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Economics _Question 1_through _20_Part 1A_1B_8A_5B_7A_7B_8B_Multiple Type Question_answers

Economics _Question 1_through _20_Part 1A_1B_8A_5B_7A_7B_8B_Multiple Type Question_answers

Economics _Question 1_through _20_Part 1A_1B_8A_5B_7A_7B_8B_Multiple Type Question_answers

Economics _Question 1_through _20_Part 1A_1B_8A_5B_7A_7B_8B_Multiple Type Question_answers

Economics _Question 1_through _20_Part 1A_1B_8A_5B_7A_7B_8B_Multiple Type Question_answers

Question 1 of 20 5.0 Points
The largest component of GDP is:

A. net exports.

B. investment.

C. consumption.

D. government purchases.
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Question 2 of 20 5.0 Points
The consumption function:

A. is a relationship between annual consumption and annual disposable income in an economy.

B. will shift upward if aggregate household wealth declines.

C. implies that annual consumption in an economy will be zero if disposable income is zero.

D. is a flat line with zero slope.
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Question 3 of 20 5.0 Points
How much is autonomous consumption when disposable income is $800 billion?

A. $0

B. $2 Trillion

C. $4 Trillion

D. $6 Trillion
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Question 4 of 20 5.0 Points
Autonomous consumption is NOT influenced by:

A. aggregate household wealth.

B. expectations of future income and wealth.

C. aggregate household debt.

D. disposable income.
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Question 5 of 20 5.0 Points
The lunch you buy in your school cafeteria is classified as:

A. a consumer durable.

B. a consumer nondurable.

C. a service.

D. either a consumer nondurable or a service because it fits into both categories.
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Question 6 of 20 5.0 Points
Which one of these would NOT constitute investment?

A. Someone buys 100 shares of Exxon-Mobil

B. Exxon-Mobil purchases 20 new oil rigs

C. General Motors builds a new assembly plant

D. Macy’s remodels its stores
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Question 7 of 20 5.0 Points
Net investment:

A. plus depreciation equals gross investment.

B. minus depreciation equals gross investment.

C. equals gross investment plus depreciation.

D. plus gross investment equals depreciation.
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Question 8 of 20 5.0 Points
In the Islamic Middle East inheritance laws were:

A. designed to keep land in units large enough to sustain a family.

B. conducive to the formation of accumulation of capital.

C. designed to easily and quickly divide up partitioned goods.

D. flexible enough to accommodate new economic conditions.
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Question 9 of 20 5.0 Points
Investment includes the purchase of:

A. stock options of Enron.

B. software by an accounting firm.

C. global positioning units for cruise missiles by the government.

D. new chalk by a local school board.
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Question 10 of 20 5.0 Points
The most important reason that corporations developed in Western Europe earlier than in the Middle Eastern countries was because of:

A. the type of business.

B. religious differences.

C. the transportation system.

D. the stages of economic development.

Question 1 of 20 5.0 Points
Which statement is true?

A. A depression followed both World War I and World War II.

B. A depression followed neither World War I nor World War II.

C. A depression followed World War I, but not World War II.

D. A depression followed World War II but not World War I.
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Question 2 of 20 5.0 Points
There was full employment in:

A. 1929 and 1942.

B. neither 1929 nor 1942.

C. 1929 only.

D. 1942 only.
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Question 3 of 20 5.0 Points
Between 1939 and 1944 our national output:

A. rose by 50%.

B. nearly doubled.

C. rose by 150%.

D. nearly tripled.
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Question 4 of 20 5.0 Points
The early 1930s was a period of:

A. inflation and deflation.

B. neither inflation nor deflation.

C. inflation.

D. deflation.
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Question 5 of 20 5.0 Points
The name of Andrew Carnegie is most closely associated with the __________ industry.

A. steel

B. rubber

C. meatpacking

D. chemical
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Question 6 of 20 5.0 Points
The transcontinental railroads were completed in the 25 years:

A. before the Civil War.

B. after the Civil War.

C. after 1890.

D. after the 20th century began.
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Question 7 of 20 5.0 Points
The term “the affluent society” was coined by:

A. Michael Harrington.

B. John Kenneth Galbraith.

C. Karl Marx.

D. Adam Smith.
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Question 8 of 20 5.0 Points
In order to raise our rate of economic growth we would need to:

A. increase the level of labor or capital.

B. reduce the level of labor.

C. spend more on military goods.

D. spend more on consumer goods.
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Question 9 of 20 5.0 Points
Human wants are:

A. relatively limited.

B. relatively unlimited.

C. easily satisfied.

D. about equal to our productive capacity.
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Question 10 of 20 5.0 Points
Whom of the following is NOT an entrepreneur?

A. Henry Ford (Ford Motor Company)

B. Tim Berners-Lee (creator of the World Wide Web)

C. John David Rockefeller (Standard Oil)

D. Bill Gates (Microsoft)

Question 10 of 20 5.0 Points
Whom of the following is NOT an entrepreneur?

A. Henry Ford (Ford Motor Company)

B. Tim Berners-Lee (creator of the World Wide Web)

C. John David Rockefeller (Standard Oil)

D. Bill Gates (Microsoft)
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Question 11 of 20 5.0 Points
Which of the following is an example of capital?

A. Money in a Swiss bank account

B. A bulldozer

C. A CD by Metallica

D. A Dracula costume for Halloween
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Question 12 of 20 5.0 Points
Tommy spends most of his monthly budget on $3 video game rentals or $6 packets of Pokemon cards. The opportunity cost to Tommy of an extra packet of Pokemon cards is:

A. one video game rental.

B. two video game rentals.

C. the cost of the Pokemon cards.

D. zero.
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Question 13 of 20 5.0 Points
The invisible hand is:

A. perfect competition.

B. the profit motive.

C. government direction.

D. the mixed economy.
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Question 14 of 20 5.0 Points
Hitler’s Germany was an example of a __________ economic system.

A. Capitalist

B. Fascist

C. Communist

D. Socialist
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Question 15 of 20 5.0 Points
Karl Marx said that:

A. whoever controls a society’s capital controls that society.

B. in the long run capitalism would survive.

C. the U.S.S.R.’s communist system was “state capitalism.”

D. capitalists and workers generally have the same economic interests.
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Question 16 of 20 5.0 Points
Private ownership of most of the means of production is common to:

A. capitalism and communism.

B. capitalism and fascism.

C. capitalism and socialism.

D. fascism and communism.
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Question 17 of 20 5.0 Points
Sweden and Norway would best be described as __________ countries.

A. Capitalist

B. Fascist

C. Communist

D. Socialist
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Question 18 of 20 5.0 Points
At equilibrium, quantity demanded __________ equals quantity supplied.

A. always

B. usually

C. sometimes

D. never
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Question 19 of 20 5.0 Points
When the market price is higher than the equilibrium price, there is:

A. a surplus.

B. a shortage.

C. both a shortage and a surplus.

D. neither a shortage nor a surplus.
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Question 20 of 20 5.0 Points
A decrease in demand means that quantity demanded falls:

A. at least one price.

B. at a few prices.

C. at most prices.

D. at all prices.

Question 1 of 20 5.0 Points
If we restrict our imports:

A. a greater tariff will be imposed.

B. our exports will decline.

C. we would have very little support from economists.

D. we would definitely solve all our trade problems.
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Question 2 of 20 5.0 Points
A hollow corporation:

A. makes goods abroad and ships them to the United States.

B. makes goods in the United States and ships them abroad.

C. imports foreign goods and puts its own name on them.

D. makes goods in the United States and has them sold abroad under another company’s name.
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Question 3 of 20 5.0 Points
The economics profession nearly unanimously backs:

A. a balance of trade deficit.

B. budget surpluses.

C. budget deficits.

D. free trade.
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Question 4 of 20 5.0 Points
When only a specified amount of a good can be imported into a country during a year, that good is subject to a(n):

A. subsidy.

B. tariff.

C. quota.

D. export restriction.
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Question 5 of 20 5.0 Points
At the core of the American trade problem is that:

A. Americans spend too much on consumption.

B. the dollar is too low.

C. the Japanese are excluding American products by means of high protective tariffs.

D. American manufacturers are too quality conscious and should instead concentrate on reducing costs.
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Question 6 of 20 5.0 Points
The principle of comparative advantage:

A. applies only when the gold standard is in effect.

B. is the basic reason that the United States has been running trade deficits.

C. states that it is advantageous to export more than you import.

D. states that total output is greatest when each product is made by the country that has the lowest opportunity cost.
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Question 7 of 20 5.0 Points
The least applicable argument for protection of U.S. industry against foreign competition is the __________ argument.

A. national security

B. infant industry

C. low wage

D. employment
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Question 8 of 20 5.0 Points
The Chinese economic expansion since the early 1980s and the Japanese economic expansion from the late 1940s through the 1980s were:

A. virtually identical.

B. both dependent on the American market.

C. based in the economic principles of Karl Marx.

D. based on closing their domestic markets to American goods and services.
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Question 9 of 20 5.0 Points
Tariffs and quotas result in:

A. a rise in the price that consumers in the importing country must pay.

B. an over allocation of resources to relatively efficient industries.

C. an increase in the foreign demand for domestically produced goods.

D. an under allocation of resources to relatively inefficient industries.
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Question 10 of 20 5.0 Points
Who does NOT gain when a tariff is imposed?

A. Domestic producers of the good

B. Domestic workers in the protected industry

C. Domestic consumers of the good

D. Domestic suppliers in the protected industry

Question 1 of 20 5.0 Points
The principle of comparative advantage:

A. applies only when the gold standard is in effect.

B. is the basic reason that the United States has been running trade deficits.

C. states that it is advantageous to export more than you import.

D. states that total output is greatest when each product is made by the country that has the lowest opportunity cost.
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Question 2 of 20 5.0 Points
At the core of the American trade problem is that:

A. Americans spend too much on consumption.

B. the dollar is too low

C. the Japanese are excluding American products by means of high protective tariffs.

D. American manufacturers are too quality conscious and should instead concentrate on reducing costs.
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Question 3 of 20 5.0 Points
High protective tariffs:

A. would be supported by most economists.

B. will become more likely if we do not reduce our trade deficit.

C. have very little support.

D. would definitely solve all our trade problems.
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Question 4 of 20 5.0 Points
A hollow corporation:

A. makes goods abroad and ships them to the United States.

B. makes goods in the United States and ships them abroad.

C. imports foreign goods and puts its own name on them.

D. makes goods in the United States and has them sold abroad under another company’s name.
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Question 5 of 20 5.0 Points
Which statement is true?

A. The Japanese have not been selling below cost nor taking advantage of economies of scale.

B. The Japanese have been selling below cost and have been taking advantage of economies of scale.

C. The Japanese have been selling below cost but have not been taking advantage of economies of scale.

D. The Japanese have been taking advantage of economies of scale but have not been selling below cost.
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Question 6 of 20 5.0 Points
The Chinese economic expansion since the early 1980s and the Japanese economic expansion from the late 1940s through the 1980s were:

A. virtually identical.

B. both dependent on the American market.

C. based in the economic principles of Karl Marx.

D. based on closing their domestic markets to American goods and services.
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Question 7 of 20 5.0 Points
The least applicable argument for protection of U.S. industry against foreign competition is the __________ argument.

A. national security

B. infant industry

C. low wage

D. employment
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Question 8 of 20 5.0 Points
A balance-of-trade surplus exists:

A. if the dollar value of exports exceeds the dollar value of imports.

B. if the dollar value of imported capital exceeds the dollar value of exports.

C. only if there is relative price inflation domestically.

D. only if full employment exists domestically.
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Question 9 of 20 5.0 Points
Which statement is FALSE?

A. Chinese factories have been pirating American goods and selling those products in China.

B. Most often “made in China” is actually made elsewhere by multinational companies that use China as a final assembly station.

C. Both China and Japan have closed markets to American made products.

D. Our trading position with Japan is very much like a colony and a colonial power.
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Question 10 of 20 5.0 Points
Which statement is FALSE?

A. If the U.S. can produce rice more efficiently than Japan can, the U.S. enjoys an absolute advantage.

B. Economists dislike both tariffs and import quotas.

C. Under the law of comparative advantage, total output is greatest when each product is made by the country that produces it most efficiently.

D. No nation will engage in trade with another nation unless it will gain by that trade.

Question 1 of 20 5.0 Points
At equilibrium GDP:

A. savings = investment, but aggregate demand does not equal aggregate supply.

B. savings = investment and aggregate demand = aggregate supply.

C. savings does not equal investment and aggregate demand does not equal aggregate supply.

D. savings does not equal investment, but aggregate demand = aggregate supply.
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Question 2 of 20 5.0 Points
Say’s law states that:

A. we can have inflation or a recession, but never both at the same time.

B. the normal state of economic affairs is a recession.

C. demand creates its own supply.

D. supply creates its own demand.
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Question 3 of 20 5.0 Points
Each of the following supports the classical theory of employment EXCEPT:

A. Say’s law.

B. wage-price flexibility.

C. the interest mechanism.

D. government spending programs.
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Question 4 of 20 5.0 Points
To fight a depression, Keynes said that the government should:

A. do nothing.

B. raise taxes.

C. spend money on carefully chosen projects.

D. spend a lot of money.
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Question 5 of 20 5.0 Points
Classical economists believed that:

A. if saving exceeded investment, prices and interest rates would rise as business accumulated unwanted inventories.

B. flexible prices and wages could not restore an economy to full employment if the interest rate were rigid.

C. our economy was either at, or tended toward full employment.

D. voluntary unemployment reflected economic inefficiency.
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Question 6 of 20 5.0 Points
The amount of real output that will be made available by sellers at various price levels is called the:

A. NDP.

B. GDP.

C. aggregate supply.

D. real balance effect
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Question 7 of 20 5.0 Points
The principal cause of the Great Depression of the 1930s was a collapse in:

A. aggregate demand.

B. aggregate supply.

C. the average price level.

D. government spending.
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Question 8 of 20 5.0 Points
The aggregate demand curve shows a(n):

A. positive relationship between prices and quantities.

B. inverse relationship between the price level and the aggregate quantity demanded.

C. independent relationship between the price level and the aggregate quantity demanded.

D. inverse relationship between the product price and the quantity of a good demanded.
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Question 9 of 20 5.0 Points
When aggregate supply exceeds aggregate demand:

A. explosive inflations occur.

B. the economy is in disequilibrium.

C. planned saving will equal planned investment.

D. inventories rise.
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Question 10 of 20 5.0 Points
Keynes’s analysis of the Great Depression led to which of the following recommendations regarding government policy?

A. An annually balanced budget

B. A decrease in government spending

C. An increase in government spending

D. An increase in taxes

Question 11 of 20 5.0 Points
The largest source of federal tax revenue comes from:

A. individual income taxes.

B. social insurance receipts.

C. corporation income taxes.

D. excise taxes.
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Question 12 of 20 5.0 Points
The Social Security tax is:

A. direct and progressive.

B. direct and regressive.

C. indirect and progressive.

D. indirect and regressive.
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Question 13 of 20 5.0 Points
An excise tax is a(n):

A. tax on earnings.

B. tax on profits.

C. income tax.

D. sales tax.
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Question 14 of 20 5.0 Points
Which of the following is a transfer payment?

A. The president’s salary

B. Veterans’ benefits

C. The NASA budget

D. Provision of national parks
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Question 15 of 20 5.0 Points
An example of a tax that is generally regarded to be progressive is the:

A. federal income tax.

B. excise tax on gasoline.

C. state sales tax.

D. payroll tax.
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Question 16 of 20 5.0 Points
The most-favored nation clause of the WTO agreement stipulates that:

A. no member nation may impose a tariff on the goods of any other member nation.

B. all member nations must offer all other member countries the same trade concessions as any other member country.

C. each member may designate another member as a favored nation, providing that nation with trade concessions.

D. all member nations must sell their goods to other member nations at cost.
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Question 17 of 20 5.0 Points
If more foreign tourists visited the United States, this would:

A. lower our merchandise trade imbalance.

B. lower our overall trade imbalance.

C. raise our merchandise trade imbalance.

D. raise our overall trade imbalance.
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Question 18 of 20 5.0 Points
Each of the following is a characteristic of the European Union EXCEPT that:

A. workers from any EU country could seek work in any other member country.

B. is the fourth largest integrated market.

C. its population and GDP are comparable to those of the United States.

D. freight is able to move anywhere within the EU without checkpoint delays and paperwork.
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Question 19 of 20 5.0 Points
The trading bloc that has eliminated all internal tariffs is:

A. the European Union.

B. NAFTA.

C. Mercosur.

D. The World Trade Organization.
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Question 20 of 20 5.0 Points
Which statement is true?

A. Since the early 1990s the U.S. trade deficit has risen slightly.

B. Net exports has always been positive.

C. The U.S. exports more services than merchandise (in terms of dollars).

D. The U.S. balance of trade was positive for most of the 20th century.

Question 11 of 20 5.0 Points
Budget deficits are appropriate during:

A. recessions, but not inflations.

B. inflations, but not recessions.

C. recessions and inflations.

D. neither recessions nor inflations.
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Question 12 of 20 5.0 Points
Each of the following is an example of discretionary fiscal policy EXCEPT:

A. public works spending.

B. making the automatic stabilizers more effective.

C. changes in tax rates.

D. the unemployment insurance program.
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Question 13 of 20 5.0 Points
During recessions:

A. savings rise.

B. corporations pay much less corporate income taxes.

C. less people collect unemployment benefits.

D. the government will raise taxes and run a budget surplus.
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Question 14 of 20 5.0 Points
In the 1930s, John Maynard Keynes said that our main economic problem was:

A. weak aggregate demand.

B. too much government spending.

C. big budget deficits.

D. high interest rates.
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Question 15 of 20 5.0 Points
According to __________, deficits cause crowding-out.

A. the federal government

B. keynesians

C. monetarists

D. classical theorists
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Question 16 of 20 5.0 Points
A deficit is created when:

A. the government is taking in more than it is paying out.

B. there are lower taxes and higher government spending.

C. the government is paying out more than it is taking in.

D. government spending is predominantly overseas.
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Question 17 of 20 5.0 Points
When government expenditures in a given year exceed tax receipts, there exists:

A. a budget surplus.

B. a budget deficit.

C. public revenue.

D. full-employment taxation.
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Question 18 of 20 5.0 Points
An illustration of the term “automatic stabilizer” is provided by:

A. the tendency of tax collections to rise as the economy moves into a recession.

B. the tendency of tax collections to fall as the economy moves into a recession.

C. increases in tax rates as the economy moves into a recession.

D. decreases in tax rates as the economy moves into a recession.
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Question 19 of 20 5.0 Points
The multiplier effect occurs because:

A. as saving levels increase, a greater pool of loanable funds is available for investment spending by businesses.

B. increases in income cause a chain reaction of spending by many businesses and individuals.

C. increases in income cause tax revenues to increase, thereby stimulating increases in government spending levels.

D. businesses copy the spending decisions of their competitors.
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Question 20 of 20 5.0 Points
Which of the following is NOT an example of a fiscal policy lag?

A. Decision

B. Monetary

C. Impact

D. Deficit

Question 11 of 20 5.0 Points
Which economist believes that all profits are linked with uncertainty and risk?

A. Frank Knight

B. Joseph Schumpeter

C. Karl Marx

D. John Maynard Keynes
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Question 12 of 20 5.0 Points
If there were no usury law the interest rate would be:

A. 6%.

B. 12%.

C. 18%.

D. 24%.
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Question 13 of 20 5.0 Points
Usury is considered the charging of:

A. higher interest rates than people are willing to pay.

B. lower interest rates than people are willing to pay.

C. unconscionably high interest rates.

D. extremely low rates of interest.
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Question 14 of 20 5.0 Points
Who said this: “The most hated sort, with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural objects of it. For money was intended to be used in exchange, but not to increase at interest…of all modes of getting wealth this is the most unnatural.”

A. Aristotle

B. Joseph Schumpeter

C. Benjamin Franklin

D. Frank Knight
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Question 15 of 20 5.0 Points
Which statement is true?

A. Joseph Schumpeter said, “risk bearing is no part of the entrepreneurial function.”

B. Benjamin Franklin said, “It is better to borrow than to lend.”

C. Aristotle said, “the fair rate of interest is exactly what the market will bear.”

D. David Ricardo said, “the landlord’s return, rent, should be taxed away by the government.”
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Question 16 of 20 5.0 Points
Which is the most accurate statement?

A. Fringe and sub-prime lending should be outlawed.

B. Poor people cannot get loans in the United States.

C. Payday lenders like the Military Financial Network make low interest loans to our military personnel.

D. When poor people get personal loans, they usually pay much higher interest rates than the average American.
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Question 17 of 20 5.0 Points
The theory of rent formulated by __________ is still used by most economists today.

A. Karl Marx

B. David Ricardo

C. Frank Knight

D. Joseph Schumpeter
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Question 18 of 20 5.0 Points
When the demand for a plot of land falls, its:

A. supply will fall.

B. supply will rise.

C. price will fall.

D. price will rise.
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Question 19 of 20 5.0 Points
As the demand for land falls, rents:

A. rise and more marginal land comes into use.

B. fall and less marginal land is used.

C. rise and less marginal land is used.

D. fall and more marginal land comes into use.
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Question 20 of 20 5.0 Points
The concept that a dollar today is worth more than a dollar in the future is called:

A. the net productivity of capital.

B. economic rent.

C. present value.

D. the capitalization of assets.

Question 11 of 20 5.0 Points
Which economist believes that all profits are linked with uncertainty and risk?

A. Frank Knight

B. Joseph Schumpeter

C. Karl Marx

D. John Maynard Keynes
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Question 12 of 20 5.0 Points
If there were no usury law the interest rate would be:

A. 6%.

B. 12%.

C. 18%.

D. 24%.
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Question 13 of 20 5.0 Points
Usury is considered the charging of:

A. higher interest rates than people are willing to pay.

B. lower interest rates than people are willing to pay.

C. unconscionably high interest rates.

D. extremely low rates of interest.
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Question 14 of 20 5.0 Points
Who said this: “The most hated sort, with the greatest reason, is usury, which makes a gain out of money itself, and not from the natural objects of it. For money was intended to be used in exchange, but not to increase at interest…of all modes of getting wealth this is the most unnatural.”

A. Aristotle

B. Joseph Schumpeter

C. Benjamin Franklin

D. Frank Knight
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Question 15 of 20 5.0 Points
Which statement is true?

A. Joseph Schumpeter said, “risk bearing is no part of the entrepreneurial function.”

B. Benjamin Franklin said, “It is better to borrow than to lend.”

C. Aristotle said, “the fair rate of interest is exactly what the market will bear.”

D. David Ricardo said, “the landlord’s return, rent, should be taxed away by the government.”
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Question 16 of 20 5.0 Points
Which is the most accurate statement?

A. Fringe and sub-prime lending should be outlawed.

B. Poor people cannot get loans in the United States.

C. Payday lenders like the Military Financial Network make low interest loans to our military personnel.

D. When poor people get personal loans, they usually pay much higher interest rates than the average American.
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Question 17 of 20 5.0 Points
The theory of rent formulated by __________ is still used by most economists today.

A. Karl Marx

B. David Ricardo

C. Frank Knight

D. Joseph Schumpeter
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Question 18 of 20 5.0 Points
When the demand for a plot of land falls, its:

A. supply will fall.

B. supply will rise.

C. price will fall.

D. price will rise.
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Question 19 of 20 5.0 Points
As the demand for land falls, rents:

A. rise and more marginal land comes into use.

B. fall and less marginal land is used.

C. rise and less marginal land is used.

D. fall and more marginal land comes into use.
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Question 20 of 20 5.0 Points
The concept that a dollar today is worth more than a dollar in the future is called:

A. the net productivity of capital.

B. economic rent.

C. present value.

D. the capitalization of assets.

Question 11 of 20 5.0 Points
Since 1900, international finance has been based on all of these EXCEPT:

A. the gold standard.

B. the silver standard.

C. fixed exchange ratios.

D. freely floating exchange rates.
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Question 12 of 20 5.0 Points
A U.S. importer of French wine would pay in:

A. dollars.

B. gold.

C. euros.

D. special drawing rights.
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Question 13 of 20 5.0 Points
Depreciation of the dollar relative to the yen means that the:

A. dollar price of the yen has fallen.

B. yen prices of Japanese goods have increased to the Japanese.

C. dollar prices of imported goods from Japan have increased.

D. yen are less expensive to Americans.
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Question 14 of 20 5.0 Points
Appreciation of the euro relative to the dollar means that the:

A. dollar price of the euro has fallen.

B. euro price of gold has risen.

C. euro prices of U.S. goods exported to the nation’s that adopted the euro as its currency have fallen.

D. euro is cheaper for Americans.
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Question 15 of 20 5.0 Points
Which statement is true?

A. The U.S. is both the world’s leading creditor nation and the leading debtor nation.

B. The U.S. is neither the world’s leading creditor nation nor the world’s leading debtor nation.

C. The U.S. is the world’s leading creditor nation and not the world’s leading debtor nation.

D. The U.S. is the world’s leading debtor nation and not the world’s leading creditor nation.
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Question 16 of 20 5.0 Points
If the foreign exchange rate of $1 is equivalent to 5 Swiss francs, then 1 Swiss franc is worth:

A. $5.

B. 50 cents.
H
C. 20 cents.

D. 5 cents.
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Question 17 of 20 5.0 Points
Under a system of freely flexible (floating) exchange rates an American trade deficit with Mexico will tend to cause:

A. the United States government to ration pesos to American importers.

B. a flow of gold from the United States to Mexico.

C. an increase in the peso price of dollars.

D. an increase in the dollar price of pesos.
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Question 18 of 20 5.0 Points
The demise of the gold standard led to:

A. more international trade.

B. greater and greater devaluation.

C. freely floating exchange rates.

D. balance-of-payment surpluses.
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Question 19 of 20 5.0 Points
The summary of the flows of goods, services, assets, and currency in and out of a country in a particular year is the:

A. balance of income statement.

B. balance of payments.

C. balance of trade.

D. trade deficit.
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Question 20 of 20 5.0 Points
Which statement if false?

A. If the U.S. can produce rice more efficiently than Japan can, the U.S. enjoys an absolute advantage.

B. Economists dislike both tariffs and import quotas.

C. Under the law of comparative advantage, total output is greatest when each product is made by the country that produces it most efficiently.

D. No nation will engage in trade with another nation unless it will gain by that trade.

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