Suppose all of the major computer manufacturers announced that beginning next month
there would be major price reductions on their computers. This would cause the current
demand for computers to:
a. increase. c. remain unchanged.
b. decrease. d. increase and then decrease.
The velocity of money is the:
a. number of times per year each dollar is used to transact an exchange.
b. rapidity of price increases during inflation.
c. number of times the price level increases during a year.
d. time it takes for checks to clear banks.
e. number of times per year each product is purchased during the year.
If nation A has a comparative advantage over nation B in the production of a product,
this implies:
a. it requires fewer resources in A to produce the good than in B.
b. the cost of producing the good in terms of some other good’s production that must be
sacrificed is lower in A than in B.
c. that nation B could not benefit by engaging in trade with A.
d. that nation A should acquire this product by trading with B.
e. that nation A could not benefit by engaging in trade with B.
In order for accounting information to be useful in making informed decisions, it must
be
a. relevant
b. reliable
c. both relevant and reliable
d. nether relevant nor reliable
Exhibit 1A-8 Straight line relationship
According to the Exhibit 1A-8, the relationship between the price and quantity
purchased of pizza is:
a. direct.
b. inverse.
c. complex.
d. independent.
Which of the following best defines the vicious circle of poverty?
a. Countries are poor because they cannot afford to save and invest.
b. Countries are poor because of high population growth.
c. Countries are poor because of lack of education and training for workers.
d. Countries are poor because of poor international credit.
An economic system is the organizations and methods used to determine:
a. what goods and services are produced.
b. how goods and services are produced.
c. for whom goods and services are produced.
d. all of these.
Cyclical unemployment is caused by:
a. shifts in the structure of the economy.
b. seasonal layoffs.
c. declines in actual output below its full-employment level.
d. the absence of job skills among the unemployed.
Using the aggregate expenditure-output model, assume the aggregate expenditures (AE)
line is above the 45-degree line at full-employment GDP. This vertical distance is called
a(n):
a. inflationary gap.
b. recessionary gap.
c. negative GDP gap.
d. marginal propensity to consume gap.
Adam Smith’s book The Wealth of Nations was published at the time of the:
a. Great Depression.
b. U.S. Declaration of Independence.
c. U.S. Civil War.
d. War of 1812.
Suppose a price floor is set by the government above the market equilibrium price.
Which of the following will result?
a. There will be a surplus.
b. The quantity demanded will exceed the quantity supplied.
c. The demand curve will shift to the left.
d. None of these.
A decrease in the money supply:
a. raises the interest rate, causing an increase in investment and an increase in GDP.
b. lowers the interest rate, causing an increase in investment and an increase in GDP.
c. raises the interest rate, causing a decrease in investment and a decrease in GDP.
d. lowers the interest rate, causing a decrease in investment and an increase in GDP.
e. lowers the interest rate, causing a decrease in investment and a decrease in GDP.
When firms advertise their products, they are attempting to:
a. shift the supply curve of the product to the right.
b. shift the supply curve of the product to the left.
c. shift the demand for the product to the right.
d. shift the demand for the product to the left.
e. create a surplus of the product.
The argument that import restrictions save jobs and promote prosperity fails to
recognize that:
a. there are no secondary effects of import restrictions.
b. import restrictions will lower prices in the protected industries.
c. import restrictions cannot create jobs in any industries.
d. U.S. imports provide people in other countries with the dollars power required for the
purchase of U.S. exports.
Exhibit 17-2 Aggregate demand and aggregate supply curves
As shown in Exhibit 17-2, if
people behave according to rational expectations theory, an increase in the aggregate
demand curve from AD1 to AD2 will cause the economy to move:
a. directly from E1 to E3 and then remain at E3.
b. directly from E1 to E2 and then remain at E2.
c. from E1 to E2 initially and then eventually move back to E1.
d. from E1 to E2 initially and then eventually move to E3.
Which of the following taxes contributed the greatest percentage of total federal
government tax revenues in recent years?
a. Individual income taxes.
b. Corporate income taxes.
c. Social Security taxes.
d. Excise taxes.
Currently, how much of the U.S. national debt is owed to foreigners?
a. About 2.5 percent.
b. About 25 percent.
c. About 30 percent.
d. About 59 percent.
In a commercial bank’s T-account, reserves and outstanding loans are recorded as:
a. debts.
b. profits.
c. assets.
d. liabilities.
Karl Marx viewed socialism only as a transition to the ideal state of communism.
If firms increase their investment spending by $10 million, then the economy’s
equilibrium output rises by exactly $10 million.
An increase in consumer wealth shifts the consumption function downward.
Assuming an economy is already experiencing full employment, then it must produce
more consumer goods and fewer capital goods if it wishes to experience greater rates of
economic growth over time.
An increase in the per unit costs of production within an economy will cause the
aggregate supply curve to shift to the right.