1) Most mainstream macroeconomists oppose a strict requirement to balance the
Federal budget annually because they conclude that such a requirement would:
A.increase real interest rates and drive out investment spending.
B.eliminate monetary policy as a stabilization tool.
C.force government to undertake expansionary fiscal policy during inflation and
contractionary fiscal policy during recession.
D.expand the size of the Federal government.
2)
refer to the above diagram in which the downsloping linear lines are budget lines and
i1, i2, and i3 comprise an indifference map. with respect to points 2, 3, and 4, we can
say that:
a.point 4 entails more utility than 3, but less than 2
b.point 4 entails more utility than 2, but less than 3
c.point 4 yields more utility than either 2 or 3
d.the levels of utility associated with these three points cannot be compared
3) strong economic growth since 1960 has allowed nations like singapore and ireland to
surpass nations such as the united kingdom and france in real gdp per capita.
4) if price and total revenue vary in opposite directions, demand is:
a.perfectly inelastic.
b.perfectly elastic.
c.relatively inelastic.
d.relatively elastic.
5) according to u.s. census bureau data, approximately how many illegal immigrants are
estimated to be living continuously in the united states?
a.5 million
b.12 million
c.23 million
d.30 million
6)
refer to the above data. the value for y is:
a.25
b.30
c.40
d.45
7) A major advantage of the built-in or automatic stabilizers is that they:
A.simultaneously stabilize the economy and reduce the absolute size of the public debt.
B.automatically produce surpluses during recessions and deficits during inflations.
C.require no legislative action by Congress to be made effective.
D.guarantee that the Federal budget will be balanced over the course of the business
cycle.
8) That the economy has achieved aggregate equilibrium is indicated by:
A.an equality of saving and planned investment.
B.an equality of aggregate expenditures and GDP.
C.the absence of unplanned changes in inventories.
D.all of these.
9) Suppose you have a $2000 bond that makes an annual interest payment of $75. Use
this information to answer the following questions.
(a)Suppose the current interest rate is 6%. What would be the market price of the bond?
(b)Suppose the current interest rate fell to 3.75%. What would be the market price of
the bond?
(c)Suppose the current interest rate fell even further to 2%. What would be the market
price of the bond?
10) Process innovation refers to:
A.development of new products.
B.implementation of better methods of producing products.
C.first discovery of new scientific principles.
D.wide-spread imitation of innovations.
11) A change in an input price will alter both production costs and the
profit-maximizing output. Thus a decline in the price of capital will reduce production
costs, increase the profit-maximizing output, and thereby increase the demand for labor.
This describes the:
A.output effect.
B.substitution effect.
C.idea of derived demand.
12) Discrimination creates a:
A.redistribution of a larger domestic output.
B.larger domestic output but no redistribution.
C.smaller domestic output but no redistribution.
D.redistribution of a smaller domestic output.
13) In his Progress and Poverty, Henry George argued that:
A.poverty is associated with the personal characteristics of individuals and therefore
cannot be remedied by government antipoverty programs.
B.economic rent could be heavily taxed without impairing the supply of land or
therefore the productive capacity of the economy.
C.rents should not be taxed because rental income is the basic source of saving, which
ultimately permits a high level of investment and economic growth.
D.taxes on rents are undesirable because they have a severe disincentive effect on
landlords.
14) The effectiveness of the built-in or automatic stabilizers is limited because:
A.the stabilizers produce budget surpluses during recessions.
B.transfer payments and subsidies increase during inflation and decrease during
recessions.
C.the offset the stabilizers provide to a change in private spending is less than the
change in private spending.
D.the stabilizers raise the general price level regardless of the phase of the business
cycle.
15) (Last Word) The final settlement of the United States v. Microsoft case:
A.requires that Microsoft provide technical information to competing companies so
they can develop software programs that work as well with Windows as Microsoft’s
own products.
B.broke up Microsoft into two competing firms.
C.found Microsoft not guilty of violating the Sherman Act.
D.forced Microsoft to sell off its major applications programs such as Word and
PowerPoint.
16) Occupational licensing has much the same effect as:
A.inclusive unionism.
B.exclusive unionism.
C.bilateral monopoly.
D.monopsony.
17) suppose that inventories were $40 billion in 2007 and $50 billion in 2008. in 2008,
accountants would:
a.add $10 billion to other elements of investment in calculating total investment.
b.subtract $10 billion from other elements of investments in calculating total
investment.
c.add $45 billion (= $90/2) to other elements of investment in calculating total
investment.
d.subtract $45 billion (= $90/2) from other elements of investment in calculating total
investment.