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Consumption spending that is independent of the level of disposable income is known
as:
a. marginal consumption.
b. transitory consumption.
c. permanent consumption.
d. relative consumption.
e. autonomous consumption.
The sub-discipline of economics that focuses especially on individual markets is:
a. normative economics.
b. positive economics.
c. microeconomics.
d. macroeconomics.
e. econometrics.
Barter is the:
a. direct exchange of goods and services.
b. exchange of goods, but not services.
c. system that does not depend on a coincidence of wants.
d. system used in advanced economies.
In Exhibit 5-11, national income (NI) equals:
a. $9,910 billion.
b. $6,210 billion.
c. $9,210 billion.
d. $7,410 billion.
e. $6,560 billion.
Which of the following would most likely occur if the federal government decreased its
spending and reduced the size of the budget deficit during a period of full employment?
a. The rate of inflation would decline.
b. The rate of inflation would rise.
c. A recession would develop.
d. Interest rates would fall.
Best National Bank is subject to a 10 percent required reserve ratio. If this bank
received a new checkable deposit of $1,000, it could make new loans of:
a. $100.
b. $900.
c. $1,000.
d. $10,000.
A decrease in the required reserve ratio will:
a. reduce commercial bank loans and reduce the money supply.
b. increase commercial bank loans and reduce the money supply.
c. increase commercial bank loans and increase the money supply.
d. decrease commercial bank loans and increase the money supply.
The dominant school of thought prior to the 1930s was known as the:
a. Keynesian school.
b. classical school.
c. rational expectations school.
d. supply-side school.
e. monetarist school.
Suppose a country with a large domestic textile industry removed all tariffs on imported
textiles, we would expect domestic:
a. textile prices to decline.
b. textile production to increase.
c. textile employment to increase.
d. textile prices to rise.
Threeorganizationsimportanttoaccountingarelistedbelow.Selecttheorganizationthatmost
closelyachievestheroledescribed.
a. American Institute of Certified Public Accountants (AICPA)
b. Financial Accounting Standards Board (FASB)
c. Securities and Exchange Commission (SEC) Requires that publicly traded companies
file annual and quarterly financial statements on a timely basis.
The costs of doing business through the sale of goods and services are called
a. Net income
b. Expenses
c. Revenues
d. Dividends
