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In Exhibit 5-9, and using the expenditures approach, gross domestic product (GDP)
equals:
a. $4,066 billion.
b. $4,144 billion.
c. $3,988 billion.
d. $4,884 billion.
e. $5,782 billion.
If the value of the marginal propensity to consume (MPC) is 0.90, the value of the
spending multiplier is:
a. 10.
b. 1.1.
c. 90.
d. 100.
When a nation totally bans trade with another country, it is imposing a(n):
a. tariff.
b. embargo.
c. quota.
d. none of these.
Over time, an increase in a nation's stock of physical capital will:
a. shift the production possibilities curve inward.
b. cause an economy to operate inside its production possibilities curve.
c. shift the production possibilities curve outward.
d. eliminate the basic economic problem of scarcity.
Which of the following can be classified as a regressive tax?
a. Excise tax.
b. Sales tax.
c. Gasoline tax.
d. All of these.
Matchthefollowingbusinessformswiththeircharacteristicsbelow.
a. Sole proprietorship
b. Partnership
c. Corporation
Easy to raise large sums of money
When the Fed conducts open market operations, it buys and sells:
a. stocks.
b. government securities.
c. foreign currency
d. gold.
If a country's population grows at the same rate as its real GDP, then real per capita
GDP:
a. grows at an increasing rate.
b. grows at a constant rate.
c. doesn't change.
d. decreases at a decreasing rate.
e. decreases at a constant rate.
In the aggregate expenditures model, assume that the MPC is 0.75. An increase in
investment spending of $6 billion would produce an ultimate increase in real GDP of:
a. $0.25 billion.
b. $0.75 billion.
c. $12 billion.
d. $24 billion.
In Exhibit 5-10, and using the expenditures approach, compute net exports (NX).
Which of the following is correct?
a. -$100 billion.
b. $150 billion.
c. $250 billion.
d. -$50 billion.
e. -$60 billion.
A decrease in the money supply:
a. lowers the interest rate, causing a decrease in investment and a decrease in GDP.
b. lowers the interest rate, causing a decrease in investment and an increase in GDP.
c. raises the interest rate, causing an increase in investment and a decrease in GDP.
d. raises the interest rate, causing an increase in investment and an increase in GDP.
e. raises the interest rate, causing a decrease in investment and a decrease in GDP.
Exhibit 16-5 Money, investment and product markets
In Exhibit 16-5, a shift in aggregate demand from AD2 to AD3:
a. increases real GDP, and lowers the price level.
b. decreases real GDP, and lowers the price level.
c. increases real GDP, and raises the price level.
d. decreases real GDP, and raises the price level.
e. has no effect on real GDP and the price level because the economy can never reach
full employment.
Calvin Corp. was organized on January 1 to operate a taxi service. For each of the
following business activities, please indicate whether it is a financing (F), investing (I)
or operating (O) activity. A. Issued shares of stock to each of the five owners.
B. Purchased five automobiles to use as taxis.
C. Paid the first month's rent for a garage.
D. Obtained a loan from the bank.
E. Received cash from a customer for a 10-mile taxi ride.
F. Paid the drivers wages for the first week.
G. Purchased a fueling station to install at the garage (includes a 500 gallon tank).
H. Declared and paid cash dividends to the owners after the first month's operations.
I. Paid cash to repair the brakes on one of the taxis.
J. Bought land for a future taxi office.
Exhibit 1A-4 Straight line
In Exhibit 1A-4, the slope of straight line
A-D is:
a. positive.
b. zero.
c. negative.
d. variable.
The base year in the consumer price index (CPI) is:
a. given a value of zero.
b. a year chosen as a reference for prices in all other years.
c. always the first year in the current decade.
d. established by law.
Which of the following pairs of goods would be considered substitutes?
a. Milk and cookies.
b. Tires and automobiles.
c. Ink and pens.
d. Coca-Cola and Pepsi.
e. Computers and computer software.
A quota is a:
a. tax on a specific quantity of imported goods.
b. limited number of foreign firms that can sell imported goods.
c. restrictive health and safety standard that raises costs.
d. tax on domestic producers so that they can make higher profits.
e. limit on the quantity of a good that can be imported.
When the tax structure of a nation is progressive, as incomes increase, the tax rate:
a. declines.
b. remains the same.
c. increases.
d. is proportional.
Which concept is the reason the dollar is used in the preparation of financial
statements?
a. Going concern
b. Legal entity
c. Monetary unit
d. Time Period
A good economic model should capture as many details about real-world behavior as
possible.
Recovery is the phase of the business cycle during which real GDP reaches its
maximum.
Any adult who does not have a job is counted as unemployed.
A majority of the commercial banks in the United States are not members of the Fed.
The interest-rate effect is the impact on real GDP caused by the inverse relationship
between the price level and the interest rate.
The way to prevent the national debt from growing is for the budget not to be in deficit.
