Which of the following is true if the price of coffee increases?
a. The demand for tea, a substitute good, will decrease.
b. The demand for coffee will increase.
c. The demand for coffee and tea will decrease.
d. Both the demand for coffee and tea will increase.
e. The demand for tea, a substitute good, will increase.
Exhibit 10-4 Aggregate supply and demand curves
As the aggregate demand curve
shifts from AD1 to AD2 in Exhibit 10-4, the economy experiences:
a. cost-push inflation.
b. demand-pull inflation.
c. wage-push inflation.
d. hyperinflation.
Which of the following must be true if good X is a normal good and income increases?
a. The demand for X will increase, and thus the price and quantity sold and bought will
decrease.
b. The demand for X will decrease, and thus the price and quantity sold and bought will
decrease.
c. The demand for X will increase, and thus the price and quantity sold and bought will
increase.
d. The demand for X will decrease, and thus the price and quantity sold and bought will
increase.
e. The demand for X will increase, and thus the price and quantity sold and bought will
remain the same.
Threeorganizationsimportanttoaccountingarelistedbelow.Selecttheorganizationthatmost
closelyachievestheroledescribed.
a. American Institute of Certified Public Accountants (AICPA)
b. Financial Accounting Standards Board (FASB)
c. Securities and Exchange Commission (SEC) Is a professional organization of
certified public accountants.
If people’s real assets increase, then the:
a. economy will move to the right along the existing consumption function.
b. economy will move to the left along the existing consumption function.
c. consumption function will shift down.
d. consumption function will shift up.
e. investment demand curve will shift up.
A tax where the percentage of income paid in taxes is the same regardless of the size of
the income is a:
a. proportional tax.
b. regressive tax.
c. progressive tax.
d. mix of a and b.
To get personal income from national income, one must:
a. subtract out retained earnings, Social Security taxes, and transfer payments, and add
in corporate business taxes.
b. subtract corporate profits and Social Security taxes, and add in transfer payments and
other income.
c. subtract retained earnings, corporate business taxes, and transfer payments, and add
in Social Security taxes.
d. subtract out corporate business taxes, Social Security taxes and transfer payments,
and add in retained earnings.
The number of the countries of the world classified as a less developed country (LDC)
is about:
a. 50.
b. 75.
c. 100.
d. 150.
e. 300.
Assume all banks in the system started have a 10 percent required reserve ratio and the
Fed made a $20,000 open market purchase. The result would be a(n):
a. $200,000 expansion of the money supply.
b. $20,000 expansion of the money supply.
c. $20,000 contraction of the money supply.
d. infinite contraction of the money supply.
Exhibit 4-10 Supply and demand data for apricots Bushels demanded
per monthPrice per
bushelBushels supplied
per month
50 $5 80
55 4 75
60 3 70
65 2 65
70 1 55 Which of the following would occur if the government set a price ceiling of $1
in the market shown in Exhibit 4-10?
a. There would be a shortage of apricots.
b. Buyers would not want to purchase all of the apricots that are supplied.
c. There would be a surplus of apricots.
d. Farmers would reduce the number of acres allocated to the growing of apricots.
Which of the following statements is true with respect to a tariff on imported cheese?
a. It lowers the price of cheese.
b. It lowers domestic cheese producers’ profits.
c. It creates tax revenues for the government.
d. It cannot result in retaliation.
e. It increases the amount of foreign cheese sold.
If the equilibrium price of bread is $2 and the government imposes a $1.50 price ceiling
on the price of bread, then:
a. more bread will be produced.
b. there will be a shortage of bread.
c. the demand for bread will decrease.
d. producers will charge $0.50 for bread.
e. $0.50 in tax revenue will be paid for each unit of bread.
In the aggregate expenditures model, if aggregate expenditures (AE) are greater than
GDP, then:
a. inventory is unchanged.
b. inventory is accumulated.
c. employment decreases.
d. GDP increases.
Which of the following statements is true concerning the consumption function?
a. It slopes upward.
b. Its slope equals the MPC.
c. It represents the direct (positive) relationship between consumption spending and the
level of real disposable income.
d. If the consumption function lies above the 45-degree line then saving is positive.
e. All of these.
The school of thought that emphasizes the natural tendency for an economy to move
toward equilibrium full employment is known as the:
a. Keynesian school.
b. supply-side school.
c. rational expectations school.
d. classical school.