A competitive market economy is unlikely to provide an efficient quantity of some
public goods because:
a. only the government has the vast resources necessary to produce public goods.
b. the nature of public goods makes it difficult for producers to withhold them from
nonpaying consumers.
c. the technology involved in the production of public goods makes it difficult for
private firms to produce them even though, once produced, they could be marketed
efficiently.
d. private production of public goods generally results in a large amount of profit,
which is difficult for a firm to effectively pay out to shareholders.
If your income increases from $33,000 to $41,000 and your consumption increases
from $8,000 to $12,000, your marginal propensity to consume (MPC) is:
a. 0.2.
b. 0.4.
c. 0.5.
d. 0.8.
e. 1.0.
What is the name of the branch of accounting concerned with providing managers and
administrators with information to facilitate the planning and control of business
operations?
a. Management accounting
b. Auditing
c. Financial accounting
d. Bookkeeping
The government wishes to close an inflationary gap by reducing real GDP by $400
billion. Assuming a tax multiplier of 4 and an income multiplier of 5, which of the
following policy prescriptions would reduce the inflationary gap by $400 billion?
a. Decreasing government spending by $400 billion and increasing taxes by $400
billion.
b. Decreasing government spending by $160 billion and decreasing taxes by $100
billion.
c. Decreasing government spending by $40 billion and decreasing taxes by $40 billion.
d. Decreasing government spending by $80 billion and keeping taxes the same.
e. Doing absolutely nothing to the economy.
If the quantity supplied exceeds the quantity demanded in a market, then the result is
which of the following?
a. Deadweight loss
b. Inefficiency
c. Overproduction
d. Each of these are true.
Which of the following could be expected to shift the aggregate demand curve?
a. An increase in government spending.
b. Consumption spending decreases.
c. Net exports fall.
d. All of these.
If the interest rate increases, then the:
a. economy will move to a new point along the existing consumption function.
b. consumption function will shift up.
c. consumption function will shift down.
d. investment demand curve will shift up.
e. economy will move to a new point along the existing investment demand curve.
The vicious circle of poverty makes it difficult for an LDC to:
a. establish political institutions. c. save and invest.
b. control inflation. d. fix its exchange rate.
If the crowding-out effect is strong, how will the potency of discretionary fiscal policy
be affected?
a. It will make fiscal policy more potent.
b. It will make fiscal policy less potent.
c. The potency of fiscal policy will be unaffected.
d. The potency of contractionary will be reduced.
If a decrease in price of good X causes the demand curve for good Y to increase, then
these two goods are:
a. normal goods.
b. complementary goods.
c. substitute goods.
d. equilibrium goods.
e. market-day goods.
Which of the following statements would come from someone classified as
unemployed?
a. I’m not working because I’m going to Jamaica with my buddy.
b. I haven’t had a job in a year, and I stopped looking for a job nine months ago.
c. I’m a full-time student at the University of Illinois who doesn’t have time to work.
d. I can’t stand my current job as a telemarketer. I used to be a nuclear engineer.
e. I’m not working. I had three interviews this week, and I’m trying to find a job.
The transmission mechanism is the effect of changes in monetary policy on prices, real
GDP, and employment.
Joseph is the president of Sunshine Enterprises. Sunshine Enterprises began business on
January 1, 2014. The company’s controller is out of the country on business. Joseph
needs a copy of the company’s balance sheet for a meeting tomorrow and asks his
assistant to obtain the required information from the company’s records. She presents
Joseph with the following balance sheet. He asks you to review it for accuracy.
Required
1> Prepare a corrected balance sheet.
2> Draft a memo explaining the major differences between the balance sheet Joseph’s
assistant prepared and the one you prepared.
Supply-side fiscal policies focus on improving the incentives to work, save, and invest.
Cost-push inflation is a result of an increase in the per unit costs of production.
The size of the spending multiplier depends on the level of real GDP.
The long-run Phillips curve is a upward-sloping line at the natural rate of
unemployment.
Abstracting from reality is an important element of all economic models.