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51 Cards in this Set

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Most business firms in the US are

Sole proprietorship


Partnerships


Corporations

Sole proprietorship

Most American corporations are

Publicly owned


Very large


Very small


Owned by foreigners


Very small

Which statement is true?

Bondholders are owners of a corporation.



The largest firms in the US are corporations



There are only 10 million business firms in the US



No business firm has sales over 10 billion.

The largest firms in the US are corporations.

Which statement is false?

There are more partnerships than corporations.



There are more proprietorships than partnerships and corporations combined.



Less than one of every ten US businesses is a partnership.



There are about 30 million business firms in the US.

There are more partnerships than corporations.

Of the four types of investment, the only one that can be negative is

Inventory investment


Investment in plant.


Investment in equipment


Investment in residential housing

Inventory investment

The flow of foreign savings into the US

Is relatively low because US interest rates are so high.



Is relatively high because US interest rates are so low.



Plays a very small role in the American economy



Plays a large and important role in the American economy.

Plays a large and important role in the American economy.

The level of investment tends to rise as the capacity utilization rate _____, and the interest rate ______.

Rises, rises


Falls,falls


Rises,falls


Falls,rises

Rises, falls

During recessions, inventory investment

Goes up while the investment in plants and equipment falls.



Is steady while the investment in plants and equipment rises.



Goes down but not as much as the investment I'm plants and equipment.



Goes down even becoming negative while the investment in plabtsvabs equipment is more stable.


Goes down even becoming negative while the investment in plabtsvabs equipment is more stable.

You have the chance to borrow 100,000$ for one year at an interest rate of 6 % and can invest this money in inventory. You would definitely borrow the money for investment if you had expected profits of ______ on your investment.

$1000


$6000


$4000


$15000

$15000

Gross investment minus _______ equals net investment.

GDP


Depreciation


Savings


Net exports

Depreciation.

The largest sector of GDP is

C


I


G


Xn

C

In 2012, US GDP was almost

750 billion


7.5 trillion


16 trillion


77 trillion

16 trillion

If you wanted to compare the standard of living of Americans with Canadians, the best measure would be

GDP


real GDP


per capita GDP


Per capita real GDP

Per capita real GDP

GDP is thar nation's expenditure on _______ goods and services produced during the year at _______ prices.

Intermediate, wholesale


Intermediate, market


Final, wholesale


Final, market

Final, Market

Which of the following is not a component of national income?

Wages and salaries


Rental income


Interest


Consumption expenditures

Consumption expenditures

In the value added process of producing and selling bread, which is the step that counts in our GDP?

When the garner sells wheat to the miller



When the miller sells flour to the baker.



When the flout is shooed to the bakery



When the bread is delivered to the supermarket.



When the bread is sold to a college student.

When the bread is sold to a college student

If the GDP deflate in year X is 112 then

Real and nominal GDP will be equal



Prices have risen 12% since the base year



Real GDP will be larger than nominal GDP



Year X probably occurred before the base year.


Prices have risen 12% since the base year .

If Nominal GDP grew at 2% last year and prices rose by 4%, then real GDP

Rose by 6%


Rose by 2%


Fell by 2%


Did not change

Fell by 2%

Two countries that are among the top 10 with the highest measures of per capita real GDP are ...

Spain and Canada


US and Canada


China and Japan


US and Japan

Us and Japan

Which of the following is not a shortcoming of GDP as a measure of well being?

Household production is included



Illegal production is not counted



The underground economy is excluded



GDP does not take into account leisure time

Household production is included

Since November 1982, we have had ______ recessions.

One


Two


Three


Four


Five

Three

A recovery is over when

Output rises



Output has reached the level of the previous peak



The unemployment rate begins to decline



The consumer confidence index rises



The index of leading economic indicators rises

Output has reached the level of the previous peak

Each of the following is a leading economic indicator except


Average workweek of production workers in manufacturing



New orders for capital goods



The unemployment rate



New building permits issued

The unemployment rate

Which is the most accurate statement?

The period 2001 through 200r was one of deflation.



A CPI of 60 means that prices rose 60%



Consumer prices in 2005 were about 10 times as high as they were in 1945



Consumer prices in 2006 were less than what they were in 1990

Consumer prices in 2005 were about 10 times as high as they were in 1945

Which statement about the computation of the unemployment rate is false?

The unemployed may be over counted because people collecting unemployment benefits, who may not be seriously looking for work, are counted as unemployed when they report to a state employment office



The unemployed may be under counted because those who want to work, but have given up looking, are not counted as unemployed.



The unemployed may be under counted because if you are currently our of work, but did work one day during that month, you are counted as unemployed.



The unemployed may be under counted because only those are collecting unemployment insurance benefits are counted as unemployed.

The unemployed may be under counted because only those are collecting unemployment insurance benefits are counted as unemployed.

Which of the following statements is true for the US economy of 2013?

The economy is in prosperity, but unemployment remains high.



The economy is still in recession but inflation is dangerously high.



The economy is in prosperity but inflation is dangerously high.



The economy is still in recession but unemployment is low

The economy is in prosperity, but unemployment remains high.

Statement I. The natural rate of unemployment while debated is generally considered around 5%.



Statement II. The unemployment rate in 2000 was the lowest on record.

Statement I is true and statement II is false.



Statement II is true and statement I is false



Both true



Both false

Statement I is true and statement II is false.

Which one of the following descriptions of inflation is accurate?

When there is inflation, the prices of all goods and services are rising.



When there is inflation, it almost always accelerates until it becomes a hyperinflation.



Once inflation sets in, it is almost impossible to bring under control.



While little inflation is good for business, a high rate of inflation is bad for business.

While little inflation is good for business, a high rate of inflation is bad for business.

Statement I. Deflation and disinflation are basically the same thing.



Statement II. Deflation is very good for business.

Statement I true and statement II fasle.



Statement II true, statement I false



Both true



Both false

Both false

Which is the most accurate statement?

Unemployment is no longer an economic problem.



Over 15 million Americans were unemployed soon after the end of the Great Recession.



During the period 1998 to 2001 unemployment was our greatest economic problem.



The unemployment rate for blacks is a little higher than the unemployment rate for whites.

Over 15 million Americans were unemployed soon after the end of the Great Recession.

Fiscal policy is conducted by

The president


The Congress


President and Congress


Federal Reserve

President and Congress

How can we close a recessionary gap?

Raise spending


Raise taxes


Lower spending


Raise interest rates

Raise spending

In an inflationary gap,

Full-employment GDP is greater than equilibrium GDP



Equilibrium GDP is greater than fill-employment GDP.



Equilibrium GDP is at the level where aggregate demand equals aggregate supply.



Equilibrium GDP is too small

Equilibrium GDP is greater than fill-employment GDP.

On a graph, a recessionary gap is measure ______ and an inflationary gap is measured ______.

Horizontally, horizontally


Horizontally, vertically


Vertically, horizontally


Vertically , vertically

Vertically, vertically

If equilibrium GDP is at 250 billion and full employment is at 600 billion how much would government purchases have rise if the multiplier is at 5?

80


120


16


10

16

The formula for the multiplier is

1/MPC


1/(1-MPC)


1-MPC


1/(1-MPS)

1/(1-MPC)

The role of automatic stabilizers is to

Protect us from the extremes of the business cycle.



Protect us from high interest rates choking off acces to credit



Protect us from crowding - in



Protect us from accumulating massive budget deficits.

Protect us from the extremes of the business cycle.

The "paradox of thrift" asserts that

If everyone tries to save more, interest rates will rise.



If everyone tries to save more, they will all end up saving more.



If everyone tries to save more, they will all end up saving less.



If everyone stops saving in the short run, we could all actually save more in the long run.

If everyone tries to save more, they will all end up saving less.

Unless extended by the congress, the full amount of time to collect unemployment benefits is

13 weeks


52 weeks


39 weeks


26 weeks

52

The effectiveness of fiscal policy depends on timing. Which of the following is not a problem in this regard?

Recognition lag


Decision lag


Deficit lag


Impact lag

Deficit lag

A federal budget deficit exists when

Revenues exceed expenditures


Expenditures exceed revenues


US makes interest payments on the national debt.

Expenditures exceed revenues

Which is one of the three jobs of money ?

Medium of exchange


Standard of value


Store a value


All of the above

All

Without money, the only way to do business is to ________.

Use gold


Barter


IOUS


Write a check

Barter

The US dollar traces it's roots back to

An old British system


Scotland


Spain


Greece

Spain

The sum of currency, demand deposits, travelers checks and other check able deposits is

M1


M2


M3


Cash minus credit

M1

The transactions, prevautionary, and speculative motives for holding money were formulated by

Alam Greenspan


Marshall McLuhan


Aristotle


David Ricardo


John Maynard Keynes

As prices rise, people seek to

Hold less money


Hold more money


Hold the same amount of money


None

Hold more money

The creation of money is carried out by

Individuals


Banks


Private business firms


US treasury

Banks

"Welfare banks" are

Owned by welfare recipients



Run by city and country welfare departments



Credit unions


Check cashing stores

Check cashing stores

The federal deposit insurance corporation does each of the following except

Insure all bank deposits of $10,000 or less.



Act as a fire wall against bank panics



Assisting banks in taking over failing banks



Finance itself by assessing bank deposits

Insure all bank deposits of $10,000 or less

The top 10 banks in the US hold approximately what percentage of all US bank deposits?

10%


one quarter


One third


60%

60%