In the equation GDP = C + I + G + F, in which F equals net export spending (i.e., total spending on exports minus total spending on imports), imports are
... [Show More] subtracted from the other types of expenditures because:
1. A) imports reduce national welfare.
2. B) other countries do not import goods from the U.S.
3. C) the value of imports is difficult to determine due to the fact that they are frequently stated in terms of foreign currency.
4. D) the value of imports is included in the other components of spending such as consumption spending.
Assuming that C = $4,500, I = $1,000, G = $1,200, Exports = $450, Imports
= $550, Depreciation = $600, and Indirect Business Taxes = $500 (all in billions of dollars), GDP equals:
1. A) $6,000 billion.
2. B) $6,600 billion.
3. C) $5,500 billion.
4. D) $6,400 billion.
Which of the following statements is correct?
1. A) Because it is subject to change, and frequently does, consumer and business confidence has only a minimal impact on future economic activity.
2. B) Business confidence is extremely important and can have a great impact on future economic activity. The same is not true of consumer confidence.
3. C) Consumer and business confidence is extremely important and can have a great impact on future economic activity.
4. D) Because it has historically remained steady, consumer and business confidence has only a minimal impact on future economic activity.
The type of policy that involves interest rates and the availability of loanable funds is known as:
1. A) fiscal policy.
2. B) federal policy.
3. C) strategic financial policy.
4. D) monetary policy.
The type of policy that involves changes in taxes or spending by the federal government is known as:
1. A) strategic financial policy.
2. B) fiscal policy.
3. C) monetary policy.
4. D) federal policy.
If a countryʹs central bank wants to stimulate spending in the economy, it should:
1. A) decrease taxes.
2. B) increase the amount of assets banks should keep on reserve at all times.
3. C) lower interest rates.
4. D) increase government spending.
If a countryʹs national government wants to stimulate spending in the economy, it should:
1. A) increase taxes and government spending.
2. B) increase taxes and decrease government spending.
3. C) decrease taxes and government spending.
4. D) decrease taxes and increase government spending.
Which of the following would have the greatest positive impact on a countryʹs domestic economy?
1. A) A decrease in the confidence of foreign investors in the countryʹs economy.
2. B) An increase in spending by foreigners on the countryʹs exports.
3. C) An increase in spending on imports from other countries.
4. D) A decrease in the incomes of consumers in foreign countries.
Chapter 1
• Question 1
Which of the following statements is correct?
Correct Answer: All else constant, a monopoly firm has more market power than a monopolistically competitive firm.
• Question 2
Which of the following statements is false? In the circular flow model: Correct Answer: factor payments are made to business firms.
• Question 3
Which of the following would be considered an example of a macroeconomic problem?
Correct Answer:
Should the federal government extend the eligibility period for unemployment benefits?
• Question 4
Which of the following is not included in gross private domestic investment spending?
Correct Answer: Household spending on
durable goods.
• Question 5
Which of the following is not a characteristic of a perfectly competitive market?
Correct Answer:
Limited information is available to all market participants.
• Question 6
Which of the following statements is correct?
Correct Answer:
Managerial decisions are affected by both microeconomic and macroeconomic forces.
• Question 7
Which of the following statements about monopoly is false?
Correct Answer:
Because there is a single firm serving the entire market, the monopolist can charge whatever price it wants to for its output.
• Question 8
The key characteristic of an oligopolistic market is:
Correct Answer: mutual interdependence among firms in the market.
• Question 9
Which of the following statements is false?
Correct Answer:
While managers must understand how output prices are determined, determination of input prices is irrelevant because it is beyond the manager's control.
• Question 10
The type of policy that involves interest rates and the availability of loanable funds is known as:
Correct Answer: monetary policy. [Show Less]