If the government collects taxes using a constant income tax rate t, then an increase in t
will result in:
A) a higher disposable income.
B) no change to disposable income.
C) a lower disposable income.
D) an unknown change in disposable income.
Which of the following is a nondurable good?
A) laptop computer
B) truck
C) food
D) washing machine
Which of the following is not a market?
A) an online electronic auction
B) a group of paving contractors bidding for a road construction contract
C) ticket scalpers selling tickets outside a sold-out sports event
D) All of the above are markets.
An arrangement that allows buyers and sellers to exchange things is called:
A) a contract.
B) a market.
C) money.
D) efficient.
Suppose real GDP was 100 in year 1 and 105 in year 2. The growth rate of real GDP is
A) 0.5 percent.
B) 1.5 percent.
C) 2.5 percent.
D) 5 percent.
In the growth accounting study done by Edward Denison, what proportion of U.S.
output growth from 1929-1982 was due to technology?
A) 35 percent
B) 60 percent
C) 0 percent
D) 20 percent
The relationship between the quantity of output produced and the quantity of inputs
used to produce it is called:
A) the production function.
B) the stock of capital.
C) technological knowledge.
D) crowding out.
Which of the following must be true when it is observed that government spending is
causing crowding out?
A) The government spending is decreasing.
B) The investment spending is increasing.
C) The consumption or investment spending is decreasing.
D) The consumption spending is increasing.
Recall Application 3, “Is a VAT in our Future?” to answer the following questions.
According to the application, what is the difference between a VAT and a sales tax?
A) The VAT is already embedded in the price of the good, while sales taxes are paid
upon purchase.
B) The sales tax is regressive while the VAT is not.
C) The sales tax is easy to collect while the VAT is not.
D) The sales tax is a consumption tax while the VAT is not.
A tax on an imported good is known as a(n):
A) import ban.
B) tariff.
C) voluntary export restraint.
D) import quota.
Refer to Application 1, “Using Value Added to Measure the True Size of
Wal-Mart,” to answer the following questions:
If we try to estimate what Wal-Mart produces, we must measure its “value added,”
which is defined as the:
A) value of total sales.
B) cost of sales.
C) value of sales – cost of sales.
D) value of sales + cost of sales.
If the government spending multiplier is 7, the tax multiplier must be
A) -6.
B) -3.
C) 3.
D) 7.
The principle of opportunity cost
A) is more relevant for firms than for individuals.
B) only refers to monetary payments.
C) is only relevant in economics.
D) is applicable to all decision-making.