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Which of the following options could be used to eliminate a recessionary gap?
a. Decrease consumption.
b. Increase investment.
c. Decrease investment.
d. Increase taxes.
The vicious circle of poverty refers to the fact that in LDCs,
a. low living standards lead to declines in population growth.
b. too much spending leads to periods of recession.
c. people are poor because too much is spent on capital goods.
d. there are not enough people in the under-15 age groups.
e. poverty leads to low investment in capital goods.
The production possibilities curve illustrates all of the following concepts except:
a. the law of increasing costs.
b. unlimited wants.
c. scarcity.
d. opportunity cost.
e. availability of resources.
Production possibilities curve analysis includes the idea of:
a. opportunity cost.
b. scarcity.
c. maximum production choices.
d. all of these.
An economist at the University of Alaska at Anchorage has been asked to explain why
the price of Alaskan crude oil has fallen recently. In order to develop a model, the
professor should take which steps?
a. Identify the problem, develop a model based on simplifying assumptions and test the
model to formulate a conclusion.
b. Gather data on crude oil prices and seemingly unrelated variables in order to look for
associations, then formulate a hypothesis based on those unexpected associations.
c. Ask people in Alaska why they are not purchasing oil.
d. None of these. The oil industry is controlled by a cartel; therefore price changes in
the industry cannot be explained using economic theories.
Which one of the following statements is true in the four-sector circular model?
a. Money flows from government to households for taxes.
b. Money flows from foreign economies to households for exports.
c. Money flows from government to firms for goods and services.
d. Money flows from firms to foreign economies for exports.
e. Money flows from households to foreign economies for resources.
Exhibit 17-1 Inflation and unemployment rates
In Exhibit 17-1, when the
unemployment rate goes from 9 percent to 1 percent, the:
a. level of inflation is unaffected.
b. inflation rate goes from 3 percent to 14 percent.
c. inflation rate goes from 3 percent to 8 percent.
d. inflation rate goes from 8 percent to 14 percent.
Exhibit 20-1 Nation of Padia
Exhibit 20-1 shows the production possibility curve of the nation of Padia. Based only
on this information, the point which would produce the highest rate of growth would
be:
a. I
b. II
c. III
d. IV
e. V
The argument that foreign trade should be restricted to protect domestic employment
and output is based on the idea that:
a. consumers are willing to pay higher prices for domestic goods.
b. producers will not exploit reduced foreign competition by charging higher prices.
c. foreign companies are more costly to deal with than domestic companies.
d. sales of imports come at the expense of domestic goods and jobs.
If loans are $300,000, checkable deposits are $600,000, and the required reserve ratio is
40 percent, then excess reserves are:
a. $360,000.
b. $240,000.
c. $120,000.
d. $60,000.
e. $30,000.
The Laffer curve is a graph of the relationship between tax rates and:
a. real GDP.
b. total tax revenues.
c. government spending.
d. inflation.
If individuals who sit in the back of the classroom receive lower grades on average than
the rest of the class, does that mean that sitting in the back of a classroom causes one to
perform poorly on exams?
a. Not necessarily. The reoccurrence of a certain relationship between two variables
does not necessarily imply causation.
b. It is not possible for an economist to determine causation between variables.
c. The reoccurrence of such a relationship is sufficient evidence that sitting in the back
of a classroom will lead to lower grades.
d. The reoccurrence of such a relationship is sufficient evidence that students who
receive low grades prefer to keep a low profile and always sit in the back of the
classroom.
Meredith Corporation is in the business of providing dog and cat grooming services to
customers within the city of New York. The following information concerning financial
activities during 2014 is available at December 31, 2014:
A. Calculate net income for 2014
B. Prepare a statement of retained earnings for the year ended December 31, 2014.
C. What information can you derive from the statement of retained earning concerning
this company? Explain.
Business entities and non-business entities are both organized to earn a profit.
a. True
b. False
