Based on information provided in the textbook, which of the following statements is
true regarding taxing millionaires and the budget deficit in 2012?
a. If the government had taxed all income earners who earned more than $1 million a
100 percent income tax rate, the budget deficit would have been completely eliminated,
and a budget surplus would have been incurred.
b. If the government had taxed all income earners who earned more than $1 million a
50 percent income tax rate, the budget deficit would have been completely eliminated.
c. If the government had taxed all income earners who earned more than $1 million a
100 percent income tax rate, the budget deficit would have fallen but not been
completely eliminated.
d. If the government had taxed all income earners who earned more than $1 million a
100 percent income tax rate, the budget would have been balanced.
Some economists argue that the Fed set its federal funds rate target “too _________” in
the early 2000s, which was one of the contributing factors which led to ____________
mortgage interest rates and a(n) ___________ housing prices.
a. low; low; increase
b. low; low; decline
c. high; high; decline
d. high; high; increase
A state of rational ignorance
a. is a reflection of too little education.
b. makes sense only if information is a free good.
c. exists only in ideal representative democracies.
d. makes sense when the costs of becoming informed are greater than the benefits.
e. none of the above
The best reason economists take only final goods and services into account when
calculating GDP is that
a. this is the way things have always been done, but there is no particular reason why.
b. they want to avoid the problem of final counting.
c. they want to avoid the problem of double counting.
d. this is the only way it can be done.
Consider the following data: currency (held outside banks) = $354 billion, checkable
deposits = $250 billion, traveler’s checks = $4 billion, small-denomination time deposits
= $200 billion, savings deposits = $100 billion, retail money market mutual funds =
$160 billion. M1 equals __________ billion and M2 equals __________ billion.
a. $608; $1,068
b. $708; $1,038
c. $708; $948
d. $694; $1,038
e. none of the above
Exhibit 3-17
At a price of $16, the quantity demanded of good X is ____________ than the quantity
supplied of good X, and economists would use this information to predict that the price
of good X would soon ______________.This would push the price __________ the
equilibrium price.
a. greater; fall; toward
b. greater; rise; toward
c. less; fall; toward
d. less; rise; away from
e. greater; rise; away from
Fiscal policy is implemented primarily by
a. local governments alone.
b. the defense department.
c. state governments alone.
d. the federal government.
e. state and local governments.
In a two-country world, the appreciation of the domestic currency shifts
a. the AD curve rightward and the SRAS curve leftward.
b. the AD curve leftward and the SRAS curve rightward.
c. both the AD curve and the SRAS curve rightward.
d. both the AD curve and the SRAS curve leftward.
e. the AD curve rightward and does not affect the SRAS curve.
Exhibit 34-4
The opportunity cost of one unit of good A is __________ for country 1 and
__________ for country 2.
a. 20B; 15B
b. 2B; 1B
c. 40B; 15B
d. 1/2B; 1B
e. 1/20B; 1/15B
Global technologies, such as electronics, have made up a significant portion of the
recent wave of manufacturing offshoring.
a. True
b. False
To expand the money supply the Fed could lower the required reserve ratio, lower the
discount rate, or purchase government securities.
a. True
b. False
As a result of an agricultural price support,
a. quantity demanded is greater than quantity supplied.
b. quantity supplied is greater than quantity demanded.
c. fewer exchanges are made.
d. a and c
e. b and c
Countries with a large GDP must also have a large per-capita GDP.
a. True
b. False
Suppose the multiplier is 4. ceteris paribus, a change in autonomous spending will
change total spending more if the aggregate supply curve is __________ than if it is
__________.
a. horizontal; upward sloping
b. upward sloping; horizontal
c. upward sloping; downward sloping
d. downward sloping; upward sloping
e. There is not enough information to answer the question.
At the time of Elise’s 20 year high school reunion she was earning $50,000 and the CPI
was 80.Now that it is time for her to attend her 25 year high school reunion, Elise’s
income has risen to $80,000 and the CPI is 150.At her 25 year reunion, can Elise
rightfully brag that her real income has risen since the last time she saw her former
classmates five years ago?
a. Yes, Elise’s real income rose during that 5 year period.
b. No, Elise’s real income fell during that 5 year period.
c. No, Elise’s real income remained constant during that 5 year period.
d. It is impossible to determine what happened to Elise’s real income.
In 2013, federal government spending made up approximately __________ percent of
GDP in the United States.
a. 14
b. 23
c. 34
d. 44
e. 54
The beginnings of the New York Stock Exchange can be traced back to a small group of
men who bought and sold stock in New York in
a. 1792.
b. 1866.
c. 1892.
d. 1929.
Economists use the word utility to describe the satisfaction one receives from a good.
a. True
b. False
Monetarists believe that
a. velocity changes in a predictable way.
b. aggregate supply depends on the money supply and velocity.
c. the SRAS curve is upward sloping.
d. a and c
e. a, b and c
Special interest groups often engage in rent seeking, which is a socially wasteful
activity.
a. True
b. False