Certifed Administrative Professional Exam (Cap

Front 1

The distinguishing characteristic of an economic good is

Back 1

that it is scarec

Front 2

The law of demand implies that people would

Back 2

buy less gas if the gasoline tax were raised 6 cents.

Front 3

Which statement is consistent with the law of demand?

Back 3

People drive less because of higher gas prices

Front 4

Goods are

Back 4

scarce for both poor and rich.

Front 5

Scarcity means that

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human desire for a good is greater than the amount that is freely available.

Front 6

Which of the following is not a basic question face by each economy?

Back 6

What goods are subject to the law of demand?

Front 7

Which factors would not affect the supply of computers?

Back 7

Increase in consumer income

Front 8

Which was not a result of the higher prices of gasoline and petroleum-derived products in early 1974?

Back 8

the demand for used Cadillacs and Lincoln Continentals increased.

Front 9

Criteria for rationing goods and resources must be established because of

Back 9

the scarcity imposed by nature

Front 10

The law of demand refers to


Profit can be defined as

Back 10

the inverse relationship between the price of a good and the quantity of the good demanded.


the difference between the revenue derived from the sale of a product and the opportunity cost of employing the resources required to produce the product.

Front 11

According to the law of supply

Back 11

there is a positive relationship between the price of a good and the amount of it offered for slae by suppliers.

Front 12

Technological advancements in the production of computer products will cause

Back 12

the supply curve for computer products to shift to the right.

Front 13

When a shorrtage of a good exists

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if the price is not permitted to rise, nonprice factors such as quality deterioration will play more of a fole in the allocation process.

Front 14

Under competitive conditions, market prices

Back 14

generally bring the self-interest of individula consumers and producers into harmony with the general welfare (economic efficiency).

Front 15

Which of the following exists in a market in which producers have momopoly power?

Back 15

Product differentiation

Front 16

Bill said, "If I didn't have a date tonight, I would save $20 and spend this evening playing chess." The opportunity cost of the date is

Back 16

$20 plus the cost of foregoing a night playing chess

Front 17

A new hospital is being built in your home town. the opportunity cost of building the new hospital would be

Back 17

the highest'valued bundle of other goods and services that might be foregone because of the hospital construction

Front 18

in this diagram, point A is

Back 18

inefficient

Front 19

Whic of the following conditions would be most likely to cause the production possibility curve for corn and beans to shift from AA to BB?

Back 19

Increasing the capital used to produce corn and beans

Front 20

Based on the graph below, if the current price of beef was $4 per pound, which of the following conditions would be accurate?

Back 20

Producers would want to supply more beef tan consumers would wish to buy

Front 21

In contrast to nominal GNP, real GNP refers to

Back 21

nominal GNP corrected for price changes.

Front 22

The consumer price index is a tool designed to measure the extent to which

Back 22

the cost of a typical bundle ("market basket") o f consumer goods has changed over time.

Front 23

Which is NOT included in the claculation of net national product?

Back 23

Depreciation

Front 24

Disposable income is equal to

Back 24

personal income - personal taxes.

Front 25

The real output of goods and services and the real income of resource suppliers

Back 25

must increase at the same rate for prices to be stable.

Front 26

Structural unemployment is a result of

Back 26

an inadequate matching of qualified workers and available jobs.

Front 27

Inflation

Back 27

is measured by changes in the cost of a typical "market basket" of goods at different times

Front 28

The portion of disposable income a consumer does not spend on current consumption is called

Back 28

saving.

Front 29

Aggregate demand is equal to

Back 29

consumption + investment _ govenrment sepnding

Front 30

The marginal propensity to consume (MPC) is

Back 30

additional current consumption expenditures divided by additinal current disposable income

Front 31

Consumption is equal to

Back 31

disposable income - saving.

Front 32

which would be considered an investment by an economist?

Back 32

A corporation buying a car for its sales staff

Front 33

A planned deficit

Back 33

would stimulate aggregate demand more than the same level of expenditures with a balanced budget.

Front 34

Which is not a built-in stabilizer?

Back 34

The investment multi;lier

Front 35

According to the supply-side view

Back 35

expansionary monetary policy will cause real output to expand without causing the rate of inflation to accelerate.

Front 36

Which would a supply-side fiscalist be most likely to propose as a policy for effectively promoting economic growth and halting inflation during the 1990s?

Back 36

An across-the-board reduction in government expenditures.

Front 37

The balanced-budget rule would require Congress to establish tax rates such that

Back 37

government expenditures and tax revenues were balanced annually

Front 38

You have been asked to study the production of the economy over the past five years. Why would you use the real GNP series rather than the nominal series?

Back 38

The nominal series reflects changes in bouth output and prices; the real series reflects changes in output.

Front 39

Suppose that U.S. policymakers decide that to stimulate the growth rate of the GNP, investment must be increased. What is needed, they conclude, is a reallocation of resources AWAY fron the porduction of consumer goods and TOWARD the production of capital goods. Which policy alternatives would be most likely to accomplish that objective?

Back 39

A higher tax credit allowance for business investment in capital equipment

Front 40

An economy is currently experiencing a high rate of unemployment as the result of deficient aggregate demand. Which policy alternatives would be most likely to push the economy toward full employment?

Back 40

A decrease in tax rates, leaving government expenditures unchanged

Front 41

Which is not a function of money?

Back 41

Measure of output

Front 42

The most frequently used monetary tool of the Federal reserve System is

Back 42

open-market operations

Front 43

The value (purchasing power) of each unit of money

Back 43

tends to decline as the money supply expands relative to the availability of goods and services.

Front 44

Which is not a function of money?

Back 44

It earns income for its holders

Front 45

The major income-earning asset of financial institutions is

Back 45

loans outstanding

Front 46

Which comprise the required reserves of financial institutions?

Back 46

Vault cash and deposits of the bank with the Federal Reserve

Front 47

Uncertainty in general business conditions will cause financial institutions to hold excess reserves. Other things constant, this will

Back 47

tend to reduce the money supply.

Front 48

Excess reserves of financial institutions are

Back 48

actual reserves minus required reserves.

Front 49

A reserve requirement of 20 percent

Back 49

implies a potential money deposit multi;lier of 5.

Front 50

The establishment of a stable monetary enviroment is

Back 50

the responsibility of the Federal Reserve System.

Front 51

Which is not a function of the Federal Reserve System?

Back 51

Limiting the national debt

Front 52

The major purpose of the Federal reserve System si

Back 52

to regulate the money supply and thereby provide a monetary climate in the best interest of the economy.

Front 53

Monetary policy

Back 53

is the major concern of the Federal reserve System.

Front 54

Open-market operations are

Back 54

the tool most often used by the Federal reserve System to alter the money supply.

Front 55

In recent years the primary toos used by the Federal reserve System to control the money supply has been

Back 55

open-market operations

Front 56

An expansion in the money supply is desired as part of an antirecession policy.

Back 56

buy U.S. securitites

Front 57

Suppose that a member bank of the Federal reserve System has $8,000 in demand deposits, is able to lian out $5,000 of this amount, and still keep $1,000 in excess reserves in the bank. What is the legal reserve requirement?

Back 57

25 percent

Front 58

The Federal Reserve System wants to reduce the supply of maoney as part of an anti-inflation policy. The Federal reserve System might

Back 58

sell U.S. securities

Front 59

Which statement describes a choice that involves conservation?

Back 59

Use resources for current or future consumption

Front 60

which business practices are generally thought to be adverse to consumer interests?

Back 60

Production of low-quality products

Front 61

Which is generally not assumend to be a consumer right?

Back 61

Right to low-priced products

Front 62

With respect to consumerism

Back 62

there are both costs and benefits to the consumer.

Front 63

Increased information about the quality of a product will

Back 63

help consumers make decisions that result in increasing their welfare.

Front 64

Which is generally considered a regulation aimed at protecting the consumer?

Back 64

Licensing of accountants

Front 65

The economic costs of regulation include

Back 65

costs of government agencies that enforce regulations.
value of resources used to meet regulations that could be available for another use.
loss of freedom to engage in those activities prohibited by regulation.

Front 66

Which government agencies is most actively engaged in consumer affairs?

Back 66

Food and Drug Administration

Front 67

Which activity is not considered and activity to help consumers?

Back 67

Providing national defense by government

Front 68

The major reason for pollution is

Back 68

lack of property rights.

Front 69

Three general ways to control pollution are the uses of

Back 69

direct controls, indirect controls, and extension of property rights.

Front 70

Which best describes discrimination?

Back 70

Equals are treated unequally.

Front 71

A specific example of discrimination in the labor market is

Back 71

a woman is denied a promotion to manager even though she has the basic qualifications for the position.

Front 72

Costs of descrimination are borne by

Back 72

individuals and society together.

Front 73

Which pieces of legislation has attempted to reduce discrimination?

Back 73

Age Discrimination Act of 1967
Civil Rights Act of 1964
Vocationa rehabilitation Act of 1973

Front 74

In a market-oriented economic system

Back 74

discrimination can never be eliminated.

Front 75

In an office buliding a number of signs can be found posted in various corridors. Which is the result of consumer action designed to protect the consumer?

Back 75

"No smoking in elevator"

Front 76

ABC Autos, Inc. is a retail automobile dealership. A series of sales promotions is being developed and considered for use in promoting the slae of new automobiles. Which statement most likely represents deceptive advertising?

Back 76

"No money down!" You can drive it away for $199 a month plus a moderat finance charge

Front 77

An increasi in the tariff on foreigh-produced automobiles would be least likely to benefit

Back 77

domestic consumers of automobiles

Front 78

Each trading nation can gain by specializing in the production of those items for which they are low-opportunity-cost producers while trading for those things for which they are high-opportunity-cost producers. This statement is best describes the implications of

Back 78

the law of comparative advantage

Front 79

A trade policy that reduces government-imposed restrictions preventing foreign goods from freely entering the U.S. market ( for example, a reduction in tariffs) will

Back 79

enhamce economic efficiency by allocationg more resources to the areas of their greatest comparative advantage.

Front 80

Which is not an argument for protecting certain domestic industries from foreign competitors?

Back 80

The law of comparative advantage

Front 81

The share of GNP in the United States that results from exports is approximately

Back 81

10 percent

Front 82

Specialization and trade, according to comparative advantage, tend to reduce cost while directing each output toward its highest valued use. Thus, total benefits increase while total output

Back 82

increases in the trading regions.

Front 83

The law of comparative advantage explains why a nation will benefit from trade when

Back 83

it exports goods for which it is a low-opportunity-cost productr while importing those for which it is a high-opportunity-cost producer.

Front 84

Which is a credit to a government's balance of payments?

Back 84

Purchase of U.S. stock by an English citizen

Front 85

For which reason do producers export goods to other nations?

Back 85

They export goods because they plan to use the compensation received as pay.

Front 86

Which does not restrict the volume of international trade?

Back 86

A stable international menetary framework

Front 87

A tariff differs from a quota in that

Back 87

a tariff is a tax imposed on imports, wheareas a quota is an absolute limit to the number of units of a godd that can be imported.

Front 88

The ifant-industry argument about tariffs states that

Back 88

tariffs should be levied on foreign porducts that compete with new domestic industries.

Front 89

Suppose that the United States imposed a tariff on television sets, preventing foreign-porduced television sets from freely entering the U.S. market. Which would be most likely to occur?

Back 89

The price of television sets to U.S. consumers would increase, and the demand for U.S. export products would fall.

Front 90

Suppose that the Swiss government subsidized the watchmaking industry, enabling Swiss producers to undersell foreign watch producers. A watch-importing nation would take bestg advantage of the Swiss subsidization policy by

Back 90

gladly accepting the subsidy of the Swiss government, displacing the appropriate adjustment for the resources temporarily from the domestic watchmaking industry.

Front 91

A no-trade situation exists in which the U.S. exports wheat to a froeign country. The U.S. domestic price

Back 91

and output of wheat would rise.

Front 92

A situation exists where labor-intensive textile products can be produced cheaply in low-wage countries tan in the United States. The United States would gain if it

Back 92

used its resources to produce other items, while importing textiles from foreigners.

Front 93

The process that involves identifying, recording, measuring,and communicationg financial information is

Back 93

accounting.

Front 94

The principle which requires that the acconting method used be the one least likely to overstate income and financial postions is caleed

Back 94

the conservatism principle.

Front 95

The accounting concept which states that accounting information should pertain to the problem at hand and provide useful information about the problem is

Back 95

relevancy.

Front 96

The accounting princple which requires that once an accounting or reporting method is selected it should be used from one period to another is

Back 96

consistency.

Front 97

Accounting reports issued solely for use by the management of a company are called

Back 97

internal reports.

Front 98

The going-concern assumption

Back 98

states that the accountant assumes that e the entity will exist for an indefinite period of time.

Front 99

Generally accepted accounting principles

Back 99

are currently set by the Financial Accounting Standards Board.

Front 100

A corporation

Back 100

is a seperate legal entity.
normally has the same rights and obligations as an individual.
requires obtaining a corporate charter.

Front 101

The principal function of an independent CPA is to

Back 101

conduct an audit to determine whether the company's financial statements are presented fairly in accordance with GAAP.

Front 102

Lew Co. purchased a plot of land for $100,000 five years ago. The appraised value of the land at that time was $105,000. Land in this area is generally worth about 50 percent more today than it was five years ago. The value of the land on Lew Co.
s current should be

Back 102

$100,000.