Contractionary fiscal policy is deliberate government action to influence aggregate
demand and the level of real GDP through:
a. expanding and contracting the money supply.
b. encouraging business to expand or contract investment.
c. regulating net exports.
d. decreasing government spending or increasing taxes.
In an efficient market, deadweight loss is ____.
a. maximum.
b. minimum.
c. constant.
d. zero.
Which of the following expenditures would be included in GDP for this year?
a. The purchase of a new car.
b. The purchase of a new tire by General Motors for a new car.
c. The purchase of a used car.
d. All of these would be included.
Which type of unemployment is most closely connected with the saying “you can’t
teach an old dog new tricks”?
a. Cyclical.
b. Frictional.
c. Structural.
d. Voluntary.
e. Seasonal.
Threeorganizationsimportanttoaccountingarelistedbelow.Selecttheorganizationthatmost
closelyachievestheroledescribed.
a. American Institute of Certified Public Accountants (AICPA)
b. Financial Accounting Standards Board (FASB)
c. Securities and Exchange Commission (SEC) Primarily responsible for setting
accounting standards today.
The lower portion of the circular flow model contains factor markets in which
households provide:
a. labor, money, and machines.
b. savings, spending, and investment.
c. natural resources, labor, and capital.
d. output of all final goods and services produced.
Mallory Trammell is a homemaker. Last week, she was busy with her normal household
chores. She is:
a. a member of the civilian labor force who is employed.
b. a member of the civilian labor force who is unemployed.
c. a member of the civilian labor force who is underemployed.
d. a discouraged worker who is not a member of the labor force.
e. not a member of the labor force.
Which of the following statements is false?
a. Marginal analysis is an examination of the effects of additions or subtractions from a
current situation.
b. The production possibilities curve shows the maximum combination of two outputs
that an economy can produce, given its available resources and technology.
c. Technology is the body of knowledge and skills applied to how goods are produced.
d. Economic growth is illustrated as an inward shift of the production possibilities
curve.
The vertical portion of the aggregate supply curve shows that at full employment an
increase in the price level will:
a. not alter the economy’s full-employment real GDP.
b. increase the economy’s full-employment real GDP.
c. reduce the quantity of goods and services purchasers will demand.
d. improve the overall efficiency of resource use.
Assuming that chicken and beef are substitutes, a decrease in the price of beef, other
things being equal, will:
a. decrease the demand for beef.
b. increase the demand for chicken.
c. decrease the demand for chicken.
d. increase the demand for beef.
Exhibit 2-15 Production possibilities curve
In Exhibit 2-15, the production possibilities
curve demonstrates:
a. changing prices.
b. economic growth.
c. decreases in resources.
d. the law of increasing opportunity costs.
e. changing technology.
Keynesian economics:
a. affirms the classical economists’ basic premise concerning competitive markets.
b. believes that monopolies and unions tend to be permanent fixtures in our economy
and the prices they create tend to be flexible, at least downwardly.
c. emphasizes the possibility that an economy can never be in equilibrium at less than
full employment.
d. prefers to emphasize aggregate supply over aggregate demand.
e. believes that unemployment results when aggregate demand is insufficient to reach a
full-employment level of real GDP.
The following information is available from the records of Focus Seascapes, Inc. at the
end of the 2014 calendar year:
Using the aggregate demand and supply model, expansionary fiscal policy will not
affect the price level, but will restore full-employment GDP.
If people buy more of a generic brand when consumer income falls, it is an inferior
good.
Inflation reduces the purchasing power of nominal income and increases the purchasing
power of fixed income.
Discuss the four steps in the ethical decision model used by accountants. Expand the
discussion to include questions that you would ask to analyze the key elements in the
situation.
If the current account and capital account are both in surplus, the official reserve
account does not have to be in deficit.
It’s easy for a private firm to provide a public good because of free riders.
If firms increase investment, the aggregate expenditures function will shift upward,
other things being equal.
A rightward shift in the money supply curve is likely to produce a rightward shift in the
aggregate demand curve.