Which of the following is a characteristic of an LDC?
a. Capital flight.
b. Vicious circle of poverty.
c. Lack of entrepreneurs.
d. All of these.
An increase in government spending will have the greatest expansionary impact on the
economy if it is combined with:
a. an increase in tax revenue equal to the increase in spending.
b. a decrease in tax revenue equal to the increase in spending.
c. unchanged tax revenue.
d. none of these is true.
GDP does not count:
a. the estimated value of homemaker production.
b. state and local government purchases.
c. spending for new homes.
d. changes in inventories.
Bill has $10 to spend on a Superman, Batman, or an X-Men T-shirt. Bill buys the
Superman T-shirt and the Batman shirt was a close second choice. What is the
opportunity cost?
a. The amount he spent, $10.
b. Nothing, since he got his preferred choice.
c. The Batman T-shirt.
d. The X-Men T-shirt.
If the equilibrium price of good X is $5 and a price ceiling is imposed at $4, the result
will be a(n):
a. accumulation of inventories of unsold gas.
b. shortage.
c. surplus.
d. all of these.
In Exhibit 9-6, the spending multiplier for this economy is equal to:
a. 1 2/3.
b. 2 1/2.
c. 3.
d. 5.
The relationship between MPC and MPS is:
a. 1 + MPC = MPS.
b. 1 – MPC = MPS.
c. 1 + MPS = MPC.
d. MPC – MPS = 1.
The Monetarist transmission mechanism through which monetary policy affects the
price level, real GDP, and employment depends on the:
a. indirect impact of changes on the interest rate.
b. indirect impact of changes on profit expectations.
c. direct impact of changes in fiscal policy on aggregate demand.
d. direct impact of changes in the money supply on aggregate demand.
If a person is taxed $100 on an income of $1,000, taxed $220 on an income of $2,000,
and taxed $390 on an income of $3,000, this person is paying a(n):
a. progressive tax.
b. poll tax.
c. regressive tax.
d. excise tax.
e. proportional tax.
Exhibit 8-12 Investment expenditures
In Exhibit 8-12, which of the following
could cause the shift from I1 to I2?
a. Lower money holdings.
b. Lower interest rates.
c. Expectations of a future economic slow-down.
d. Lower disposable income.
e. Lower capacity utilization.
Exhibit 3A-1 Comparison of Market Efficiency and Deadweight Loss
As shown in Exhibit 3A-1, if the market is in equilibrium, then ____ represents
consumer surplus.
a. ABEC
b. AED
c. EGH
d. BEF
Which of the following is true?
a. Frictional unemployment implies a lack of available jobs.
b. During a recession, cyclical unemployment will be low.
c. When an economy is at full employment, actual unemployment will be less than the
natural rate of unemployment.
d. When actual GDP equals potential GDP, the actual unemployment rate will equal the
economy’s natural rate of unemployment.
Which of the following would be classified as external users of financial statements?
a. Stockholders and management of the company
b. The controller of the company and a company’s stockholders
c. The company’s marketing managers
d. The creditors and stockholders of the company
Which of the following is a characteristic of socialism?
a. Rejection of central planning.
b. Government ownership of all factors of production.
c. Government ownership of most of the factors of production.
d. Private ownership of all factors of production.