National income is defined as
A) gross national product plus transfer payments.
B) gross national product less retained earnings plus transfer payments.
C) gross domestic product less retained earnings plus transfer payments.
D) gross domestic product less the consumption of fixed capital.
If the marginal propensity to save is 0.1, then a $10 million decrease in disposable
income will
A) increase consumption by $9 million.
B) increase consumption by $1 million.
C) decrease consumption by $9 million.
D) decrease consumption by $1 million.
The processes used to produce goods and services describes
A) innovation.
B) entrepreneurship.
C) technology.
D) capital.
Figure 2-4
Figure 2-4 shows various points on three different production possibilities frontiers for
a nation.
Refer to Figure 2-4. Consider the following events:
a. a reduction in the patent protection period to no more than 2 years
b. a war that destroys a substantial portion of a nation’s capital stock
c. the lack of secure and enforceable property rights system
Which of the events listed above could cause a movement from W to V?
A) a only
B) a and b only
C) a and c only
D) b and c only
E) a, b, and c
Which of the following is an example of human capital?
A) a computer
B) a factory building
C) a college education
D) a software program
On a balance sheet
A) total assets must equal total liabilities plus equity.
B) total assets plus equity must equal total liabilities.
C) total assets plus total liabilities must equal zero.
D) total assets plus total liabilities plus equity must equal zero.
The graph below represents the market for alfalfa. The equilibrium price is $7.00 per
bushel, but the market price is $9.00 per bushel. Identify the areas representing
consumer surplus, producer surplus, and deadweight loss at the equilibrium price of
$7.00 and at the market price of $9.00.
An increase in the demand for LED light bulbs due to changes in consumer tastes,
accompanied by an increase in the supply of LED light bulbs as a result of government
subsidies, will result in
A) an increase in the equilibrium quantity of LED light bulbs and no change in the
equilibrium price.
B) an increase in the equilibrium price of LED light bulbs and no change in the
equilibrium quantity.
C) an increase in the equilibrium price of LED light bulbs; the equilibrium quantity
may increase or decrease.
D) an increase in the equilibrium quantity of LED light bulbs; the equilibrium price
may increase or decrease.
The situation in which short-term interest rates are pushed to zero, leaving the central
bank unable to lower them further is known as
A) the Taylor rule.
B) a liquidity trap.
C) a zero-sum game.
D) an interest rate panic.
Which of the following would contribute to a sustained high rate of economic growth in
the long run in an economy?
A) growth in capital per hour accompanied by technological change
B) increases in labor force participation rates as workers who are out of the labor force
pursue rising wages
C) a shift of workers in the economy from the agricultural sector to the nonagricultural
sector
D) an influx of immigrant labor into an economy without any accompanying
technological change
In the circular flow model, the value of total income for an economy ________ the
value of total production.
A) equals
B) is greater than
C) is less than
D) may be greater than or less than
Which of the following statements about economic resources is false?
A) Economic resources include financial capital and money.
B) Economic resources are also called factors of production.
C) Economic resources are used to produce goods and services.
D) Some economic resources are human-made while others are found in nature.
Assume you set up a sole proprietorship and your lawyer tells you that as the owner you
will face unlimited liability. What does that mean?
A) You are liable for organizing the business.
B) You could stand to lose your personal wealth if the business goes bankrupt.
C) There is no legal responsibility of the business in case a customer sues, as the
business is legally untouchable.
D) None of these explain what unlimited liability means.
U.S. net export spending rises when
A) the price level in the United States rises relative to the price level in other countries.
B) the growth rate of U.S. GDP is slower than the growth rate of GDP in other
countries.
C) the value of the U.S. dollar increases relative to other currencies.
D) the inflation rate is higher in the United States relative to other countries.