The social security tax is a:
a. progressive tax at all income levels.
b. regressive tax above a certain income level.
c. proportional tax at all income levels.
d. none of these.
When Brazil can generate a product using fewer labor hours and resources than the
United States, an economist would say that Brazil had:
a. a comparative advantage in production of the product.
b. an absolute advantage in production of the product.
c. a higher opportunity cost of producing the product.
d. no incentive to import the product, regardless of the cost-price conditions for other
products.
Capital accounts are a measure of how much ____ have invested ____.
a. c and d
b. d and e
c. U.S. stockholders; in the market
d. foreign stockholders; in foreign firms
e. U.S. firms; in foreign nations
If the banking system’s money multiplier is 4, then a $2,000 increase in checkable
deposits when banks hold excess reserves will result in which of the following events?
a. The money supply will decrease
b. The money supply will not change.
c. The money supply will increase by exactly $8,000.
d. The money supply will increase by more than $8,000.
e. The money supply will increase by less than $8,000.
GDP is a measure of:
a. domestic production.
b. changes in the general level of prices.
c. material well-being.
d. social welfare.
Which of the following statements is true?
a. The four phases of the business cycle, in order, are: peak, recovery, trough, recession.
b. When unemployment is rising then real GDP is rising.
c. The economic problem typically associated with a recovery is rising unemployment.
d. Full employment exists in an economy when the unemployment rate equals the sum
of frictional, and structural unemployment rates.
The slope of the consumption function is called the:
a. autonomous consumption rate.
b. marginal consumption rate.
c. average propensity to consume.
d. marginal propensity to consume.
Demand for a good will always rise when:
a. the price of a complementary good falls.
b. the price of a substitute good falls.
c. tastes change.
d. incomes decrease.
e. the price of the good falls.
In Exhibit 5-10, compute disposable personal income (DI). Which of the following is
correct?
a. $5,178 billion.
b. $6,450 billion.
c. $5,740 billion.
d. $7,740 billion.
e. $8,350 billion.
According to the law of supply, there is a direct relationship between quantity supplied
and:
a. the number of sellers.
b. costs of resources.
c. technology.
d. the price of the good.
SeveralitemsfromthefinancialstatementsofStandardTiresarelistedbelow.Usethefollowing
answerchoicestoidentifythetypeofaccountforeachitemlisted.Placeyouranswersinthespac
eprovided.
a. Assets
b. Liabilities
c. Revenues
d. Expenses
e. Owners’ equity Inventories
M2 money includes all but which one of the following?
a. Checkable deposits.
b. Savings accounts.
c. Large repurchase agreements.
d. Money market mutual accounts.
e. Small time deposits.
Which of the following changes in the exchange rate represents a depreciation of the
dollar?
a. 100 yen = $1 to 110 yen = $1
b. 1 yen = $.10 to 1 yen = $.08
c. 1 peso = $10 to 1 peso = $11
d. 200 francs = $10 to 250 francs = $10
Suppose Japan has a comparative advantage over Canada in the production of VCRs.
This means that Japan:
a. needs fewer resources to produce DVDS than does Canada.
b. has better technology for producing DVDs than does Canada.
c. has a lower opportunity cost of DVD production than does Canada.
d. can produce more VCRs in a given period of time than can Canada.
An economy that is operating below its full-employment capacity is experiencing:
a. Say’s Law.
b. unrealizable inflationary expectations.
c. Keynesian aggregate demand.
d. an inflationary gap.
e. a recessionary gap.
The speculative demand for holding money is when people hold money:
a. instead of near money.
b. to transact purchases they expect to make.
c. as insurance against unexpected needs.
d. to speculate in the stock market.
e. to take advantage of changes in interest rates.
Because GDP does not account for improvements in the quality of goods, the GDP
calculation:
a. tends to overstate the true value of output in the United States.
b. tends to understate the true value of output in the United States.
c. provides an accurate value of output in the United States.
d. provides the best measure of output in the United States.
e. measures the value correctly because price changes always capture the value of
quality changes.
Exhibit 8-11 Consumption function
In Exhibit 8-11, which of the
following could cause the movement from C1 to C2?
a. A decrease in real asset holdings.
b. Lower interest rates.
c. Expectations that the economy will grow.
d. Expectations of lower future prices.
e. Lower money holdings.
The political business cycle refers to the possibility that:
a. incumbent politicians will be reelected regardless of the state of the economy.
b. politicians will manipulate the economy to enhance their chances of being reelected.
c. there are more recessions prior to elections.
d. recessions coincide with election years.
Determining the price of compact discs is a concern of:
a. macroeconomics.
b. microeconomics.
c. both macroeconomics and microeconomics.
d. neither macroeconomics nor microeconomics.