A supply schedule shows the relationship between:
a. demand and supply.
b. supply and income.
c. price and income.
d. quantity supplied and price.
e. income and quantity supplied.
Exhibit 2-4 Production possibilities curve data ABCDE
Capital goods 0 10 20 30 40
Consumer goods 200 180 140 80 0 According to the data given in Exhibit 2-4, the
production of 140 units of consumer goods and 10 units of capital goods:
a. is possible but would be inefficient.
b. may be a result of unemployment.
c. may be a result of unused natural resources.
d. all of the above.
e. none of the above.
Because of transactions which take place in the underground economy, the:
a. GDP calculation tends to overstate the actual value of goods sold in the economy.
b. GDP calculation tends to accurately portray the value of goods sold in the economy.
c. GDP calculation tends to understate the actual value of goods sold in the economy.
d. value of the GDP calculation will be equal to the value of the national income
calculation.
e. value of the GDP calculation through the expenditure approach will be greater then
the value calculated through the income approach.
If the marginal propensity to save (MPS) is 0.10, the value of the spending multiplier is:
a. 1.
b. 9.
c. 10.
d. 90.
The change in consumption divided by a change in disposable income is called the:
a. consumption function.
b. marginal propensity to consume.
c. marginal propensity to spend.
d. spending function.
e. changing propensity to consume.
Which of the following is a shortcoming of GDP?
a. GDP measures nonmarket transactions.
b. GDP includes an estimate of illegal transactions.
c. GDP includes an estimate of the value of household services.
d. None of these are true.
If the quantity demanded exceeds the quantity supplied in a market, then the result is
which of the following?
a. Deadweight loss
b. Inefficiency
c. Underproduction
d. Each of these are true.
A tax levied on imported goods is called a(n):
a. excise tax.
b. quota.
c. foreign profits tax.
d. tariff.
GAAP stands for Generally Accepted Auditing Procedures.
a. True
b. False
When people use recent information to gradually adjust their forecasts of inflation, they
are said to have:
a. static expectations.
b. adaptive expectations.
c. rational expectations.
d. spiraling expectations.
New residential housing is counted in GDP as a(n):
a. durable consumption good.
b. household durable good.
c. investment good.
d. inventory expansion.
e. long-term durable good.
Using the aggregate expenditures model, if aggregate expenditures (aggregate demand)
is $10 trillion and aggregate output is $3 trillion:
a. businesses will accumulate inventories, and output will decline.
b. real output will increase if the full-employment capacity of the economy is greater
than $10.3 trillion.
c. inflation will be a problem if the full-employment capacity of the economy exceeds
$10.3 trillion.
d. both b and c are correct.
The opportunity cost of holding money balances increases when:
a. the inflation rate decreases.
b. the interest rate increases.
c. the interest rate decreases.
d. GDP is far from full employment.
If the economy is inflationary, the Fed would most likely:
a. encourage banks to provide loans by buying government securities.
b. encourage banks to provide loans by raising the discount rate.
c. encourage banks to provide loans by selling government securities.
d. restrict bank lending by selling government securities.
e. restrict bank lending by lowering the federal funds rate.
Keynes called money people hold to make routine day-to-day purchases the:
a. transactions demand for holding money.
b. precautionary demand for holding money.
c. speculative demand for holding money.
d. store of value demand for holding money.
Barton Building Company is ready to sell its bonds. Which one of the following
financial questions is most relevant to the issue of the bonds and that investors will
most likely want answered before they purchase the bonds?
a. How many product lines did Barton Building Company have last year?
b. What will be Barton Building Company’s cost to start operations in another city?
c. How much debt does Barton Building Company already have?
d. Will Barton Building Company pay dividends?
If consumer incomes go up and Harley Davidson motorcycles are a normal good, the
effect on the demand for motorcycles, ceteris paribus, will be a(n):
a. upward movement along the demand curve for motorcycles.
b. downward movement along the demand curve for motorcycles.
c. rightward shift in the demand curve for motorcycles.
d. leftward shift in the demand curve for motorcycles.
Which of the following would cause the U.S. dollar to depreciate against the Japanese
yen?
a. Greater popularity of U.S. exports in Japan.
b. A higher price level in Japan.
c. Higher real interest rates in the United States.
d. Higher incomes in the United States.
Exhibit 4-1 Supply and demand data PriceQuantity
demandedQuantity
supplied
$1.00 500 50
1.50 450 150
2.00 400 250
2.50 300 300
3.00 150 350 Exhibit 4-1 shows that at a price of $3.00,
a. the market is in equilibrium.
b. there will be excess quantity demanded.
c. there will be excess quantity supplied.
d. there is a price ceiling in effect.