Economic Theory
Test Bank
Course Introduction
Economic Theory is the study of fundamental principles that govern the allocation of scarce resources in societies. This course covers the core concepts of microeconomics and macroeconomics, including demand and supply, market structures, consumer and producer behavior, and the role of government in markets. Students will explore theoretical frameworks that explain how individuals and firms make economic decisions, how markets function, and how economic policies impact growth, efficiency, and equity. Through analytical models and real-world applications, the course aims to provide a solid foundation for understanding economic phenomena and policy debates.
Recommended Textbook
Economics Principles and Applications 6th Edition by Robert E. Hall
Available Study Resources on Quizplus
35 Chapters
4566 Verified Questions
4566 Flashcards
Source URL: https://quizplus.com/study-set/3646
Page 2
Chapter 1: What Is Economics
Available Study Resources on Quizplus for this Chatper
178 Verified Questions
178 Flashcards
Source URL: https://quizplus.com/quiz/72533
Sample Questions
Q1) The study of how consumers and producers interact in individual markets is
A) macroeconomics
B) labor economics
C) microeconomics
D) econometrics
E) development economics
Answer: C
Q2) In one year,a weapons plant can manufacture either 1,000 more guns or 50 more tanks.The plant's opportunity cost of an extra gun is approximately
A) 50 tanks
B) 20 guns
C) 20 tanks
D) 1/20 of a tank
E) 1/50 of a tank
Answer: D
Q3) Land,labor,and money are the three categories of economic resources.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above.
Page 3
Chapter 2: Scarcity,choice,and Economic Systems
Available Study Resources on Quizplus for this Chatper
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/72532
Sample Questions
Q1) Sven has a comparative advantage over Alice in cooking but not in doing the laundry.Which of the following must be true?
A) Sven must have an absolute advantage in both cooking and doing the laundry.
B) Sven has a lower opportunity cost in doing the laundry.
C) Sven has an absolute advantage in doing the laundry.
D) Alice must have an absolute advantage in cooking.
E) Sven must have a lower opportunity cost than Alice for cooking.
Answer: E
Q2) The specialization of labor
A) leads to a reduction in unemployment
B) means that less equipment will be employed when labor and capital are substitutes in production
C) expands the output a society can produce
D) decreases the costs to the firm of coordinating activities
E) effectively separates labor from management
Answer: C
Q3) An economy's production possibilities frontier is fixed in the long run.
A)True
B)False
Answer: False
To view all questions and flashcards with answers, click on the resource link above. Page 4
Chapter 2: Scarcity, choice, and Economic Systems: Part A
Available Study Resources on Quizplus for this Chatper
184 Verified Questions
184 Flashcards
Source URL: https://quizplus.com/quiz/72531
Sample Questions
Q1) Consider the competitive market for oil.Which of the following would result from the discovery of new oil fields that can be profitably accessed at the current price?
A) both b and d
B) an increase in the demand for oil
C) an excess demand for oil as oil companies shift resources to developing the new fields
D) an excess supply of oil if the price of oil fails to drop sufficiently E) an increase in the expected future price of oil
Answer: D
Q2) "As income rises,the demand for most goods also rises." This statement
A) is inconsistent with the law of demand
B) suggests that many goods are inferior goods
C) shows that the quantity demanded is inversely related to price
D) suggests that most goods are normal goods
E) does not apply to goods traded in competitive markets
Answer: D
To view all questions and flashcards with answers, click on the resource link above.
Chapter 4: Working With Supply and Demand
Available Study Resources on Quizplus for this Chatper
58 Verified Questions
58 Flashcards
Source URL: https://quizplus.com/quiz/72530
Sample Questions
Q1) A price ceiling will increase the amount that is traded in the market while a price floor will reduce the amount that is traded in the market
A)True
B)False
Q2) When analyzing the housing market,the supply curve
A) will be upward sloping because the higher the price of a house the more that will exist
B) will be horizontal to illustrate that the supply of housing is a stock variable
C) will be downward sloping;that is what went wrong with the housing market
D) will be vertical to illustrate that the supply of housing is a stock variable
E) could be horizontal,vertical or upward sloping depending upon the housing market in question
Q3) Federal subsidies to higher education have the effect of
A) increasing the demand for higher education
B) increasing the supply of higher education
C) decreasing the demand for higher education
D) decreasing the supply of higher education
To view all questions and flashcards with answers, click on the resource link above.
6
Chapter 5: Elasticity
Available Study Resources on Quizplus for this Chatper
150 Verified Questions
150 Flashcards
Source URL: https://quizplus.com/quiz/72529
Sample Questions
Q1) If a 10 percent rise in the price of bananas leads to a 20 percent reduction in the quantity of bananas demanded,then the price elasticity of demand is 0.50.
A)True
B)False
Q2) The income elasticity of demand measures
A) the relative certainty of future income
B) how elastic supply is compared to demand
C) the percent change in quantity demanded relative to the percent change in income
D) the percent change in income relative to the percent change in quantity demanded
E) how much income will stretch to make expected payments
Q3) Figure 5-8 shows the demand schedule for hockey pucks.At which price is demand the least price elastic?
A) $1
B) $2
C) $3
D) $4
E) $5
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Consumer Choice
Available Study Resources on Quizplus for this Chatper
143 Verified Questions
143 Flashcards
Source URL: https://quizplus.com/quiz/72528
Sample Questions
Q1) Which of the following most clearly illustrates the law of diminishing marginal utility?
A) The total satisfaction from consuming a good falls as more of the good is consumed.
B) Marginal utility falls as total utility falls.
C) The quantity of a good demanded falls as its price rises.
D) The additional satisfaction from consuming a good falls as more of the good is consumed.
E) There is a direct relationship between the price of a good and its total utility.
Q2) The market demand curve for a good is found by
A) adding up the quantities demanded by all consumers at different prices of that good
B) adding up the quantities demanded by all consumers at different incomes
C) adding up the maximum price each consumer is willing to pay for each possible quantity of the good
D) varying consumers' total income and determining what prices they are willing to pay
E) vertically summing the individual consumers' demand curves
To view all questions and flashcards with answers, click on the resource link above.
8
Chapter 7: Production and Cost
Available Study Resources on Quizplus for this Chatper
127 Verified Questions
127 Flashcards
Source URL: https://quizplus.com/quiz/72527
Sample Questions
Q1) The Marginal Cost curve will
A) cut ATC at the minimum of ATC but cut AVC at a point to the left of the minimum of AVC.
B) cut ATC at the minimum of ATC but cut AVC at a point to the right of the minimum of AVC.
C) cut AVC at the minimum of AVC but cut ATC at a point to the left of the minimum of ATC.
D) cut AVC at the minimum of AVC but cut ATC at a point to the right of the minimum of ATC.
E) cut both ATC and AVC at their respective minimums
Q2) Whenever marginal cost is below average cost,average cost must fall as output increases.
A)True
B)False
Q3) A firm's minimum efficient scale is defined as
A) the output level at which LRATC first reaches its minimum level
B) any output level at which LRATC is minimized
C) the highest output level at which LRATC takes on its minimum value
D) the output level at which the firm charges its highest price
E) the lowest output level at which the firm can charge a positive price
To view all questions and flashcards with answers, click on the resource link above. Page 9
Chapter 8: How Firms Make Decisions: Profit Maximization
Available Study Resources on Quizplus for this Chatper
118 Verified Questions
118 Flashcards
Source URL: https://quizplus.com/quiz/72526
Sample Questions
Q1) Figure 8-4 indicates data for the total cost curve and the demand curve facing Jonathan's Riding Mower Shop.The quantities indicated are potential daily sales.If Jonathan sells 5 riding mowers per day,he will earn an economic profit of
A) $3,000
B) $1,750
C) $2,150
D) $1,850
E) $2,050
Q2) A firm's total revenue
A) can be read off the demand curve it faces,but only if we know total cost of production B) can be read off the demand curve it faces,but only if we know how must output the firm sells
C) is found by multiplying price per unit by the number of units produced and sold D) is equal to profit when inputs are fixed in the short run
E) will be positive at any level of output
To view all questions and flashcards with answers, click on the resource link above.
10
Chapter 9: Perfect Competition
Available Study Resources on Quizplus for this Chatper
248 Verified Questions
248 Flashcards
Source URL: https://quizplus.com/quiz/72525
Sample Questions
Q1) Which of the following expressions equals profit per unit of output?
A) MR - MC
B) P - AVC
C) MR - P
D) P - ATC
E) MR - ATC
Q2) Under perfect competition
A) the only major difference between firms is the mark-up they use to determine prices
B) a single seller sets the price
C) a small number of sellers offer a differentiated product
D) sellers offer a standardized product
E) a small number of buyers and sellers negotiate the market price
Q3) In short-run equilibrium in a perfectly competitive market,
A) the price varies along the market supply curve
B) each consumer can buy whatever quantity he wishes to buy at the market price
C) the price varies along the market demand curve
D) the market demand curve is horizontal
E) the market demand curve is vertical
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 9: Perfect Competition: Part A
Available Study Resources on Quizplus for this Chatper
5 Verified Questions
5 Flashcards
Source URL: https://quizplus.com/quiz/72524
Sample Questions
Q1) One of the defining characteristics of a perfectly competitive market is
A) both buyers and sellers are well informed about the market
B) a small number of buyers
C) high barriers to entry
D) a small number of buyers but a large number of sellers
E) buyers are better informed about the market than sellers
Q2) Diminishing marginal returns are the reason why some industries have positively-sloped long-run average cost curves.
A)True
B)False
Q3) Which of the following is not a characteristic of a perfectly competitive market
A) buyers and sellers are well informed about the market
B) standardized product
C) many buyers and few sellers
D) easy exit out of the industry
E) easy entry into the industry
Q4) In a perfectly competitive market,a technological advance allows all firms to earn higher economic profits in the long run.
A)True
B)False
Page 12
To view all questions and flashcards with answers, click on the resource link above.
Chapter 10: Monopoly
Available Study Resources on Quizplus for this Chatper
210 Verified Questions
210 Flashcards
Source URL: https://quizplus.com/quiz/72523
Sample Questions
Q1) The total cost of production for the perfect price discriminator in Figure 10-27 is
A) $1,500.00
B) $1,137.50
C) $787.50
D) $875.00
E) more than $1,500.00
Q2) Unlike perfectly competitive firms,monopolists can control
A) how much of the good to produce
B) what inputs to use in production
C) its plant size
D) the price charged per unit of output
E) the quality of inputs used in production
Q3) When a monopoly is created through government franchise,
A) the firm is assured of above-normal profit
B) it is subject to government price regulation
C) the firm will discontinue any rent-seeking activity
D) price discrimination is forbidden
E) the government prevents both entry and exit in the long run
To view all questions and flashcards with answers, click on the resource link above.
13
Chapter 11: Monopolistic Competition and Oligopoly
Available Study Resources on Quizplus for this Chatper
192 Verified Questions
192 Flashcards
Source URL: https://quizplus.com/quiz/72522
Sample Questions
Q1) If the sellers in a market are aware of their strategic interdependence,then
A) each firm bases its pricing and output decisions on the monopoly model
B) each firm,when making pricing or output decisions,must consider the reactions of its competitors
C) the firms have little incentive to collude in their pricing and output decisions
D) the firms undertake little advertising because they cannot recoup the cost through higher prices
E) no firm is able to earn above-normal profit in the long run
Q2) In the short run,a monopolistic competitor can
A) not earn an economic profit because of competition
B) use limit pricing to reduce competition
C) maximize profits by charging the highest price the market will bear
D) earn an economic profit
E) maximize profit by selecting the minimum efficient scale
Q3) Antitrust policies usually focus on encouraging cost-efficient mergers between firms in the same industry.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 14
Chapter 12: Labor Markets
Available Study Resources on Quizplus for this Chatper
95 Verified Questions
95 Flashcards
Source URL: https://quizplus.com/quiz/72521
Sample Questions
Q1) In a perfectly competitive labor market,the supply of labor curve facing a firm will be
A) horizontal
B) vertical
C) upward sloping
D) downward sloping
E) equal to its marginal revenue product curve
Q2) The labor supply curve is typically upward sloping because as the wage rate rises,
A) it will exceed the reservation wages of more individuals
B) the opportunity cost of leisure falls
C) the demand for the good produced by labor increases
D) the marginal revenue product of labor falls
E) the marginal revenue product of labor rises
Q3) A labor market differs from a product market because
A) in a labor market,firms are suppliers and households are demanders
B) the usual laws of economics do not apply to labor markets
C) supply and demand are only relevant for labor markets
D) supply and demand are only relevant for product markets
E) in a labor market,firms are demanders and households are suppliers
To view all questions and flashcards with answers, click on the resource link above.
Chapter 12: labor Markets: Part A
Available Study Resources on Quizplus for this Chatper
86 Verified Questions
86 Flashcards
Source URL: https://quizplus.com/quiz/72520
Sample Questions
Q1) Brett is equally qualified for two different jobs -- video store clerk and coffee shop cashier.Brett is initially indifferent between the two jobs but when he finds out that they pay the same wage he prefers the job at the video store.This must mean that
A) the coffee shop pays a compensating wage differential.
B) the video store must be in a dangerous neighborhood.
C) the video job pays a compensating wage differential.
D) Brett decides he likes videos more than coffee.
E) the video job would require him to work harder.
Q2) The minimum wage is constant across the United States.
A)True B)False
Q3) Less-risky professions tend to enjoy compensating wage differentials.
A)True
B)False
Q4) All else constant,the quantity of labor supplied is inversely related to the amount of training required for a job.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
16
Chapter 13: Capital and Financial Markets
Available Study Resources on Quizplus for this Chatper
114 Verified Questions
114 Flashcards
Source URL: https://quizplus.com/quiz/72519
Sample Questions
Q1) Consider three bonds,from Corporation X,Corporation Y,and Corporation Z.The X and Y bonds mature in 1 year,while the Z bond matures in 2 years.The Y and Z bonds have face values of $5,000,while the X bond has a face value of $4,000.If the interest rate is 10 percent (0.10)per year,rank the three bonds from highest present value to lowest present value.
A) X,Y,Z
B) Z,Y,X
C) Y,Z,X
D) Z,X,Y
E) Y,X,Z
Q2) A formalwear shop will earn a net income of $1,500 per year on a tuxedo.A tuxedo is good for two years,after which it will be worn out and worthless.If the interest rate is 10 percent (0.10)per year,what is the present value of a new tuxedo to the shop? (Assume that each year's income is received at the end of the year. )
A) $148.76
B) $2,955.30
C) $2,955.59
D) $2.603.31
E) $3,000.00
To view all questions and flashcards with answers, click on the resource link above. Page 17
Chapter 14: Economic Efficiency and the Competitive Ideal
Available Study Resources on Quizplus for this Chatper
80 Verified Questions
80 Flashcards
Source URL: https://quizplus.com/quiz/72518
Sample Questions
Q1) Consider a market with a price floor.If the price floor is lowered,which of the following would happen?
A) The consumer surplus would increase,the producer surplus would decrease and the dead weight loss would decrease
B) The consumer surplus would decrease,the producer surplus would decrease and the dead weight loss would increase
C) The consumer surplus,the producer surplus and the dead weight loss would all decrease
D) The consumer surplus,the producer surplus and the dead weight loss would all increase
E) The consumer surplus would decrease,the producer surplus would increase and the dead weight loss would increase
Q2) If all opportunities for Pareto improvements have been exhausted,
A) economic efficiency has been achieved
B) the allocation of goods and services is fair
C) perfect competition has been achieved
D) the economy is in disequilibrium
E) economic inefficiency has been achieved
To view all questions and flashcards with answers, click on the resource link above.
18
Chapter 15: Governments Role in Economic Efficiency
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/72517
Sample Questions
Q1) A natural monopoly
A) typically arises because of a patent or copyright
B) is a firm that,due to economies of scale,can serve a market at lower average cost than two or more firm could
C) is a Pareto improvement as compared to a perfectly competitive market
D) enjoys diseconomies of scale,so average total cost falls as more output is produced
E) enjoys economies of scale,so average total cost rises as more output is produced
Q2) Under Section 2 of the Sherman Act,
A) firms cannot act in ways that increase prices
B) contracts between parties are deemed binding
C) firms cannot operate in perfectly competitive markets
D) firms that earn short-run profits face penalties
E) a firm cannot attempt to monopolize an industry
Q3) Negative externalities produce inefficiency but positive externalities do not.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
19
Chapter 16: Comparative Advantage and the Gains From International Trade
Available Study Resources on Quizplus for this Chatper
120 Verified Questions
120 Flashcards
Source URL: https://quizplus.com/quiz/72516
Sample Questions
Q1) In an Israeli factory,each worker can produce 2/5 of a shirt in an hour or 1/10 of a pair of pants in an hour.If there are 500 workers in the factory,what is opportunity cost of producing one shirt?
A) 1 pair of pants
B) 4 pairs of pants
C) 1/2 pair of pants
D) 1/4 pair of pants
E) 2 pairs of pants
Q2) If free international trade is compromised by the imposition of an import quota or tariff,
A) all of the following are true
B) import-competing producers in the country that imposes the tariff or quota will be able to sell a larger quantity at higher prices
C) consumers of import goods will obtain a larger quantity at lower prices
D) workers in export industries will find more jobs
E) consumers of export goods will obtain a larger quantity,although only at higher prices
To view all questions and flashcards with answers, click on the resource link above.
Chapter 17: What Macroeconomics Tries to Explain
Available Study Resources on Quizplus for this Chatper
106 Verified Questions
106 Flashcards
Source URL: https://quizplus.com/quiz/72515
Sample Questions
Q1) If a factory hires 1,000 new workers,the nation's output level is probably
A) increasing and unemployment is likely to increase
B) increasing and unemployment is likely to decrease by 1000 individuals
C) fluctuating
D) stable
E) increasing and unemployment is likely to decrease by less than 1,000 individuals
Q2) For the average living standard of a nation to __________,__________ must increase faster than the price level
A) increase;nominal GDP
B) increase;real GDP
C) decrease;nominal GDP
D) remain constant;nominal GDP
E) decrease;real GDP
Q3) Inflation has never been a major problem in the U.S.
A)True
B)False
Q4) Recessions can sometimes last less than a single year.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 21
Chapter 18: Production, income, and Employment
Available Study Resources on Quizplus for this Chatper
227 Verified Questions
227 Flashcards
Source URL: https://quizplus.com/quiz/72514
Sample Questions
Q1) A real variable is one that is
A) not adjusted for the dollar's changing value
B) measured in current dollars
C) adjusted for the dollar's changing value
D) not measured in terms of goods and services
E) not adjusted for changes in the price level
Q2) Providing training to unemployed individuals will help to alleviate
A) frictional unemployment
B) seasonal unemployment
C) structural unemployment
D) cyclical unemployment
E) short-term unemployment
Q3) Inventory changes (that is,goods produced but not sold)are important in calculating GDP because
A) they are the least volatile component of investment
B) these changes mean the economy has extra goods available for purchase
C) they are an example of transfer payments
D) GDP includes all possible sources for goods and services
E) we want to measure all current production when computing GDP
To view all questions and flashcards with answers, click on the resource link above.
Page 22
Chapter 19: The Price Level and Inflation
Available Study Resources on Quizplus for this Chatper
164 Verified Questions
164 Flashcards
Source URL: https://quizplus.com/quiz/72513
Sample Questions
Q1) A payment that is periodically adjusted in proportion to a price index such as the CPI is known as a(n)
A) unionized payment.
B) indexed payment.
C) scaled payment.
D) inflated payment.
E) adjusted payment.
Q2) The price of a typical basket of goods and services in one period divided by the price of the same basket in a different year is a(n)
A) price index
B) TV-violence index
C) employment index
D) output index
E) unemployment index
Q3) The Consumer Price Index (CPI)is an index of the cost of a market basket of goods purchased by a typical household.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 23
Chapter 20: The Classical Long-Run Model
Available Study Resources on Quizplus for this Chatper
185 Verified Questions
185 Flashcards
Source URL: https://quizplus.com/quiz/72512
Sample Questions
Q1) When the government is running a budget surplus,
A) the demand for loanable funds includes only business investment spending
B) the supply of loanable funds includes only business investment spending
C) the loanable funds market cannot be in equilibrium
D) the supply of loanable funds includes only household saving
E) there will be an excess supply of loanable funds
Q2) Which economic phenomenon is the short-run macro model most useful in explaining?
A) The sources of employment in the long run
B) The trend of output in the long run
C) The sources of cyclical unemployment
D) The reasons why some workers become discouraged
E) The sources of long-run economic growth
Q3) Which of the following groups would be considered suppliers in the labor market?
A) Government agencies
B) Firms
C) Households
D) Stockholders
E) Landlords
To view all questions and flashcards with answers, click on the resource link above.
Page 24
Chapter 20: Part A: The Classical Model in an Open Economy
Source URL: https://quizplus.com/quiz/72511
Sample Questions
Q1) Which of the following is a leakage in an open economy?
A) Planned investment
B) Imports
C) Exports
D) Government purchases
E) Money
Q2) In the classical model with an open economy,an increase in government purchases always causes complete crowding out.
A)True
B)False
Q3) In the classical model,when an open economy has balanced trade,Say's law does not hold.
A)True
B)False
Q4) In the classical model,even when a country runs a trade deficit,Say's law holds.
A)True
B)False
Q5) In the classical model,when an open economy has balanced trade,Say's law holds.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 25
Chapter 21: Economic Growth and Rising Living Standards
Available Study Resources on Quizplus for this Chatper
185 Verified Questions
185 Flashcards
Source URL: https://quizplus.com/quiz/72510
Sample Questions
Q1) Which of the following is a reason why a country barely at subsistence levels cannot achieve growth very easily?
A) It cannot decrease capital goods in order to increase consumption goods.
B) The lower income means that Say's law does not apply here.
C) Too much savings exist and therefore it remains underutilized.
D) It cannot decrease consumption goods in order to increase capital goods.
E) It cannot decrease capital goods in order to also decrease consumption goods.
Q2) The order of Soviet dictator Joseph Stalin to farmers in the 1930s to produce capital equipment rather than food
A) was based on government support payments for agriculture.
B) relied on foreign assistance.
C) was an illustration of the capital formation method.
D) was an illustration of the brute force method of breaking the poverty cycle,and it was a very successful policy.
E) was an illustration of the brute force method of breaking the poverty cycle,and it meant starvation for millions of farmers.
Q3) Budget deficits cause interest rates to be high.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 26
Chapter 22: Economic Fluctuations
Available Study Resources on Quizplus for this Chatper
85 Verified Questions
85 Flashcards
Source URL: https://quizplus.com/quiz/72509
Sample Questions
Q1) If a new computer program was developed that dramatically improved productivity in most firms,what would happen in the labor market?
A) The real wage would not change but employment would decrease.
B) The real wage would increase and employment would decrease.
C) The real wage would decrease and so would employment.
D) The real wage would decrease and employment would increase.
E) The real wage would increase and so would employment.
Q2) The classical model explains away unemployment as a long-run problem by assuming that
A) coordination in labor markets will occur within an acceptable period of time
B) the economy consists of multiple,coordinated sectors
C) it causes firms to cut back on their long-run production plans
D) what is a problem during one period will seem more like an opportunity for economic growth during another period
E) higher saving will stimulate increased investment
Q3) The classical assumption that labor markets clear makes it difficult for that model to explain recessions.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Page 27
Chapter 23: The Short-Run Macro Model
Available Study Resources on Quizplus for this Chatper
206 Verified Questions
206 Flashcards
Source URL: https://quizplus.com/quiz/72508
Sample Questions
Q1) If we know that the slope of the consumption function is 0.6,then we know that if real disposable income increased by $1,000 billion,real consumption spending would
A) increase by $60 billion
B) increase by $1,000 billion
C) increase by $600 billion
D) increase by $6,000 billion
E) decrease by $6 billion
Q2) Automatic stabilizers do not include
A) taxes
B) interest rates
C) transfer payments
D) forward-looking behavior
E) enhancing the multiplier effect
Q3) Real consumption spending is inversely related to
A) real disposable income
B) the amount of common stock owned
C) the amount of real estate owned
D) expectations of future income
E) the interest rate
To view all questions and flashcards with answers, click on the resource link above. Page 28
Chapter 24: Fiscal Policy
Available Study Resources on Quizplus for this Chatper
115 Verified Questions
115 Flashcards
Source URL: https://quizplus.com/quiz/72506
Sample Questions
Q1) As a percentage of GDP,non-military government purchases have remained very low and stable.
A)True
B)False
Q2) Under what condition can the U.S.government continue to pay interest on a rising debt without eventually needing to increase the average tax rate?
A) If the national debt grows at the same rate as nominal GDP
B) If the nominal interest on the national debt grows faster than nominal GDP
C) If the total interest payments on the national debt grow faster than nominal GDP
D) If the national debt grows faster than nominal GDP
E) If the real interest on the national debt grows faster than real GDP
Q3) Countercyclical fiscal policy is viewed by most economists
A) as the perfect instrument for preventing boom and bust economies
B) as a useful but imperfect instrument for reacting to boom and bust economies
C) having no impact in the short run or long run.
D) doing more damage than good in both the short run and long run.
E) as having an impact only in the long run.
To view all questions and flashcards with answers, click on the resource link above. Page 29
Chapter 25: Money,banks,and the Federal Reserve
Available Study Resources on Quizplus for this Chatper
242 Verified Questions
242 Flashcards
Source URL: https://quizplus.com/quiz/72505
Sample Questions
Q1) One of the costs of the Federal Deposit Insurance Corporation's protection is
A) bank managers may take great risks with depositors' money
B) the public pays closer attention to the bank managers' actions
C) the Fed was forced to reduce its regulation of banks
D) bank managers may act too cautiously with depositors' money
E) banks' profits increased
Q2) Which of the following Federal Reserve policy tools is used most often?
A) Open market operations
B) Changing the required reserve ratio
C) Changing the discount rate
D) Changing the prime lending rate
E) Moral suasion
Q3) Which of the following is the most liquid category of assets?
A) Large time deposits
B) Money market mutual fund balances
C) Small time deposits
D) Saving-type accounts
E) Demand deposits
To view all questions and flashcards with answers, click on the resource link above.
Chapter 26: The Money Market and Monetary Policy
Available Study Resources on Quizplus for this Chatper
146 Verified Questions
146 Flashcards
Source URL: https://quizplus.com/quiz/72503
Sample Questions
Q1) Open market purchases of bonds by the Federal Reserve eventually
A) reduce the pressures on bond markets
B) increase real GDP
C) lead to open market sales of bonds
D) increase the interest rate
E) encourage tax increases
Q2) Refer to Figure 14-1.If the economy is currently at point X,an increase in the interest rate will
A) increase the quantity of money demanded (moving the economy toward point A)
B) decrease the quantity of money demanded (moving the economy toward point B)
C) increase money demand (shifting the curve toward curve C)
D) decrease money demand (shifting the curve toward curve D)
E) leave the economy at point X
Q3) Refer to Figure 14-2.If the interest rate is 8 percent,
A) there is an excess supply of money equal to $100 billion
B) there is an excess demand for money
C) there is an excess supply of money equal to $400 billion
D) the Fed will decrease the money supply
E) the interest rate will tend to rise
To view all questions and flashcards with answers, click on the resource link above.
Page 31
Chapter 26: Feedback Effects From GDP to the Money
Market
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/72502
Sample Questions
Q1) When the feedback effects from income to the money market are included,
A) a given change in the money supply will cause a smaller change in the quantity of money demanded.
B) a given change in the money supply will cause a larger change in the interest rate
C) given change in the money supply will cause no change in the interest rate
D) a given change in the money supply will cause a smaller change in the interest rate
E) a given change in the money supply will cause a larger change in the quantity of money demanded.
Q2) Whenever spending changes,which of the following dampens the overall effect on GDP?
A) A change in the money supply.
B) A change in taxes.
C) A change in the interest rate.
D) A change in the public's expectations.
E) None of the above.
Q3) The rise in equilibrium GDP shifts the money demand curve to the left.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 32
Chapter 27: Aggregate Demand and Aggregate Supply
Available Study Resources on Quizplus for this Chatper
185 Verified Questions
185 Flashcards
Source URL: https://quizplus.com/quiz/72501
Sample Questions
Q1) A decrease in the price level
A) decreases investment spending,thereby shifting the AD curve.
B) increases investment spending,thereby shifting the AD curve.
C) does not shift the AD curve.
D) increases autonomous consumption spending,thereby shifting the AD curve.
E) changes the slope of the AD curve.
Q2) The economy's long-run aggregate supply curve
A) never shifts
B) indicates that in the long run,the price level is constant C) is shifted by demand shocks
D) is a vertical line at the full-employment level of output
E) is perfectly elastic
Q3) The aggregate demand curve tells us equilibrium real GDP at any level of income. A)True
B)False
Q4) The AD curve shifts rightward if taxes decrease.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 33
Chapter 28: Inflation and Monetary Policy
Available Study Resources on Quizplus for this Chatper
141 Verified Questions
141 Flashcards
Source URL: https://quizplus.com/quiz/72500
Sample Questions
Q1) Moving up the Phillips curve in the short run will cause the entire curve to shift upward in the long run.
A)True
B)False
Q2) Revisions in the interest rate target
A) occur on a daily basis
B) have widespread impacts on the financial markets
C) require Congressional approval
D) are based solely on data gathered in previous quarters
E) are a no-lose opportunity for the Fed
Q3) Which of the following would lead to a rightward shift of the money demand curve?
A) Expectations that the interest rate will fall
B) New substitutes for money become popular
C) The use of electronic money increases
D) Substitutes for money become less popular
E) The use of credit cards increases
Q4) If unemployment is below the natural rate,GDP is below potential output.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above. Page 34
Chapter 29: Exchange Rates and Macroeconomic Policy
Available Study Resources on Quizplus for this Chatper
156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/72499
Sample Questions
Q1) The exchange rate is
A) the rate at which one currency is traded for another
B) always constant
C) the tax a foreign nation imposes to change its currency into dollars
D) irrelevant to those who do not travel to foreign countries
E) controlled by the Federal Reserve
Q2) Moral hazard is a problem for the insurance industry.
A)True
B)False
Q3) Refer to Figure 17-2.If the dollar price of the guilder is $0.70,we would expect
A) Dutch exports to be very attractive to Americans
B) a recession in the United States
C) a decrease in the exchange rate until it achieves equilibrium at $0.50 per guilder
D) the demand curve for guilders to shift to the right
E) the supply of guilders curve to shift to the left.
Q4) A reliable indicator of a healthy economy is a stable currency.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.
Chapter 30: Appendix-finding Equilibrium GDP
Algebraically
Available Study Resources on Quizplus for this Chatper
4 Verified Questions
4 Flashcards
Source URL: https://quizplus.com/quiz/72507
Sample Questions
Q1) If autonomous consumption is $5,000,the MPC is 0.7,net taxes are $2,000,investment spending is $4,000,and government purchases equal $2,500,and NX = $0,what is equilibrium GDP?
A) $14,428.6
B) $33,666.7
C) $40,800
D) $43,000
E) $45,000
Q2) If net taxes are included in the model,the equation that shows consumption at each level of income is: C = a + b(Y - T)or C = a + bY - bT.
A)True
B)False
Q3) If I = $2,000,G = $4,000,T = $1,000,NX = $0,autonomous consumption = $1,000 and the marginal propensity to consume is 0.6,what is the equilibrium value of output?
A) $16,000
B) $7,000
C) $6,400
D) $3,840
E) $8,000
Page 36
To view all questions and flashcards with answers, click on the resource link above.
Chapter 31: Appendix: Capital and Leverage
Available Study Resources on Quizplus for this Chatper
10 Verified Questions
10 Flashcards
Source URL: https://quizplus.com/quiz/72504
Sample Questions
Q1) One way to decrease leverage is increasing capital.
A)True
B)False
Q2) Deleveraging is the process of reducing leverage,and therefore increasing the risk to capital from any further declines in asset prices.
A)True
B)False
Q3) Deleveraging is the process of reducing leverage,and therefore reducing the risk to capital from any further declines in asset prices.
A)True
B)False
Q4) It was the rapid and system-wide deleveraging that contributed to the downward spiral of the 2008 financial crisis.
A)True
B)False
To view all questions and flashcards with answers, click on the resource link above.