Economics for Business Test Preparation
Course Introduction
Economics for Business provides students with a solid foundation in microeconomic and macroeconomic concepts relevant to modern business decision-making. Through the exploration of supply and demand, market structures, pricing strategies, and the influence of governmental policies, students gain an understanding of how economic forces shape organizational outcomes. The course emphasizes practical applications, equipping learners with analytical tools to interpret economic trends, assess risks and opportunities, and make informed business decisions in both domestic and international contexts.
Recommended Textbook
Macroeconomics 12th Edition by Robert J Gordon
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18 Chapters
2208 Verified Questions
2208 Flashcards
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Chapter 1: What Is Macroeconomics
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71 Verified Questions
71 Flashcards
Source URL: https://quizplus.com/quiz/29964
Sample Questions
Q1) The period of the business cycle which follows the trough is the A)recession.
B)expansion.
C)peak.
D)All of the above may follow the trough.
Answer: B
Q2) International influences have become relatively ________ important for the U.S.economy in recent decades,as we become a more ________ economy.
A)less,"open"
B)less,"closed"
C)more,"open"
D)more,"closed"
Answer: C
Q3) Fiscal policy tries to influence target variables by manipulating A)money supply.
B)interest rates.
C)government expenditures.
D)All of the above.
Answer: C
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Page 3
Chapter 2: The Measurement of Income,prices,and Unemployment
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104 Verified Questions
104 Flashcards
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Sample Questions
Q1) Suppose that steel produced this year is used to produce a car sold next year.The value of the steel ________ included in GDP this year as ________.
A)is;an intermediate good
B)is not;an intermediate good
C)is;an adjustment to inventories
D)is not;an adjustment to inventories
Answer: C
Q2) We go from personal income to personal disposable income by A)subtracting undistributed profits.
B)adding transfer payments.
C)subtracting personal income taxes.
D)subtracting depreciation.
E)subtracting personal saving.
Answer: C
Q3) Refer to above Table 2-2.The chain-weighted GDP deflator for year 2 is A)1.313.
B)1.211.
C)1.324.
D)1.280.
Answer: D
4
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Chapter 3: Income and Interest Rates: the Keynesian Cross
Model and the Is Curve
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167 Verified Questions
167 Flashcards
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Sample Questions
Q1) In Figure 3-4 above,the shift from AP to AP could have been caused by a ________ in T of ________.
A)fall,300
B)fall,180
C)fall,500
D)rise,300
E)rise,500
Answer: C
Q2) Refer to the information above.What will be the equilibrium level of GDP if taxes are reduced by 10?
A)460
B)470
C)510
D)520
Answer: A
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Page 5
Chapter 4: Strong and Weak Policy Effects in the Is-Lm
Model
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) The fiscal-policy multiplier will be greater
A)the greater is the interest responsiveness of the demand for money.
B)the smaller is the interest responsiveness of autonomous expenditures.
C)the smaller is the income responsiveness of the demand for money.
D)All of the above tend to make the fiscal-policy multiplier greater.
Q2) The money supply is controlled by the
A)New York Stock Exchange.
B)Federal Reserve System.
C)stock of gold in the economy.
D)President of the United States.
Q3) In Figure 4-5 above,suppose that real income is YB and the money market is in equilibrium.The interest rate at this point is ________ to support commodity market equilibrium,so that involuntary inventory changes are ________.
A)too low,positive
B)too low,negative
C)just right,zero
D)too high,positive
E)too high,negative
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Chapter 5: Financial Markets, financial Regulation, and Economic Instability
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52 Verified Questions
52 Flashcards
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Sample Questions
Q1) ________ occurs when a central bank purchases assets with the intention not of lowering the short-term interest rate,which is already at zero,but with the purpose of increasing bank reserves.
A)Quantitative easing
B)Fiscal incrementing
C)Loan originating
D)Fiscal easing
Q2) The ratio of the liabilities of a financial institution to equity capital is called A)leverage.
B)assets.
C)liabilities.
D)equity.
Q3) Subprime mortgages refer to the mortgages issued
A)by low rating financial institutions.
B)at an interest rate below prime rate.
C)to borrowers with low incomes and poor credit histories.
D)by government
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Page 7
Chapter 6: The Government Budget, the Government Debt, and the Limitations of Fiscal Policy
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149 Verified Questions
149 Flashcards
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Sample Questions
Q1) Suppose the government borrows to purchase military ammunition which is immediately used up in target practice.The rate of return on this investment is ________,and in this case the government debt ________ a burden on future taxpayers.
A)r,is not
B)r,is
C)0,is not
D)-r,is not
E)-r,is
Q2) A prominent postwar pattern of U.S.government budget deficits was broken in 1983-1990 as
A)recession was accompanied by a shrinking deficit.
B)recession was accompanied by a growing deficit.
C)recovery from recession was accompanied by a shrinking deficit.
D)recovery from recession was accompanied by a growing deficit.
Q3) The clearest indicator of a switch to a less expansionary fiscal policy is a
A)rise in the actual surplus.
B)fall in the actual surplus.
C)rise in the natural employment surplus.
D)fall in the natural employment surplus.
Page 8
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Chapter 7: International Trade, exchange Rates, and Macroeconomic Policy
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156 Verified Questions
156 Flashcards
Source URL: https://quizplus.com/quiz/29979
Sample Questions
Q1) In the 1970s and 1980s,the real exchange rate of the dollar ________,which is ________ PPP theory.
A)fluctuated widely,consistent
B)fluctuated widely,inconsistent C)was nearly constant,consistent D)was nearly constant,inconsistent
Q2) Which of the following are differences between the Fed and the European Central Bank which explain the slow response of the ECB to the economic slowdown in Europe?
A)The ECB is unable to compromise between the needs of high and low unemployment nations like France and Ireland.
B)The ECB has many policy targets.
C)The ECB inflation target includes energy costs which cause it to be more likely to raise interest rates when energy costs rise.
D)All of the above.
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9
Chapter 8: Aggregate Demand, aggregate Supply, and the Great Depression
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155 Verified Questions
155 Flashcards
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Sample Questions
Q1) Which of the following statements regarding the Japanese deflation which began in 1992 is incorrect?
A)The growth rate of nominal GDP has fallen dramatically.
B)The growth rate of real GDP has remained fairly stable.
C)The GDP deflator has fallen significantly.
D)All of the above.
Q2) According to the classical economists when output Y rises above the natural rate of employment,wages and prices would
A)fall causing output to rise;unemployment would be permanent.
B)rise causing output to rise;increased employment would be temporary.
C)rise causing output to fall;increased employment would be temporary.
D)fall causing output to fall;unemployment would be temporary.
Q3) If autonomous spending does NOT respond to changes in the interest rate,the resulting ________ IS curve implies that an economy ________ self-correct.
A)horizontal,will instantly
B)horizontal,can fail to
C)vertical,will instantly
D)vertical,can fail to
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Chapter 9: Inflation: Its Causes and Cures
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191 Verified Questions
191 Flashcards
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Sample Questions
Q1) From a long-run equilibrium with p = pe = 0,suppose x rises permanently to 8 and pe never rises from zero.The economy will come to rest
A)on its LP curve with p = 8.
B)at p = 0 and Y = 108.
C)back at p = 0 and Y = 100.
D)on its SP curve at p = 8.
E)on its SP curve at p = 4 and Y = 104.
Q2) Suppose that members of Congress and the President believe that the natural rate of unemployment is 2% but in fact it is 6%,and employing fiscal policy they increase AD each time unemployment rises above 2%.The underestimation of the natural rate combined with adaptive expectations will
A)lead to continuous inflation by shifts in both AD and SAS.
B)lead to a continuous inflation by a shift in only AD.
C)lead to a continuous inflation by a shift in only SAS.
D)lead to continuous increases in output and unemployment.
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11
Chapter 10: The Goals of Stabilization Policy: Low Inflation and
Low Unemployment
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132 Verified Questions
132 Flashcards
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Sample Questions
Q1) Applying elementary economics,mismatch unemployment should fall when relative wages
A)rise.
B)fall.
C)are more flexible.
D)are less flexible.
Q2) Indexation is designed to
A)moderate the costs of inflation,not inflation itself.
B)rapidly reduce inflation.
C)reduce the natural rate of unemployment.
D)rapidly reduce inflationary expectations.
Q3) Excessive unemployment benefits and government overregulation are part of the ________ hypothesis of why a nation's ________ unemployment rate can be high.
A)hysteresis,cyclical
B)hysteresis,natural
C)structuralist,cyclical
D)structuralist,natural
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Page 12
Chapter 11: The Theory of Economic Growth
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113 Verified Questions
113 Flashcards
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Sample Questions
Q1) Since 1973,the average annual growth rate of real GDP per person in the United States has been slower than the average annual growth rate in
A)Germany and Canada.
B)France and Italy.
C)Japan and United Kingdom.
D)France and Canada.
Q2) The one determinant of the growth of capital per person that can be affected by policy is the
A)depreciation rate.
B)saving rate.
C)money supply growth.
D)rate of technological change.
Q3) Which of the following "factors of production" is included in the neoclassical growth theory?
A)skills and education of the workforce
B)cultural attitudes toward work
C)effectiveness of the legal system in protecting property rights
D)labor measured in units of effective labor
E)all of the above
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Page 13
Chapter 12: The Big Questions of Economic Growth
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74 Verified Questions
74 Flashcards
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Sample Questions
Q1) Gordon notes that along with slow labor productivity growth in the period 1973-1995,real wages also grew slowly.What sort of productivity shocks are consistent with this explanation of the link between real wage growth and the growth of labor productivity?
A)productivity shocks which decrease supply of labor given the demand for labor
B)productivity shocks which increase supply of labor given the demand for labor
C)productivity shocks which increase demand for labor given the supply of labor
D)productivity shocks which decrease demand for labor given the supply of labor
Q2) How does Gordon integrate the exogenous factors affecting economic growth into the production function for an economy?
A)Y = A(G,R,H)F(K,P,T,N)
B)Y = A(G,P,T)F(K,R,H,N)
C)Y = A(G,P,T,R)F(K,H,N)
D)Y = A(P,T,K)F(G,R,H,N)
Q3) The formula for the growth rate of multifactor productivity is
A)a = y + bk + (1 - b)n.
B)y = a + bk + bn.
C)a = y - bk - (1 - b)n.
D)y = a - b/k(1 - b)n.
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Page 14
Chapter 13: Money,banks,and the Federal Reserve
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148 Verified Questions
148 Flashcards
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Sample Questions
Q1) The simplest money-creation multiplier is equal to A)eD.
B)H/e.
C)1/e.
D)e/H.
E)H/D.
Q2) Tobin's generalized portfolio approach to the demand for money is based on the assumption that
A)money is needed for transactions.
B)all interest-bearing assets are risky.
C)the levels of risk and return vary among assets.
D)variations in wealth have little effect on asset demands.
Q3) Suppose that you are the central bank president in a developing country which is predominantly agricultural.During planting season,c the proportion of demand deposits held as cash doubles,but you wish to keep the money supply constant.You may decide to
A)reduce e and/or buy securities and/or lower the rediscount rate.
B)increase e and/or buy securities and/or lower the rediscount rate.
C)reduce e and/or sell securities and/or raise the rediscount rate.
D)increase e and/or sell securities and/or raise the rediscount rate.
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Chapter 14: The Goals, tools, and Rules of Monetary Policy
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135 Verified Questions
135 Flashcards
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Sample Questions
Q1) "Monetarism" advocates a monetary policy
A)at the full discretion of the Fed.
B)that fixes the growth rate of money.
C)that fixes a constant short-term interest rate.
D)that fixes the growth rate of real GDP.
E)that fixes the unemployment rate.
Q2) Observers of the economy often complain that indicators of economic activity are often contradictory.This is an example of the ________ lag.
A)data
B)recognition
C)legislative
D)effectiveness
Q3) Economists who support a monetary rule as opposed to an activist monetary policy believe that the effectiveness lag in monetary policy is
A)short and variable,policy changes affect AD quickly and are predictable.
B)zero,policy changes have an immediate effect on expenditures.
C)long and variable,policy changes affect AD slowly over time and are unpredictable.
D)long,but predictable.
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Chapter 15: The Economics of Consumption Behavior
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103 Verified Questions
103 Flashcards
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Sample Questions
Q1) During the 1990s the household savings rate in the United States as measured by NIPA
A)increased dramatically from two percent to almost six percent.
B)fell sharply and was only 0.7% by the year 2004.
C)increased only slightly because the federal budget deficit was finally eliminated.
D)fell to two percent when a federal budget surplus appeared.
Q2) Suppose a person calculates her permanent income by adaptive expectations.Last year's permanent income was 38,000,this year's actual income is 41,000,j = 0.30,and k = 0.86.What is her consumption expenditure this year?
A)30,422
B)12,174
C)40,226
D)38,774
E)33,454
Q3) The stock market boom during the 1990s
A)boosted consumption relative to income.
B)depressed the percentage of disposable income saved by households.
C)may explain the behavior of household savings during that decade.
D)All of the above.
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Page 17
Chapter 16: The Economics of Investment Behavior
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111 Verified Questions
111 Flashcards
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Sample Questions
Q1) In a simple macroeconomic model,replacing the assumption of exogenous investment with the accelerator theory of investment ________ the effect on equilibrium GDP of fiscal policy changes,and ________ the effect on equilibrium GDP of changes in autonomous consumption.
A)increases,increases
B)increases,dampens
C)dampens,increases
D)dampens,dampens
Q2) Residential investment did NOT decline in the recession which began in A)1973.
B)1981.
C)1990.
D)2001.
Q3) By the accelerator hypothesis,if a firm's actual sales jump in one period to a higher maintained level,that firm's net investment
A)also jumps in one period to a higher maintained level.
B)gradually drifts upward to a higher maintained level.
C)jumps upward and then falls back to zero.
D)jumps upward and then falls back part of the way.
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Page 18
Chapter 17: New Classical Macro and New Keynesian Macro
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170 Verified Questions
170 Flashcards
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Sample Questions
Q1) The RBC model tells us that
A)as the real wage rate rises,the amount of labor supplied and thus output produced falls.
B)as the price level rises,the real wage rises,thus raising the amounts of labor supplied and output produced.
C)as the real interest rate rises,the amount of labor supplied and thus output produced rises.
D)as the price level rises above the expected price level,actual output rises above the natural real GDP.
Q2) Faced with a decrease in the demand for its product,a monopolist will lower prices and maintain output at its previous level if
A)the gain in profit is less than the increase in real wages paid.
B)the gain in profit is less than the decrease in real wages paid.
C)the gain in profit is less than the menu costs.
D)the gain in profit is greater than the increase in menu costs.
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Chapter 18: Conclusion: Where We Stand
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29 Verified Questions
29 Flashcards
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Sample Questions
Q1) The U.S.economy in the 1960s was dominated by a massively expansionary ________ policy that ended up ________.
A)monetary,overstimulating the economy
B)monetary,being impotent in ending the long stagnation of that decade
C)fiscal,overstimulating the economy
D)fiscal,being impotent in ending the long stagnation of that decade
Q2) The depth of the 1981-1982 recession caused the Fed to abandon its experiment in targeting ________ and move to what now appears to be ________ growth rule.
A)money growth,an interest rate
B)money growth,a real GDP growth
C)money growth,an unemployment rate
D)interest rates,a high-powered money growth
E)interest rates,a nominal GDP growth
Q3) When did the Fed fail to engage in a pre-emptive strike to keep the economy at or near the natural rate of unemployment?
A)1994
B)1998
C)2001
D)None of the above.The Fed acted in each of these years.
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Page 20