The largest component of household consumption spending is expenditures on:
a. services.
b. durable goods.
c. nondurable goods.
d. food.
e. transportation.
Which of the following does not hinder economic development?
a. Lack of education
b. Poor agricultural productivity
c. Low investment in human capital
d. Lack of technology
e. Good nutrition
A point inside a production possibilities curve reflects:
a. the law of increasing costs.
b. technological innovation.
c. less than full use of resources and technology.
d. economic efficiency.
e. a way to increase future economic growth.
Which of the following is the best example of a public good?
a. Apples.
b. Cars.
c. Education.
d. National defense.
Karl Marx published:
a. Das Kapital.
b. General Theory of Communism.
c. The Wealth of Nations.
d. Capitalist Manifesto.
In order to achieve a high economic freedom rating, a country must:
a. provide secure protection of privately owned property and evenhanded enforcement
of contracts.
b. refrain from creating barriers that limit domestic and international trade.
c. rely more fully on markets rather than governments to allocate goods and resources.
d. do all of these.
When the MPC gets smaller, the spending multiplier:
a. gets larger.
b. gets smaller.
c. stays the same.
d. gets smaller at low real GDP, and larger at high real GDP.
e. gets larger at low real GDP, and smaller at high real GDP.
The basic purpose of economic models is to:
a. construct simplifying assumptions about the real world.
b. explain reality in all its complexity.
c. construct situations where controlled experiments can be carried out.
d. provide explanations for, and predictions of the relationship between variables.
If the economy is inflationary, the Fed would most likely:
a. increase bank reserves by raising the discount rate.
b. increase bank reserves by buying government securities
c. decrease bank reserves by lowering the discount rate.
d. decrease bank reserves by selling government securities.
e. decrease bank reserves by lowering the legal reserve requirement.
Which of the following would cause the money supply in the United States to expand?
a. A decrease in reserve requirements.
b. An increase in the discount rate.
c. The sale of U.S. government bonds by a Federal Reserve bank.
d. An increase in the world supply of gold.
Compensation of employees:
a. excludes the monetary value of fringe benefits.
b. excludes paid vacations.
c. is the largest component of GDP.
d. excludes contributions to employees’ Social Security.
e. includes rental income.
Which of the following will cause a movement along the supply curve?
a. An increase or decrease in the raw materials costs.
b. An increase in labor costs.
c. Changes in the cost of the machinery used to make a good.
d. Changes in the market price of a good, other things held constant.
The sum of past federal budget deficits is the:
a. GDP debt.
b. trade debt plus GDP.
c. national debt.
d. Congressional debt.
List three different groups of users of accounting information. Indicate the type of
decisions each group typically makes from accounting information.
Economics is the study of people making choices faced with the problem of unlimited
wants and limited resources.
If pork and beans is an inferior good, other things being equal, an increase in consumer
income will decrease the demand for pork and beans.
Microeconomics only looks at the behavior of one consumer or one firm in a market,
while macroeconomics looks at the behavior of an entire industry or group of
consumers.
The classical approach to a downturn in the business cycle was for the government to
do nothing.
Suppose the market price of a good X is below the equilibrium price. The result is a
shortage and sellers can be expected to decrease the quantity of that good X supplied.
The Keynesian model shows that the economy has a natural tendency toward full
employment.
If a good gives rise to substantial external benefits to society that are associated with its
production and/or consumption then the good likely has too few resources devoted to its
production.
What are the public choice theory arguments against government involvement in the
economy?
The points along the supply curve represent the maximum willingness of firms to
accept payment for a product offered for sale at various prices.