Which one of the following is an economic obligation for a business entity?
a. Salaries paid to employees for services rendered
b. Amounts owed to creditors
c. Materials used in manufacturing products
d. Payment of rent for the next year
If the money supply is $250 billion and nominal GDP is $1 trillion, the velocity of
money is:
a. 0.25.
b. 0.40.
c. 2.50.
d. 4.00.
Exhibit 15-7 Lower Walloon National Bank AssetsLiabilities
Reserves $10,000 Checkable deposits $10,000 In Exhibit 15-7, if the required reserve
ratio is increased to 25 percent, the Lower Walloon National bank needs to keep:
a. $2,000 on reserve at all times.
b. $2,500 on reserve at all times.
c. $10,000 on reserve at all times.
d. $0 on reserve at all times.
e. legal and excess reserves equal to each other at all times.
Which of the following would shift the investment demand curve leftward?
a. An increase in business taxes.
b. A decrease in business taxes.
c. A tax credit for new investment.
d. Firms are operating their plants at full capacity.
The main problem with using the infant industries argument to justify protecting an
industry from foreign competition is that:
a. all industries will claim that they are infant industries in order to gain protection.
b. the protected industry will become too efficient and drive out foreign competition.
c. once in place, it is difficult to remove protection even as the industry matures.
d. it causes the goods that are produced in the protected industry to have lower prices.
e. this policy compromises national security if the infant industry produces military
goods.
When an economy is operating below its potential capacity, Keynesian economists
argue that:
a. taxes should be raised if the government is currently running a budget deficit.
b. taxes should be lowered but only if the government is running a budget surplus.
c. the government should cut taxes and/or increase spending in order to stimulate
aggregate demand.
d. all of these.
M1 refers to:
a. the most narrowly defined money supply definition.
b. currency held by the public plus checking account balances.
c. the smallest of the money-supply definitions.
d. all of these.
The time period assumption assumes a company prepares financial statements every
month.
a. True
b. False
Assuming that bus travel is an inferior good, an increase in consumer income, other
things being equal, will cause a(n):
a. upward movement along the demand curve for bus travel.
b. downward movement along the demand curve for bus travel.
c. rightward shift in the demand curve for bus travel.
d. leftward shift in the demand curve for bus travel.
Which of the following would be expected if the tariff on foreign-produced automobiles
were increased?
a. The domestic price of automobiles would fall.
b. The supply of foreign automobiles to the domestic market would decline, causing
auto prices to rise.
c. The number of unemployed workers in the domestic automobile industry would rise.
d. The demand for foreign-produced automobiles would increase, causing the price of
automobiles to increase in other nations.
An economy that is operating below its full-employment capacity is experiencing a(n):
a. tax-induced recession.
b. recessionary gap.
c. fiscal drag.
d. market correction.
e. inflationary gap.
The required reserves of a bank are:
a. held as deposits with the Federal Reserve System.
b. equal to its loans.
c. equal to its checkable deposits.
d. none of these.
Which one of the following will shift the consumption function upward?
a. Higher interest rates.
b. Expectations that the economy will grow in the future.
c. A decrease in money holdings.
d. Higher capacity utilization rates.
e. A tax increase.
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onsofamajorneedofeachofthevarioususers.Fillintheblankwiththeoneusergroupthatismost
likelytohavetheneeddescribedtotherightoftheblank.Someusergroupsmaybeusedmorethan
onceornotatall.
a. Stockholder
b. Company management
c. Supplier
d. Banker
e. Internal Revenue Service
f. Securities and Exchange Commission
g. Labor union The company’s profitability since the last work force contract was
signed.
An economy using money is more efficient that a barter economy because the use of
money reduces the time spent searching for trading partners with a coincidence of
wants and therefore more time can be spent producing goods and services.
The Monetarists advocate the monetary rule in order to stabilize the business cycle
which states that the money supply should be increased by a constant rate year after
year.
Explain why rational expectations theorists do not support government intervention to
alleviate unemployment. Explain their views on the effectiveness of fiscal policy and
monetary policy.
Real investment spending for the past 35 years is more volatile than real personal
consumption.
A price floor is a price set below equilibrium by government and it creates a shortage.
In the aggregate expenditures model, if aggregate expenditures (AE) are less than GDP,
then GDP decreases.