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The impact of the multiplier effect is to:
a. smooth out the up and down swings of the business cycle.
b. promote price stability.
c. magnify small changes in spending into much larger changes in real GDP.
d. reduce the impact of an increase in investment on output and employment.
A demand curve for The Steel Porcupines' concert tickets would show the:
a. number of tickets the box office is willing to sell at various prices.
b. number of people who need tickets.
c. quality of people who want to buy these concert tickets.
d. number of tickets that will be purchased at various prices.
Which of the following is not counted as part of M1?
a. Coins.
b. Federal Reserve notes or " paper money."
c. Passbook savings deposits.
d. Checkable deposits.
If the marginal propensity to save is 0.40, a $20 billion increase in investment spending
would cause equilibrium output to:
a. increase by $50.
b. increase by $80.
c. decrease by $33.
d. decrease by $40.
e. decrease by $20.
The Phillips curve:
a. is downward sloping.
b. is upward sloping.
c. shows there is a tradeoff between unemployment and the inflation rate.
d. shows there is a tradeoff between population and the inflation rate.
Exhibit 10-3 Aggregate supply and demand curves
In Exhibit 10-3, the change in equilibrium from E1 to E2 represents:
a. deflation.
b. demand-pull inflation.
c. price-push inflation.
d. cost-push inflation.
A positive economic statement:
a. contains personal and social value judgments.
b. is always a mathematical expression.
c. should never be used by an economist.
d. is proper provided the advocator is clear the position rests on personal assessment.
e. is an unbiased report of the facts of the economy.
Exhibit 2-11 Production possibilities curves
In Exhibit 2-11, which of the following
could have caused the production possibilities curve to shift from the one labeled B to
the one labeled A?
a. A major natural disaster.
b. An increase in resources.
c. An advance in technology.
d. A decrease in unemployment.
e. An improvement in literacy.
Exhibit 11-3 Aggregate demand and supply model
Suppose the economy in Exhibit 11-3
is in equilibrium at point E1 and the marginal propensity to consume (MPC) is 0.80.
Following Keynesian economics, to restore full employment, the government should
increase its spending by:
a. $200 billion.
b. $250 billion.
c. $500 billion.
d. $1 trillion.
When selecting between the best alternatives regarding an ethical dilemma in
accounting all of the following should be considered except:
a. which alternative provides the most relevant information.
b. which alternative provides the most accurate information.
c. which alternative provides the most neutral information.
d. which alternative provides the most profitable information.
If income increases from $110,000 to $120,000 and consumption from $108,000 to
$114,000, the marginal propensity to consume is:
a. 0.40.
b. 0.60.
c. 0.94.
d. 1.60.
Which of the following is a free rider?
a. Butch breeds the feared pit bulls, and his neighbors now erect fences around their
property.
b. Fred watches many public television programs, but he has never sent in a
contribution.
c. Barry steals candy from the store where he works.
d. Betty regularly uses the local public library.
e. Joe drives 20,000 miles a year on public streets, but he pays no more in taxes than
Sam, who only drives 1,000 miles.
The demand curve for money:
a. shows the amount of money balances that individuals and businesses wish to hold at
various levels of private investment.
b. reflects the open market operations policy of the Federal Reserve.
c. shows the amount of money that households and businesses wish to hold at various
rates of interest.
d. indicates the amount that consumers wish to borrow at a given interest rate.
An increase in regulation will shift the aggregate:
a. demand curve leftward.
b. supply curve rightward.
c. supply curve leftward.
d. demand curve rightward.
If the marginal propensity to consume (MPC) is 0.50, the value of the spending
multiplier is:
a. 5.
b. 1.
c. 2.
d. 5.
The Fed is often considered the bankers' bank because it:
a. demands much more currency than it has available.
b. no longer has a monopoly on printing paper currency.
c. lowers the discount rate in order to restrict the money supply.
d. holds bankers reserves, provides banks with currency and loans, and clears their
checks.
e. refuses to uses its power of open market operations when a quorum of state-chartered
bankers petitions it.
