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Select one:
a. The expansionary phase, the full-employment phase, and the contractionary phase
b. The Phillips phase, the stagflation phase, and the growth phase
c. The Phillips phase, the stagflation phase, and the recovery phase
d. The expansionary phase, the stagflation phase, and the recovery phase
The principle stating that, for virtually all goods and services, there is a negative relationship
between price and quantity demanded, all other things unchanged, is the law of:
Select one:
a. supply.
b. demand.
c. scarcity.
d. increasing opportunity costs.
The study of how people choose among the alternatives available to them is the:
Select one:
a. definition of economics.
b. model of demand.
c. theory of opportunity costs.
d. method of distinguishing between microeconomics and macroeconomics.
An economic system is the set of rules that define _______ and _______ .
Select one:
a. resources; prices
b. who gets to vote; when elections will be held
c. market prices; factors of production
d. how an economy's resources are to be owned; how decisions about the resources are to be
made
Suppose the economy experiences a recessionary gap. Expansionary monetary policy will
Select one:
a. increase interest rates and increase exchange rates.
b. increase interest rates and decrease exchange rates.
c. decrease interest rates and increase exchange rates.
d. decrease interest rates and decrease exchange rates.
Consider a bakery that buys flour to bake cakes. Which of the following statements is true?
Select one:
a. The value of the cake and the flour used to make the cake are counted as part of GDP.
b. Only the value of the cake is counted in GDP.
c. Only the value of the flour used to make the cake is counted in GDP.
d. Only the difference between the value of the cake and the value of the flour is counted in
GDP.
Economic data that are adjusted for price-level changes are said to be expressed in terms of:
Select one:
a. indexed dollars.
b. deflated dollars.
c. nominal dollars.
d. real dollars.
Potential output is
Select one:
a. the level of real GDP that exists when the economy is experiencing only cyclical and
structural unemployment.
b. the level of real GDP that exists when the quantity of labor supplied is equal to the
quantity of labor demanded.
c. the level of real GDP that exists when the actual rate of unemployment is zero.
d. the level of real GDP that exists when the economy is experiencing only frictional and
cyclical unemployment.
A negative relationship between the quantity demanded and price is called the law of ______.
Select one:
a. demand
b. diminishing marginal returns
c. market clearing
d. supply
The monetary policy tool that involves the buying and selling of government bonds is
Select one:
a. moral suasion.
b. reserve requirements.
c. the discount rate.
d. open-market operations.
The labor theory of value holds that the value of goods ultimately depends on the:
Select one:
a. demand and supply of labor translated into prices.
b. relative amount of labor used in their production.
c. monopoly prices set for them by monopolists.
d. labor being used in the market place, but value must also be a result of the interaction of
demand and supply in the long run.
If the Fed purchases federal government bonds on the open market, bank reserves will
Select one:
a. decrease leading to a decrease in the money supply.
b. increase leading to a decrease in the money supply.
c. increase leading to an increase in the money supply.
d. decrease leading to an increase in the money supply.
_______ Of the following, which statistic do economists use to measure the business cycle?
Select one:
a. Changes in the inflation rate
b. Changes in real gross domestic product
c. Changes in the value of imports
d. Changes in the implicit price deflator
Suppose a bookstore has 500 copies of a new, unsold Economics textbook. This
Select one:
a. is treated as an increase in the bookstore’s inventories and will decrease the store’s gross
private domestic investment.
b. is treated as an increase in the bookstore’s inventories and will increase the store’s gross
private domestic investment.
c. is treated as an increase in the “intermediate goods” category of gross private domestic
investment.
d. will not affect gross private domestic investment or consumption until the books are sold.
Which of the following is true about low-income countries?
Select one:
a. They face high levels of potential output, largely because of the size of their population.
b. They tend to have low levels of potential output and are producing well below their
potential.
c. They face high levels of potential output, but tend to produce well below their potential
because of high illiteracy rates.
d. They face high levels of potential output, but tend to produce well below their potential
because of political instability.
What is a quota?
Select one:
a. A restriction on exports
b. A unit tax imposed on a product
c. A ceiling on the amount of a good or service that can be exported
d. A ceiling on the amount of a good or service that can be imported
Taxes assessed on firms and employees on wages and salaries earned are called
Select one:
a. dividend taxes.
b. payroll taxes.
c. corporate profits taxes.
d. earned income taxes.
An important distinction between the classical and Keynesian view of the economy is that
Select one:
a. Keynes stressed the supply side of an economy while classical economists stressed the
demand side of the economy.
b. classical economists argued that output gaps were caused by shifts in the long-run
aggregate supply while Keynes’ maintained that output gaps were created by shifts in aggregate
demand.
c. Keynes stressed the demand side of an economy while classical economists stressed the
supply side of the economy.
d. classical economists argued that output gaps were caused by shifts in the long-run
aggregate supply while Keynes’ maintained that output gaps were created by wage and price
rigidities.
You spend $20 to buy a used textbook at the college bookstore. What function does money
perform here?
Select one:
a. medium of exchange
b. store of value
c. unit of account
d. standard of deferred payment
Which of the following is not included under gross private domestic investment?
Select one:
a. Construction of a new office building
b. Purchase of a new computer by an accounting firm
c. Scientific research undertaken by a biomedical engineering firm
d. Construction of a new private suburban home
The total value of all final goods and services produced in a country during a given period,
adjusted to eliminate the effects of changes in prices is called:
Select one:
a. nominal GDP.
b. current GDP.
c. real GDP.
d. average GDP.
When we are forced to make choices we are facing the concept of:
Select one:
a. ceteris paribus.
b. free goods.
c. scarcity.
d. the margin.