1) Suppose the government purposely changes the economy’s standardized budget from
a deficit of 3 percent of real GDP to a surplus of 1 percent of real GDP. The government
is engaging in a(n):
A.expansionary fiscal policy.
B.contractionary fiscal policy.
C.neutral fiscal policy.
D.high-interest rate policy.
2) (Consider This) Credit card balances are:
A.a component of M1.
B.a component of M2 but not of M1.
C.a component of M1 but not of M2.
D.not a component of M1 or M2.
3) if average total cost is declining, then:
a.marginal cost must be greater than average total cost.
b.the average fixed cost curve must lie above the average variable cost curve.
c.marginal cost must be less than average total cost.
d.total cost must also be declining.
4) if intermediate goods and services were included in gdp:
a.the gdp would be overstated.
b.the gdp would then have to be deflated for changes in the price level.
c.nominal gdp would exceed real gdp.
d.the gdp would be understated.
5) a leftward shift of a product supply curve might be caused by:
a.an improvement in the relevant technique of production.
b.a decline in the prices of needed inputs.
c.an increase in consumer incomes.
d.some firms leaving an industry.
6) The following data for the hypothetical nations of Alpha and Beta. Qs is domestic
quantity supplied and Qd is domestic quantity demanded.
Refer to the above data. Alpha’s export supply is represented by:
A.
B.
C.
D.
7) World commodity prices over the past 150 years have:
A.steadily decreased in both the short run and long run.
B.decreased in the long run despite occasional short-run increases.
C.remained constant in the long run despite occasional short-run fluctuations.
D.steadily increased in both the short run and long run.
8) Near-monies:
A.include all financial and real assets that can be easily converted into currency.
B.are certain highly liquid financial assets that do not function directly as a medium of
exchange but can be readily converted into M1.
C.are excluded from M2 because they are highly liquid.
D. are defined as monetary balances that are immediately available, at zero cost, for
household and business transactions.
9) If you place a part of your summer earnings in a savings account, you are using
money primarily as a:
A.medium of exchange.
B.store of value.
C.unit of account.
D.standard of value.
10) The following table shows estimated wages and salaries, proprietors income,
corporate profits, interest, rent, and the national income of the United States in a recent
year.
(a)What were wages and salaries as a percentage of the national income?
(b)What were labors share of the national income and the capitalists share as a
percentage of national income? Show your calculations.
11) Other things equal, the prospect of imitation by others:
A.decreases the expected rate of return on R&D expenditures.
B.increases the expected rate of return on R&D expenditures.
C.increases the interest-rate cost of funds used to finance R&D expenditures.
D.decreases the interest-rate cost of funds used to finance R&D expenditures.
12) use the following table for a hypothetical single-product economy.
refer to the above data. nominal gdp in year 4 is:
a.$320.
b.$450.
c.$225.
d.$800.
13) according to most experts, which of the following factors is most important in
causing health care costs to rise?
a.the aging of the population
b.rising incomes
c.malpractice suits
d.fee-for-service health insurance and cost-increasing technology.
14) in purchasing products a and b, a consumer is in equilibrium when:
a.mua/pa = mub/pb
b.mua/pb = mub/pa
c.mua – mub = pa/pb
d.mua pa = mub pb
15)
Refer to the above diagram, in which Qf is the full-employment output. The shift of the
aggregate demand curve from AD3 to AD2 is consistent with:
A.an expansionary fiscal policy.
B.a major recession.
C.a contractionary fiscal policy.
D.demand-pull inflation.
16) Assume the price of capital doubles and, as a result, firms make no change in the
relative quantities of capital and labor they employ. This implies that:
A.labor is not readily substitutable for capital.
B.the law of diminishing returns is not applicable.
C.the firms are producing an inferior good.
17) The following consolidated balance sheet of the commercial banking system.
Assume that the reserve requirement is 10 percent. All figures are in billions and each
question should be answered independently of changes specified in any preceding ones.
Refer to the above data. Suppose the Fed wants to reduce the money supply by $400
billion to drive up interest rates and dampen inflation. Assuming that the money
multiplier is operating to full effect, to accomplish the desired reduction the Fed could:
A.sell $20 billion of U.S. securities to the banks.
B.buy $20 billion of U.S. securities from the banks.
C.sell $40 billion of U.S. securities to the banks.
D.buy $40 billion of U.S. securities from the banks.
18) which of the following curves is not u-shaped?
a.mc
b.afc
c.avc
d.atc
19) the availability of health insurance tends to:
a.decrease the demand for health care and cause an underallocation of resources to the
health care industry.
b.increase the quantity of health care demanded and cause an underallocation of
resources to the health care industry.
c.increase the quantity of health care demanded and cause an overallocation of
resources to the health care industry.
d.decrease the quantity of health care demanded and cause an overallocation of
resources to the health care industry.
20) Checkable deposits are:
A.included in M1.
B.not included in either Ml or M2.
C.considered to be a near money.
D.also called time deposits.