced 220 pounds of jelly beans at $5 per pound and 90 pounds of
gum drops at $2 per pound in 2012, its real gross domestic product (GDP) was
A) 310 pounds of candy.
B) $180.
C) $1,100.
D) $1,280.
Which of the following situations will arise in the domestic market following the
imposition of an import quota?
A) imports increase, domestic production decreases, prices decrease
B) imports decrease, domestic production increases, prices decrease
C) imports decrease, domestic production decreases, prices increase
D) imports decrease, domestic production increases, prices increase
Recall the Application about the relationship between tax rates and tax revenues which
was proposed by Yu Juo, one of the twelve wise men who succeeded Confucius in
ancient China, to answer the following question(s).This Application addresses the idea
that
A) cutting tax rates will decrease tax revenue.
B) cutting tax rates may actually increase tax revenues.
C) increasing tax rates is necessary to increase tax revenues.
D) there is ultimately no relationship between tax rates and tax revenues.
An increased federal budget surplus during an expansion serves as an automatic
economic stabilizer for all of the following reasons except:
A) reduced transfer payments from welfare programs partly offset the overall increase
in household income.
B) higher personal income translates into a higher tax load and so consumption
spending is slightly curbed.
C) higher corporate profits translate into a higher tax load and so investment spending
is slightly curbed.
D) the positive government saving stimulates consumption spending.
First National Trust has assets of $900,000 and liabilities of $600,000. First National
Trust’s owners’ equity is:
A) $0.
B) $300,000.
C) $600,000.
D) $900,000.
If the flat tax is 27 percent, a person who makes $3000 a month will pay ________ a
month in income taxes.
A) $810
B) $270
C) $8100
D) $2190