Survey of Economics Practice Exam
Course Introduction
Survey of Economics provides students with an introduction to fundamental economic principles and concepts, encompassing both microeconomics and macroeconomics. The course covers topics such as supply and demand, market structures, consumer behavior, the role of government, national income, inflation, unemployment, and monetary and fiscal policy. Designed for students from diverse academic backgrounds, this course emphasizes real-world applications, encouraging critical thinking about economic issues and decision-making in personal, business, and policy contexts.
Recommended Textbook
Economics Private and Public Choice 14th Edition by
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Page 2
David A. Macpherson
Chapter 1: The Economic Approach
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Sample Questions
Q1) Your professor loves her work,teaching economics.She has been offered other positions in the corporate world that would increase her income by 25 percent,but she has decided to continue working as a professor.Her decision would not change unless
A)the marginal cost of teaching increased.
B)the marginal benefit of teaching increased.
C)the marginal cost of teaching decreased.
D)the marginal benefit of a corporate job decreased.
Answer: A
Q2) Which of the following is a positive economic statement?
A)Government control of rent is a fair way to help poor people afford housing.
B)Government control of rent keeps landlords from charging too much rent.
C)Government control of rent decreases the number of new apartments constructed.
D)Government control of rent is an injustice.
Answer: C
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Chapter 2: Asome Tools of the Economist
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Sample Questions
Q1) Which of the following is true regarding value,transaction costs,and exchange?
A)Middlemen can be viewed as agents who create value by reducing transaction costs and,thereby,facilitating gains from exchange.
B)Middlemen fail to create value since they do not expand the supply of physical goods.
C)A good or service has a given value regardless of who uses it or how it is used.
D)Voluntary exchange reduces value by channeling goods into the hands of people who value them least.
Answer: A
Q2) According to the law of comparative advantage,both individuals and nations will be able to produce a larger joint output if each productive activity is undertaken by
A)the high opportunity cost producer.
B)the low opportunity cost producer.
C)the producer who is able to hire workers at the lowest wage.
D)the party that can complete the productive activity most rapidly.
Answer: B
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Chapter 3: Asupply,demand,and the Market Process
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Sample Questions
Q1) If coffee and cream are complements,an increase in the price of coffee will cause
A)the demand for cream to increase.
B)the demand for cream to fall.
C)the demand for coffee to fall.
D)no change in the demand for cream;only quantity demanded would be affected.
Answer: B
Q2) In the textbook market,a rise in consumer income,other things being equal,will cause
A)the demand curve for textbooks to shift to the left.
B)the demand curve for textbooks to shift to the right.
C)a downward movement along the demand curve for textbooks.
D)an upward movement along the demand curve for textbooks.
Answer: B
Q3) Refer to Figure 3-20.If 40 units of the good are being bought and sold,then
A)cost to sellers is equal to the value to buyers.
B)the value to buyers is greater than the cost to sellers.
C)the cost to sellers is greater than the value to buyers.
D)producer surplus would be greater than consumer surplus.
Answer: B
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Chapter 4: Asupply and Demand: Applications and Extensions
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Sample Questions
Q1) Refer to Figure 4-12.The supply curve S and the demand curve D indicate initial conditions in the market for college textbooks.A new government program is implemented that grants students a $30 per textbook subsidy on every textbook they purchase,shifting the demand curve from D to D .Which of the following is true for this subsidy given the information provided in the exhibit?
A)Textbook buyers will receive an actual benefit of $10 from the subsidy,while textbook sellers will receive an actual benefit of $20 from the subsidy.
B)Textbook buyers will receive an actual benefit of $20 from the subsidy,while textbook sellers will receive an actual benefit of $10 from the subsidy.
C)Textbook buyers will receive the full $30 benefit from the subsidy.
D)Textbook sellers will receive the full $30 benefit from the subsidy.
Q2) If the federal government placed a 50 cent per pack excise tax on cigarette manufacturers,and if as a result,the price to consumers of a pack of cigarettes went up by 40 cents,the
A)actual burden of this tax falls mostly on consumers.
B)actual burden of this tax falls mostly on manufacturers.
C)actual burden of the tax would be shared equally by producers and consumers.
D)tax would clearly be a progressive tax.
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Chapter 5: Difficult Cases for the Market and the Role of Government
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Sample Questions
Q1) Which of the following would be a protective function of government?
A)providing national defense
B)undertaking income redistribution
C)providing national parks
D)monopolizing mail delivery
Q2) Because the benefits derived from an activity decline as it is expanded,it is generally wise to
A)undertake all actions that generate benefits.
B)expend the smallest possible amount of resources on this type of activity.
C)avoid any activity with this characteristic.
D)stop the activity before perfection is reached..
Q3) Which English philosopher argued that people own themselves and,as a result,own the fruits of their labor,and thus,the role of government is to protect these natural rights of individuals?
A)Karl Marx
B)John Locke
C)Immanuel Kant
D)Ralph Nader
Q4) Is education a public good? Focus on whether it meets the two criteria for being a public good.
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Chapter 6: The Economics of Collective Decision-Making
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Sample Questions
Q1) Legislators often gain by bundling a number of projects benefiting local districts at the expense of general taxpayers together on a single bill.Such legislation is called
A)market failure legislation.
B)the rational-ignorance effect.
C)public-goods legislation.
D)pork-barrel legislation.
Q2) Government decisions tend to be biased toward actions that have A)current benefits that are easily observable and future costs that are difficult to identify.
B)current benefits and future costs that are both difficult to identify.
C)future costs that are easily observable.
D)clear benefits to the poor at no costs to the wealthy.
Q3) Payments that users (consumers)are required to make if they want to receive certain services provided by the government are called A)tax deductions.
B)transfer payments.
C)user charges.
D)sales taxes.
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8
Chapter 7: Ataking the Nations Economic Pulse
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Sample Questions
Q1) Refer to Table 7-12.Measured in terms of 2000 prices,real GDP in 2005 was A)600.
B)750.
C)900.
D)1,333.
Q2) Refer to Table 7-12.Between 2000 and 2005,the general level of prices increased by approximately
A)16.7 percent.
B)33.3 percent.
C)66.7 percent.
D)133.3 percent.
Q3) The Liebowitz family purchased a used two-year-old sofa at Swanson's Used Furniture Store in March of 2011.How will this affect the 2011 GDP?
A)Only the sale value of the used sofa will be included in the 2011 GDP.
B)Only the commission received by the salesman will be included in the 2011 GDP.
C)The sale will have no effect on the 2011 GDP.
D)Both the sale value of the sofa and the commission will be included in the 2011 GDP.
Q4) Explain the two approaches to calculating GDP.
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Page 9
Chapter 8: Economic Fluctuations, unemployment, and Inflation
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Sample Questions
Q1) Potential output is the
A)maximum rate of output that can ever be achieved.
B)highest rate of output that has ever been achieved in the past.
C)maximum sustainable output level consistent with the economy's resource base and current institutions.
D)the rate of output present when the general level of prices is unstable.
Q2) Which of the following groups will generally have the highest rate of unemployment?
A)women over the age of 25
B)men over the age of 25
C)teenagers
D)college graduates
Q3) When economists say that full employment is present,they mean that A)no one is unemployed.
B)everyone who would like to have a job is employed.
C)the rate of unemployment accompanying normal "shopping" (by employees and employers)in a world of imperfect information is present.
D)the rate of unemployment that reflects the impact of an economic contraction is present.
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Chapter 9: Aan Introduction to Basic Macroeconomic
Markets
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Sample Questions
Q1) The supply of resources,level of technology,and the quality of an economy's institutional arrangements provide the constraint that determines the shape of the
A)short-run aggregate supply curve.
B)long-run aggregate supply curve.
C)supply of loanable funds.
D)aggregate demand curve.
Q2) When the actual rate of unemployment is less than the natural rate of unemployment,the economy
A)operates at an output greater than its long-run potential.
B)operates at its maximum sustainable output.
C)must also be experiencing stable prices (zero inflation).
D)operates at an output less than its long-run potential.
Q3) Controlling the money supply to achieve desired macroeconomic goals is called A)monetary policy.
B)cyclical policy.
C)fiscal policy.
D)industrial policy.
Q4) What are the three reasons why the aggregate demand curve slopes downward? Give an example of each.
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Chapter 10: Dynamic Change, economic Fluctuations, and the Ad-As Model
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Sample Questions
Q1) As shown in Figure 10-18,and assuming the aggregate demand curve shifts from AD to AD ,the full-employment level of real GDP is
A)$10 billion.
B)$4 billion.
C)$100 billion.
D)unable to be determined.
Q2) Given the aggregate demand and aggregate supply conditions depicted in Figure 10-5,which of the following is the most likely occurrence?
A)an increase in resource prices that will stimulate aggregate demand and direct the economy to long-run equilibrium
B)a decrease in resource prices that will reduce costs and shift SRAS to the right,directing the economy to long-run equilibrium
C)a continuation of this price level and output in the long run
D)a shift in LRAS to the left as the result of an increase in the expected inflation rate
Q3) Which will cause a larger short-run increase in prices: an anticipated or unanticipated increase in aggregate demand? Will they cause the same increase in prices in the long run?
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Page 12
Chapter 11: Fiscal Policy: the Keynesian View and Historical Perspective
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Sample Questions
Q1) Unemployment compensation payments
A)rise during a recession and thereby help stimulate consumption.
B)rise during a recession and thereby retard consumption.
C)rise during economic expansion and thereby help stimulate consumption.
D)rise during economic expansion and thereby retard consumption.
Q2) The marginal propensity to consume (MPC)is
A)consumption expenditures divided by saving.
B)consumption expenditures divided by disposable income.
C)consumption expenditures divided by personal income.
D)additional consumption expenditures divided by additional disposable income.
Q3) During normal times,the multiplier effect of an increase in government spending financed by taxes will be
A)strengthened,if the additional spending flows into sectors of the economy where the unemployment rates are low.
B)weakened by an offsetting reduction in spending due to the higher taxes.
C)unaffected,as long as the higher taxes are in the future.
D)strengthened,if corporate tax rates are increased and personal tax rates remain unchanged.
Q4) How does Keynesian economic theory recommend that fiscal policy be conducted?
Page 13
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Chapter 12: Fiscal Policy, incentives, and Secondary Effects
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Sample Questions
Q1) The crowding-out effect stresses that
A)an increase in government expenditures will stimulate aggregate demand and,thereby,help to prevent recessions.
B)an increase in taxes will restrain aggregate demand and,thereby,help to control inflation.
C)additional government borrowing to finance a larger deficit will increase the demand for loanable funds,causing real interest rates to rise.
D)a budget deficit is a highly effective tool with which to combat recessions.
E)both a and d are correct.
Q2) Crowding out refers to the situation in which
A)borrowing by the federal government raises interest rates and causes firms to invest less.
B)foreigners sell their bonds and purchase U.S.goods and services.
C)borrowing by the federal government causes state and local governments to lower their taxes.
D)increased federal taxes to balance the budget causes interest rates to increase and consumer credit to decrease.
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14
Chapter 13: Amoney and the Banking System
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Sample Questions
Q1) When the monetary authorities expand the supply of money rapidly,
A)its purchasing power tends to increase.
B)holding money is a poor method of storing value.
C)the long-run sustainable real growth rate of the economy will tend to increase.
D)the prices of goods and services will generally decline.
Q2) If the Fed wanted to shift to a restrictive monetary policy and reduce the money supply,it could
A)increase the interest rate paid on excess reserves encouraging banks to extend more loans.
B)decrease the interest rate paid on excess reserves encouraging banks to extend more loans.
C)decrease the interest rate paid on excess reserves encouraging banks to hold excess reserves rather than extend more loans.
D)increase the interest rate paid on excess reserves encouraging banks to hold excess reserves rather than extend more loans.
Q3) How do changes in open market operations alter the monetary base,and how do changes in the monetary base translate to changes in the money supply?
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Chapter 14: Modern Macroeconomics and Monetary Policy
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Sample Questions
Q1) Which one of the following factors would reduce the quantity of money balances that households would want to hold?
A)higher prices
B)a rise in inflation
C)higher nominal interest rates
D)an expansion in nominal income (nominal GDP)
Q2) Why do individuals choose to hold part of their wealth in money rather than in other types of assets? Discuss the benefits and costs of holding money.
Q3) A decrease in the nominal interest rate would
A)encourage people to hold larger money balances.
B)encourage people to hold smaller money balances.
C)force the Fed to increase the money supply.
D)cause households to decrease consumption.
Q4) When the Fed unexpectedly decreases the money supply,
A)real interest rates will tend to decline.
B)the exchange rate value of the dollar will tend to appreciate.
C)aggregate demand will tend to increase.
D)there is generally no impact on the economy.
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Page 16
Chapter 15: Stabilization Policy, output, and Employment
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Sample Questions
Q1) Activists believe that
A)discretionary changes in macroeconomic policy can help smooth the ups and downs of the business cycle.
B)balancing the federal budget is of primary importance to economic stability.
C)the economy's self-correcting mechanism,if not stifled by perverse policies,will prevent prolonged periods of high unemployment.
D)the M1 money supply should be increased at a steady annual rate.
Q2) When persons overestimate inflation (when actual inflation is lower than was expected),actual unemployment will
A)exceed the natural rate of unemployment.
B)equal the natural rate of unemployment.
C)fall below the natural rate of unemployment.
D)decrease if the government is running a budget deficit and increase if a budget surplus is present.
Q3) What is the index of leading indicators,and what is it used for?
Q4) How has macro-policy changed since the 1970s? How have the views of economists on the trade-off between inflation and unemployment changed?
Q5) Explain two reasons why economic forecasting can only be of limited use.
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Chapter 16: Creating an Environment for Growth and Prosperity
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Q1) Which of the following will discourage investment?
A)well-defined property rights
B)monetary instability
C)a low and steady rate of inflation
D)low tax rates
Q2) An increase in real per capita income will generally lead to
A)a cleaner environment and more time for recreation.
B)a reduction in life expectancy because working conditions are less desirable.
C)an increase in the number of hours worked by residents.
D)an increase in real GDP that is less rapid than the increase in population
Q3) The growth records of Japan and Hong Kong during the last fifty years indicate that an economy can grow rapidly without
A)securely defined property rights.
B)abundant domestic natural resources.
C)significant capital formation.
D)adopting modern technology.
Q4) Why is competition important? Do business firms operating in competitive markets have a strong incentive to serve the interests of consumers? Do business owners have to care about the interests of others if they are going to provide them with helpful products and services?
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Chapter 17: Institutions,policies,and Cross-Country
Differences in Income and Growth
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Q1) For most less-developed countries,the proven technologies of the high-income countries are readily available.Why hasn't this always led to economic growth for these low-income countries?
Q2) According to data on GDP growth between 1980 and 2009,
A)poor nations stagnated,while the rich nations continued to grow.
B)poor nations grew rapidly,while the rich nations stagnated.
C)most of the world's rapidly growing countries were located in Africa.
D)many poor nations grew more rapidly than wealthy nations,while others continued to stagnate.
Q3) Which of the following economies was most economically free during 1980-2009?
A)United States
B)Brazil
C)Japan
D)Hong Kong
Q4) Which country had the most rapid growth rate of real income per person during 1980-2009?
A)Japan
B)China
C)United States
D)Russia
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Chapter 18: Gaining From International Trade
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Q1) Trade restrictions that limit the sale of low-price foreign goods in the U.S.market
A)increase the real income of Americans.
B)benefit domestic producers in the protected industries at the expense of consumers and domestic producers in export industries.
C)help channel more of our resources into producing goods for which we are a low-cost producer.
D)reduce unemployment and increase the productivity of American workers.
Q2) Relative to a no-trade situation,if the United States exported wheat,the domestic price of wheat
A)would rise,and domestic output would also rise.
B)would decline,but the domestic output would rise.
C)would decline,and domestic output would decline also.
D)would rise,but domestic output would fall.
Q3) If tariffs are decreased,the long-run effect is most likely to be
A)a decrease in both U.S.imports and exports.
B)an increase in both U.S.imports and exports.
C)a decrease in U.S.imports and an increase in U.S.exports.
D)an increase in U.S.imports and a decrease in U.S.exports.
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Chapter 19: International Finance and the Foreign Exchange Market
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Q1) Which of the following would most likely cause a nation's currency to depreciate?
A)an increase in exports coupled with a decline in imports
B)a slower inflation rate than those of its trading partners
C)lower domestic real interest rates
D)lower real interest rates abroad
Q2) Which one of the following would create a demand for a foreign currency and supply of dollars in the foreign exchange market?
A)the spending of French tourists in the United States
B)the purchase of Japanese automobiles by American consumers
C)the sale of U.S.computer equipment to a French buyer
D)the purchase of a U.S.shoe factory by a Mexican investor
Q3) Figure 18-3 displays the international currency market for yen in terms of dollars and dollars in terms of yen.The supply curve in graph (A)is comprised of
A)U.S.citizens attempting to purchase Japanese-made goods.
B)Japanese attempting to purchase U.S.-made goods.
C)U.S.businesses attempting to sell to the Japanese.
D)Japanese businesses attempting to sell to the U.S.
E)the U.S.government attempting to unload dollars to the international market.
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Chapter 20: Consumer Choice and Elasticity
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Sample Questions
Q1) Suppose you are the manager of a local water company,and you are instructed to get consumers to reduce their water consumption by 10 percent.If the price elasticity of demand for water is -.25,by how much would you have to raise the price of water?
A)10 percent
B)25 percent
C)40 percent
D)100 percent
Q2) The demand for Chocolate Chip Cookie Dough ice cream is likely quite elastic because
A)ice cream must be eaten quickly.
B)this particular flavor of ice cream is viewed as a necessity by many ice-cream lovers.
C)the market is broadly defined.
D)other flavors of ice cream are good substitutes for this particular flavor.
Q3) A good with a high income elasticity is generally considered to be
A)an inferior good.
B)a luxury good.
C)a necessity.
D)inexpensive,relative to other goods.
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Chapter 21: Acosts and the Supply of Goods
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Q1) Which of the following is most likely to be true of economic and accounting profits?
A)Economic profits are less than accounting profits.
B)Accounting profits are less than economic profits.
C)Economic profits plus accounting profits equal zero.
D)Accounting profits minus economic profits equal zero.
Q2) Costs that a firm remaining in business will still incur even if it halts current production are called
A)fixed costs.
B)variable costs.
C)implicit costs.
D)explicit costs.
Q3) Which of the following is the best example of a fixed cost for a business?
A)the insurance payment for the protection of a building owned by the firm
B)shipping charges for the delivery of products
C)managerial salaries paid
D)the total of medical insurance premiums on the firm's employees
Q4) Mr.Jones pays his employees by the hour.He believes they purposely work slowly to maximize their personal satisfaction.What can he do to provide them with a stronger incentive to work efficiently?
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Chapter 22: Aprice Takers and the Competitive Process
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Q1) Suppose the demand for large (and therefore high-gasoline consumption)cars decreases sharply during an energy crisis.The most likely market adjustment would be
A)a sharp rise in the price of large cars in the short run as people rush to purchase these vehicles before producers cut back on manufacturing them.
B)a moderate increase in short-run prices,followed by a larger long-run price increase as the supply of large cars is depleted.
C)lower short-run prices,which will lead to an expansion in the number of large cars sold.
D)a decrease in the price of large cars in the short run,leading to a reduction in output,which will moderate the price decline in the long run.
Q2) The competitive price-taker model is usually used to illustrate the competitive process.If firms cannot choose their price,where is the competition?
Q3) If the demand for pizza falls,pizza suppliers will suffer economic losses,and some firms will leave the industry.Why is this considered good? Shouldn't we feel sorry for these business owners?
Q4) Why is it considered "ideal" for price to just equal marginal cost?
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24
Chapter 23: Price-Searcher Markets With Low Entry Barriers
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Q1) Monopolistic competition is a term referring to markets characterized by A)price-taker firms.
B)price-searcher firms in markets with low barriers to entry.
C)price-searcher firms in markets with high barriers to entry.
D)oligopoly,a small number of sellers.
Q2) A contestable market is one in which
A)there is a competitive (normal)profit rate and few firms operating.
B)the costs of entry and exit are high.
C)each firm produces an identical product.
D)the fixed costs of firms in the market are also sunk costs.
Q3) Given the cost and demand conditions shown in Figure 10-5 for the competitive price-searcher firm,what is the level of output it should produce to maximize its profit?
Q4) What type of industry is the market for grocery products? Is over-capacity present?
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Chapter 24: Aprice-Searcher Markets With High Entry
Barriers
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Q1) The demand and cost conditions in an industry are as depicted in Figure 11-7.In the viewpoint of economic efficiency,what would the ideal price and output be?
A)price,$7;quantity produced,100
B)price,$10;quantity produced,170
C)price,$14;quantity produced,100
D)price,$7;quantity produced,200
Q2) Given the cost and revenue curves illustrated in Figure 11-10,what price will a profit-maximizing monopolist charge?
A)P
B)P
C)P
D)P
Q3) A monopoly is most likely to emerge in a market when
A)the producers in the market have U-shaped average total cost curves.
B)the price elasticity of demand for the product is high.
C)the cost of entry and exit into the market is low.
D)economies of scale are large relative to market demand.
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Page 26
Chapter 25: The Supply of and Demand for Productive Resources
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Q1) If steel workers obtain a substantial wage increase,employment in the steel industry will be likely to fall the most if
A)the demand curve for steel is highly inelastic.
B)the demand curve for steel is highly elastic.
C)the demand curve for steel workers is highly inelastic.
D)there are no good substitutes for steel.
Q2) What happens to labor supply in the pear-picking market when the wage paid to apple pickers increases?
A)The labor supply will stay unchanged until the wages paid to pear pickers change.
B)The labor supply will decrease.
C)The labor supply will increase.
D)The labor supply may fall or rise,depending on the price of pears.
Q3) The marginal product of labor is the
A)value marginal product of labor multiplied by the price of the good produced.
B)total output of labor divided by the quantity of labor used.
C)additional output resulting from employing one additional unit of labor.
D)same as the marginal revenue product of labor in price-taker markets.
Q4) There is an Italian soccer player who makes more than $10 million a year.Why?
Page 27
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Chapter 26: Earnings, productivity, and the Job Market
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Q1) Suppose that an employer hires workers with blue eyes and workers with brown eyes.Each type of worker has the same productivity.Which of the following is correct if the employer discriminates by offering blue-eyed workers lower wages than brown-eyed workers?
A)The employer will be just as cost efficient as a nondiscriminating employer.
B)The employer will face higher costs than a nondiscriminating employer.
C)The employer will have lower costs.
D)The employer will have higher profits.
E)Both a and c are correct.
Q2) Millionaires tend to be older than the general population because
A)older workers generally have more education than younger workers.
B)many achieve millionaire status by saving from a relatively modest income,and this will take a lengthy period of time.
C)the earnings of most people peak during the retirement phase of life.
D)older people have less to do,and therefore,they have more time to come up with innovative ideas.
Q3) Joanne states: "The best way to increase the wages of workers is to increase worker productivity." Is Joanne correct? Why or why not?
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Chapter 27: Investment, the Capital Market, and the Wealth of Nations
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Source URL: https://quizplus.com/quiz/26265
Sample Questions
Q1) If an individual or family began at age 25 paying funds into a tax-free investment account or pension earning a 7 percent real return,how much would they have to save annually in order for the funds to be worth a million dollars (measured in the purchasing power of today's dollar)when they reach age 65?
A)approximately $5,000 annually
B)approximately $10,000 annually
C)approximately $20,000 annually
D)approximately $50,000 annually
Q2) The procedure used to calculate the present value of future income is called
A)indirect production.
B)investment tax shelter planning.
C)discounting.
D)amortizing.
Q3) If the money rate of interest is 12 percent and the real rate of interest 7 percent,the inflationary premium is
A)5 percent.
B)7 percent.
C)12 percent.
D)19 percent.
Page 29
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Chapter 28: Income Inequality and Poverty
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Q1) Which of the following limits the ability of the current system of transfer programs to increase the incomes of the able-bodied poor?
A)The high implicit marginal tax rates that accompany the current income transfer programs reduce the incentive of the poor to earn.
B)The transfer programs encourage the poor to marry and form dual-earner families.
C)The transfer programs tend to increase the wages that employers are required by law to pay for low-skill labor.
D)The transfer programs reduce the likelihood of single-parent families.
Q2) (I)Opponents to government action to reduce income inequality argue that the pattern of economic outcomes is more important than the process that generates the outcomes.
(II)Opponents of government action to reduce income inequality argue that the proposed solutions will retard economic growth.
A)Both I and II are true.
B)Both I and II are false.
C)I is true;II is false.
D)I is false;II is true.
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Page 30
Chapter 29: Government Spending and Taxation
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Q1) Which of the following is true?
A)Real federal spending per person was approximately 50 times higher in 1900 than 1800.
B)Real federal spending per person was approximately 80 times higher in 2010 than 1916.
C)Real federal spending per person grew slowly under the Reagan Administration during the 1980s,but it increased rapidly under the Clinton administration in the 1990s.
D)In recent years,government expenditures at the state and local levels have been greater than government spending at the federal level.
Q2) OECD data for 1960 through 1999 indicates that a 10 percent increase in government expenditures as a percent of GDP
A)increases economic growth by about 5 percent.
B)increases economic growth by about 2 percent.
C)has no effect on economic growth.
D)reduces economic growth by about 1 percent.
Q3) How have the size and functions of government in the United States changed during the last century?
Q4) Discuss how size of government can negatively affect economic growth.
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Chapter 30: The Economics of Social Security
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Q1) Most married women who choose to work can expect to receive
A)substantially higher Social Security benefits than if they had not worked and thus not paid into the system.
B)substantially lower Social Security benefits than if they had not worked and thus not paid into the system.
C)approximately the same Social Security benefits than if they had not worked and thus not paid into the system.
D)benefits based on their husbands' salary plus 50 percent of their own salary.
Q2) Which of the following is true?
A)The regressive nature of the Social Security benefit formula works to the disadvantage of blacks and other groups with below-average earnings.
B)Social Security works to the disadvantage of blacks and other groups with below-average life expectancy.
C)Blacks derive a higher rate of return from their Social Security taxes than whites.
D)Hispanics derive a lower rate of return from their Social Security taxes than both whites and blacks.
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Chapter 31: The Stock Market: Its Function, Performance, and Potential As an Investment Opportunity
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Source URL: https://quizplus.com/quiz/26269
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Q1) The present value of $1 million to be received in the future will
A)increase if the interest rate rises.
B)increase if the payment is received at a more distant time in the future.
C)be greater than $1 million.
D)increase if the interest rate were to fall from 8 percent to 4 percent.
Q2) During the last two centuries,after adjustment for inflation,
A)corporate bonds have yielded a real return of approximately 7 percent annually,compared to a real return of about 3 percent for corporate stocks.
B)corporate stocks have yielded a real return of approximately 7 percent annually,compared to a real return of about 3 percent for bonds.
C)both corporate stocks and bonds have yielded a real rate of return of about 3 percent.
D)both corporate stocks and bonds have yielded a real rate of return of about 7 percent.
Q3) Buying shares of corporate stock tends to be more risky when
A)the stock of a single corporation is purchased.
B)the stock may have to be sold within a few months.
C)all stocks bought are in the same industry.
D)all of the above are true.
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Page 33
Chapter 32: Great Debates in Economics: Keynes Versus Hayek
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Q1) In the main chorus of the Keynes-Hayek rap lyrics,Keynes states "I want to steer markets" and Hayek replies,"I want them set free." These statements are referring to A)the tendency of Keynesians to favor government intervention and central planning and the tendency of Hayekians to favor free markets.
B)the tendency of Keynesians to favor restrictive fiscal policy and the tendency of Hayekians to favor expansionary fiscal policy.
C)the tendency of Keynesians to favor budget deficits and the tendency of Hayekians to insist on budget surpluses.
D)the tendency of Keynesians to favor fiscal policy and of Heyekians to favor monetary policy.
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34
Chapter 33: The Crisis of 2008: Causes and Lessons for the Future
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Q1) Which of the following makes it difficult for monetary policy-makers to institute policy changes in a manner that will promote economic stability?
A)Monetary policy-makers do not have sufficient tools to alter the supply of money.
B)The time lags between changes in monetary policy and when the changes exert an impact on output and prices are long and variable.
C)Monetary policy is unable to alter short-term interest rates.
D)Even though monetary policy can alter interest rates,there is little evidence that interest rates influence the demand for and prices of housing.
Q2) An SEC rule change allowing investment banks to increase the leverage of their investment capital prompted many investment banks to
A)increase the amount of assets held in relation to mortgage-backed securities being issued.
B)decrease the amount of assets held in relation to mortgage-backed securities being issued.
C)decrease the amount of mortgage-backed securities being offered.
D)reduce the ratio of mortgage loans to equity capital of the investment bank.
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Chapter 34: Lessons From the Great Depression
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Q1) Which of the following best describes the impact of fiscal policy during the Great Depression?
A)Despite the large increases in government spending as a share of GDP when the New Deal policies were initiated,the expansionary fiscal policy failed to stimulate demand.
B)Fiscal policy was focused on monetary expansion,when it should have focused on maintaining a balanced budget.
C)It is difficult to link expansionary fiscal policy with economic recovery because government spending and budget deficits were a relatively small portion of GDP prior to the beginning of World War II.
D)There is a direct correlation between increases in government spending as a share of GDP and increases in output and employment.
Q2) The rapid growth in stock prices during the 1920s was due in large part to
A)the expansionary monetary policy of the Federal Reserve.
B)the wartime demand for military equipment and supplies.
C)the artificially high value of the dollar,which eventually led to the stock market crash of 1929.
D)the technological innovations of the decade,which spurred economic growth.
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Page 36
Chapter 35: Lessons From Japan and Canada
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Sample Questions
Q1) The "catch up phenomenon" refers to
A)the ability of an economy to recover from a severe recession.
B)the ability of lower income countries to grow rapidly by emulating the practices and technology of higher income countries.
C)the likelihood of a sharp decline in asset and stock market prices following a prolonged period of economic growth.
D)the failure of low-income countries to catch up with high-income countries because no country can sustain economic growth over long periods of time.
Q2) As the U.S.recovers from the 2008-2009 recession,asset prices are not likely to rebound quickly
A)even though asset prices did rebound quickly in Japan during the 1990s.
B)because it will take time to correct the mal-investment in the housing market.
C)because there are not enough loanable funds in the banking system due to restrictive monetary policy.
D)because the supply of housing will be unable to keep up with demand,as was the case in Japan during the 1990s.
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Chapter 36: The Federal Budget and the National Debt
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Q1) What determines the creditworthiness of any organization,including the federal government?
A)the size of its debt relative to its income base
B)the interest rate at which it can borrow money
C)the length of time it has existed
D)the length of time it is expected to operate
Q2) Domestically financed deficit spending shifts the cost of government spending to future generations by
A)causing a higher future tax liability with no offsetting gains.
B)shifting the opportunity cost of the resources used by government onto future generations.
C)reducing the capital stock,lowering productivity and wages.
D)all of the above.
Q3) Refer to Table ST8-1.In the first year,this country
A)ran a deficit of $210.
B)had a surplus of $10.
C)ran a deficit of $10.
D)had a surplus of $210.
Q4) Many people assert that the national debt is not a problem because "we owe it to ourselves." Is this true?
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Chapter 37: The Economics of Healthcare
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Q1) During the last four decades,
A)the total expenditures of Americans on health care have been relatively constant.
B)the share of health-care expenditures covered by a third party (either the government or an insurance company)has increased substantially.
C)the prices of health-care services have risen but not as rapidly as the general level of prices.
D)health-care providers have lowered prices in response to the rapid increase in medical technology.
Q2) The growth of third-party payments (payments by insurers and the government)of healthcare services during the last four decades has been accompanied by
A)a reduction in expenditures on healthcare as a share of the economy.
B)an increase in the sensitivity of consumers to the prices of healthcare services.
C)persistent increases in the prices of healthcare services and rapid growth in the total expenditures on healthcare.
D)an increase in the incentive of suppliers to provide healthcare services at a low cost.
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Chapter 38: Education: Problems and Performance
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Sample Questions
Q1) The combined SAT scores of American students is
A)higher today than 40 years ago.
B)approximately the same as 40 years ago.
C)significantly lower than in 1970.
D)rising rapidly due to improved educational surroundings and technology.
Q2) Spending per elementary student in the United States is ____ than that of most developed countries,and real spending per student in American public elementary and secondary schools has ____ between 1970 and 2009.
A)greater;fallen
B)greater;risen
C)less;risen
D)less;fallen
Q3) The incentive of schools to provide a high quality education at a low cost and the incentive of parents and students to shop around for the best schools will be weakest when education is produced
A)privately but paid for by taxpayers and provided free of charge.
B)by public schools and the cost of education is covered by taxes.
C)privately and parents must purchase it with their own money.
D)by public schools and parents purchase it with their own money.
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Page 40
Chapter 39: Earnings Differences Between Men and Women
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Q1) Why is it NOT surprising that men make up the minority of college graduates?
A)Because of discrimination against women,men are able to get good jobs with only a high school degree.
B)Men are smarter than women and they do not need a higher education to be attractive to employers.
C)Given their greater physical strength,many men accept high-paying but physically demanding jobs instead of going to college.
D)Many men decide to pursue jobs in professional sports and this significantly reduces the number of males who go to college.
Q2) During the decade following the passage of the 1962 equal pay legislation and the 1964 civil rights legislation,
A)the male/female wage differential became much smaller.
B)the male/female wage differential became much larger.
C)there was little change in the earnings of women relative to men.
D)the educational choices of women and men became less similar.
Q3) Evaluate the following: "Employers who discriminate against women will have lower costs than rival firms that hire employees strictly on the basis of merit (productivity)."
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Page 41
Chapter 40: Do Labor Unions Increase the Wages of Workers
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Q1) The share of the labor force that was unionized increased from 7.4 percent in 1930 to more than 30 percent in 1955.During these 25 years,the share of national income allocated to labor (in contrast to capital)
A)increased approximately 10 percent.
B)increased 17.6 percent.
C)fell 20 percent.
D)was virtually unchanged.
Q2) Why is it that the airline pilots union will likely be stronger and more effective than the fruit pickers union?
Q3) Which of the following is not a cause of the decline in unionization in the United States?
A)deregulation in transportation and communication industries
B)increased foreign competition
C)growth in the number of smaller firms
D)an increase in the number of workers wishing to be union members
Q4) If a firm operates in a competitive industry and its unionized labor force is successful in bargaining for a wage increase,where is the firm likely to get the money to pay the higher wages?
Q5) In a strike,what does the union have to lose? What does management lose?
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Chapter 41: The Question of Resource Exhaustion
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Sample Questions
Q1) An example of a renewable resource is
A)coal.
B)oil.
C)timber.
D)diamonds.
Q2) Predictions of severe shortages due to impending natural resource depletion
A)are widely accepted by resource economists even though such predictions are a relatively new occurrence.
B)have been wrong in the past,but most resource economists believe that the threat of resource depletion is now far more severe than ever before.
C)are typically made without adequate recognition and consideration of resource price elasticities.
D)typically assume that price elasticities are greater than they really are.
Q3) The supply of oil for users in the United States
A)was never an issue of serious public concern until the 1970s.
B)has never been an issue of serious concern by political leaders.
C)has often been a topic for dire warnings and forecasts of oil depletion.
D)has been more and more in doubt since the early 1980s.
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Chapter 42: Difficult Environmental Cases and the Role of Government
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Source URL: https://quizplus.com/quiz/26280
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Q1) Which of the following is an example of a deficiency caused by a regulatory approach to pollution?
A)ignored information provided by market signals
B)special interest influence on policies
C)lack of accountability by regulators for costs of regulation
D)all of the above
Q2) An economist would argue that global warming is
A)unquestionably a human-generated problem that should be stopped immediately at all costs.
B)simply fear mongering,for there is no scientific evidence that the average temperature on earth is changing.
C)likely to cause massive starvation as temperatures on earth rise,reducing agricultural productivity.
D)a serious issue that may best be addressed primarily by making changes as problems occur in the future.
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