1. A tax is regressive if it takes a: A. Smaller fraction of dollars as income r
ID: 1177727 • Letter: 1
Question
1. A tax is regressive if it takes a:
A.
Smaller fraction of dollars as income rises.
B.
Smaller fraction of dollars as income falls.
C.
Larger number of dollars as income rises.
D.
Larger number of dollars as income falls.
2. If the economy relies entirely on the market mechanism to answer the WHAT, HOW, and FOR WHOM questions, it tends to.
A.
Overproduce goods that yield external benefits and overproduce those
that generate external costs.
B.
Underproduce goods that yield external benefits and underproduce those
that generate external costs.
C.
Overproduce goods that yield external benefits and underproduce those
that generate external costs.
D.
Underproduce goods that yield external benefits and overproduce those
that generate external costs.
3. Which of the following is not a final good or service?
A.
A computer purchased by a local middle school.
B.
A refrigerator purchased by a home owner.
C.
Paper purchased by a textbook company.
D.
A flu shot purchased by a teacher.
4. Which of the following types of government spending is included in the calculation of GDP?
A.
Federal spending only.
B.
Federal, state, and local government spending for any purpose.
C.
Federal, state, and local spending on transfer payments only.
D.
Federal, state, and local government spending on goods and services only.
5. When an economy enters a recession, the
A.
Number of unemployed falls.
B.
Number of discouraged workers falls.
C.
Duration of unemployment rises.
D.
Cost of unemployment falls.
6. The proportion of the labor force that is unemployed is the
A.
Employment index.
B.
Underemployed rate.
C.
Okun's Law.
D.
Unemployment rate.
7. Your real income is
A.
The same as your nominal income in times of high inflation.
B.
Measured in current dollars.
C.
The amount of money you receive during a given time period.
D.
The purchasing power of the money you receive.
8. Controversies between Keynesian, monetarist, and supply-side theories focus on the
A.
Existence or nonexistence of the aggregate supply curve.
B.
Importance of international balances to the economy.
C.
Shape and sensitivity of aggregate demand and aggregate supply curves.
D.
Usefulness of aggregate demand and supply to analyze adjustment of
the macro equilibrium.
9. A recessionary gap
A.
Is the amount by which total spending exceeds GDP.
B.
Would occur if total output were less than aggregate demand.
C.
Would cause a depletion of inventories.
D.
Is the amount by which the rate of actual spending falls short of
full-employment GDP
10. Gross exports for the United States depend most directly on the
A.
Spending behavior of foreign consumers and businesses.
B.
Spending behavior of U.S. consumers.
C.
Spending behavior of U.S. government agencies.
D.
Level of U.S. GDP.
11. The primary source of macro instability, when there is no government intervention and no foreign trade, is the relationship between
A.
Consumption and saving.
B.
Saving and taxes.
C.
Investment and consumption.
D.
Investment and saving.
A.
Macro failure is likely to occur but will go away quickly.
B.
Macro failure is likely to occur, and it isn't likely to go away.
C.
Macro failure is unlikely to occur.
D.
None of the choices are correct.
A.
Aggregate supply.
B.
Aggregate demand.
C.
Unemployment.
D.
Interest rates.
14. The fiscal policy target for achieving full employment when an inflationary gap exists is known as the
A.
Fiscal stimulus.
B.
AD excess.
C.
AD shortfall.
D.
Fiscal restraint
A.
A higher inflation rate and a higher unemployment rate.
B.
A higher inflation rate and a lower unemployment rate.
C.
A lower inflation rate and a lower unemployment rate.
D.
A lower inflation rate and a higher unemployment rate
A.
Smaller fraction of dollars as income rises.
B.
Smaller fraction of dollars as income falls.
C.
Larger number of dollars as income rises.
D.
Larger number of dollars as income falls.
Explanation / Answer
Smaller fraction of dollars as income rises.
Underproduce goods that yield external benefits and overproduce those that generate external costs.
Paper purchased by a textbook company
Federal, state, and local government spending on goods and services only.
Duration of unemployment rises
Unemployment rate.
The purchasing power of the money you receive.
Usefulness of aggregate demand and supply to analyze adjustment of the macro equilibrium.
Is the amount by which the rate of actual spending falls short of full-employment GDP
Spending behavior of foreign consumers and businesses.
Consumption and saving.
Macro failure is likely to occur, and it isn't likely to go away.
Aggregate demand
Fiscal restraint
A lower inflation rate and a lower unemployment rate.
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