1. The MPC can be used to predict the effect of a tax increase. TRUE OR FALSE 2.
ID: 1097543 • Letter: 1
Question
1. The MPC can be used to predict the effect of a tax increase. TRUE OR FALSE
2. A decrease in disposable income causes a shift in the consumption function. TRUE OR FALSE.
3. The Federal Reserve's principal tool in the manipulation of aggregate demand is the personal income tax. TRUE OR FALSE.
4. Unconventional monetary policies include massive lending to banks and open-market purchases of assets other than Treasury bills. TRUE OR FALSE.
5. Specialization permits larger outputs and offers economies of large-scale production. TRUE OR FALSE.
6. Trade occurs only when a country has an absolute advantage and not just a comparative advantage over another country. TRUE OR FALSE.
7. If all countries produce the goods for which they have comparative advantages, all countries benefit with the increased production of goods with no additional resources being used. TRUE OR FALSE.
8. A country's comparative advantage can be illustrated by the graph of the production possibilities frontier. TRUE OR FALSE.
9. Cheap labor is the source of comparative advantages. TRUE OR FALSE.
10. An export subsidy is a payment by the government to exporters to permit them to charge lower prices. TRUE OR FALSE.
11. A tariff is a tax on imports imposed by the country that is importing the goods. TRUE OR FALSE.
12. Which of the following would be counted as investment in the national income accounts?
a.
the purchase of a newly issued stock
b.
the purchase of a newly built apartment house
c.
the purchase of a newly minted coin
D. the payment of tuition at a private college
13. Which of the following is a transfer payment?
a.
Work-study students receive wages transferred from the university budget.
b.
A company pays the moving expenses for a transferred employee.
c.
A student transfers to another college and receives a tuition rebate.
d.
A student receives a tuition grant from the federal government.
14. Which of the following definitions of the money supply includes only the most liquid forms of money?
a.
M1
b.
M2
c.
savings deposits.
d.
money market mutual deposits.
15. In the past, when the United States enjoyed a continuing trade surplus, wages in the United States
a.
were much lower than wages in countries that imported U.S. products.
b.
were much higher than wages in countries that imported U.S. products.
c.
were roughly the same as wages in countries that imported U.S. products.
d.
fell throughout that period, enabling the continuing trade surplus.
e.
rose throughout that period, ending the trade surplus.
16. One reason why nations trade is because
a.
trading provides opportunities to earn profits.
b.
the rate of interest is not the same in all countries.
c.
resources are not equally distributed to all nations.
d.
some nations like to build one thing while others like to build another.
17. Which of the following might lead a nation to engage in international trade?
a.
Differences in natural endowments such as climate
b.
Differences in skills of labor force
c.
Differences in endowments of natural resources
D. All of the above are correct.
18. Trade between two nations is complicated by
a.
the variability in exchange rates of the respective nation's currencies.
b.
different production techniques in the nations.
c.
the age and experience of the respective nation's diplomats.
D. the variability in climate between the nations.
19.Which of the following observations is true of the principle of comparative advantage?
a.
It arises from the absolute cost advantage.
b.
It helps determine most efficient patterns of production.
c.
It was advanced by Adam Smith.
d.
It means producing a good using smaller quantities of resources than others.
20. If two countries each are currently producing two goods, and each begins to specialize in the good in which it has a comparative advantage, what will happen to total (world) output?
a.
It will increase.
b.
It will decrease.
c.
It will be unchanged in both countries.
d.
It will rise in one country and fall in the other, but the total is unchanged.
e.
Uncertain; economic theory has no answer to this question.
a.
the purchase of a newly issued stock
b.
the purchase of a newly built apartment house
c.
the purchase of a newly minted coin
D. the payment of tuition at a private college
13. Which of the following is a transfer payment?
a.
Work-study students receive wages transferred from the university budget.
b.
A company pays the moving expenses for a transferred employee.
c.
A student transfers to another college and receives a tuition rebate.
d.
A student receives a tuition grant from the federal government.
Explanation / Answer
1 . true
2. true ...shift left...
3.false
4.true
5.true
6.false
7.false
8.true
9.false
11.true
12.a
13,b
14.d
15.b
16.a
17.d
18.a
19,a
20.c
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