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Recall the Application about why the U.S. federal government took over the debt of the
state governments in the late 1700s to answer the following question(s).According to
this Application, in exchange for the federal government absolving their debts, the
states were willing to give up their ability to raise revenue from collecting
A) import tariffs.
B) income taxes.
C) property taxes.
D) all of the above
If net investment is negative, the capital stock has ________; if net investment is
positive, the capital stock has ________.
A) decreased; decreased
B) increased; decreased
C) decreased; increased
D) increased; increased
Because the long-run aggregate supply curve is vertical, firms will produce all they can
in the long run:
A) at any given price level.
B) when the price level is low.
C) when the price level is high.
D) when the price level is moving downwards.
An unexpected decrease in inventories has:
A) a negative effect on future production.
B) a positive effect on future production.
C) no effect on future production.
D) a positive effect on current production.
The study of the choices made by individual households, firms, and government is
called:
A) macroeconomics.
B) microeconomics.
C) managerial economics.
D) market economics.
The market demand curve is:
A) negatively sloped.
B) upward sloping.
C) always vertical
D) always horizontal.
All of the following are benefits of the Fed having only the single goal of price stability
EXCEPT
A) the Fed would be more credible.
B) the Fed would be free from political pressures.
C) the fed would not be distracted and led astray by other concerns.
D) there would be greater reliance on fiscal policy for economic stabilization.
Suppose you have $400 and the inflation rate is 5 percent. In order to earn a real return
of $16 on your investment, the nominal interest rate needs to be near
A) 0 percent.
B) 4 percent.
C) 6 percent.
D) 9 percent.
________ unemployment occurs due to a mismatch between the jobs that are available
and the skills of workers seeking jobs.
A) Structural
B) Cyclical
C) Frictional
D) Voluntary
A variable is considered procyclical if it moves:
A) in the same direction as real GDP.
B) in the same direction as unemployment.
C) in a different direction as real GDP.
D) in a different direction as inflation.
Deflation is a great economic problem because:
A) prices and wages fall but interest rates remain the same.
B) prices and wages fall but debts remain the same.
C) prices fall more slowly than wages.
D) lower prices and wages promote unemployment.
If a one-year bond is purchased for $700 and the interest rate is 5 percent, what will it
pay in one year?
A) $35
B) $665
C) $735
D) $770
Which of the following are ways to save money and still limit your taxes?
A) individual retirement accounts (IRAs)
B) buying tax exempt bonds
C) Keogh plans
D) All of the above are correct.
Proponents of the estate and gift tax argue that the tax is necessary because
A) it generates a large portion of total federal revenue.
B) it prevents "unfair" accumulation of wealth across generations.
C) it is only applied to items that have not previously been taxed.
D) it is the primary source of funding for Medicare and Medicaid.
