The V in the equation of exchange represents the:
a. variation in the GDP.
b. variation in the CPI.
c. variation in real GDP.
d. average number of times per year a dollar is spent on final goods and services.
Automatic stabilizers stabilize the level of real GDP because:
a. Congress quickly changes spending and tax revenue.
b. federal expenditures and tax revenues change as the level of real GDP changes.
c. the spending and tax multiplier are constant.
d. wages are controlled by the minimum wage law.
The buying and selling of government securities by the Fed is known as:
a. open market operations.
b. federal bond operations.
c. treasury bond operations.
d. open bonds operations.
e. discount rate operations.
Which one of the following is notan external user of financial information?
a. Company management
b. Internal Revenue Service
c. Creditors
d. Stockholders
A tax is regressive if it collects a:
a. larger amount as income rises.
b. constant amount as income rises.
c. smaller fraction of income as income falls.
d. smaller fraction of income as income rises.
Which of the following is closest to the definition of capital?
a. c and e.
b. c and d.
c. Tools, equipment, means of transportation
d. Factories and machinery.
e. Borrowed money.
Which of the following will reduce the supply of motorcycles?
a. An increase in the population age 16 to 35, the primary consumers of motorcycles.
b. An increase in taxes imposed on motorcycle producers.
c. A technological improvement reducing the production costs of motorcycles.
d. A government study that reveals motorcycle riders, on average, live 10 years longer
than those who don’t ride motorcycles.
Adding more resources causes:
a. downward movement along a production possibilities curve.
b. the production possibilities curve to shift in.
c. upward movement along a production possibilities curve.
d. the production possibilities curve to shift out.
e. the production possibilities curve to become positively sloped.
Which of the following would be of particular interest to a microeconomist?
a. The price of fruit the typical household consumes.
b. The nation’s inflation rate.
c. The nation’s rate of unemployment.
d. The budget of the national government.
e. The growth of the economy.
Of the following choices, which is the best example of a nation’s economic
infrastructure?
a. Natural resources.
b. Highway system.
c. Government.
d. Religious and cultural beliefs.
e. Population growth rate.
Why do negative externalities like pollution result in inefficiency?
a. Because producers artificially restrict their supply.
b. Because producers ignore the external costs they impose on third-parties.
c. Because producers manufacture more goods than people can afford to buy.
d. Because producers will receive an unequal distribution of profits.
Exhibit 8-9 Consumption function
In Exhibit 8-9, the value of the
marginal propensity to save is:
a. .50.
b. .25.
c. .20.
d. .80.
e. .75.
Which of the following is true for the law of demand?
a. Sellers increase the quantity of a good available as the price of the good increases.
b. An increase in price results from false needs.
c. There is an inverse relationship between the price of a good and the quantity of the
good demanded.
d. Prices increase as more units of a product are demanded.
Buying a cup of coffee with a dollar bill represents the use of money as a:
a. medium of exchange.
b. unit of account.
c. store of value.
d. all of these.
Because of the automatic stabilizers, a decline in the level of economic activity will
cause:
a. a reduction in tax revenues collected.
b. an increase in government expenditures.
c. a greater budget deficit.
d. all of these.