Archives: Quiz

Which of the following items is included when computing M1? a. Checking accounting entries. b. Currency in circulation. c. All of the above. d. None of the above. The equilibrium level of real GDP is $5,000 billion, the full employment […]

The type of unemployment that occurs because of a recession is called: a. frictional unemployment. b. seasonal unemployment. c. natural unemployment. d. cyclical unemployment. The required reserve ratio in Exhibit 15-4 is: a. 5 percent. b. 10 percent. c. 15 […]

The Phillips Curve shows the trade-off between: a. unemployment and output. b. inflation and output. c. unemployment and inflation. d. imports and exports. e. unemployment and imports. The conduct of monetary policy is the responsibility of: a. commercial banks. b. […]

According to the monetarists, which of the following is true? a. Instability in the money supply is the primary cause of economic instability. b. A reduction in the money supply will cause consumers to increase spending. c. A reduction in […]

Which of the following provides the foundation of the case for free trade? a. The law of diminishing marginal utility b. The anti-dumping argument c. The industrial diversity argument d. The theory of comparative advantage Using the aggregate expenditure-output model, […]

Some cities finance their airports with a departure tax: every person leaving the city by plane is charged a small fixed dollar amount that is used to help pay for building and running the airport. The departure tax follows the: […]

If the federal government were to run a budget deficit, this would: a. increase the size of the national debt. b. reduce the size of the national debt. c. leave the size of the national debt unchanged. d. increase the […]

The seven members of the Board of Governors serve 14-year terms to: a. reduce political influence. b. provide steady employment. c. inhibit independent decisions. d. prevent illegal appointments. Which of the following represents the proper order of the financial decision […]

The beginning balance of retained earnings was $630,000, and the ending balance was $650,000. The company declared and paid dividends of $60,000. A) Determine the amount of net income for the year. B) What information would one find on the […]

In the United States, the most recent use of wage and price controls occurred during the: a. Nixon administration. b. Carter administration. c. Reagan administration. d. Clinton administration. Exhibit 15-5 Balance sheet of Tucker National Bank Assets Liabilities Required reserves […]

In a socialistic system, most economic decisions are made by: a. firms. b. consumers. c. stockholders. d. government planners. In Marx’s ideal communist society, the state: a. actively promotes income incentives. b. follows the doctrine of laissez faire. c. owns […]

As inflation drives up prices, people attempt to find substitutes and adjust what they buy. The resulting substitution bias problem causes the CPI to: a. overstate the impact of higher prices on consumers. b. consistently underestimate the true inflation rate. […]

One big difference between tariffs and quotas is that tariffs: a. raise the price of a good while quotas lower it. b. generate tax revenues while quotas do not. c. stimulate international trade while quotas inhibit it. d. hurt domestic […]

If a country’s real GDP is growing at 5 percent and the population is also growing at 5 percent, its: a. per capita real GDP grows at an increasing rate. b. per capita real GDP grows at a constant rate. […]

In the aggregate expenditures model, if an economy operates below equilibrium GDP, there will be: a. unplanned inventory depletion. b. unplanned inventory accumulated. c. a decrease in GDP. d. a decrease in employment. Over a ten year period, the monthly […]

Assume that full-employment real GDP is Y = $1,200 billion, the current equilibrium real GDP is Y = $1,600 billion, and the MPC = 0.8. In order to bring the economy to a full-employment real GDP, a. a recessionary gap […]

Keynesians identify three principal motives for demanding money. They are the: a. transactions demand, precautionary demand, and liquidity motive. b. transactions demand, precautionary demand, and convertibility motive. c. transactions demand, speculative demand, and volatility motive. d. transactions demand, speculative demand, […]

The sum of payments made to resource owners for the use of their resources is: a. gross domestic product. b. net domestic product. c. national income. d. personal income. e. disposable personal income. Jamal (now age 54) lost his job. […]

Threeorganizationsimportanttoaccountingarelistedbelow.Selecttheorganizationthatmost closelyachievestheroledescribed. a. American Institute of Certified Public Accountants (AICPA) b. Financial Accounting Standards Board (FASB) c. Securities and Exchange Commission (SEC) Issues financial accounting concepts that are used as a guide to accounting standard setting. A balance sheet provides […]

Which of the following is the best example of an action that imposes an external cost? a. Wear and tear on your car as the result of frequent use. b. Deterioration in the average quality of a house you own […]

Suppose the consumer price index (CPI) stands at 250 this year. If the inflation rate is 10 percent, then next year’s CPI will equal: a. 250. b. 260. c. 275. d. 500. Assume that Paris First National Bank is a […]

Which of the following is not an example of a factor of production? a. A forest. b. A computer program. c. A labor leader. d. Dollars. Exhibit 10-4 Aggregate supply and demand curves The increase in the price level as […]

Assume that an economy’s real GDP multiplier is 4. If this economy is in equilibrium at $2,000 billion, then which one of the following actions will bring it to a full employment equilibrium of $1,500 billion? a. $500 billion spending […]

The aggregate supply curve relating the price level to real GDP has three distinguishing segments. Which one of the following indicates the segments? a. The horizontal segment reflects the increasing pressure on the price level as firms bid for resources. […]

Which of the following is true if the price of coffee increases? a. The demand for tea, a substitute good, will decrease. b. The demand for coffee will increase. c. The demand for coffee and tea will decrease. d. Both […]

Which of the following options could be used to eliminate a recessionary gap? a. Decrease consumption. b. Increase investment. c. Decrease investment. d. Increase taxes. The vicious circle of poverty refers to the fact that in LDCs, a. low living […]

All of the following are important provisions of the Sarbanes-Oxley Act except: a. The establishment of a new Public Company Accounting Oversight Board. b. The requirement to prepare both FASB and IASB financial statements. c. A requirement that the external […]

An advantage of automatic stabilizers is that this type of fiscal policy is not subject to: a. imprecise knowledge of full-employment real GDP. b. special interest groups. c. lag time problems. d. All of these are true. The term “balance […]

In the former Soviet economy, the supreme planning board that transmitted economic decisions down to producing and consuming units was called the: a. Soviet Ministry. b. Polit Bureau. c. Gosplan. d. Soviet Central Committee for Economic Planning. Which of the […]

Assume that brand X is an inferior good and name brand Y is a normal good. An increase in consumer income, other things being equal, will cause a(n): a. upward movement along the demand curve for name brand Y. b. […]

Which of the following has a direct relationship rather than an inverse relationship with the supply curve? a. The number of sellers. b. Resource prices. c. Consumer income. d. Prices of other goods that firms could produce. United Airlines is […]

Which of the following is not evidence of the lower standard of living among less-developed countries? a. High per capita real GDP. b. High percentage of households headed by females. c. High infant mortality rate. d. Low life expectancy. e. […]

Which of the following is infrastructure? a. Highways. b. Bridges. c. Airports. d. All of these. When the discount rates fall, the cost: a. of loans to bankers’ best customers goes down. b. of loans between banks falls. c. of […]

SeveralitemsfromthefinancialstatementsofStandardTiresarelistedbelow.Usethefollowing answerchoicestoidentifythetypeofaccountforeachitemlisted.Placeyouranswersinthespac eprovided. a. Assets b. Liabilities c. Revenues d. Expenses e. Owners’ equity Capital stock A price ceiling that sets the price of a good below market equilibrium will cause: a. An increase in quantity demanded of the good. […]

Durable and nondurable goods and services lumped together in the expenditure approach to measuring GDP are called: a. Personal consumption. b. Gross private domestic investment. c. Government spending. d. Inventory. e. Employee compensation. Which of the following people would be […]

Which approach to calculating GDP is computed using compensation of employees, rental income, profits, net interest, indirect business taxes, and depreciation? a. The expenditure approach. b. The income approach. c. The product-market approach. d. The circular-flow approach. The expenditure approach […]

Providedbelowisalistofimportantusersofaccountinginformation.Belowthelistaredescripti onsofamajorneedofeachofthevarioususers.Fillintheblankwiththeoneusergroupthatismost likelytohavetheneeddescribedtotherightoftheblank.Someusergroupsmaybeusedmorethan onceornotatall. a. Stockholder b. Company management c. Supplier d. Banker e. Internal Revenue Service f. Securities and Exchange Commission g. Labor union The exact amount of profit on each product of the company. If people refused to […]

Changes in government spending and/or taxes as the result of legislation is called: a. open market operations of the Federal Reserve. b. discretionary fiscal policy. c. balanced budget operations. d. discretionary monetary policy. Gross private domestic investment includes business: a. […]

Threeorganizationsimportanttoaccountingarelistedbelow.Selecttheorganizationthatmost closelyachievestheroledescribed. a. American Institute of Certified Public Accountants (AICPA) b. Financial Accounting Standards Board (FASB) c. Securities and Exchange Commission (SEC) Since there is a lack of a profit motive in nonbusiness entities, they do notneed information provided by […]

Which of the following is most likely to help the residents of a nation produce more goods and services and achieve higher income levels? a. Higher tax rates. b. A higher rate of investment. c. A smaller trade sector. d. […]

Exhibit 5-1 Use the information below to answer the following question(s). National income accountBillions of dollars Personal consumption expenditures $900 Personal taxes 180 Government consumption and gross investment 300 Interest income 60 Exports 40 Imports 75 Depreciation 60 Gross investment […]

Noise pollution is a serious problem. One major contributor is the recent development of very powerful amplification equipment for automobile radios. Many people complain that the windows in their home vibrate when some cars drive by. Others complain that loud […]

If Y = $500 billion, autonomous consumption = $300 billion, and the marginal propensity to save = 0.20, then saving will equal: a. -$200 billion. b. $200 billion. c. -$100 billion. d. $100 billion. e. $40 billion. The sum of […]

The primary source of revenue at the federal level is: a. the corporate income tax. b. the personal income tax. c. property taxes. d. sales taxes. e. customs duties. Full employment is the rate of employment that results when: a. […]

Which of the following groups analyzes federal budgets proposals? a. The Council of Economic Advisors. b. The Office of Management and Budget. c. The Congressional Budget Office. d. The House and Senate Budget Committees. Marcos Inc. had net income for […]

When the opportunity cost of producing carrots increases as more carrots are produced, then: a. no more carrots will be produced. b. resources are equally suited to the production of carrots and to other goods. c. the production possibilities curve […]

The quantity of reserves held by a bank in addition to the legally required amounts is known as: a. actual reserves. b. excess reserves. c. the required reserve ratio. d. the money multiplier. e. the monetary base. The former Soviet […]

If V = 5, P = 100, and Q = 10, then M is: a. 20. b. 10. c. 500. d. 1,000. e. 200. A strength of the market economy is that: a. it results in an equal distribution of […]

Assume the Fed purchases a government security from a private dealer and pays with a Fed check of $100,000. If this check is deposited by the dealer in a bank with a 10 percent required reserve ratio, the bank can […]

Increased production, but not increased inflation, will result in higher: a. nominal GDP. b. money GDP. c. real GDP. d. current dollar GDP. An increase in the real rate of interest that can be earned on U.S. investments above the […]