The marginal propensity to consume is defined as the:
a. fraction of total income not spent on consumption.
b. proportion of any change in income that is spent on consumption.
c. fraction of total income spent on consumption.
d. fraction of a change in income that is saved.
Gross domestic product (GDP) is:
a. $600 billion.
b. $100 billion.
c. $500 billion.
d. $915 billion.
e. $800 billion.
If the marginal propensity to save (MPS) is 0.50, the value of the spending multiplier is:
a. 1.
b. 2.
c. 4.
d. 9.
Classical theory advocates ____ policy and Keynesian theory advocates ____ policy.
a. nonintervention; intervention
b. active; nonstabilization
c. stabilization; fixed wage
d. fixed rule; passive
A major technological advance would be represented on a production possibilities curve
by a(n):
a. movement off the production possibilities curve toward a point outside the curve.
b. movement toward the curve from a point inside the curve.
c. outward shift of the entire curve.
d. movement to the left along the curve to a higher point.
The dominant school of economic thought until midway through the Great Depression
of the 1930s was:
a. classical.
b. Keynesian.
c. monetarism.
d. supply-side.
e. rational expectations.
Inflation:
a. reduces the cost-of-living of the typical worker.
b. is measured by changes in the cost of a typical market basket of goods between time
periods.
c. causes the purchasing power of a dollar to rise.
d. has no effect on real income.
Threeorganizationsimportanttoaccountingarelistedbelow.Selecttheorganizationthatmost
closelyachievestheroledescribed.
a. American Institute of Certified Public Accountants (AICPA)
b. Financial Accounting Standards Board (FASB)
c. Securities and Exchange Commission (SEC) Prepares and grades the Uniform CPA
Examination.
An expense is an inflow of assets resulting from the sale of goods and services.
a. True
b. False
The income security program category for federal government outlays includes
spending for:
a. Social Security.
b. Medicare.
c. Welfare.
d. Unemployment compensation.
e. All of these.
National income is calculated by subtracting ____ from GDP.
a. depreciation.
b. investment and net exports.
c. Social Security insurance contributions and transfer payments.
d. corporate and personal income taxes.
Cyclical unemployment is caused by:
a. shifts in the job skills required in the economy.
b. seasonal layoffs.
c. declines in real GDP.
d. cyclical changes in the job skills among workers.
Exhibit 3-3 Demand curves
Which of the graphs in Exhibit 3-3 depicts the effect of a decrease in the price of
domestic cars on the demand for foreign cars?
a. Graph A.
b. Graph B.
c. Graph C.
d. Graph D.
Which of the following statements is true?
a. The Phillips curve has always been stable.
b. If the Phillips curve shifts outward to the right this illustrates a greater tradeoff
between unemployment and inflation.
c. Keynesian economics assumes a vertical Phillips curve.
d. According to the natural rate hypothesis the Phillips curve is downward sloping.
e. All of these.
Consider borrowers and lenders who agree to loans with fixed nominal interest rates. If
inflation is higher than what the borrowers and lenders expected, then who benefits
from lower real interest rates?
a. Only the borrowers benefit.
b. Only the lenders benefit.
c. Both borrowers and lenders benefit.
d. Neither borrowers nor lenders.
If a shortage of a product currently exists in the market,
a. the market price is too high.
b. the quantity demanded is less than the quantity supplied.
c. the quantity demanded exceeds the quantity supplied at the market price.
d. there is an excess supply of the product.
e. there will be a tendency for the price to fall.
Barter requires:
a. that the exchanged goods be portable.
b. that the exchanged goods be durable.
c. a coincidence of wants.
d. that the exchange medium be divisible.
e. an effective middleman.
Which of the following most accurately indicates the implications of an economy’s
production possibilities curve?
a. If all the resources of an economy are being used efficiently, more of one good can be
produced only if less of another good is produced.
b. If all the resources of an economy are being used efficiently, it is generally possible
to produce more of one good without having to sacrifice the production of other goods.
c. Over time, it is generally impossible for a country to expand its production of goods.
d. An economy will automatically move toward a point that lies outside of the
production possibilities constraint unless proper government policy constrains
production.
If the GDP chain price index in a given year is less than 100, real GDP in that year
would be greater than nominal GDP.
List the names of three companies with which you are familiar that are manufacturers
or producers. Also list the names of three companies that are retailers. Finally, provide
the names of three service providers.
Gross domestic product (GDP) is a satisfactory measure of both economic “goods” and
“bads”.
If the U.S. dollar appreciates relative to the British pound, then we pay fewer dollars for
a pound.
The spending multiplier does not apply to investment spending by businesses.
The official unemployment rate can be criticized for both understating and overstating
the true number of unemployed.