When economists say the quantity supplied of a product has decreased, they mean the:
a. supply curve has shifted to the left.
b. supply curve has shifted to the right.
c. price of the product has risen, and consequently, suppliers are producing more of it.
d. price of the product has fallen, and consequently, suppliers are producing less of it.
Under adaptive expectations theory, people expect the rate of inflation this year to be:
a. zero, regardless of the rate last year.
b. the same as last year.
c. the rate based on predictable and fiscal policies.
d. All of these.
The perpetual problem in economics is:
a. our inability to work together effectively.
b. our inability to satisfy everyone’s wants with the available resources.
c. a recognition of continual class differences.
d. our inability to utilize resources efficiently.
e. likely to be solved in resource-rich countries.
Sharon pays a tax of $4,000 on her income of $40,000, while Brad pays a tax of $1,000
on his income of $20,000. This tax is:
a. regressive.
b. progressive.
c. proportional.
d. a flat tax.
The following information is provided by the Centos Corporation:
What is the net income for Centos Corp.?
a. $10,000
b. $20,000
c. $30,000
d. Unable to tell from the information provided.
The finite nature of the economy’s resource base:
a. will be solved if only we would learn to conserve.
b. is only a problem in developing countries.
c. will be solved as technology advances.
d. will always be with us.
According to the Laffer curve, the federal tax rate affects:
a. incentive to work.
b. savings.
c. investment.
d. tax revenue.
e. All of these.
The combination of frictional and structural unemployment is the:
a. cyclical rate of unemployment.
b. transitional rate of unemployment.
c. civilian rate of unemployment.
d. natural rate of unemployment.
Which one of the following will shift the investment demand curve leftward?
a. A technological breakthrough.
b. Lower tax rates.
c. Optimistic business expectations.
d. A lower rate of capacity utilization.
e. None of these.
According to rational expectations theory, predictable expansionary monetary and fiscal
policies to reduce the unemployment rate are:
a. desirable because the result is to lower inflation.
b. harmful because the only result is higher inflation.
c. ineffective on the price level.
d. None of these.
In the Keynesian model, the larger the marginal propensity to consume, the:
a. larger the multiplier.
b. larger the marginal propensity to save.
c. higher the income level of the economy.
d. smaller the change in income derived from a given change in government spending.
Which one of the following is the most accurate definition of economics?
a. Economics is the study of stocks and bonds.
b. Economics is the study of how people allocate unlimited resources.
c. Economics is the study of how consumers choose to spend their income.
d. Economics is the study of how society chooses to allocate scarce resources.
If a nation imports more than it exports, then its net exports are:
a. positive.
b. negative.
c. zero.
d. unstable.
If there is a recession, the Fed would most likely:
a. increase bank reserves by raising the discount rate.
b. increase bank reserves by buying government securities.
c. decrease bank reserves by raising the discount rate.
d. decrease bank reserves by selling government securities.
e. decrease bank reserves by lowering the legal reserve requirement.
Exhibit 10-6 Aggregate supply curve
In Exhibit 10-6, the aggregate
supply curve becomes vertical at GDP = $1,200 because:
a. there are no more workers available at any wage rate to increase real GDP.
b. the price level remains constant.
c. the only workers available would demand higher wage rates.
d. the economy is experiencing low employment and low production.
e. the Treasury is no longer allowed to explain away the deficit with creative accounting
Exhibit 8-8 Aggregate expenditures function
In Exhibit 8-8, aggregate
income will equal consumption plus investment and the economy will be in equilibrium
when real disposable income is:
a. $2.33 trillion.
b. $3 trillion.
c. $7 trillion.
d. $10 trillion.
Which of the following directs the buying and selling of U.S. government securities?
a. Board of Governors.
b. Federal Reserve Banks.
c. Federal Open Market Committee.
d. Federal Advisory Council.
e. Member banks.
If Dana can paint his house faster than Luke, a professional house painter, then:
a. Dana has a comparative advantage in house painting.
b. Dana has an absolute advantage in house painting.
c. Luke has a comparative advantage in house painting.
d. Luke has an absolute advantage in house painting.
e. Dana should always paint his own house.