The key factors in raising standards of living in low-income countries have been
increases in
A) capital accumulation and the money supply.
B) technology and knowledge.
C) foreign aid and population.
D) income and government ownership of resources.
Employers withhold several taxes from employees ‘ paychecks, one of which is FICA.
Congress requires employers to pay half of the FICA tax and workers to pay the other
half. Does this mean that the burden of the FICA tax falls evenly on employers and
employees? Briefly explain.
Because minimum wage is a price floor
A) it will be set below the market equilibrium price.
B) it will create a deadweight loss.
C) it will increase the number of jobs available in the labor market.
D) it will maximize consumer surplus.
In the United States in 2013, the Bureau of Economic Analysis began counting
spending on research and development as ________, which counts as a part of GDP.
A) investment
B) consumption
C) depreciation
D) intermediate goods
Figure 2-8
Figure 2-8 shows the production possibilities frontiers for Costa Rica and Guatemala.
Each country produces two goods, pineapples and coconuts.
Refer to Figure 2-8. What is the opportunity cost of producing 1 ton of pineapples in
Guatemala?
A) 1/2 of a ton of coconuts
B) 1 1/3 tons of coconuts
C) 2 tons of coconuts
D) 180 tons of coconuts
Suppose that in a market for used cars, there are good used cars and bad used cars
(lemons). Consumers are willing to pay as much as $9,000 for a good used car but only
$3,000 for a lemon. Sellers of good used cars value their cars at $7,500 each and sellers
of lemons value their cars at $1,500 each. Buyers cannot tell if a used car is reliable or
is a lemon. Based on this information, what is the likely outcome in the market for used
cars?
A) Sellers of good used cars will drop out of the market.
B) Sellers of good used cars will incur losses.
C) Sellers of lemons will drop out of the market.
D) Used cars will sell for $6,000.
During which of the following periods was growth in GDP per capita the strongest?
A) prior to 500 A.D.
B) 500 A.D. to 1800 A.D.
C) 1800-1900 A.D.
D) 1900-2000 A.D.
Until recently, many developing countries
A) were quite open to foreign investment.
B) encouraged foreign direct investment but discouraged foreign portfolio investment.
C) sealed themselves off from foreign investment.
D) encouraged foreign portfolio investment but discouraged foreign direct investment.
Which of the following is an example of spending on goods and services in the circular
flow model?
A) Micah purchases a new wrench for his auto repair business.
B) Chester buys a first-class ticket from Atlanta to London for his long-awaited
vacation.
C) Toby buys a new lawn mower to use in his lawn care business.
D) Lily purchases a new massage table for use in her therapy center.
For purposes of monetary policy, the Federal Reserve has targeted the interest rate
known as the
A) federal funds rate.
B) Treasury bill rate.
C) discount rate.
D) prime rate.
A critical function of the government in facilitating the operation of a market economy
is
A) producing goods and services for low income households.
B) setting up and enforcing private property rights.
C) ensuring an equal distribution of income to all citizens.
D) controlling the market prices of food items.
To increase the money supply, the Federal Reserve could
A) raise the discount rate.
B) decrease income taxes.
C) raise the required reserve ratio.
D) conduct an open market purchase of Treasury securities.
E) lower transfer payments.