In the former Soviet economy, the supreme planning board that transmitted economic
decisions down to producing and consuming units was called the:
a. Soviet Ministry.
b. Polit Bureau.
c. Gosplan.
d. Soviet Central Committee for Economic Planning.
Which of the following are beliefs of classical theory?
a. Long-run full employment.
b. Inflexible wages.
c. Inflexible prices.
d. All of these.
Which one of the following items would be the most liquid?
a. Pizza.
b. Ticket to next week’s basketball game.
c. Stereo.
d. Dollar bill.
e. U.S. savings bond.
Exhibit 12-4 Marginal tax rate lines
In Exhibit 12-4, line C represents a(n):
a. regressive tax.
b. progressive tax.
c. proportional tax.
d. ability-to-pay tax.
A bank has $100 million of checkable deposits, $6 million of required reserves, and $2
million of excess reserves. What is the required reserve ratio?
a. 2 percent.
b. 3 percent.
c. 6 percent.
d. 12 percent.
The nation has its own MPC. When disposable income increases from $300 billion to
$400 billion, national consumption increases from $300 billion to $360 billion. At Y =
$400 billion, the MPC is:
a. 0.2.
b. 0.5.
c. 0.6.
d. 0.67.
e. 1.33.
A country that can produce a good using fewer resources than another country has a(n):
a. lower opportunity cost of producing the good than another country.
b. absolute advantage.
c. specialization in the production of the good.
d. all of these.
An entrepreneur is:
a. an employee in a factory.
b. the manager of a factory.
c. the person who conceives and starts a business.
d. the person who contracts to work for a specific price.
e. the person who does not assume any risk in business.
Using the income approach, the smallest component in the calculation of GDP is:
a. net interest.
b. rental income.
c. profits.
d. compensation of employees.
Which of the following statements is true?
a. There is no single correct strategy for economic growth and development.
b. In general, GDP per capita is highly correlated with alternative quality of life
measures.
c. The World Bank is affiliated with the United Nations and makes long-term
low-interest loans to LDCs.
d. All of these.
A partnership is a business owned by two individuals; if three or more individuals
organize a business, it must be established as a corporation.
a. True
b. False
Exhibit 17-4 Short-run and long-run Phillips curves
Suppose the economy in Exhibit
17-4 is at point E1, and the Fed increases the money supply. If people have rational
expectations, then the economy will move:
a. to point A in the short run and point B in the long run.
b. directly to point B.
c. to point C in the short run and point D in the long run.
d. directly to point D.
Exhibit 10-4 Aggregate supply and demand curves
In Exhibit 10-4, point E2
represents:
a. real GDP above full-employment GDP.
b. real GDP that equals full-employment GDP.
c. a depression.
d. real GDP below full-employment GDP.
If the exchange rate between the yen and the dollar changes from 110 yen = $1 to 100
yen = $1, then:
a. the dollar has depreciated in value.
b. U.S.-made goods will become more expensive to Japanese citizens.
c. the dollar has appreciated in value.
d. Japanese-made goods will become less expensive to U.S. citizens.
e. there will be a decrease in the demand for dollars in the foreign exchange market.
Assuming coffee and tea are substitutes, a rise in the price of coffee will have which of
the following effects on the market for tea?
a. A movement up along the tea demand curve.
b. A movement down along the tea demand curve.
c. A leftward shift in the tea demand curve.
d. A rightward shift in the tea demand curve.
The belief that the velocity of money is not constant but highly predictable is associated
with the:
a. classical school.
b. Keynesian school.
c. supply-side school.
d. rational expectations school
e. monetarist school.
External debt is that portion of the national debt:
a. held by private investors.
b. held by the Federal Reserve.
c. that the United States does not intend to repay.
d. held by foreigners.
A point outside a production possibilities curve reflects:
a. efficiency.
b. specialization.
c. inefficiency.
d. unemployment.
e. an impossible choice.
Who would benefit if the exchange rate with yen (in U.S. dollars) increased?
a. c and e.
b. Japanese tourists.
c. U.S. consumers.
d. U.S. exporters.
e. Japanese exporters.
A cost or benefit of a good imposed on people other than the consumers or producer of
a good is called a(n):
a. public good.
b. merit good.
c. private good.
d. externality.