To finance medical care, the federal government raises the tax per pack paid by sellers
of cigarettes. Other things being equal, the price of cigarettes rises because of a(n):
a. upward movement along the supply curve for cigarettes.
b. rightward shift of the supply curve for cigarettes.
c. upward movement along the demand curve for cigarettes.
d. leftward shift of the supply curve for cigarettes.
Aggregate supply increases when:
a. wage rates decrease while the economy’s price level remains unchanged.
b. resource availability is reduced.
c. there are fewer workers.
d. there is less capital and the price level remains unchanged.
e. there are increased inflationary expectations of labor.
Brock Corporation’s endÂofÂyear balance sheet consisted of the following amounts:
What is Brock’s totalliabilitiesbalance at the end of the current year?
a. $8,000
b. $65,000
c. $108,000
d. $173,000
The production possibility curve is bowed outward from the origin because of:
a. the law of increasing opportunity costs.
b. the finite nature of the resource base.
c. inefficiency.
d. improper output mix.
e. unemployment.
The national debt is the:
a. difference between a nation’s exports and imports of goods and services.
b. sum of the personal debt of all citizens in the United States.
c. indebtedness of the federal government in the form of outstanding interest-earning
government security.
d. sum of the net personal debts of Americans to foreigners.
Structures in the economy increase aggregate demand when the economy is in recession
and decrease aggregate demand when the economy is inflationary are known as:
a. tax transfers.
b. inventory investment.
c. accelerators.
d. depreciation.
e. automatic stabilizers.
If banks are fully loaned up, have no excess reserves, and the required reserve ratio is
raised, the amount that banks can lend is:
a. reduced and the money supply contracts.
b. reduced and the money supply expands.
c. reduced and there is no change in the money supply.
d. increased and the money supply expands.
e. increased and the money supply contracts.
Exhibit 2-1 Production possibilities curve data Consumption
Goods Capital
Goods
10 0
9 1
7 2
4 3
0 4
In Exhibit 2-1, the opportunity cost of producing the fourth unit of capital is:
a. 0.
b. 1 unit of consumption goods.
c. 2 units of consumption goods.
d. 4 units of consumption goods.
e. there is not enough information to estimate the opportunity cost.
When there are positive externalities associated with the consumption of a good, we can
expect the market:
a. demand curve to lie above the social demand curve.
b. demand curve to lie below the social demand curve.
c. supply curve to lie above the social supply curve.
d. supply curve to lie below the social supply curve.
e. demand curve to lie below the social supply curve.
Which of the following does not illustrate opportunity cost?
a. If I study, I must give up going to the football game.
b. If I buy a computer, I must do without a 35″ television.
c. If I spend more on clothes, I must spend less on food.
d. All of these illustrate opportunity cost.
The federal personal income tax was designed to be a:
a. progressive tax.
b. regressive tax.
c. proportional tax.
d. poll tax.
e. payroll tax.
If the Federal Reserve increases the money supply, ceteris paribus, the:
a. rate of interest decreases.
b. rate of interest increases.
c. rate of interest is unaffected.
d. Fed sells bonds.
The relationship between consumer expenditures and disposable income is the:
a. savings function.
b. the tax rate function.
c. disposable income function.
d. consumption function.
Which of the following expenditures would not be included in GDP?
a. Purchase of a new lawnmower.
b. Purchase of a silver cup previously sold new in 1950.
c. Purchase of a ticket to the latest movie.
d. All of these would be counted in GDP.
Which one of the following transactions would be included in GDP?
a. Ms. Kim pays $50 for a used picture frame at a neighborhood garage sale.
b. Mr. Doe donates $500 to his town’s junior college scholarship fund.
c. Ms. Bartolini pays $500 to fix the front end of her car damaged in a recent accident.
d. Ms. Smith pays $5,000 to purchase 100 shares of Microsoft stock.
The following accounting principles and assumptions are included in the conceptual
framework of accounting:
For each situation in A through C below, identify which assumption or principle applies
by selecting from the list provided above, and explain why that assumption or principle
applies. A) Global Corp. has divisions in several countries around the world. Each of
these countries has a currency different from the U.S. dollar. Global Corp. is a U.S.
company and must include the financial data of its worldwide divisions in its financial
statements.
B) Steve and Mike operate a security business as a partnership. They are considering
the advantages of changing over to the corporate form of business.
C) Island Pasta is a locally owned and operated fast-food business. The owners have
decided to expand into nearby cities. Expansion will require more capital, but
management doesn’t expect it will stay in business for more than a year or so regardless
if it expands or not.
Cyclical unemployment is the result of the business cycle.
Compliance with wage and price controls by unions and businesses is strictly voluntary.
Assume a ceiling price is set above the equilibrium price. The eventual result is a
shortage.
In the aggregate expenditures model, if aggregate expenditures (AE) are less than GDP,
then GDP increases.
Policies to increase the supply of money in the economy are primarily a concern of
microeconomics.
Banks do not create money when they make loans.