Principles Of Microeconomics

Macroeconomics

1. the market where business sell goods and services to households and the government is called a. goods market b. factor market c. capital market d. money market 2. Real gross domestic product is best defined as a. the market value of intermediate goods and services produced in an economy including exports b. all goods and services produced in an economy, stated in prices in a given year and multiplied by quantity c. the market value of all final goods and services produced in an economy stated in the prices of a given year d. the market value of goods and services produced in an economy stated in current year prices 3. underemployment includes a. who work off the books to avoid paying taxes b. who are working part time or not using all their skills at a fulltime job c. who are tired of looking for a job so they quit looking but still want one d. whose skills are not in demand anymore 4. .The bureau of economic analysis is responsible for which of the following a. setting interest rates b. managing the money supply c. calculating the US gross domestic product d. paying unemployment benefits 5. The federal reserve provides which of the following data a. federal funds rate b. stock price of GE c. bond yields of corporation d. debt to GDP of Ireland 6. Consider if the government instituted a 10% income tax surcharge. In terms of the AS/AD model this change should have a. shifted the AD curve to the left b. shifted the AD curve to the right c. made the AD curve flatter 7. The largest source of household income is in the U.S. is obtained a. stock dividends b. wages and salaries c. interest earnings d. rental income 8. If the depreciation of a country’s currency increases it aggregate expenditures by 20, the AD curve will a. shift right by more than 20 b. shift right by less than 20 c. shift right by exactly 20 d. not shift at all 9. Aggregate demand management policies are designed most directly to a. minimize unemployment b. minimize inflation c. control the aggregate level of spending in the economy d. prevent budget deficits or surpluses 10. Suppose that consumer spending is expected to decrease in the near future. If output is at potential output, which of the following policies is most appropriate according to the AS/AD model a. an increase in government spending b. an increase in taxes c. a reduction in government spending d. no change in taxes or government spending. 11. According to Keynes, market economies A. never experience significant declines in aggregate demand B. quickly recover after they experience a significant decline in aggregate demand C. may recover slowly after they experience a significant decline in aggregate demand D. are constantly experiencing significant declines in aggregate demand 12. The laissez-faire policy prescription to eliminate unemployment was to A. eliminate labor unions and government policies that hold real wages too high B. strengthen unions and government regulations protecting unions and workers C. increase real wages so that people are encouraged to work D. have government guarantee jobs for everyone 13. In the AS/AD model, an expansionary monetary policy has the greatest effect on the price level when it A. increases both nominal and real income B. increases real income but not nominal income C. increases nominal income but not real income D. doesn't increase real or nominal income 14. The Federal funds rate A. is always slightly higher than the discount rate B. can never be close to zero C. may sometimes have to be targeted at zero D. is an intermediate target

ECO | 372 | Macroeconomics | assessment | 1. the market where business s

23) A merger between a textile mill and a clothing manufacturing company would be considered a A. horizontal merger B. vertical merger C. conglomerate merger D. diagonal merger 24) A merger between a baby food company and a life insurance company would be considered a A. horizontal merger B. vertical merger C. conglomerate merger D. diagonal merger 25) From the point of view of consumer and producer surplus, what problem may be created when a country subsidizes the cost of energy to consumers to help alleviate the burden of higher energy costs? A. It hurts the poor and benefits the rich. B. It leads to less fuel being used than the amount that maximizes consumer surplus. C. It encourages the consumption of too much fuel at the expense of other goods . D. It has no effect; consumers gain a surplus, but taxpayers lose the same amount because they must finance the subsidy. 26) Suppose people freely choose to spend 40 percent of their income on health care, but the government decides to tax 40 percent of a person's income to provide the same level of coverage as before. What can be said about deadweight loss in each case? A. Taxing income results in deadweight loss, while purchasing health care on one's own does not result in deadweight loss. B. Taxing income results in less deadweight loss, because government knows better what health care coverage is good for society. C. There is no difference because the goods are purchased in the market in either case. D. There is no difference because the total spending remains the same and the health care purchased remains the same. 27) The U.S. textile industry is relatively small because the US imports most of its clothing. A clear result of the importation of clothing is A. there is less variety available than there would be without imports B. the quality of clothing is lower than it would be without imports C. the price of clothing is higher than it would be without imports D. the price of clothing is lower than it would be without imports 28) Countries can expect to gain from international trade as long as they A. keep production diversified B. specialize according to their comparative advantage C. produce only those goods for which they have a relatively high opportunity cost D. use trade restrictions to reduce competition for domestic producers 29) Which of the following is an example of the law of one price? A. Exchange rates tend to have equivalent values. For example, one Italian lire equals one U.S. dollar. B. Because people have essentially the same basic needs wherever they live, they tend to buy the same bundle of goods. C. Because wages are so much lower in China, eventually all U.S. jobs will be outsourced to China, leaving the US to import all goods at one price. D. Because their countries have similar institutions, the price paid for a computer in Germany and the United States are about the same when converted into the same currency. 30) The fact that U.S. managers' salaries are substantially greater than those of comparable managers in Japan may be related to A. an increase in the demand for CEOs B. an increase in the supply of CEOs C. the comparatively greater competitive markets in Japan D. the greater number of public goods provided in the United States

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