Econ Final

Built-in stabilizers are not sufficiently strong to prevent recession or inflation, but they can reduce the severity of a recession or inflation. A. True B. False

A

Consider the market for tax return software. If professional tax return preparers raise the price of services they provide, how does the affect the market for tax return software? A. Demand increases and supply is unaffected B. Demand is unaffected and supply increases C. Demand is unaffected and supply decreases D. Demand decreases and supply is unaffected

A

Economic historians identify which items as a major factor that started the industrial revolution in Britain? A. Steam engine B. Automobile C. Telephone D. Electric Motor

A

If investment decreases by $20 billion and the economy's MPC is .5, the aggregate demand curve will shift: A. Leftward by 40 billion at each price level B. Rightward by 20 billion at each price level C. Rightward by 40 billion at each price level D. Leftward by 20 billion at each price level

A

Joe owns a store specializing in soccer jerseys. In 2012 he purchased $150,000 worth of jerseys from manufactures, employed one worker for $40,000 purchased $20,000 worth of supplies from an office supply store and sold jerseys for $280,000. Based on this information what was the value added at Alejandro's store in 2012? A. 70,000 B. 110,000 C. 280,000 D. 490,000

A

Other things equal if the national incomes of the major trading partners of the U.S were to rise, the U.S: A. aggregate demand curve would shift to the right B. Aggregate supply curve would shift to the left C. aggregate supply curve would shift to the right D. Aggregate demand curve would shift to the left

A

The Labor force includes: A. employed workers and persons who are unemployed but actively seeking work B. Employed workers, but excludes persons who are unemployed C. Full-time workers, but excludes part time workers D. Permanent employees but excludes temporary employees

A

The MPC for an economy is: A. The slope of the consumption schedule B. The slope of the savings schedule C. 1 divided by the slope of the consumption schedule D. 1 divided by the slope of the savings schedule

A

The investment demand curve will shift to the left as the result of: A Business pessimism about future economic conditions B. Limited available productive capacity C. An increase in the interest rate D. A decrease in business taxes

A

The key to assessing discretionary fiscal policy is to observe the change in the cyclically adjusted budget. A. True B. False

A

The production possibilities curve illustrates the basic principle that: A. If all the resources of an economy are in use, more of one good can be produced only if less of another good is produced. B. The production of more of any one good will require smaller and smaller sacrifices of other goods. C. An economy will automatically obtain full employment of its resources. D. An economy's capacity to produce increases in proprtion to its population size.

A

The public debt is equal to the sum of the Federal government's past (deficits, surpluses) minus its budget (deficits, surpluses). The most meaningful way to measure the public debt is relative to (interest rates, GDP). Most of the US public debt is (internal, external) because foreigners hold about (57, 29) percent. A. deficits; surpluses; GDP; internal; 29 B. surpluses; deficits; interest rates; external; 57 C. deficits; surpluses; GDP; external; 57 D. surpluses; deficits; interest rates; internal; 29

A

The so called wealth effect will result in households A. Spending more and saving less B. Spending less and saving more C. Spending less and saving less D. Spending more and saving more

A

Which is an important consequence of the public debt of the United States? A. It transfers a portion of the U.S. output to foreign nations. B. It reduces the income inequality in the U.S. C. It increases incentives to work, innovate and invest. D.It may crowd out public investment in nation's infrastructure.

A

Which is the main problem with the barter system of exchange? A. It requires a coincidence of wants B. It fosters specialization and division of labor C It encourages self-interest and selfishness D. It undermines the right to bequeath

A

Which of the following institutional structures is most likely to promote growth? A. A well enforced system of patents and copyrights B. A tightly regulated market system C. A system of tariffs and other trade barriers to protect domestic companies D. All of the above

A

Which of the following is the largest contributor to the growth of labor productivity in the United States? A. Technological advance B. Education and training of labor C. Increases in quantity of capital D. Improved resource allocation

A

Which of the following statements is most accurate about advanced economies? A. Economies experience a positive growth trend over the long run, but experience significant variability in the short run B. Economies expereince positive and stable growth over both the long and short run C. Economies expereince a positive growth trend over the short run, but experience significant variability in the long run. D. Economies experience little long-run growth in output but can expereince significant growth in the short run

A

Which of the following would be a normative Economic Statement? A. The worsening balance of trade must be corrected if this nation is to remain competitive in the world economy. B.Consumer prices are rising at a faster then in past months, indicating a renewal of inflationary pressures on the economy. C. The unemployment rate fell for the fourth straight month. reflecting the effects from stronger economic growth in the second quarter D. To help balance the federal budget, congress increased the tax on gasoline to its highest level in the past ten years.

A

A required element of specialization is: A. A capitalist economy B. Exchange and trade C. Free enterprise D. Competition

B

A trough in the business cycle occurs when: A. Cyclical unemployment is at a minimum point B. Employment and output reach their lowest levels C. The natural rate of unemployment is at a minimum point D. The inflation rate is at its lowest point

B

According to many economists, the primary burden of the debt is the A. absolute size of the debt for the economy. B. annual interest charges from bonds sold to finance the public debt.

B

Because every transaction has a buyer and a seller, A. GDP is more closely associated with an economy's income than it is with an economy's expenditure. B. Every transaction contributes equally to an economy's income and to its expenditure. C. THe number of firms must be equal to the number of households in a simple circular-flow diagram. D. Firms profits are necessarily zero in a simple circular flow diagram.

B

Because tax revenues are (directly, inversely) related to GDP, the economy has some (artificial, built-in) stability. If the GDP increases, then tax revenue will increase, and the budget surplus will (increase, decrease), thus (stimulating, restraining) the economy when it is needed A. Directly; Artificial; Increase; Stimulating B. Directly, Built-in; Increase; Restraining C. Inversely; Artificial; Decrease; Stimulating D. Directly, Built-in; Increase; Stimulating

B

Beef is a normal good. You observe that both the equilibrium price and quantity of beef have fallen over time. Which of the following explanations would be most consistent with this observation? A. The price of chicken has rises and the price of steak sauce has fallen B. New medical evidence has been released that indicates a negative correlation between a persons beef consumption and life expectancy. C. The demand curve for beef must be positively sloped. D. Consumers have experienced an increase in income and beef production technology has improved

B

Current thinking about discretionary fiscal policy among mainstream economists is that it should be designed to A. counteract the effects of monetary policy. B. contribute to long-run economic growth. C. "fine-tune" the economy in the short-run, but not in the long run. D. control inflationary pressure, but not be used to fight recessioin.

B

Economic Systems differ according to which two main characteristics? A. How goods are produced and who gets them. B. Who owns the factors of production, and the methods used to coordinate economic activity. C. The technology used in production, and the quantity and quality of natural resources. D. The political system in place, and the degree of scarcity facing the economy.

B

Economists who see evidence of a political business cycle argue that members of Congress tend to increase taxes and reduce expenditures before elections and to reduce taxes and increase expenditures after elections. A. True B. False

B

GDP is the market value of: A. Resources (Land,Labor,Capital and entrepreneurship) in an economy in a given deal. B. All final goods and services produced in an economy in a given year. C.Consumption and investment spending in an economy in a given year D. All output produced and accumulated over the years

B

If 40,000 worker- hours produced a total output of $600,000 in an economy, the labor productivity is: A. $10/worker-hour B. $15/worker-hour C. $24/worker-hour D. $240/worker-hour

B

If bob's disposable income increases from $4,000 to $4,500 and her level of saving increases from $200 to $325, it may be concluded that her marginal propensity to: A. Consume is .80 B. Consume is .75 C. Consume is .60 D. Save is .30

B

If households expect that a tax cut will be temporary, they are likely to spend more and save less, thus reinforcing the intended effect of the tax cut on aggregate demand. A.True B. False

B

If the price level increases in the U.S relative to foreign countries then American consumers will purchase more foreign goods and fewer U.S goods. This statement describes: A. the output effect B. the foreign purchases effect C. the interest rate effect D. the exchange rate effect

B

In an effort to avoid recession, the government implements a tax rebate program, effectively cutting taxes for households. We would expect this to: A. affect neither aggregate supply nor aggregate demand B. increase aggregate demand C. reduce aggregate demand D. reduce aggregate supply

B

National income accountants can avoid multiple counting by: A. Including transfer payments in their calculations B. Only counting final goods C. Counting both intermediate and final goods D. Only counting intermediate goods

B

Recognition, administrative, and operational lags in the timing of federal fiscal policy make fiscal policies more effective in reducing the rate of inflation and decreasing unemployment in the economy. A. True B. False

B

State and local governments' fiscal policies have tended to assist and reinforce the efforts of the federal government to counter recession and inflation A. True B. False

B

Suppose the government purposely changes the economy's cyclically-adjusted budget from a deficit of 3 percent of potential GDP to a surplus of 1 percent. The government is engaging in a(n): A. expansionary fiscal policy. B. contractionary fiscal policy C. neutral fiscal policy D. high-interest rate policy

B

The Multiplier applies to: A. investment but not to net exports, government, spending, or consumption B. Investment, net exports, government spending and consumption C. increases in spending but not to decreases in spending D. Spending by the private sector but not by the public sector

B

The actual budget deficit of the Federal government in 2009 was about $1.4 trillion. On the basis of this information it can be concluded that fiscal policy was expansionary in 2009. A. True B. False

B

The explanation as to why the aggregate demand curve slopes downward is the same as the explanation as to why the demand curve for a single product slopes downward. A. True B. False

B

The immediate short run aggregate supply curve is: A. Vertical B. Horizontal C. Upsloping D.Downslopping

B

The investment demand curve suggests: A. that changes in the real interest rate will not affect the amount invested. B. There is an inverse relationship between the real rate of interest and the level of investment spending C. That an increase in business taxes will tend to stimulate investment spending D. There is a direct relationship between the real rate of interest and the level of investment spending.

B

The most important determinant of consumption and saving is the: A. Level of bank credit B. level of income C. interest rate D. Price level

B

The phrase "too much spending chasing too few goods" best describes: A. the GDP gap B. Demand-Pull inflation C. The inflation premium D. Cost Push inflation

B

The public debt as a percentage of GDP is higher in the US than in most other industrial nations. A. True B. False

B

The short run aggregte supply assumes that product prices are: A.Fixed while input prices are flexible B. Flexible while input prices are fixed C. Both input and product prices are flexible D. Both input and product prices are fixed

B

When the Federal government employs an expansionary fiscal policy to increase real GDP and employment in the economy, it usually runs a budget (surplus, deficit) and (lends, borrows) in the money market. These actions may (raise, lower) interest rates in the economy and (stimulate, crowd out) private investment spending. A. surplus; lends; raise; stimulate B. deficit; borrows; raise; crowd out C. surplus; borrows; lower; crowd out D. deficit; lends; raise; stimulate

B

When the excess capacity of business expands unintentionally, agree: A. Demand increases B. Demand Decreases C. Supply Increases D. Supply decreases

B

Which of the following constitute the types of unemployment occurring the natural rate of unemployment? A. Frictional and cyclical unemployment B. Structural and frictional unemployment C. Cyclical and structural unemployment D. Frictional, structural, and cyclical unemployment

B

Which of the following factors have been the dominant source of economic grown in the U.S.? A. Increase in population B. Increase in labor productivity C. Increase in labor hours D. Increase in labor force

B

Which of the following is included in GDP? A. Public Assistance for welfare recipients B. Fees received by stockbrokers C. Cash gifts from relatives during the holidays D. Payments received from selling stocks in one's portfolio

B

Which of the following may shift the consumption schedule upward? A. an increase in disposable income B. A decrease in real interest rates C. A significant decrease in stock prices D. A decrease in people's ability to borrow

B

Which of the following most closely relates to the idea of opportunity costs? A.Technological Change B. Tradeoffs C. Economic Growth D. Capitalism

B

Which of the following statements is true? A. If prices were fully inflexible, there would be no short-run economic fluctuations B. If prices were fully flexible, there would be no short run economic fluctuations C. Short run economic fluctuations are made worse because prices are flexible D. Short run economic fluctuations would be less severe if prices were inflexible

B

Which of the following would an economist consider to be investment? A. A stockbroker buying 10,000 shares of starbucks stock B. Boeing building a new factory C. Oprah buying a 10 million dollar home from a fellow celebrity D. All of the above

B

(Last Word) Before computers, businesses counted their inventory so infrequently that changes in production needed to respond to changes in demand: A. Were very mild B. Never Happened C. Were quite sharp D. Happened very frequently

C

A nation's real GDP was $250 billion in 2011 and $265 billion in 2012. Its population was 122 million in 2011 and 125 million in 2012. What is the growth rate of real GDP per capita in 2012? A. 1.1% B. 2.5% C. 3.4% D. 5.0%

C

A rightward shift of the investment demand curve might be caused by: A. an increase in the price level B. a decline in the real interest rate C. businesses planning to increase their stock of inventories D. an increase in business taxes

C

All of the following would affect the position of the supply curve for cranberries except the: A. Price of agricultural land for cranberries B. Cost of fertilizers for cranberry production C.Popularity of cranberry drinks D. Development of a new pest control for cranberries.

C

An increase in the overall level of prices is called: A. Growth B. Expansion C. Inflation D. Nominal GDP growth

C

As a Consequence of the problem of scarcity: A. There is never enough of anything B. Production that has to be planned by government C.Individuals have to make choices from among alternatives D.Things which are plentiful have relatively high prices

C

For the aggregate demand curve, when the price level changes, there is a (movement along, change in) the curve. When the entire aggregate demand curve shifts, there is a change in (the quantity of real output demanded, aggregate demand). A. movement along; the quantity of real output demanded B.change in; the quantity of real output demanded C.movement along; aggregate demand D. change in; aggregate demand

C

If a $100 Billion decrease in investment spending causes income to decline by $100 billion in the first round of the multiplier process and by $75 billion in the second round income will eventually decline by: A. 200 billion B. 300 billion C. 400 billion D. 500 billion

C

If the US public debt is held domestically, then for U.S. taxpayers it is (a liability, an asset), and for U.S. citizens and institutions owning the U.S. debt securities, it is (a liability, an asset). The implication of domestically-held public debt is that the payments on the debt (will, will not) affect U.S. purchasing power. Aan asset; a liability; will B. a liability; a liability; will C. a liability; an asset; will not D.an asset; an asset; will not

C

If the consumption schedule shifts downward, and the shift was not caused by a tax change then the saving schedule: A May shift either upward or downward B. Will shift Downward C. Will shift upward D. Will not shift

C

In comparing GDP data over a period of years, a difference between nominal and real GDP may arise because A. Of changes in trade deficits and surpluses B. the length of the workweek has declined historically C. inflation arises over time D. depreciation may be greater or smaller than gross investment

C

In national income accounting, consumption expenditures include A. Purchases of both new and used consumer goods B. Consumer durable goods and consumer nondurable goods but not services C. Consumer durable goods, consumer nondurable goods, and services D. Changes in business inventories

C

JR sells RV's. In 2012 she added 400,000 to her inventory. In 100,000 of this addition was from used RV's she purchased while the remaining 300,000 was from her purchases of newly manufactured RV's. How much of JR's inventory is included in 2012 GDP A. O B. 100,000 C. 300,000 D. 400,000

C

Other things equal a 10 percent decrease in corporate income taxes will A. decrease the market price of capital goods B. have no effect on the location of the investment-demand curve C. shift the investment- demand curve to the right D. Shift the investment-demand curve to the left

C

Suppose an individual sees a tremendous opportunity to produce and sell a new product, but dismisses the idea because there is no way to exploit the opportunity for personal gain. This situation best identifies the: A. Self-Sufficiency dilemma under communism B. Asymmetric information problem under communism C.Incentive problem under communist central planning D. Coordination problem under communist central planning.

C

The aggregate demand curve is the relationship between the total demand for output and the: A. Income Level B. Interest Rate C. Price level D. Real GDP

C

The consumer price index was 177.1 in 2001 and 179.9 in 2002. Therefore the rate of inflation in 2002 was about: A. 2.8 B. 3.4 C. 1.6 D. 4.1

C

The crowding-out effect from government borrowing is reduced when: A. interest rates are rising. B. the economy is operating at full employment. C. government spending improves human capital in the economy. D. government spending can substitute for private investment spending.

C

The multiplier is A. 1/MPC B. 1/(1+MPC) C. 1/MPS D. 1/(1-MPS).

C

The price of a small sized soft ice cream cone at Dairy Queen is 2.50 and jack has 10 dollars he could spend on ice cream or other items. Jack feels the first unit of ice cream is worth 3.50, the 2nd ice cream is worth 2.75 and the 3rd is worth 2.25 and all subsequent ice creams are wroth 1.50. How many ice cream cones could he purchase? A. Four B. Three C. Two D.One

C

The relationship between consumption and disposable income is such that: A. an inverse and stable relationship exists between consumption and income B. a direct but very volatile relationship exists between consumption and income C a direct and relatively stable relationship exists between consumption and income D. the two are usually equal

C

What is the primary reason that economic shocks lead to cyclical changes in output in employment? A. Government is unable to respond by changing the amount of money in circulation B. Changes in total spending cause supply shocks that cause cyclical variation C. Prices are sticky in the short urn D. Prices are flexible in the long run

C

When oil and energy prices rise, the economy tends to experience: A. Natural inflation B. Demand-Pull inflation C. Cost-Push Inflation D. Unanticipated inflation

C

When one speaks of "demand" in a particular market this refers to: A. One price-quantity combination on the demand curve B.One point on the demand curve C. The whole demand curve D.How much of an item buyers want to buy at a given price.

C

When the US dollar appreciates relative to foreign currencies it means that: A. We need more dollars to buy each unit of another currency B. We can buy less foreign currency with a given amount of dollars C. The value of foreign currencies decreased relative to our dollar D. Foreigners need less of their currency to buy one dollar

C

Which of the following relations is not correct? A. 1-MPC=MPS B. APS+APC=1 C. MPS=MPC+1 D. MPC+MPS=1

C

(Last Word) Why is there a shortage of human organs available for transplant? A. The quantity supplied is greater than the quantity demand at the current zero price. B. The supply curve for human organs is horizontal at the current zero price. C. The demand curve for organs is vertical at the current zero price D. The quantity demanded is greater than the quantity supplied at the current zero price

D

A leftward shift of the supply curve for oil in the United States is most likely the result from: A. In increase in the subsidy for oil exploration and drilling B. A decrease in the fees that oil companies must pay for drilling licenses C. A decrease in the world price of oil D. An increase in the costs of exploration and drilling for oil

D

Assume that there is a fixed rate of interest on contracts for borrowers and lenders. If unanticipated inflation occurs in the economy then: A. Both lenders and borrowers benefit. B. Both lenders and borrowers are hurt C. Borrowers are hurt but lenders benefit D. Lenders are hurt but borrowers benefit

D

Economic Resources are also called: A. free gifts of nature B. Consumption goods C. Units of money capital D. Units of production

D

Economists develop economic principles at two levels: Microeconomics and macroeconomics. Which of the following statements do NOT pertain to macroeconomics? A. "More Workers are being hired by the nation's business" B. "The U.S. economy imported more goods and services than it exported last year." C. "The U.S. economy grew at an annual rate of 2.4 percent last year." D. "New Discoveries in medicine are leading to strong growth in the biotech industry."

D

Graphically the market demand curve is: A. Steeper than any individual demand curve that is part of it B. Greater than the sum of the individual demand curves C. The vertical sum of individual demand curves D. The horizontal sum of individual demand curves

D

If the US dollar appreciates relative to foreign currencies, then: A. U.S goods will look cheaper to foreign buyers B. Foreign goods will look more expensive to U.S buyers C. Net exports of the U.S will increase D. Foreign buyers will find U.S goods becoming more expensive

D

In the treatment of U.S exports and imports, national income accountants A. Subtract exports, but add imports in calculating U.S GDP B. Subtract both exports and imports in calculating U.S GDP C. Add both exports and imports in calculating U.S GDP D. Add exports but subtract imports, in calculating U.S GDP

D

Investment spending in the U.S. tends to be unstable because: A. expected profits are high variable B. Capital goods are durable C. Innovation occurs at an irregular pace D. all of these contribute to the instability

D

Suppose that a person's nominal income rises by 5 percent and the price level rises from 125 to 130. The persons real income will: A. fall by about 1 percent B. Remain constant C. Rise by about 4 percent D. Rise by about 1 percent

D

The determinants (shifters) of aggregate supply: A. Are consumption, investment, government and net export spending B. Explain why real domestic output and the price level are positivley related C. Explain the three distinct ranges of the aggregate supply curve D. Include input prices and input productivity

D

The industries or sectors of the economy in which business cycle fluctuation tend to affect output most are: A. Military goods and capital goods B. Services and consumer nondurable goods C. Clothing and education D. Capital goods and consumer durable goods

D

The multiplier effect relates to: A. Changes in the price level to changes in real GDP B. Changes in the interest rate to changes in investment C. Changes in disposable income to changes in consumption D. Changes in spending to changes in real GDP

D

The value of the multipler is likely to fall if there is a fall in: A. the marginal propensity to save B. Income C. Total Spending D. The marginal propensity to consume

D

Unemployment: A. Can exist at any point on a production possibilities curve B. Causes the production possibilities curve to shift inward C. Is illustrated by a point outside the production possibilities curve D. Is illustrated by a point inside the production possibilities curve

D

Which of the following is a consequence of rent controls established in large cities to keep housing affordable for the poor? A. The quality of rental housing declines as landlords lack the funds and incentives to maintain properties. B. Less rental housing is available as prospective landlords find it unprofitable to rent at restricted prices C. Apartment buildings are torn down in favor of office buildings, shopping malls, and other buildings where rents are not controlled D. All of these are consequences of rent controls

D

Which of the following is a demand factor in economic growth? A. More human and natural resources B. Technological progress and innovation C. An increase in the economy's stock of capital goods D. An increase in total spending in the economy

D

Which of the following is used to measure directly the average standard of living across countries? A. Purchasing power party B. Real GDP C. Nominal GDP D. Real GDP per person

D