CHAPTER 38
Money and Profit
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414.
a. there is often a lack of sufficient demand for goods and services.
b. there can never be excess production above demand for any length of time.
c. the economy is naturally prone to severe booms and busts.
d. there is a constant danger of runaway inflation.
415. Suppose the United States produced $12 trillion of goods and services in 2005, according to
a. the economy will produce more than $12 trillion in 2006.
b. the supply of $12 trillion goods will lead to a general glut of goods if consumer demand
falls.
c. the supply of $12 trillion in goods and services will be matched by $12 trillion in
spending.
d. the economy will be able to save about $1 trillion for future consumption.
416. Aggregate demand is defined as
a. the total dollar amount of goods and services that consumers, investors, foreigners, and
governments plan to buy at a given price level.
b. the total dollar amount of goods and services that business produces and plans to sell at a
given price level.
c. the demand for a materials used in concrete.
d. the demand for all the various types of goods and services consumed by a household.
417. Aggregate supply is defined as
a. the total output that business produces and plans to sell at a given price level.
b. the total dollar amount of goods and services that consumers, investors, foreigners, and
governments plan to buy at a given price level.
c. the total quantity of goods that sellers would like to sell during a given period, at various
prices, holding other things constant.
d. the total quantity of goods that buyers would like to buy during a given period, at various
prices, holding other things constant.
418. Progressive economists such as Wesley Mitchell
a. showed that capitalist economies often do not produce equilibrium but do produce a
business cycle with booms and busts.
b. claimed that the internal workings of market capitalism produce an economy without
booms or busts or price inflation that the market could not correct quickly.
c. claimed that unemployment and inflation are caused by factors external to the economy
and are not due to how the economy itself operates.
d. argued that aggregate demand must always equal aggregate supply at any level of supply.
419. Progressive economists argue that recessions and depressions occur when
a. there is an unexpected outside shock to the economy.
b. aggregate demand is insufficient to purchase aggregate supply.
c. government intervenes and disturbs the process of equilibrium.
d. the Federal Reserve issues too much currency.
420. Capitalist economic institutions were fully developed in England
a. by the end of the 18th century
b. by the end of the 16th century
c. by the end of the 17th century
d. by the end of the 15th century.
421. An economy in which most output is produced for sale on the market is
a. a feudal economy.
b. a capitalist economy.
c. a communal economy.
d. a socialist economy.
422. During the Roman Empire, there was considerable trade, and most of it was
a. in agricultural goods.
b. in military goods.
c. in luxury goods.
d. in livestock
423. What are the 4 functions of money in a modern economy?
a. store of value, unit of accounting, medium of exchange, standard of deferred payment.
b. t of accounting.
c. store of value, medium of exchange, standard of deferred payment, emergency reserve.
d.