Economics Review Chapters 13-17

20 Questions | Total Attempts: 89

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Economics Quizzes & Trivia

Review of Chapters 12-17 in "Principles of Macroeconomics. "


Questions and Answers
  • 1. 
    After the Great Depression of the 1930's and particularly since World War II until the 1970's, the ideas of the ____ school became conventional wisdom.
    • A. 

      Classical

    • B. 

      Keynesian

    • C. 

      Monetarism

    • D. 

      Supply-side

    • E. 

      Rational expectation

  • 2. 
    In the view of the classical school, unemployment
    • A. 

      Is a permanent condition

    • B. 

      Disappears when everyone who is willing to work at the equilibrium wage finds employment

    • C. 

      Exists because people do not interfere with the competitive process

    • D. 

      Is only temporary because all wages and prices are rigid

    • E. 

      Is necessary and not really harmful to the economy

  • 3. 
    The Phillips curve traces a set of combinations of rates of
    • A. 

      Interest and unemployment

    • B. 

      Real GDP and inflation

    • C. 

      Real GDP and interest

    • D. 

      Inflation and interest

    • E. 

      Unemployment and inflation

  • 4. 
    When the economy enteres a prosperity phase personal income tax collections
    • A. 

      Fall along with consumption and real GDP

    • B. 

      Rise along with real GDP but unemployment insurance payments to workers fall

    • C. 

      Rise but real GDP and unemployment insurance payments to workers fall

    • D. 

      Fall along with real GDP but unemployment insurance payments to workers rise

    • E. 

      Fall causing real incomes and employment to fall

  • 5. 
    City streets, sewage systems, and police protection are all examples of
    • A. 

      Public goods

    • B. 

      Private goods

    • C. 

      Exclusive goods

    • D. 

      Rival goods

    • E. 

      Consumer goods

  • 6. 
    The highest expenditure on a security item found in national spending at the federal, state, and local level is on
    • A. 

      Social Security

    • B. 

      Fire

    • C. 

      Corrections

  • 7. 
    Social Security is financed, in part, by
    • A. 

      Sales taxes

    • B. 

      Excise taxes

    • C. 

      Payroll taxes

    • D. 

      Alcohol and cigarette taxes

    • E. 

      State lotteries

  • 8. 
    Contributions to and payments from Social Security
    • A. 

      Represent transfers from the young to the elderly

    • B. 

      Represent transfers from the elderly to the young

    • C. 

      Are voluntary

    • D. 

      Represent transfers from high-income to low-income people

    • E. 

      Are part of the government's public goods purchases

  • 9. 
    The term used to describe the situation in which government spending causes interest rates to increase and private sector investment to fall is
    • A. 

      Negative feedback

    • B. 

      Crowding out

    • C. 

      Positive pressure

    • D. 

      Transfer of burden

    • E. 

      Investment shift

  • 10. 
    Unlike an internally held public debt, an externally held public debt
    • A. 

      Cannot pass the debt burden on to future generations

    • B. 

      Can pass the debt burden to future generations

    • C. 

      Expires upon maturity

    • D. 

      Cannot be reduced because foreigners hold the debt

    • E. 

      Causes crowding out

  • 11. 
    Compared to the rest of the industrial world, the United State's tax revenues
    • A. 

      As a percent of GDP is the lowest

    • B. 

      As a percent of GDP ranks among the highest

    • C. 

      As a percent of GDP ranks among the lowest

    • D. 

      As a percent of GDP is the highest

    • E. 

      Is the lowest

  • 12. 
    When a person's income rises and the tax rate is constant, the tax is a
    • A. 

      Regressive tax

    • B. 

      Poll tax

    • C. 

      Progressive tax

    • D. 

      Head tax

    • E. 

      Proportional tax

  • 13. 
    A nation should specialize in the production of the good for which it has a(n)
    • A. 

      Absolute advantage

    • B. 

      Exchange rate

    • C. 

      Specialization

    • D. 

      Comparative advantage

    • E. 

      Terms of trade

  • 14. 
    Since the 1930's, average U.S. tariff rates on imports have
    • A. 

      Risen dramatically

    • B. 

      Risen slowly

    • C. 

      Declined dramatically

    • D. 

      Declined slowly

    • E. 

      Remained about the same

  • 15. 
    A tariff is a tax on _____ goods that is designed to ____.
    • A. 

      Exported; protect domestic industries

    • B. 

      Exported; hurt foreign industries

    • C. 

      Imported; make domestic consumers pay more

    • D. 

      Imported; protect domestic industries

    • E. 

      Domestic; discourage imports

  • 16. 
    A lawyer once boasted, "I can fix my plumbing problem faster than that plumber." His friend replied, "Then why don't you fix it?" The lawyer explained: "Because
    • A. 

      The plumber could practice law, and I prefer law."

    • B. 

      I have an absolute advantage practicing law."

    • C. 

      The plumber uses fewer labor resources."

    • D. 

      The plumber is more efficient."

    • E. 

      I have a comparative advantage practicing law."

  • 17. 
    An appreciation of Canadian currency means that
    • A. 

      Canada's exports will become less expensive

    • B. 

      Canada's imports will become more expensive

    • C. 

      Canada's imports will become less expensive

    • D. 

      It now requires more Canadian currency to exchange for one unit of another currency

    • E. 

      It now requires less of other currencies to exchange for a unit of Canadian currency

  • 18. 
    If foreign exchange rates are determined by the interaction of supply and demand forces for the various currencies, then the exchange rate is
    • A. 

      Fixed

    • B. 

      Government determined

    • C. 

      Set by the value of gold

    • D. 

      Said to float

    • E. 

      Not in equilibrium

  • 19. 
    The current account in a balance of payments records
    • A. 

      All money flows among countries

    • B. 

      Exports and imports of goods and services

    • C. 

      Only the international transaction involving capital goods

    • D. 

      Only the international transactions involving consumer goods

    • E. 

      Only exports and imports purchased on credit

  • 20. 
    If the United States government wants to eliminate an unfavorable balance of trade, it could
    • A. 

      Reduce tariffs

    • B. 

      Encourage imports

    • C. 

      Reduce quotas on imports

    • D. 

      Depreciate the dollar

    • E. 

      Increase taxes on exported goods

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