Please see the below 50 questions from ECON 125.
Q1. If the United States exports wheat to foreign countries that levy tariffs on wheat imports, the probable result is that the price of wheat will
a. fall in foreign countries
b. rise in the United States
c. rise in foreign countries
d. rise faster in the United States than in foreign countries
Q2. The international organization that replaced the General Agreement on Tariffs and Trade (GATT) is the
a. World Bank
b. Export-Import Bank
c. World Trade Organization
d. International Monetary Fund
Q3. If a tariff is used to protect U. S. jobs,
a. income is transferred from consumers to protected producers
b. national production and income increase
c. national production rises but income decreases
d. the effect is neutral since imports are replaced by domestic goods
Q4. Dumping refers to the practice of
a. flooding a foreign market with large quantities of a good
b. selling a product abroad at a price below cost or below the domestic price
c. exporting inexpensive products to foreign countries
d. selling surplus goods abroad with counterfeit brand names
Q5. A provision that permits raising tariffs if domestic producers are suffering under an existing tariff is known as
a. a trading bloc
b. exchange control
c. antidumping
d. an escape clause
Q6. The distribution of world income is
a. equalizing rapidly
b. very unequal
c. very equal for countries in the Northern Hemisphere
d. very equal for countries in Europe
Q7. Welfare caseloads tend to fluctuate with
a. business cycles
b. weather
c. stock markets
d. minimum wage rates
Q8. Channeling people according to sex or race into particular occupations tends to
a. lower the wage rate in these occupations
b. increase the wage rate in these occupations
c. reduce income inequality among occupations
d. affect employment opportunities, but not wage rates
Q9. Which of the following is a disincentive to leave welfare?
a. decrease in real income
b. lower taxes
c. higher incomes
d. all of these
Q10. One of the problems with official poverty statistics is that they
a. do not account for inflation
b. are not adjusted annually
c. omit in-kind transfers, such as food stamps
d. omit Medicare payments
Q11. National income is equivalent to total earnings in the form of wages, rent, interest, and profits.
a. true
b. false
Q12. The size of the circular flow
a. measures the level of household purchases from business
b. measures the level of income and output
c. increases if there are more planned leakages
d. measures the level of prices
Q13. The total resource cost of goods and services produced by the U. S. economy is known as
a. real GDP
b. personal income
c. national wealth
d. national income
Q14. It is true that a stable economy occurs when
a. total injections into the circular flow are large enough to make up for government tax leakages
b. total leakages from the circular flow are great enough to offset the effects of government spending
c. total planned leakages from the circular flow are exactly equal to total planned injections into the circular flow
d. actual saving is equal to planned investment
Q15. Inventory accumulation occurs whenever
a. output is less than spending
b. output exceeds spending
c. investment exceeds saving
d. a deficit budget occurs
Q16. As the economy approaches the peak phase of the cycle, profits will tend to
a. decrease because of higher sales but lower prices
b. increase because of higher sales and higher prices
c. decrease because of lower sales
d. increase because of the elasticity of demand
Q17. Interest rates usually rise during the contraction phase of the business cycle.
a. true
b. false
Q18. Recurring fluctuations in business activity over the course of one year are known as
a. seasonal variations
b. random fluctuations
c. the trend
d. the business cycle
Q19. Cost changes generally lag behind price changes during the business cycle.
a. true
b. false
Q20. Economic indexes whose upward and downward turning points generally precede the peaks and troughs of general business activity are known as
a. causal indicators
b. leading indicators
c. roughly preceding indicators
d. primary indicators
Q21. The aggregate demand curve is the sum of individual demand curves in the economy.
a. true
b. false
Q22. The purpose of the Keynesian analysis is to explain what determines the
a. size of the labor force
b. price level
c. amount of money required in the economy
d. levels of national income, output, and employment
Q23. If household incomes go up and almost all the increases are spent on consumer goods,
a. the marginal propensity to consume is high
b. the marginal propensity to consume is low
c. planned investment must be decreasing
d. the marginal propensity to save is high
Q24. Classical economists believed that
a. the market system always operated at a position of full employment
b. occasional problems of unemployment could occur but would be quickly eliminated by the system of self-regulating markets
c. the price level would adjust to balance planned saving with planned investment
d. the economy had several possible equilibrium output levels
Q25. Which of the following explains the downward slope of the aggregate demand curve?
a. disposable income remains unchanged when prices rise
b. higher domestic prices encourage exports and discourage imports
c. higher prices reduce the household's real wealth
d. all of these
Q26. Suppose that the Consumer Price Index increased from 100 to 120 between 2015 and 2016. Your nominal wages rose during the same period from $200 a week to $260. By how much did your real income rise?
a. 30 percent
b. 16. 7 percent
c. 8. 33 percent
d. 12 percent
Q27. In a price index, the quantity of goods and services being measured between two periods
a. must be increased
b. must be held constant
c. must be decreased
d. should be increased or decreased
Q28. Which of the following tend to be at a disadvantage in periods of rising prices?
a. debtors
b. people with fixed incomes
c. salespeople whose commissions are very susceptible to price changes
d. all of these
Q29. Excess reserves are the amount of money a bank
a. is required to hold against its checkable deposits
b. is required to hold against its checkable deposits and savings accounts
c. has in excess of its required reserves
d. usually holds to be ready to meet unexpected withdrawals
Q30. If the CPI is 150, the value of the dollar now compared to in the base period is
a. $1. 50
b. $1
c. $0. 67
d. $0. 50
Q31. The interest rate at which commercial banks lend to their customers with the best collateral is known as
a. prime rate
b. federal funds rate
c. discount rate
d. T-bill rate
Q32. The Board of Governors of the Federal Reserve System is
a. under the jurisdiction of the U. S. president
b. responsible to the Secretary of the U. S. Treasury
c. independent within the U. S. government
d. responsible to the Council of Economic Advisors
Q33. The Federal Reserve System is built around
a. four regional banks
b. six regional banks
c. twelve district banks
d. one bank with several branches
Q34. Each Federal Reserve Bank
a. is directly responsible to the U. S. president
b. is controlled by its own Board of Governors
c. lacks autonomy
d. handles a district of equal geographic size
Q35. The interest rate at which banks borrow excess reserves from each other is known as the
a. prime rate
b. federal funds rate
c. discount rate
d. T-bill rate
Q36. If business leaders thought an existing tax credit provision on new investment might be suspended because of inflation, this would cause
a. investment spending to slacken
b. investment spending to accelerate
c. no effect on investment plans
d. interest rates to decline
Q37. Fiscal policy deals with
a. interest rates
b. the money supply
c. the government budget
d. bank credit
Q38. During an inflationary period, the Federal Reserve is most likely to
a. lower the discount rate
b. buy government securities
c. lower reserve requirements
d. raise the discount rate
Q39. Government demand-management policies that are used to try to increase the equilibrium level of output in the economy are known as
a. expansionary policies
b. fiscal dividends
c. output policies
d. laissez-faire policies
Q40. In the long run, the economy tends towards
a. the natural rate of unemployment
b. the structural unemployment rate
c. the frictional unemployment rate
d. the cyclical unemployment rate
Q41. Refunding the debt refers to
a. selling new bonds to raise money to pay off maturing bonds
b. raising taxes to lower the national debt ceiling
c. raising the debt ceiling to allow the government to issue more debt
d. Fed purchases of government bonds in the open market
Q42. A loan is said to be productive if it
a. increases the purchasing power of the borrower
b. increases the present utility of the borrower's possessions
c. ultimately costs less to repay than it was worth when borrowed, due to inflation
d. increases the borrower's total output and profits
Q43. The major advantage of the flat tax is its
a. simplicity
b. progressivity
c. fairness
d. use of tax credits
Q44. The gasoline tax is based on the principle of
a. cost of service
b. benefit received
c. ability to pay
d. equality of sacrifice
Q45. The size of the national debt relative to GDP will not be reduced by
a. paying off some of the debt
b. lowering the federal deficit
c. having the GDP grow faster than the debt
d. having creditors forgive part of the debt
Q46. Floating exchange rates are determined by the
a. forces of supply of and demand for currencies
b. governments with a trade surplus
c. governments with a trade deficit
d. IMF under the Bretton Woods Agreement
Q47. An appreciation of the U. S. dollar would
a. encourage foreigners to invest in the United States
b. discourage foreigners from buying U. S. goods
c. discourage the travel abroad of U. S. citizens
d. encourage foreign travel in the United States
Q48. The balance of trade includes
a. all debit and credit items
b. all merchandise, services, and capital transactions
c. only merchandise exports and imports
d. only service transactions
Q49. Which of the following would cause a credit to the U. S. balance of payments?
a. a group of U. S. citizens goes to New Zealand for a vacation
b. General Motors pays a dividend to a citizen of Brazil
c. Lloyd's of London makes an insurance payment to a U. S. resident
d. Russia cancels its purchases of U. S. wheat and buys wheat from Argentina
Q50. A debit item on the U. S. balance of payments is any transaction that
a. results in a loss by U. S. sellers
b. results in a loss by U. S. buyers
c. makes foreigners use up their holdings of U. S. dollars
d. makes U. S. dollars available to foreigners