Which of the following is a shortcoming of GDP?
a. GDP excludes changes in inventories.
b. GDP includes an estimate of illegal transactions.
c. GDP excludes nonmarket transactions.
d. GDP excludes business investment spending.
Which of the following is not an example of money used as a unit of account?
a. A British pound is worth $3.00.
b. Auto repairs were $3,000 last year.
c. Business travel totaled 12,000 miles.
d. Gasoline sells for $1.20 per gallon and oil is $5.00 per quart.
A chain saw is an example of which of the following factors of production?
a. Land.
b. Labor.
c. Capital.
d. None of these.
Which of the following is not an argument used in favor of protectionism?
a. To protect an “infant” industry.
b. To protect domestic jobs.
c. To preserve national security.
d. To protect against “unfair” competition because of cheap foreign labor.
e. To reduce prices paid by domestic consumers.
An externality is an unintended ____ imposed on ____ as a result of the ____.
a. c or d
b. cost; sellers; negligence of others
c. cost; third parties; economic activity of others
d. benefit; third parties; economic activity of others
e. benefit; sellers; beneficence of others
Which of the following compose the reserves of a commercial bank?
a. checkable deposits and time deposits
b. vault cash and deposits of the bank with the Federal Reserve
c. U.S. securities and stock equity
d. cash and U.S. securities
If Y = $500 billion, autonomous consumption = $400 billion, and the marginal
propensity to save = 0.20, then saving will equal:
a. -$300 billion.
b. $300 billion.
c. $0.
d. $80 billion.
e. -$80 billion.
Classical economists believed that:
a. price flexibility automatically directs market economies to full employment.
b. budget deficits and surpluses were necessary for the control of economic
fluctuations.
c. market economies suffer prolonged periods of recessions and depressions.
d. market economies are inherently unstable because of fluctuating aggregate demand.
If the spending multiplier is equal to 4, then a $25 initial increase in investment
spending will lead to a:
a. $25 increase in real GDP.
b. $1 decrease in real GDP.
c. $1 increase in real GDP.
d. $100 decrease in real GDP.
e. $100 increase in real GDP.
Consider an economy made up of 100 people, 50 of whom hold jobs, 10 of whom are
looking for work, and 15 of whom are retired. The unemployment rate is
approximately:
a. 10 percent.
b. 12 percent.
c. 17 percent.
d. 20 percent.
e. 25 percent.
Which of the following is not an automatic stabilizer?
a. Personal income tax revenue.
b. Corporate income tax revenue.
c. Unemployment compensation benefits.
d. Property tax revenue.