Life Economics
The Federal Reserve System was created in:
1913
The determine M2 you must:
add time deposits and other deposit accounts to M1
You would expect a society with a traditional economy to have most of its economic activity directed toward:
agriculture
Managers whose compensation is not based on the profits of the business that employs them may attempt to maximize profits to:
all of the above
The expected reaction to a shortage is:
all of the above
managers whose compensation is not based on the profits of the business that employs them may attempt to maximize profits to:
all of the above
which of the following is a barrier to entry that could keep potential rivals out of a monopolized market?
all of the above
which of the following could NOT create a barrier to entry into a market?
all of the above could create a barrier to entry
A weakness of a planned economy is:
all of these answers are correct
Based on the U.S. Bureau of Labor Statistics' method for measuring employment and unemployment, who of the following would be "employed"
all of these answers are correct
Distinctions between the between the different factor incomes are important because they affect:
all of these answers are correct
The Emergency Economic Stabilization Act was passed
all of these answers are correct
The change in total output that occurs following a change in nonincome-determined spending is:
all of these answers are correct
The federal government may not pursue a proper fiscal policy strategy because:
all of these answers are correct
The functions of the Federal Reserve Banks include:
all of these answers are correct
The interest rate is:
all of these answers are correct
Which of the following is NOT included in the calculation of this year's GDP?
all of these answers are correct
The Federal Reserve carries out monetary policy or initiates changes in the money supply by:
altering the amount of excess reserves in the banking and depository institutions system
Because of the money multiplier, an initial change in excess reserves in the depository institutions system can lead to a multiple change in the:
amount that can be loaned by all institutions, taken together, in the system
An example of a durable good is:
an automobile
an example of a durable good is:
an automobile
Over the long run, a monopolist can earn:
an economic profit while operating inefficiently
All other things equal, which of the following statements is true?
an economy will contract when investment is less than saving
if supply decreases and demand increases in a market, there will be:
an increase in equilibrium price, but whether equilibrium quantity increases or decreases will depend on how much supply and demand shift
The Fed's purchase of securities from depository institutions results in:
an increase in reserves and a potential expansion in the money supply
An increase in the equilibrium price and quantity in a market would be caused by:
an increase in the number of buyers in the market
Fiscal policy tools include changes in each of the following:
interest rates
The performance of services in more than one state by a single banking organization is:
interstate banking
The performance of services in more than one state by a single banking organizations is:
interstate banking
Price elasticity of demand:
is a measure of buyers' sensitivities to a change in the price of a product
A comparison of the benefits and costs of economic growth:
is difficult because the benefits may appear immediately, while it may take several years for the costs to become apparent
In a pure competition, the market demand curve for a product:
is downward sloping, but the demand curve for an individual seller's product is horizontal
in a pure competition, the market demand curve for a product:
is downward sloping, but the demand curve for an individual seller's product is horizontal
To maximize its profit or minimize its loss by producing, a firm should operate where:
marginal revenue equals marginal cost
to maximize its profit or minimize its loss by producing, a firm should operate where:
marginal revenue equals marginal cost
the opportunity cost of working rather than going to school is:
the higher wages that come with additional education
The phase of the business cycle during which economic activity hits its minimum level is the:
trough
Last year Mr. Mooka spend $5,000 to acquire 100 shares of stock in a dairy business that later declared bankruptcy. The dairy business' creditors can sue Mr. Mooka for:
$0
There would be no surplus or shortage in this market if producers charged a price of:
$4
A good cost $400 in the base year, and in a later year the price index number for the good was 125.0. in that later year the good cost:
$500
increases by $200 million (THIS IS NOT THE WHOLE QUESTION)
$800 million
If the reserve requirement is 25 percent, the money multiplier is:
4
if the quantity of prerecorded CDs demanded is equal to 600-10 (price of the CD), at a price of $16 each, the number of CDs demanded would be:
440
With a reserve requirement of 20 percent, the money multiplier would be:
5
Which of the following is an example of a capital good?
A cash register
Which of the following would cause an increase in the supply of automobiles?
A decrease in the cost of steel
A decrease in the equilibrium price and quantity in a market would be caused by:
A decrease in the popularity of the product sold in the market
Which of the following is most liquid?
A demand deposit at a commercial bank
Which of the following statements about public goods is FALSE?
A government loan to a farmer is an example of a public good
Which is NOT an example of a model?
A list of key economic indicators for a year
Which of the following statemtns about inflation is true?
A major flood that destroys an important crop could cause cost-push inflation
Which of the following would reduce the effectiveness of automatic stabilizers in combating a recession?
A reduction in the number of brackets in the federal personal income tax
If producers in this market charged a price of $2, there would be:
A shortage of 300 units
Which of the following statements about a sole proprietorship is FALSE
A sole proprietor can raise money by borrowing from financial institutions, issuing stocks, and issuing bonds
Which of the following statements about a sole proprietorship is FALSE?
A sole proprietor can raise money by borrowing from financial institutions, issuing stocks, and issuing bonds
Which of the following statements is FALSE?
All banks are required to belong to the Federal Reserve System as member banks
Which of the following is a barrier to entry that could keep potential rivals out of a monopolized market?
All of the above
Which of teh following is NOT create a barrier to entry into a market?
All of the above could create a barrier to entry
Which of the following would NOT cause an increase in the supply of a product
An increase in the price of the product
Which of the following statements is true?
Banks holding long-term, fixed-rate mortgages carrying low interest rates are penalized by high rates of inflation
Which of the following in NOT an example of nonprice competition?
Buying ads that state the product is priced lower than rival's products
which of the following is NOT an example of nonprice competition?
Buying ads that state the product is priced lower than rivals' products
Discretionary fiscal policy required explicit action by:
Congress to raise or lower tax rates in response to changes in economic activity
Which of the following countries would rely most on central planning for economic decisions?
Cuba
The act that allowed banks to form bank holding companies and engage in both banking and nonbanking activities, such as securities and insurance activities, was the:
Gramm-Leach-Bliley Act of 1999
Which of the following was NOT an objective of the New Deal?
Lowering agricultural prices, so people could afford to eat
The definition of the money supply that includes only coins and paper money in circulation, nonbank-issued traveler's checks, demand deposits primarily at commercial banks, and other checkable deposits is:
M1
Someone arguing that M2 is a better definition of the money supply than M1 might state that:
M2 includes money market and other accounts that are readily available to spend
Which is the correct sequence if we are ranking market structures from that where a firm has most control over price to that where a firm has least control?
Monopoly, oligopoly, monopolistic competition, pure competition
which of the following approaches to the macroeconomy would be least likely to advocate limiting government intervention to bring the economy to full employment?
New Keynesian economics
The authorization for buying and selling of government securities by the Federal Reserve comes form the:
Open Market Committee
Which of the following statements about government taxes and revenues is FALSE?
Recent legislation has made developments that require tax abatement illegal in order to hold down the tax burden faced by individuals
From 1980 to 2010, which of the following has been the smallest source of total income going to U.S. households?
Rental income
Which of the following statements best describes the relationship among scarcity, economic decisions, and economic systems?
Scarcity imposes basic economic decisions on a society that are made through the type of economic system it chooses
On which function does the federal government spend the most money?
Social security and medicare
If sellers in a purely competitive market are operating at a loss, then over the long run:
Some sellers will leave the market and the remaining firms will eventually break even.
The development of overall objectives and policies for the Federal Reserve System is the responsibility of:
The Board of Governors
Which of the following statements is FALSE?
The Economic Stabilization Act was passed to extend the time limits of the Federal Reserve
Which of the following statements about open market operations is FALSE?
The Fed deals only with commercial banks and other depository institutions in its open market operations
The government programs and legislative reforms initiated during the 1930s to reduce the problems of the Great Depression were termed:
The New Deal
Which of the following statements is FALSE
The Open Market Committee buys and sells stocks and bonds of private corporations for the Federal Reserve System
Which of the following statements if FALSE?
The average income of households headed by a person attaining a bachelor's degree is about equal to the average income for all U.S. households
which of the following statements is true?
The definition of equity depends on a person's value judgments, and any of these answer choices could fulfill an individual's concept of equity
Which of the following statements about demand is FALSE?
The demand curve for a product will shift to the left as its price rises
Which of the following is NOT a problem caused by a large national debt?
The entire debt must be periodically paid off, which cases recessions
None of the following activities are included in the calculation of GDP. Which one does NOT result in understating GDP?
The sale of illegal goods, such as recreational drugs
Which of the following statements about national banks is FALSE?
They are owned and managed by the U.S. government
The idea of individual decision making popularized by Adam Smith in the late 1700s provided the foundation for:
U.S. capitalism
Which of the following statements if FALSE?
WRONG ANSER NOT THE LARGEST PERCENTAGE OF BUSINESS RECEIPTS GOES TO CORPORATIONS. ALSO NOT EVERY PARTNERSHIP MUST HAVE AT LEAST ONE GENERAL PARTNER
in evaluating profit-maximizing or loss-minimizing behavior, the main difference between firms in pure competition and monopoly is found in the:
WRONG ANSER NOT all of the above
Which of the following is NOT a characteristic of a monopolistically competitive market?
WRONG ANSER NOT there is a large number of sellers
The most frequently used monetary policy tool is:
WRONG ANSER NOT there is no preferred tool, all three are used equally by the Fed to control the money supply
A transfer payment is
WRONG ANSWER IS NOT all of the above are examples of transfer payments
If money GDP were $10.0 trillion in a particular year, and the GDP price index number were 125.0 for that year, then real GDP would be:
WRONG ANSWER NOT $12.5 trillion
If a commercial band has $160 million in deposits, $40 million in actual reserves, and a reserve requirement of 20 percent, that bank can make new loans of:
WRONG ANSWER NOT $32 million
The satisfaction realized from consuming a good or service is referred to by economists as:
WRONG ANSWER NOT CONSUMER WELL-BEING
Which of the following is NOT a characteristic of an oligopolistic market?
WRONG ANSWER NOT Entry into the market is difficult
Which of the following is NOT a characteristic of a monopolistic market?
WRONG ANSWER NOT Excess profits can be earned over the long run
Which of the following statements about government intervention in the U.S. economy is FALSE?
WRONG ANSWER NOT Government intervention into the economy includes setting the legal framework within which business and households must operate when dealing with one another
Which of the following was NOT an objective of the New Deal?
WRONG ANSWER NOT Preventing fraudulent banking and investment practices
Which of the following is NOT a characteristic of the purely competitive market model?
WRONG ANSWER NOT There is no nonprice competition
A decrease in real GDP should lead to:
WRONG ANSWER NOT a decrease in the rate of unemployment
Which of the following is an example of an economic theory?
WRONG ANSWER NOT a tax cut to increase spending by businesses and households
If a purely competitive firm is earning an economic profit
WRONG ANSWER NOT all of the above
In evaluating profit-maximizing or loss-minimizing behavior, the main difference between firms in pure competition and monopoly is found in the:
WRONG ANSWER NOT all of the above
In the long run, firms in purely competitive and monopolistically competitive markets will both:
WRONG ANSWER NOT all of the above
Maximizing economic well-being requires that:
WRONG ANSWER NOT all of the above
if a purely competitive firm is earning an economic profit:
WRONG ANSWER NOT all of the above
in the long run, firms in a competitive and monopolistically competitive markets will both:
WRONG ANSWER NOT all of the above
maximizing economic well-being requires that:
WRONG ANSWER NOT all of the above
a transfer payment is
WRONG ANSWER NOT all of the above are examples of transfer payments
A major advantage of a gold standard system is:
WRONG ANSWER NOT all of these answers are correct
Household spending:
WRONG ANSWER NOT all of these answers are correct
The factor of production that organizes economic activity and bears the risk of success or failure in a business venture is:
WRONG ANSWER NOT all of these answers are correct
When classifying factors of production, capital refers to:
WRONG ANSWER NOT all of these answers are correct
An increase in nonincome-determined spending leads to:
WRONG ANSWER NOT an increase in the level of economic activity that is less than the increase in nonincome-determined spending
In a circular flow model of a market economy, households:
WRONG ANSWER NOT are buyers and businesses are sellers in input markets
Government purchases of goods and services
WRONG ANSWER NOT are income-determined spending
Financial institutions
WRONG ANSWER NOT are organizations such as banks, insurance companies, and brokerage houses
A monopolistic competitor will lose some, but not all, of its buyers when it raises its price by a small amount. The ability to keep some buyers is mainly due to:
WRONG ANSWER NOT barriers to entry into the market
One reason buyers demand less of a product as its price increases is:
WRONG ANSWER NOT buyers must save more of their incomes as prices increase
an auto repair shop, a corn field, and a person managing a coffee shop that they own are, respectively, examples of:
WRONG ANSWER NOT capital, land, and labor
which of the following would most likely be sold by purely competitive sellers?
WRONG ANSWER NOT computers, or men's and women's clothing.. probably dentist
An increase in the interest rate will:
WRONG ANSWER NOT decrease the amount of loans demanded and the amount of loans supplied
A financial depository institution's actual reserves are equal to its:
WRONG ANSWER NOT demand deposit balances minus excess reserves
A socialist system:
WRONG ANSWER NOT depends exclusively on planning to decide what goods and services will be produced, and exclusively on markets to decide how they will be distributed
Changes in the value of money are:
WRONG ANSWER NOT directly related to changes in the general level of prices during inflation, and inversely related during deflation
The interest rate that banks charge other banks for borrowing excess reserves is the:
WRONG ANSWER NOT discount rate
If a purely competitive firm is just breaking even, its owner is:
WRONG ANSWER NOT earning no profit
if a purely competitive firm is just breaking even, its owner is:
WRONG ANSWER NOT earning no profit
You would expect economic activity to decrease if investment spending, spending from borrowing and transfer payments, government purchases, and.....
WRONG ANSWER NOT equal to saving, taxes, and imports
Which of the following is NOT a characteristic of a monopolistic market?
WRONG ANSWER NOT excess profits can be earned over the long run
which of the following is NOT a characteristic of a monopolistic market?
WRONG ANSWER NOT excess profits can be earned over the long run
Based on the information in this production possibilities table, the opportunity cost of going from 0 to 40million units of consumer goods:
WRONG ANSWER NOT greater than the opportunity cost of going from 40 to 80 million units of consumer goods
The opportunity cost to a student of preparing for an examination is:
WRONG ANSWER NOT high for a student with a high GPA and low for a student with a low GPA
Which of the following is NOT found in a purely competitive market?
WRONG ANSWER NOT identical products
which of the following is NOT found in a purely competitive market
WRONG ANSWER NOT identical products
If there were an increase in the market demand for a product with no change in market supply, the equilibrium price would:
WRONG ANSWER NOT increase and the equilibrium quantity decrease
The purpose of a tight money policy is to:
WRONG ANSWER NOT increase borrowing by businesses
The sale of government securities to a commercial bank by the Federal Reserve would:
WRONG ANSWER NOT increase the commercial bank's discount rate
A local sports team began selling season tickets this week. There is a rumor that season tickets will decrease in price by 25 percent in three weeks. This rumor should:
WRONG ANSWER NOT increase the current demand for tickets
In economics, it is generally assumed that if a firm cannot earn a profit then it should:
WRONG ANSWER NOT maximize sales
Which of the following statements is true
WRONG ANSWER NOT maximizing by a household involves balancing costs and benefits, and maximizing by a business involves finding the output providing the larges revenue
which of the following statements is true?
WRONG ANSWER NOT maximizing by a household involves balancing costs and benefits, and maximizing by a business involves finding the output providing the largest revenue
The economic system in which the basic economic questions are answered through markets with some government intervention is a:
WRONG ANSWER NOT mixed economy
Sellers incur losses over the long run in:
WRONG ANSWER NOT monopolistic competition and oligopoly
economic growth is illustrated using a production possibilities curve by:
WRONG ANSWER NOT moving from a point inside, or to the left of, the curve to a point on the curve
Given the equation of exchange, MV=PQ, if the money supply is increased when the economy is operating at full employment the expected result will be an increase in:
WRONG ANSWER NOT output (Q)
Which of the following statements is true?
WRONG ANSWER NOT people can be included in either household or family statistics, but never both
The money received by a business when its product is sold is called its
WRONG ANSWER NOT profit
the money received by a business when its product is sold is called its:
WRONG ANSWER NOT profit
Market failure occurs when:
WRONG ANSWER NOT public policy produces a problem for society or fails to achieve society's goals
Markets with a large number of firms selling differentiated products, and where entry into and exit from the market are fairly easy, are
WRONG ANSWER NOT pure competitiors
Markets with a large number of firms selling differentiated products, and where entry into and exit from the market are fairly easy, are:
WRONG ANSWER NOT pure competitiors
Markets with a large number of firms selling differentiated products, and where entry into and exit from the market are fairly easy, are:
WRONG ANSWER NOT pure competitors
If supply increases and demand falls, then equilibrium:
WRONG ANSWER NOT quantity will increase but the effect on equilibrium price will depend on the magnitudes of the shifts in supply and demand
All resources are:
WRONG ANSWER NOT scarce in absolute terms, but many resources are abundant compared to the wants and needs they must satisfy
In a pure market economy, who receives goods and services is determined by the:
WRONG ANSWER NOT sellers who have produced those goods and services
Which of the following transactions would occur in a product market?
WRONG ANSWER NOT selling a machine you designed to a manufacturer so that it can lower its costs of production
If the price of a product were to decrease, a seller's supply curve for that product would
WRONG ANSWER NOT shift to the left
The way a society is organized to make the basic economic decisions is referred to as its:
WRONG ANSWER NOT social-economic structure
When the Federal Reserve buys securities on the open market, excess reserves in the depository institutions system:
WRONG ANSWER NOT stay the same, but are transferred from one account to another
Which of the following statements is true?
WRONG ANSWER NOT the factor of production category termed capital includes stocks, bonds, and money
Which of the following recent developments in the U.S. economy is true?
WRONG ANSWER NOT the government has taken over all corporations that produce goods for defense
When comparing two business cycles, you should expect:
WRONG ANSWER NOT the intensity of the expansion or contraction to be the same in both cycles
Market failure occurs when:
WRONG ANSWER NOT the price system fails to equalize income differentials between individuals
A production possibilities table or graph shows:
WRONG ANSWER NOT the time it takes to produce two goods when the economy is at full employment and resources and technology are held constant
which of the following is NOT a characteristic of a monopolistically competitive market?
WRONG ANSWER NOT there is a large number of sellers
which of the following is NOT a characteristic of the purely competitive market model?
WRONG ANSWER NOT there is no nonprice competition
In a pure market economy, who receives goods and services is determined by the:
WRONG ANSWER NOT value judgments of those administering each particular market
According to new classical economics, over the long run the economy will operate:
WRONG ANSWER NOT with zero unemployment WRONG ANSWER NOT with significant unemployment because of misguided government policies
The "shutdown loss" for a firm is:
WRONG ANSWER NOT zero and NOT none of the above
Since the early 1980s:
WRONG ANSWER NOT: U.S. exports always exceeded U.S. imports
An increase in the intererast rate will:
WRONG ANSWER NOT: decrease the amount of loans demanded and the amount of loans supplied
A monopolistic competitor will lose some, but not all, of its buyers when it raises its price by a small amount. The ability to keep some buyers is mainly due to:
WRONG ANSWER NTO barriers to entry into the market
A monopolistic competitor will lose some, but not all, of its buyers when it raises its price by a small amount. The ability to keep some buyers is mainly due to:
WRONG ANWSER NOT barriers to entry into the market
Changes in the value of money are:
WRONG ASWER NOT directly related to changes in the general level of prices
Which of the following statements about the M1 money supply is true?
WRONG Coins and paper money are issued by the U.S. Treasury, while demand deposit accounts are help in Federal Reserve Banks
The financial depository institution that holds and maintains the largest amount of deposits in the M1 money supply is the:
WRONG Federal Reserve Bank
On which function do state and local governments spend the most money?
WRONG Health and hospitals
Which of the following statements about crowding out is FALSE?
WRONG It occurs when borrowing by the government reduces borrowing by households and businesses
A production possibilities curve shows:
WRONG NOT all of these answers are correct
A decrease in the equilibrium interest rate and increase in the equilibrium quantity of loans made would result from
WRONG NOT: a decrease in excess reserves WRONG NOT: an increase in the demand for loans
Which of the following constitutes currency?
WRONG Nonbank-issued traveler's checks, demand deposits, coins, and paper money
Each of the following is an example of the use of discretionary fiscal policy EXCEPT:
WRONG a tax cut was passed in 1975 to counteract a recession
Automatic stabilization:
WRONG all of these answers are correct
John pays a local income tax of 5 percent, regardless of the size of his income, and a states tax of 5 percent on his purchases, regardless of the value of his purchases. The income tax:
WRONG and the sales tax are both proportional
You would expect a federal government surplus budget to be associated with:
WRONG expansionary fiscal policy
Since 1985, interest payments on funds borrowed by the federal government have generally:
WRONG increased as a percentage of total federal expenditures ALSO WRONG decreased as a percentage of total federal expenditures
If an economy experiences chronic and severe inflation where prices were adjusted upward on a daily basis:
WRONG people would want to save more of their incomes than previously
When government provides a good of service that could be sold in a private market, such as education, it is providing a:
WRONG public good
Since 1985, the largest percentage of federal expenditures has been for:
WRONG purchases of goods and services
Automatic stabilizers:
WRONG push the federal budget toward a surplus regardless of whether the economy is expanding of contracting
Money is created when someone:
WRONG takes a loan of $1,000 from his mother
The savings and loan crisis can be attributed to:
WRONG the relaxation of regulations which led to investment in risky ventures
The supply of a product is price elastic if a 10 percent increase in price leads to:
a 12 percent increase in quantity supplied
An increase in the interest rate will lead to:
a decrease in business investment spending and the amount of loans demanded
A decrease in the equilibrium price and quantity of a product in a market would be caused by:
a decrease in demand
A reserve account can be defined as:
a deposit in the name of a financial depository institution held at a Federal Reserve Bank or other designated place
You are given the following price=quantity information: ($10 and 180 units), $15 and 150 units), ($20 and 200 units). This information would graph as:
a downward-sloping line and conform to the Law of Demand
A regressive tax results in lower income individuals paying:
a higher percentage of their income in a tax than higher income individuals
Which of the following best describes a model?
a hypothetical economy used to analyze the effects of a tax cut
A decrease in income would result in:
a leftward shift of a buyer's demand curve for a new car
Which is NOT an example of a model?
a list of key economic indicators for a year
The purchase of a controlling number of shares of stock in one corporation by another corporation is:
a merger or acquisition
the purchase of a controlling number of shares of stock in one corporation by another corporation is:
a merger or acquisition
An increase in production costs at a Ford automobile plant, and an increase in the general level of prices in the U.S. economy are examples of:
a microeconomic problem and a macroeconomic problem, respectively
Firm A is concerned about the reactions of buyers to the price it sets for its product. Firm B is concerned about the reactions of buyers and its few rivals to the price it sets for its product. Firm C has no control over the price at which its product is sold. Firms A, B, and C are, respectively
a monopolistic competitor, an oligopolist, and a pure competitor
Firm A is concerned about the reactions of buyers to the price it sets for its product. Firm B is concerned about the reactions of buyers and its few rivals to the price it seta for its product. Firm C has not control over the price at which its product is sold. Firms A, B, and C are, respectively:
a monopolistic competitor, an oligopolistic, and a pure competitor
When economies of scale make it more efficient to have one seller, rather than several sellers, in a market:
a natural monopoly exists
when economies of scale make it more efficient to have one seller, rather than several sellers, in a market:
a natural monopoly exists
The minimum wage law is an example of:
a price floor
A personal income tax that takes 5% of income under $50,000, 15% of incomes between $50,000 and $100,000, and 25% of the incomes over $100,000 is an example of:
a progressive tax
a business cycle is:
a recurring period of growth and decline in an economy's real output
The expected reaction to a surplus is:
a reduction in price
in the kinked demand curve oligopoly model, a firm that raises its price will experience
a relatively large decrease in sales as its customers switch to other lower-priced competitors
Economic growth is illustrated using a production possibilities curve by:
a rightward shift of the curve
If, in a market, a price ceiling is set above the equilibrium price, then:
a shortage will develop
Who of the following would NOT be counted as unemployed?
a student who has been laid off and decides to devote all energies to attending school
A surplus occurs when the price charged in a market is:
above the equilibrium price
Implementing proper fiscal policy is difficult when unemployment:
and inflation are both high
A decrease in the number of buyers in a market would cause equilibrium price:
and quantity to decrease
Mutual funds:
are pools of dollars from depositors that are used to make financial investments
A notable difference between household personal consumption expenditures and business investment spending is that personal consumption expenditures
are relatively stable from year to year, while investment spending fluctuates widely
To maximize utility from the purchase of expensive candy that costs twice as much as cheap candy, the added satisfaction from the expensive candy should be:
at least twice as great as the added satisfaction from the cheap candy
to maximize utility from the purchase of expensive candy that costs twice as much as cheap candy, the added satisfaction from the expensive candy should be:
at least twice as great as the added satisfaction from the cheap candy
The Employment Act of 1946:
authorizes the government to assist in creating an environment to promote maximum employment
"Muckrakers" were:
authors, journalist, and others who drew public attention to social, labor, and other problems in the early 20th century
The change in government payments for unemployment compensation that occurs as the economy moves into a recession is an example of:
automatic stabilization
Which of the following is NOT a tool of monetary policy?
automatic stabilization
To maximize satisfaction from earning income, an individual should:
balance the added income from working against the opportunities forgone because of work
to maximize satisfaction from earning income, an individual should:
balance the added income from working against the opportunities forgone because of work
To maximize satisfaction from earning income or from consuming goods and services, you must:
balance the advantages and disadvantages of alternative earning or spending strategies and choose the one that appears to be the best
to maximize satisfaction from earning income or from consuming goods and services, you must:
balance the advantages and disadvantages of alternative earning or spending strategies and choose the one that appears to be the best
To maximize economic well-being, a person should:
balance the benefits and costs of different courses of action and select the one that adds most to satisfaction
to maximize economic well-being, a person should:
balance the benefits and costs of different courses of action and select the one that adds most to satisfaction
For something to be considered money it must:
be generally accepted as a medium of exchange
The purpose of a price ceiling is to keep the actual price charged in a market:
below an equilibrium price that is considered too high, and shortages may develop
Crowding out occurs when government borrowing reduces:
borrowing by households and businesses
The federal government maintains its debt by:
borrowing money from lenders
Equilibrium price and equilibrium quantity are the price and quantity:
both of the above
The term "dual banking system" refers to the fact that:
both the federal and state governments can charter commercial banks
Which of the following is a leakage from the spending stream?
business saving and taxes
Free enterprise refers to the right of:
businesses to make their own decisions and operate with a profit motive
which of the followng is NOT an example of nonprice competition?
buying ads that state the product is priced lower than rivals' products
A Limited Liability Company
can be classified as a proprietorship, partnership, or corporation
A limited Liability Company
can be classified as a proprietorship, partnership, or corporation
A financial holding company:
can engage in banking, securities, insurance, and other financial activities
A tractor used to harvest corn crops on a farm is:
capital
The multiplier effect is equal to:
change in nonincome-determind spending divided by percentage of additional income not spent
The acquisition by a pharmaceutical company of a company that makes bowling balls would be an example of a:
conglomerate merger
the acquisition by a pharmaceutical company of a company that makes bowling balls would be an example of a:
conglomerate merger
Federal Reserve Notes:
constitute almost all of the U.S. paper money in circulation
Goods, such as corn chips, that are produced for final buyers are:
consumer goods
Suppose Good A costs $1.00 per unit and Good B costs $2.00 per unit. If each additional unit of Good B adds three times as much to your total satisfaction than is added by each additional unit of good A, you will increase your total satisfaction from consuming goods A and B by:
consuming less of Good A and more of Good B
A business can continue on indefinitely if it is organized as a:
corporation
In any given year, the largest share of business receipts typically goes to:
corporations
Limited liability is a characteristic of:
corporations
in any given year, the largest share of business receipts typically goes to:
corporations
limited liability is a characteristic of:
corporations
Upward pressure on prices coming from the sellers' side of the market causes:
cost-push inflation
A decrease in the equilibrium price in a purely competitive market:
could be caused by a decrease in market demand or an increase in market supply
a decrease in the equilibrium price in a purely competitive market:
could be caused by a decrease in market demand or an increase in market supply
Cyclical and structural unemployment differ in that:
cyclically unemployed persons have the possibility of regaining their jobs, while structurally unemployed persons have no possibility of regaining their jobs
If the price of a good or service increases and all nonprice factors are held constant, quantity demanded will:
decrease
If the economy were to slip into a recession, you would expect personal income taxes and transfer payments such as unemployment compensation to automatically:
decrease and increase, respectively
If there were an increase in the market supply of a product with no change in market demand, the equilibrium price would:
decrease and the equilibrium quantity increase
The sale of government securities to a commercial bank by the Federal Reserve would:
decrease the commercial bank's excess reserves
A local sports team began selling season tickets this week. There is a rumor that season tickets will decrease in price by 25 percent in three weeks. This rumor should:
decrease the current demand for tickets
The sequence of events in a recession can be categorized as:
decreased spending- lower output- lower employment- lower income
Which of the following would coincide with a tight money policy?
decreasing excess reserves
Since 2000 the federal government has primarily had:
deficit budgets
Human capital investments:
include formal education, on-the-job training, and related activities
Assume a corporation announces a 75% increase in profits. This would likely lead to an increase in the:
demand for the stock and its equilibrium price
assume a corporation announces a 75% increase in profits. This would likely lead to an increase in the:
demand for the stock and its equilibrium price
The world's economies
differ from one another in terms of how they mix individual and collective decision making
The interest rate a Federal Reserve Bank charges a financial depository institution for borrowing reserves is the:
discount rate
Deliberate Congressional action to change government purchases, transfer payments, and/or taxes to affect the level of economic activity is:
discretionary fiscal policy
Deliberate Congressional action to change government purchases, transfer payments, and/or taxes to affect the level of economic activity it:
discretionary fiscal policy
The demand curve for an indicidual seller in monopolistic competition is:
downward sloping
the demand curve for an individual seller in monopolistic competition is:
downward sloping
The demand curve for an individual seller's product in monopolistic competition is:
downward sloping because of product differentiation
The demand curve for and individual seller's product in monopolistic competition is:
downward sloping because of product differentiation
the demand curve for an individual seller's product in monopolistic competition is:
downward sloping because of product differentiation
A state toll road is not a public good because:
drivers cannot use the road without paying a charge
Over the long run, a monopolistically competitive seller will:
earn only a normal profit and not operate at the lowest point on its long-run average total cost curve
over the long run, a monopolistically competitive seller will:
earn only a normal profit and not operate at the lowest point on its long-run average total cost curve
A main concern about the crowding out of private borrowing increased federal government borrowing is:
economic growth may be limited because businesses cannot afford to borrow to buy the machinery and equipment needed for growth
The way a society is organized to make the basic economic decisions is referred to as its:
economic system
A woman who owns and operates her own real estate company is an example of:
entrepreneurship
You would expect economic activity to decrease if investment spending, spending from borrowing and transfer payments, government purchases, and exports were
equal to saving, taxes, and imports
The maximum amount by which an economy's money supply can increase is equal to an initial change in:
excess reserves divided by the reserve requirement
if monopolistically competitive firms are sustaining losses, then over the long run firms will:
exit the market, and losses will decrease
You would expect a federal government deficit budget to be associated with:
expansionary fiscal policy
The economic policy that focuses on changing the size of the spending stream by changing government taxes and/or expenditures is:
fiscal policy
The difference between fiscal and monetary policy is fiscal policy:
focuses on government spending and taxing, while monetary policy focuses on saving and borrowing
A person who quits a job in Los Angeles to look for work in Chicago is:
frictionally unemployed
which of the following is an economic policy?
giving families a tax break on college tuition in order to encourage more degrees
crowding out occurs when borrowing by:
government reduces borrowing by households and businesses
The price paid to borrow money, which is expressed as a percentage of the amount borrowed, is the
interest rate
Considering only the household sector, if household saving and taxes are less than spending from borrowing and transfers, then injections into the spending stream are:
greater than leakages, and the level of economic activity will increase
Over the last 20 years, federal government expenditure have been:
greater than state and local government expenditures
A socialist system:
has collective ownership of many factors of production and attempts to equalize the distribution of income
The acquisition of General Motors by Ford Motor Company would be an example of a:
horizontal merger
the acquisition of General Motors by Ford Motor Company would be an example of a:
horizontal merger
Which of the following is an injection into the spending stream, or into the circular flow model?
household expenditures from transfer payments
The multiplier effect would NOT be initiated by an increase in:
household income-determined spending
In a planned economy:
how goods and services are produced is a determined by what resources planners make available to producers
a country where there are extremely rapid increases in the general level of prices is experiencing:
hyperinflation
Given that Q=300-60P, where Q is quantity and P is price:
if P=$2, then Q=180 and if P=$5, then Q=0
Which of the following statements if FALSE?
if firms are in the same industry, they must also be in the same market
which of the following statements is FALSE?
if firms are in the same industry, they must also be in the same market
Which of the following statements about price indexes if FALSE?
if items that cost $200 in the base year cost $300 this year, the price index number for this year is 300.0
People are considered to be "underemployed" if they work:
in a job that does not fully utilize their skills
The basic economic decisions are faced:
in every economy because of scarcity
According to the Law of Demand, a decrease in the price of a product will cause its quantity demanded to:
increase
If holding all else equal, the level of household saving decreased and the level of business investment spending increased, the level of economic activity would:
increase
If the general level of prices in the U.S. fell, the value of money would:
increase
Increasing the amount of loans available should:
increase spending by businesses and households and the overall level of economic activity
The sequence of events in an expansion can be categorized as:
increased spending-higher output-higher employment-higher income
Decreasing the reserve requirment:
increases excess reserves and the money supply
The quantity of loans demanded:
increases when the interest rate decreases
Over the last 25 years the dollar amount of government expenditures has been:
increasing
Which of the following would coincide with an easy money policy?
increasing excess reserves
Microeconomics is the study of:
individual decision-making units, such as households and business firms
Microeconomics, unlike macroeconomics, focuses on:
individual households and businesses, and how they make decisions
microeconomics, unlike macroeconomics, focuses on:
individual households and businesses, and how they make decisions
If economic policymakers decide to primarily pursue the goal of full employment and full production, which of the following is most likely to result?
inflation
Monetary policy is designed to affect the level of economic activity by:
influencing the leakages and injections that flow through the economy's financial institutions
Which of the following statements is true?
it is generally assumed that profit maximization is the basic goal of a firm, but other short-term objectives may exist as well
The invisible hand doctrine is most closely assosciated with:
laissez-fair capitalism
A deficit budget occurs when government revenues are:
less than expenditures
A surplus occurs in a market when quantity demanded is:
less than quantity supplied
You would expect economic activity to decrease if investment spending, spending from borrowing and transfer payments, government purchases, and exports were:
less than saving, taxes, and imports
Bank failures are usually the result of:
loan losses combined with deposit withdrawals
The study of the U.S. economy as a whole, and how all households in the economy interact with all businesses and the government is:
macroeconomics
The Depository Institutions Deregulation and Monetary Control Act of 1980:
made depository institutions more similar in the types of deposits and loans they could afford
Financial depository institutions create money when they:
make loans
A decrease in interest rates would:
make more investment projects attractive
An important weakness of monetary policy is:
making excess reserves available does not insure that businesses and households will borrow
When a market system causes a problem or cannot achieve a goal set by society there is:
market failure
Mutual interdependence refers to the:
market situation where there are so few sellers that each must weigh the reactions of its rivals to its policies
mutual interdependence refers to the:
market situation where there are so few sellers that each must weight the reactions of its rival to its policies
In economics, it is generally assumed that if a firm cannot earn a profit then it should:
maximize sales
A price index that compares prices in a given year to prices in a fixed base year:
may mask the effects of year-to-year changes in prices
which of the following would most likely be sold by purely competitive sellers?
men's and woman's clothing
The economic system where the interests of the state are placed ahead of the interests of individual is:
mercantilism
Market structures are:
models of market situations for grouping sellers according to the degree of competition among them
market structures are:
models of market situations for grouping sellers according to the degree of competition among them
A market with a single seller, and where entry into the market is impossible, is:
monopolistic
a market with a single seller, and where entry into the market is impossible, is:
monopolistic
A firm has the greatest control over price in a:
monopolized market
a firm has the greatest control over price in a:
monopolized market
which is the correct sequence if we are ranking market structures from that where a firm has most control over price to that where a firm has least control
monopoly, oligopoly, monopolistic competition, pure competition
Beginning in the mid-1980s, the Soviet Union, China, and other planned economies:
moved toward greater use of free markets and individual decision making
Membership in the Federal Reserve is required of:
national banks
contemporary economists who hold that government intervention through macroeconomic policy is not advisable would likely belong to the:
new classical school
In the kinked demand curve oligopoly model, a firm that raises its price will experience:
no change in sales because competing firms will raise their prices by the same amount
The "shutdown loss" for a firm is:
non of the above
A review of prior business cycles allows us to conclude that the phases of different business cycles are of
non-uniform duration and unequal intensity
Which of the following faces unlimited liability?
none of the above
If the only spending in the economy were household spending based on earned income, and if households always spent all of their incomes, from one year to the next the level of economic activity would:
not change
Demand-pull inflation:
occurs when spending exceeds the economy's ability to produce goods and services
Mutual interdependence where firms respond to the actions of other firms in their market, ocurs in
oligopolist markets?????
Mutual interdependence, where films respond to the actions of other firms in their market, occurs in:
oligopolistic markets
Mutual interdependence, where firms respond to the actions of other firms in their market, occurs in:
oligopolistic markets
two variables are inversely related when:
one variable decreases as the other increases
A regressive tax is:
one where the percentage of income taxed is inversely related to the size of the taxpayer's income
the two functions of an entrepreneur are:
organize resources and bear the risk of a business' failure
A decrease in the supply of money generally leads to a decrease in:
output and employment
an increase in productivity occurs when:
output per worker increases
You would not expect private businesses to provide public goods because:
people can use these goods without paying for them
A price index measures the:
percentage change in the price of an item or group of items
Of the following, the lowest average household income would likely be found in households headed by a:
person 65 years of age or older
of the following, the lowest average household income would likely be found in households headed by a:
person 65 years of age or older
Of the following groups, the highest average household income occurs in households headed by a:
person with a college degree
of the following groups, the highest average household income occurs in households headed by a:
person with a college degree
Household pretax income that is used for spending, paying taxes, and saving is:
personal income
household pretax income that is used for spending, paying taxes, and saving is:
personal income
A usury law on interest rates is an example of a:
price ceiling
If a firm's sales revenue increases after lowering the price of its product, the demand for its product is:
price elastic
Changes in the quantity supplied of a good or service are caused by changes in the:
price of the good or service
A change in the demand for a product would NOT be caused by a change inj the:
price of the product
A buyer's demand for a product refers to the amounts of the product the buyer would purchase at different:
prices
according to the classical school of economics, if aggregate demand were to decrease and the economy were to experience some unemployment:
prices and wages would fall until the economy returned to full employment
The largest portion of the national debt is held by:
private domestic foreign investors such as individuals, banks, and corporations
Over the long run, purely competitive firms:
produce at the lowest possible cost per unit
over the long run, purely competitive firms:
produce at the lowest possible cost per unit
If a firm sells 10,000 units of output at a price of $100 each, and has costs of $800,000 its:
profit equals $200,000
In economics, it is usually assumed that the fundamental objective of a business firm is to maximize:
profit or minimize loss
in economics, it is usually assumed that the fundamental objective of a business firm is to maximize:
profit or minimize loss
which of the following is true?
profit-revenue-cost
Which of the following is true?
profit=revenue-costs
The term retained earnings refers to:
profits held back by a business for investment or other purposes
The federal personal income tax is a:
progressive tax
Which of the following is NOT a function of money?
promoter of barter
A tax where the percentage of income taxed is the same regardless of the size of the income is called a:
proportional tax
To maximize utility an individual should purchase items that:
provide the highest satisfaction per dollar spent
to maximize utility an individual should purchase items that:
provide the highest satisfaction per dollar spent
The two main categories of government expenditures are:
purchases of goods and services, and transfer payments
An individual seller has no control over the price of its product in:
pure competition
an individual seller has not control over the price of its product in:
pure competition
Which is the correct sequence if we are ranking market structures from that with the largest number of sellers to that with the smallest?
pure competition, monopolistic competition, oligopoly, and monopoly
Which is the correct sequence if we are ranking market structures from that with the largest numbers of sellers to that with with the smallest?
pure competition, monopolistic competition, oligopoly, and monopoly
A country that allows no market activity in making the basic economic choices has a:
purely planned economy
In a price leadership oligopoly model, when the price leader increases its price, the other firms will:
raise their prices
in a price leadership oligopoly model, when the price leader increases its price, the other firms will:
raise their prices
Keynesian economics:
reached its peak of popularity during the 1960s, came under attack in the 1970s and 1980s, and recently saw its policy tools used again
which of the following statements is true?
real output per person has grown substantially in the United States since 1980
Increasing the reserve requirement:
reduces the amount of loans a bank can make and reduces the money supply
The relative importance a person assigns to various actions or alternatives:
reflects the person's value judgments
The primary function of the Federal Reserve System is to:
regulate the money supply
from 1980 to 2010, which of the following has been the smallest source of total income going to U.S. households
rental income
The transition from a planned to a market-oriented economy:
requires that property rights be redefined to allow private ownership
Loans and deposits are:
respectively, assets and liabilities of a bank
All resources are:
scarce relative to the wants and needs they must satisfy, but many resources are abundant in absolute terms
Sellers are in the same market if they:
sell similar products and compete for the same buyers
sellers are in the same market if they:
sell similar products and compete for the same buyers
Because of the Law of Demand, demand curves:
slope downward
An economic system where many of the factors of production are collectively owned and there is an attempt to equalize incomes is:
socialism
Difficulty in raising large amounts of funds is a problem mainly for:
sole proprietorships and partnerships
The majority of businesses in the U.S. economy are:
sole proprietorships, and the majority of business receipts go to corporations
A point inside, or to the left of, a production possibilities curve indicates that:
some of the economy's resources are unemployed
if sellers in a purely competitive market are operating at a loss, then over the long run:
some sellers will leave the market and the remaining firms will eventually break even
The majority of household income is used for:
spending
the majority of household income is used for:
spending
monetarism is the school of thought tha tfoavors:
stabilizing the economy through control of the money supply
An increase in excess reserves would increase the:
supply of loans and reduce the interest rate
If producers in this market charged a price of $6, there would be a:
surplus of 200 units
Leakages include:
taxes, saving, and imports
Probably the most important factor leading to improved resource efficiency over the long run is:
technological change
A market is composed of a group of firms:
that produce similar products and compete for the same buyers
Legislation giving the federal government the responsibility to provide an environment for achieving full employment, full production, and stable prices was:
the Employment Act of 1946
economics is concerned with tradeoffs caused by scarcity "Tradeoffs" refers to:
the alternatives given up when making choices
A financial depository institution's required reserves are:
the amount of actual reserves that must be kept to back deposits
which of the following statements is FALSE?
the average income of households headed by a person attaining a bachelor's degree is about equal to the average income for all U.S. households
which of the following statements is true?
the definition of equity depends on a person's value judgments, and any answer choices could fulfill an individual's concept of equity
Public choice is the study of:
the economic motives and attitudes of voters and public officials, and their effects on government decision-making
Demand-pull inflation occurs when?
the economy is operating at or close to full employment
Which of the following would cause the demand curve for a product to shift to the right today?
the expectation that the product will be unavailable in the future
The value of money is measured by:
the gods, services, and resources it can purchase
Macroeconomics is the study of:
the operation of the economy as a whole, and economic topics such as total output, employment, and inflation
In the U.S. the last two decades:
the percentage of households with only one person has slightly increased
in the U.S. over the last two decades:
the percentage of households with only one person has slightly increased
A participation rate refers to:
the percentage of people in some specified group that are in the labor force
If the price charged in a market was $10 and the equilibrium price in that market was $8, you would expect:
the price charged in the market to decrease to $8
You would expect the level of investment spending by businesses to increase if:
the rate of interest on borrowed funds decreased
The majority of the federal debt is financed by:
the sale of treasury securities to private domestic and foreign investors
A direct relationship occurs when two variables move in:
the same direction, and graph as an upward-sloping line
An increase in a seller's employees' wages would cause:
the seller's supply curve to shift to the left
Econometrics is:
the use of the statistical techniques to determine the relationship between economy variables
Holding everything else constant, which of the following would cause economic activity to decrease?
the value of exports is less than the value of imports
A society's economic system is defined by:
the way in which basic economic decisions are made
A major problem with using fiscal policy is that:
there are time lags between the identification of a problem and the development of a fiscal policy with the problem
According to the Law of Demand:
there is an inverse relationship between a change in a product's price and a change in the quantity demanded
the basic policy implication of the classical school is:
there is no need for government intervention to correct economic problems
Maximizing satisfaction from consuming goods and services with limited incomes is difficult for individuals because:
they can spend their incomes in different ways, each resulting in a different level of satisfaction
maximizing satisfaction from consuming goods and services with limited incomes is difficult for individuals because:
they can spend their incomes in different ways, each resulting in a different level of satisfaction
The entry of new sellers into a market would cause equilibrium price:
to decrease and equilibrium quantity to increase
The multiplier effect is the change in:
total output generated by a change in nonincome-determined spending
In the Keynesian model, if total spending by households, businesses, government units and foreign buyers is less than the total output produced in the economy, then:
total output will decrease
Keynesian and new Keynesian economics focus on the relationship between total output and:
total spending
In the equation of exchange, MV and PQ can be interpreted as, respectively:
total spending and the dollar value of output in the economy
The primary determinant of the overall level of economic activity is:
total spending by households, businesses, government, and foreign buyers
The economic systems of people such as some early Native American tribes that were small, focused on agriculture, and operated with production methods not changed for generations are best characterized as:
traditional or agrarian economies
A clothing manufacturer that acquires a woolen mill is an example of a:
vertical merger
a clothing manufacturer that acquires a woolen mill is an example of a:
vertical merger
The largest source of personal income in the U.S. is:
wages, salaries, and other labor income
the largest source of personal income in the U.S. is:
wages, salaries, and other labor income
For a business to maximize its profit or minimize its loss, it must:
weigh the expected revenues and costs of different strategies and choose the one that contributes most to its profitability
Direct government intervention in the household sector would include:
welfare payments
The opportunity cost of a purchase or a decision is:
what had to be given up to make that purchase of decisison
A problem associated with barter is:
what individuals want to trade must coincide for exchange to occur
A possible economic policy problem exists in that:
when an economy reaches full production and full employment buyers' increased spending power may cause inflation
Which of the following is NOT one of the three basic economic decisions?
when goods and services should be produced, and when their producers should be paid
A progressive tax is one:
where there is a direct relationship between the percentage of income taxed and the size of the income
Which fo the following is NOT a feature used to distinguish among the four market models?
whether the firms in the market are proprietorships, partnerships, or corporations
Which of the following is NOT a feature used to distinguish among the four market models?
whether the firms in the market are proprietorships, partnerships, or corporations
A consumer attempting to maximize his or her satisfaction from consuming different goods needs to look at:
whether the goods are durable or nondurable, and whether he or she is buying them for his/her own or someone else's use
a consumer attempting to maximize his or her satisfaction from consuming different goods needs to look at:
whether the goods are durable or nondurable, and whether he or she is buying them for his/her own or someone else's use
