economics exam 2 review
B
An excise tax of 60 cents is levied on a product. As a result of the tax, the price of the product goes from $1 to $1.40. Which of the following is true? A. The producer pays the majority of the tax but not the entire tax. B. The consumer pays the majority of the tax but not the entire tax. C. The producer pays the entire tax. D. The consumer pays the entire tax.
A
An excise tax of $0.75 is levied on a product. As a result of the tax, the market price of the product goes from $4.00 to $4.50. How much of the tax does the consumer pay? A. $0.50. B. $0.25. C. $0.38. D. The consumer pays none of the tax.
D
Assessing taxes by charging a tax rate equal to a fraction of the market price of each unit purchased is known as A. dynamic taxation. B. value added taxation. C. transactional taxation. D. ad valorem taxation.
119.66, 19.66
Commodity Market Basket Quantity 2001 price 2002 price Corn 20 lbs. $2.00 $2.35 Apples 15 lbs. $2.25 $2.75 Assuming that 2001 is the base year, calculate the price index for 2002. In 2002, the price index is ________ (Round your answer to two decimal places.) The inflation rate between 2001 and 2002 is ______%
D
Consider an economy with only two groups of people: Wage earners and Goods sellers. If the price level increases by 20% while the nominal wages remains the same, A. income will be redistributed from goods sellers to wage earners. B. real wages will not be affected as nominal wages remained the same. C. no income redistribution will occur as nominal wages are same as before. D. income will be redistributed from wage earners to goods sellers.
A
Full employment means A. there is a level of unemployment consistent with "normal" frictions in the labor market. B. everyone has a job. C. there is "normal" frictional unemployment and a small amount of cyclical unemployment. D. everyone in the labor force has a job.
A
If a household purchases a new car and a new refrigerator, this would be classified as spending on A. consumer durables. B. consumer services. C. consumer nondurables. D. None of the above.
D
If nominal GDP increases, it is possible that A. prices have increased. B. output has increased. C. both prices and output have increased. D. any of the above might have happened.
C
In the circular flow of income A. households buy goods and services while firms sell goods and services. Firms obtain labor from households, capital from government, and raw materials from firms. B. households demand goods and services which are supplied by firms, and the firms demand resources that are supplied by intermediate firms. C. households demand goods and services that are supplied by firms, while supplying resources that are demanded by firms. D. households buy goods and services and firms supply goods. Resources are supplied by other firms.
46.8, 13, 75
In this country, ____ million people are unemployed, and the unemployment rate is _____ PERCENT. (Round your responses to one decimal place.) The labor force participation rate is ____%. (Round your answer to the nearest percent.) Labor force 360.0 million Adults in the military 18.0 million Employed adults 313.2 million Nonadult population 18.0 million Institutionalized adults 12.0 million Nonmilitary, noninstitutionalized adults not in labor force 120.0 million
A
Marisa has just graduated from college and is seeking a job comma but hasn't found one yet. Which type of unemployment is this? A. frictional unemployment B. structural unemployment C. seasonal unemployment D. cyclical unemployment
B
Per capita real GDP equals A. real GDP in the nation's capital, Washington, D.C. B. real GDP/population. C. real GDP/human capital. D. real GDP/investment capital.
D
Real GDP is computed by adjusting nominal GDP for A. exchange rate changes. B. depreciation. C. capital consumption allowances. D. changes in the price level.
A
Suppose a government has access to the following sources of funding currently as well as over the long run: Source Dollar Amount Taxes $2 comma 000 User charges $ 300 Borrowed funds $ 750 Over the long run, this government's fundamental revenues are equal to A. $2,300. B. $3,050. C. $2,000. D. $2,750.
C
Suppose a government has access to the following sources of funding currently as well as over the long run: Source Dollar Amount Taxes $2,000 User charges $ 300 Borrowed funds $ 750 In the current time period, this government's spending on goods and services and transfer payments is limited to A. $2,300. B. $2,750. C. $3,050. D. $2,000
D
Suppose social security contributions rise by $1 billion while social security benefits also rise by $1 billion. Further, personal income taxes fall by $500 million. As a result, A. both personal and disposable personal income should increase. B. national income, personal income, and disposable income should increase. C. personal income, disposable personal income, and national income remain unchanged. D. disposable income should increase while personal income and national income are unchanged.
D
Suppose the federal government replaced the current income tax system with a system that taxed all income at 20%, but the first $20 comma 000 of income was tax exempt. Such a system would be a ________________ tax system. A. proportional B. regressive C. confiscatory D. progressive
D
The adjustment in exchange rate conversions that takes into account differences in the true cost of living across countries is called A. currency-adjusted purchasing power. B. nominal purchasing power. C. raw purchasing power. D. purchasing power parity.
A
The biggest component of GDP using the expenditure approach is ____________ and the biggest component of GDP using the income approach is _____________. A. consumer expenditures; wages B. investment expenditures; profit C. consumer expenditures; profit D. government expenditures; taxes
C
The corporate income tax in the United States A. excludes dividends paid out. B. only taxes retained earnings. C. results in individuals' being doubly taxed on corporate earnings. D. does not apply to profits earned on exports.
B
The following table gives the per loaf sales values at each stage of bread production: Stage of Production $ Value of Sales Stage 1: Seed, fertilizer $0.12 Stage 2: Growing $0.28 Stage 3: Milling $0.50 Stage 4: Baking $0.80 Stage 5: Retail price $1.15 The addition to GDP from the production and sale of one loaf of bread is A. $2.85. B. $1.15. C. $0.35. D. $1.70.
B
The fundamental limitation on public expenditures during a specific time interval is expressed by A. the size of the tax base. B. the government budget constraint. C. the governing political party. D. no such limitation exists.
A
The largest component of GDP by far is A. personal consumption expenditures. B. net exports. C. government purchases of goods and services. D. gross private domestic investment.
C
The type of unemployment that rises as the economy goes into a recession is called A. frictional. B. seasonal. C. cyclical. D. structural.
D
Total income can be viewed as the sum of A. payments to factor services such as land, labor, capital, and entrepreneurial activity. B. the dollar value of output produced since total income and total production are equal. C. wages, rents, interest, and profits. D. All of the above.
D
Total income can be viewed as the sum of A. wages, rents, interest, and profits. B. payments to factor services such as land, labor, capital, and entrepreneurial activity. C. the dollar value of output produced since total income and total production are equal. D. All of the above.
D
What is the structure of the U.S. income tax system? A. The U.S. income tax system only considers the average tax rate for an individual. B. The U.S. income tax system is basically a proportional tax system since all people with the same income pay the same tax. C. The U.S. income tax system is a regressive tax system since higher income individuals pay a higher tax. D. The U.S. income tax system is a progressive tax system where the marginal tax rate exceeds the average tax rate.
C
Which of the following explains the difference between the average tax rate and the marginal tax rate? A. The average tax rate uses total income while the marginal tax rate refers to the tax rate of the first dollar earned. B. The average tax rate refers to the first dollar earned while the marginal tax rate uses total income. C. The average tax rate uses total income while the marginal tax rate refers to the tax rate of the last dollar earned. D. The average tax rate refers to the last dollar earned while the marginal tax rate uses total income.
C
Which of the following is consistent with dynamic tax analysis? A. An increase in the tax rate will have no impact on the tax base. B. A decrease in the tax rate will likely cause a decrease in the tax base. C. An increase in the tax rate will likely cause a decrease in the tax base. D. An increase in the tax rate will likely cause an increase in the tax base.
C
Which of the following is most likely to gain from unanticipated inflation? A. A senior citizen who receives Social Security payments. B. A bank that specializes in mortgage lending. C. A consumer with a five year auto loan. D. A restaurant that has printed menus.
A
Which of the following measures will lower the natural rate of unemployment? A. More high school graduates enter college without looking for employment right away. B. Government increases spending to reduce the job loss during a recession. C. The labor force becomes less educated over time. D. Government increases the duration of unemployment compensation benefits.
C
Which of the following statements is true concerning the historical picture of business activity in the United States? A. All recessions have been caused by external shocks. B. The largest expansion since World War II took place in the early 1960s. C. The frequency and size of fluctuations around the trend has decreased since World War II. D. Business fluctuations are regular and take 8 years from the start of a recession to the end of the peak period.
D
Jim's favorite breakfast is two eggs, 1/5 lb. of bacon, 1/7 lb. of white toast, 1/6 can (16 ounce can) of frozen concentrate orange juice, and 1 lb. of grapefruit. The following table contains 1991 and 2001 prices for these five items. Using 1991 as the base year, compute the price index for Jim's breakfast for 2001. Item 1991 Price 2001 Price One dozen eggs $1.08 $1.02 One pound bacon $2.15 $2.75 One pound bread $0.63 $0.98 One can orange juice $1.98 $1.86 One pound grapefruit $0.57 $0.55 A. 93.02 B. 111.7 C. 89.53 D. 107.5
