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Which combination of fiscal policy actions would most likely be offsetting?
A. Increase in taxes and government spending
B. Decrease in taxes and increase in government spending
C. Increase in taxes but no change in government spending
D. Decrease in taxes but no change in government spending
A 4 percent reduction in the price of a product causes consumer expenditure to remain
the same. The price elasticity of demand is:
A. zero.
B. greater than zero.
C. greater than zero but less than 1.
D. equal to 1.
It is the custom for paper mills located alongside the Layzee River to discharge waste
products into the river. Operators of hydroelectric generating plants on the river find
they must clean up the river's water before it flows through their equipment.
Refer to the above information. Which of the following policies would be most
appropriate for dealing with this problem?
A.Levy a tax on the consumers of paper goods and use the tax revenues to conduct
research on new energy sources.
B.Levy a tax on the consumers of electricity and use the tax revenues to subsidize the
consumers of paper goods.
C.Levy a tax on the producers of electricity and use the tax revenues to clean up the
river.
D.Levy a tax on the producers of paper goods and use the tax revenues to clean up the
river.
Once a government has provided a public good, everyone:
A.pays the cost.
B.can obtain the benefit.
C.experiences positive externalities.
D.experiences negative externalities.
The following list contains items that are related to aggregate demand and/or aggregate
supply.
Refer to the above list. Changes in which combination of factors best explain why the
aggregate supply curve would shift?
A. 1 and 2
B. 2 and 10
C. 3 and 6
D. 7 and 8
One of the major causes of income inequality is the difference in:
A. unemployment benefits.
B. transportation.
C. education.
D. housing.
Susie has lost her job in a Vermont textile plant because of import competition. She
intends to take a short course in electronics and move to Oregon, where she anticipates
that a new job will be available. We can say that Susie is faced with:
A. secular unemployment.
B. cyclical unemployment.
C. structural unemployment.
D. frictional unemployment.
In the United States, credit cards account for about what percentage of the dollar
volume of transactions for goods and services?
A. 10 percent
B. 25 percent
C. 40 percent
D. 65 percent
The following data relate to the supply schedule of a product.
Over which price range is the elasticity of supply greater than 1?
A. $10 to $15
B. $15 to $20
C. $20 to $25
D. $25 to $30
The price elasticity of demand is a measure of the:
A. steepness or slope of a demand curve.
B. absolute changes in quantity demanded and price.
C. responsiveness of quantity demanded to a change in price.
D. sensitivity of the quantity demanded for one good to a change in the price of another
good.
Refer to the above graph. If the interest rate is 5 percent, the supply of money would be:
A. $50 billion.
B. $100 billion.
C. $150 billion.
D. $200 billion.
In comparing a tariff and an import quota, we find that:
A. the tariff and quota both generate the same amount of revenue for the U.S. Treasury.
B. the tariff generates revenue for the U.S. Treasury, but the quota does not.
C. the quota generates revenue for the U.S. Treasury, but the tariff does not.
D. neither the tariff nor the quota generates revenue for the U.S. Treasury.
In an economy experiencing declining production capacity:
A. net private domestic investment is positive.
B. net private domestic investment is negative.
C. disposable income exceeds personal income.
D. nominal GDP exceeds real GDP.
The public debt is held as:
A. U.S. securities, corporate bonds, and common stock.
B. Federal Reserve Notes.
C. U.S. gold certificates.
D. Treasury bills, Treasury notes, Treasury bonds, and U.S. savings bonds.
Which cannot be a characteristic of an oligopolistic industry?
A. Differentiated products.
B. A large number of consumers.
C. Significant barriers to entry.
D. A perfectly elastic firm demand curve.
In the following question you are asked to determine, other things equal, the effects of a
given change in a determinant of demand or supply for product X upon (1) the demand
(D) for, or supply (S) of, X; (2) the equilibrium price (P) of X; and (3) the equilibrium
quantity (Q) of X.
An increase in income, if X is a normal good, will:
A. increase D, increase P, and increase Q.
B. increase D, increase P, and decrease Q.
C. increase S, increase P, and increase Q.
D. decrease D, increase P, and increase Q.
Commercial banks, mutual fund companies, and securities firms are all part of the
_____ services industry.
A. government
B. economic
C. financial
D. political
Refer to the above diagram. If AD1 shifts to AD2, then the equilibrium output and price
level are:
A. P1Q3.
B. P2Q3.
C. P1Q2.
D. P2Q2.
A bank is in the position to make loans when required reserves:
A. equal actual reserves.
B. equal excess reserves.
C. are less than actual reserves.
D. are greater than actual reserves.
The kinked-demand curve model of oligopoly:
A. suggests a firm's rivals will ignore a price cut but match a price increase.
B. suggests small changes in unit costs will have no effect on equilibrium price and
output.
C. assumes a firm's rivals will match any price change it may initiate.
D. assumes a firm's rivals will ignore any price change it may initiate.
An economic model is:
A. a value judgment.
B. a fact.
C. built using theory.
D. built on policies.
A purely competitive firm, as shown above, will face what kind of change in profits
over the long run, assuming industry demand is constant?
A. Profits will increase.
B. Profits will decrease.
C. Profits will be unchanged.
D. Cannot be decided from the information given.
Which of the following would not shift the demand curve for beef?
A. A widely publicized study that indicates beef increases one's cholesterol
B. A reduction in the price of cattle feed
C. An effective advertising campaign by pork producers
D. A change in the incomes of beef consumers
Answer the next question on the basis of the following consolidated balance sheet for
the commercial banking system. Assume the required reserve ratio is 10 percent. All
figures are in billions.
Refer to the above data. The commercial banking system has excess reserves of:
A. $0.
B. $30 billion.
C. $60 billion.
D. $70 billion.
The major source of production in the economy comes from:
A. conglomerates.
B. corporations.
C. partnerships.
D. sole proprietorships.
Which would make it easier to maintain an effective collusive agreement in a cartel?
A. The emergence of a number of potential entrant firms.
B. A decrease in the elasticity of demand for the cartel's product.
C. An increase in the number of substitutes for products produced by the cartel.
D. A new method of pricing that makes it more difficult for firms in the cartel to
determine the prices at which other cartel members are selling their product.
A point on the frontier of the production possibilities curve is:
A. attainable and the economy is efficient.
B. attainable, but the economy is inefficient.
C. unattainable and the economy is inefficient.
D. unattainable, but the economy is efficient.
If the cyclically adjusted budget shows a deficit of about $100 billion and the actual
budget shows a deficit of about $150 billion, it can be concluded that there is:
A. built-in stability.
B. a cyclical deficit.
C. an expansionary fiscal policy.
D. a contractionary fiscal policy.
Which of the following is a private transfer payment?
A. The sale of shares of stock in Walmart.
B. The sale of used clothing at a thrift store.
C. The Social Security benefits sent to a retired worker.
D. A check for $100 sent by a parent to a daughter at college.
Suppose that real domestic output in an economy is 2400 units, the quantity of inputs is
60, and the price of each input is $30. All else equal, if the price of each input decreased
from $30 to $20, productivity would:
A. increase from $40 to $90 and aggregate supply would decrease.
B. increase from $50 to $60 and aggregate supply would decrease.
C. increase from $60 to $70 and aggregate supply would increase.
D. remain unchanged and aggregate supply would increase.
Which of the following is a true statement?
A. Economists who support economic growth say that it is the most practical route to
the higher standards of living the vast majority of people desire.
B. Most economists believe that the recent productivity acceleration implies an end to
the business cycle.
C. Most economists believe that increases in real GDP actually produce decreases in
overall economic well-being because of spillover costs.
D. Mainstream economists disagree as to whether the rate or productivity growth was
higher between 1995 and 2009 than between 1973 and 1995.
Monetary policy in the United States is conducted by the:
A. U.S. Treasury.
B. Federal Reserve.
C. Internal Revenue Service.
D. Office of Management and Budget.
