On the job training:
a. is an important component for building human capital
b. may be just as important as formal education in raising productivity
c. is less amenable to influence by the government
d. All of the above are correct.
If the Fed increases the required reserve ratio, how will this affect excess reserves and
the money supply?
a. Both will increase.
b. Excess reserves increase and the money supply decreases.
c. Both will decrease.
d. Excess reserves decrease and the money supply increases.
Trusts were groups of firms that acted together to raise prices above competitive levels.
a. True
b. False
Statistical correlation always implies causation.
a. True
b. False
A corporation’s income is taxed
a. immediately after it is deposited in the bank.
b. only before it is distributed to its owners.
c. only after it is distributed to owners.
d. both before and after it is distributed to owners.
During a period of economic depression, such as has existed for a long period in Japan,
a profit-oriented bank will act in such a way that
a. dampens the fluctuations.
b. makes the depression worse.
c. is neutral with respect to the fluctuations.
d. is counter-cyclical and stabilizing.
If a society uses the market system, it must rely solely on markets to solve all of its
problems.
a. True
b. False
Treasury securities have ____ risk of default and mortgage-backed securities have ____
risk of default.
a. no; no
b. no; some
c. some; no
d. some; some
Firms should use a resource up to a point where MRP = P.
a. True
b. False
An economic recession in Japan will cause the aggregate demand curve in the United
States to shift to the right.
a. True
b. False
How is it possible for the economy to have a recessionary gap?
a. Equilibrium is at a GDP level below full employment.
b. Equilibrium is at a GDP level equal to full employment.
c. Equilibrium is at a GDP level above full employment.
d. GDP is rising at full employment.
e. GDP is falling at full employment.
In response to the economic downturn, the federal government enacted a fiscal stimulus
bill with funding in excess of $700 billion.
a. True
b. False
When equilibrium GDP falls below potential GDP, an inflationary gap exists.
a. True
b. False
If a female supervisor is discriminated against by one of her workers who refuses to
cooperate, she may earn lower wages.
a. True
b. False
For most firms in the economy, the largest part of factor costs is the cost of
a. labor.
b. capital.
c. property and machinery.
d. land and natural resources.
In a market system, the major coordination tasks are carried out
a. with the approval of central planners.
b. as part of the regular appropriation process of Congress.
c. irregularly by the major corporations.
d. automatically by the market mechanism.
Total output equals total income
a. only at equilibrium.
b. always.
c. only at non-equilibrium levels of income.
d. never.
The most volatile component of aggregate demand is:
a. consumer spending
b. government purchases
c. net exports
d. investment spending
Bank lending and deposits tend to change as interest rates change. Can the Fed
counteract this tendency?
a. Yes, through its ability to affect the money supply.
b. Yes, through its ability to change tax levels.
c. No, the Fed is forbidden by the Constitution from intervening in the economy.
d. No, the Fed almost always follows a passive monetary policy.
If output is increased beyond the point where total profit is maximized,
a. marginal profit will be zero.
b. marginal profit will be negative.
c. marginal profit will be positive.
d. MR > MC.
The actions of speculators
a. help smooth out price fluctuations.
b. serve no useful economic purpose.
c. make investment much more risky.
d. cause severe shortages of some commodities.
When people trade goods for money, money is being used as a medium of exchange.
a. True
b. False
To calculate a firm’s per unit of output profit, it is necessary to subtract
a. price from cost per unit.
b. price from resource costs.
c. cost per unit from product price.
d. cost per unit from cost of resources.
Monopoly firms may lead to higher costs than perfectly competitive firms.
a. True
b. False
Externalities are commonly generated from
a. purely competitive retail industries.
b. modern computer technologies.
c. ordinary consumption and production activities.
d. benefits from further pollution abatement, which are zero.
Along a straight-line demand curve the
a. slope is constant.
b. ratio P/Q constantly changes.
c. elasticity grows much smaller toward the right-hand end.
d. All of the above are correct.
In order for the price system to have satisfied the exacting requirements for efficiency,
a. MU must equal MC for each and every commodity.
b. the average cost of producing each good must be equal to its MU.
c. the maximum possible of total economic profit must be produced.
d. every consumer’s MU will be equal to marginal physical product
The U.S. economy in the 1990s benefited from an aggregate supply curve shifting
outward.
a. True
b. False
Under a floating exchange rate system with mobile international capital, it is always
true that current account
a. deficit + capital account surplus = trade deficit.
b. surplus − capital account surplus = trade deficit.
c. surplus + capital account deficit = 0.
d. surplus − capital account surplus = 0.
The largest component of aggregate demand is
a. investment spending.
b. consumer spending.
c. government spending.
d. total imports.
The process of innovation is the act of
a. discovering a new production process.
b. discovering a new product.
c. basic scientific research.
d. adopting a new product to a market demand.
The one disadvantage of paper money is that it is easier to
a. duplicate and counterfeit.
b. carry.
c. divide.
d. store and use at a later time.