Midterm - Summer 20131. (Points 5) The worst rece.docx

Midterm - Summer 2013
1.
(Points: 5)
The worst recession since World War II started in which year?
a. 1953
b. 1957
c. 1973
d. 1981
e. 2007
Save Answer
2.
(Points: 5)
Each of the following was an effect of cheap or free land during
the 19th century except
a. a high marriage rate.

b. a high birth rate.
c. a high rate of immigration.
d. a rapid rate of technological development.
e. a high rate of migration from the farms to the cities.
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3.
(Points: 5)
The mechanical reaper was invented by
a. Eli Whitney.
b. The Marsh brothers.
c. John Deere.
d. Cyrus McCormick.
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4.
(Points: 5)
The New Deal was the economic program of

a. Herbert Hoover.
b. Franklin D. Roosevelt.
c. Dwight D. Eisenhower.
d. Lyndon B. Johnson.
e. Ronald Reagan.
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5.
(Points: 5)
Comparing the United States economy in 1900 with our
economy today, all of the following are still present EXCEPT
a. large agricultural surpluses.
b. an abundance of entrepreneurial ability.
c. "cutting edge" technological progress.
d. a positive balance of trade with the rest of the world.
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6.
(Points: 5)
Who promised "two cars in every garage and a chicken in every
pot?"
a. Herbert Hoover
b. Franklin D. Roosevelt
c. Dwight D. Eisenhower
d. John F. Kennedy
e. Ronald Reagan
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7.
(Points: 5)
The most accurate appraisal of the American economy early in
the 21st century would be that we
a. had the largest economy in the world with no major economic
problems.
b. had the largest economy in the world, but were faced with
some major economic problems.

c. did not have the largest economy in the world, and had no
major economic problems.
d. did not have the largest economy in the world and did face
some major economic problems.
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8.
(Points: 5)
Under President Eisenhower the problem of inflation
a. got a lot worse.
b. got a little worse.
c. stayed about the same.
d. got a little better.
e. got a lot better.
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9.
(Points: 5)
Statement I. President Ronald Reagan said that if we cut tax

rates, people would have more incentive to work, output would
rise, and inflation would subside. Statement II. President
Reagan presided over the worst recession we have had since
World War II.
a. Statement I is true and statement II is false.
b. Statement II is true and statement I is false.
c. Both statements are true.
d. Both statements are false.
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10.
(Points: 5)
The transcontinental railroads were completed in the 25 years
a. before the Civil War.
b. after the Civil War.
c. after 1890.
d. after the 20th century began.

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11.
(Points: 5)
Cyrus McCormick and Eli Whitney were important in the
technology of
a. steel.
b. automobiles.
c. agriculture.
d. oil.
e. chemicals.
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12.
(Points: 5)
The Great Depression began in
a. the second half of 1929.
b. the middle of 1930.
c. early 1932.

d. march 1933.
e. may 1937.
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13.
(Points: 5)
Each of the following is an example of an economic resource
except
a. land.
b. money.
c. capital.
d. labor.
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14.
(Points: 5)
Which statement is true?

a. Productive efficiency has never been achieved.
b. The U.S. economy achieved productive efficiency from mid-
1997 through mid-2001.
c. The U.S. economy achieved productive efficiency from 1980
to 1997.
d. Our economy generally attains productive efficiency.
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15.
(Points: 5)
The central fact of economics is
a. production.
b. distribution.
c. equilibrium.
d. efficiency.
e. scarcity.
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16.

(Points: 5)
Statement I. Resources are often referred to as "the means of
production." Statement II. Capital is a resource.
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17.
(Points: 5)
Referring to a production possibilities curve and the goods
being compared, depict the economic event. The bubonic plague
(Black Death) in the 1300s killed one-third of Europe's
population (capital goods vs. consumer goods).
a. A movement from a point inside the curve to a point on or
near the curve
b. A movement from a point on or near the curve to a point
inside the curve
c. A shift in the entire curve to the right (outward)

d. A shift in the entire curve to the left (inward)
e. A movement along the curve
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18.
(Points: 5)
"The value of the next best alternative" defines
a. the Law of Increasing Costs.
b. the economic problem.
c. allocative efficiency.
d. opportunity cost.
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19.
(Points: 5)
John Maynard Keynes noted that
a. we could print all the money we want and still have scarcity.

b. "to secure the greatest amount of pleasure with the least
possible outlay should be the aim of all economic effort."
c. the general notion that scarcity is due to not having enough
money is an illusion.
d. we could print all the money we want and still have scarcity
AND the general notion that scarcity is due to not having
enough money is an illusion.
e. we could print all the money we want and still have scarcity
AND "to secure the greatest amount of pleasure with the least
possible outlay should be the aim of all economic effort."
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20.
(Points: 5)
Statement I. Entrepreneurial ability is not a resource. Statement
II. Virtually all of our resources are buried under the ground.

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21.
(Points: 5)
Assuming that a society always operates on its production
possibilities curve, an outward shift of the curve implies
a. economic growth has occurred.
b. the society is making more efficient use of its available
resources.
c. consumer demand has increased.
d. the present value of capital resources has increased.
Save Answer
22.
(Points: 5)
Economic growth can be shown by ____________________
production possibilities curve.
a. an outward shift of the
b. an inward shift of the

c. a movement from one point to another along the
d. a movement to a point inside the
Save Answer
23.
(Points: 5)
Which of the following is an example of opportunity cost?
a. The income that could have been earned by working full-time
instead of going to college.
b. The decline in the grades of a student athlete that occurs
because she decides to spend more time practicing sports than
on her academic work.
c. The value of other things you could have done with the same
time and money it cost you to go to the movies.
d. The value of the next-best bundle of goods and services that
could have been produced instead of using those resources to
put astronauts on the moon.
e. All of the choices are examples of opportunity cost.
Save Answer
24.

(Points: 5)
A small economy produces only pizzas and jeans. If resources
are used inefficiently in the economy,
a. it will be possible to produce more pizzas without decreasing
the production of jeans.
b. the economy will be operating at a point on its production
possibilities curve.
c. the economy will be operating at a point outside its
production possibilities curve.
d. it will not be possible to produce more jeans or pizzas.
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25.
(Points: 5)
Private ownership of most of the means of production is
common to
a. capitalism and communism.
b. capitalism and fascism.
c. capitalism and socialism.

d. fascism and communism.
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26.
(Points: 5)
Which of the following is NOT a characteristic of the capitalist
form of economic organization?
a. Central planning.
b. A reliance on decentralized market processes for resource
allocation purposes.
c. Private ownership of productive resources.
d. All of the choices are true.
Save Answer
27.
(Points: 5)
What is a mixed economy?
a. An economy in which production and distribution is done by
both a private sector and a public sector.

b. An economy that has a mixture of resources.
c. An economy run by representatives of different political
parties.
d. An economy that produces a blend of various products rather
than concentrating on a single product.
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28.
(Points: 5)
a. Our economic system leads to an equitable distribution of
income.
b. One of the basic functions of our government is to transfer
some income from the rich and the middle class to the poor.
c. The price mechanism and the definition of economics are
incompatible.
d. None of the statements are true.
Save Answer
29.

(Points: 5)
Mao Tse-tung was responsible for
a. both the Great Leap Forward and the Cultural Revolution.
b. neither the Great Leap Forward nor the Cultural Revolution.
c. the Great Leap Forward, but not the Cultural Revolution.
d. the Cultural Revolution, but not the Great Leap Forward.
Save Answer
30.
(Points: 5)
When our resources are NOT allocated efficiently, we have
_______________.
a. answered the basic economic questions
b. a market failure
c. a government failure
d. market equity

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31.
(Points: 5)
Externalities consist of ___________________.
a. only external costs
b. only external benefits
c. both external costs and external benefits
Save Answer
32.
(Points: 5)
Which statement was coined by Adam Smith?
a. By pursuing his own interest, he frequently promotes that of
the society more effectually than when he really intends to
promote it.
b. The factory owner, by paying his workers meager wages, is
able to use this surplus to buy more capital goods.
c. The foundation of our economic system is socialist ownership
of the means of production in the form of state property and
collective farm and cooperative property.

d. None of these statements were coined by Adam Smith.
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33.
(Points: 5)
A person will do more good pursuing his own self-interest than
if he consciously set out to promote the public good was the
view of
a. Karl Marx.
b. John Maynard Keynes.
c. Mikhail Gorbachev.
d. Adam Smith.
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34.
(Points: 5)
A socialist economy is characterized by
a. an extensive reliance on markets to allocate final goods and

services.
b. an extensive reliance on the profit motive to govern resource
allocation decisions.
c. elimination of the problem of scarcity since all basic
necessities are available to all citizens.
d. public ownership of productive resources.
e. high levels of unemployment and inflation.
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35.
(Points: 5)
"From each according to his ability; to each according to his
needs" is from
a. The Communist Manifesto.
b. The Capitalist Manifesto.
c. The Socialist Manifesto.
d. The Fascist Manifesto.
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36.
(Points: 5)
When the market price is lower than the equilibrium price, there
is
a. a surplus.
b. a shortage.
c. both a shortage and a surplus.
d. neither a shortage nor a surplus.
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37.
(Points: 5)
According to the law of demand, the
a. quantity demanded of a good does not vary with price.
b. quantity demanded of a good varies directly with price.
c. quantity demanded of a good is negatively related to its price.
d. quantity demanded depends on the quantity supplied.

Save Answer
38.
(Points: 5)
Shortages are associated with price _______; surpluses are
associated with price _______.
a. floors; ceilings
b. ceilings; floors
c. equilibrium; equilibrium
d. None of these choices are correct.
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39.
(Points: 5)
If a price ceiling is set above the equilibrium price, then
a. prices will fall as soon as the ceiling price is abolished.
b. prices will remain the same (not rise) when the price ceiling
is lifted.
c. equilibrium price and ceiling prices are two totally different

concepts and hence do not affect each other.
d. prices will begin to rise rapidly when the price ceiling is
lifted.
Save Answer
40.
(Points: 5)
a. Rent control is a price floor.
b. A usury law is a price floor.
c. The minimum wage law is a price floor.
d. None of these statements are true.
Save Answer
41.
(Points: 5)
Rent control is a form of price _____ and is responsible for
housing _____.

a. floor, shortages
b. floor, surpluses
c. ceiling, shortages
d. ceiling, surpluses
Save Answer
42.
(Points: 5)
If the price system is allowed to function without interference
and a surplus occurs, quantity demanded will _____________
and quantity supplied will _____________ until the price falls
to its equilibrium.
a. rise, rise
b. fall, fall
c. rise, fall
d. fall, rise
Save Answer
43.
(Points: 5)

At equilibrium, each of these is true except
a. quantity demanded equals quantity supplied.
b. the price has no tendency to change.
c. market price equals equilibrium price.
d. there may be a shortage or a surplus.
Save Answer
44.
(Points: 5)
At equilibrium, if quantity supplied is 16, quantity demanded
a. is less than 16.
b. is 16.
c. s more than 16.
d. cannot be found without more information.
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45.
(Points: 5)
If market price is above equilibrium price,
a. quantity demanded is greater than quantity supplied.
b. quantity supplied is greater than quantity demanded.
c. quantity supplied is equal to quantity demanded.
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46.
(Points: 5)
If the government set a price ceiling of 25 cents for a loaf of
bread, the most likely consequence would be
a. a surplus of bread.
b. no one would go hungry.
c. most Americans would put on weight.
d. a shortage of bread.
Save Answer

47.
(Points: 5)
Which of these relations is correct?
a. APC - APS = 1
b. MPC + MPS = 1
c. APC + MPC = 1
d. 1 + MPC = MPS
Save Answer
48.
(Points: 5)
When the C line is above the 45-degree line,
a. there is dissaving and consumption is greater than disposable
income.
b. there is dissaving and consumption is less than disposable
income.
c. there is positive saving and consumption is greater than
disposable income.

d. there is positive saving and consumption is less than
disposable income.
Save Answer
49.
(Points: 5)
If disposable income and consumption in an economy are equal,
a. consumers must be incurring debt.
b. consumption must also be equal to saving.
c. household saving must be zero.
d. None are true.
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50.
(Points: 5)
Statement I. APC + APS = 1. Statement II. MPC + MPS = 1.

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51.
(Points: 5)
According to the permanent income hypothesis, households will
tend to react to a temporary tax cut by
a. assuming the new tax level will be permanent.
b. saving most of the additional disposable income.
c. increasing consumption sharply in response to the higher
disposable income.
d. temporarily increasing their marginal propensity to consume.
Save Answer
52.
(Points: 5)
If the APC is .7, we save

a. 3 percent of our income.
b. 7 percent of our income.
c. 30 percent of our income.
d. 70 percent of our income.
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53.
(Points: 5)
An increase in interest rates results in
a. increased consumption and decreased savings.
b. increased savings and decreased consumption.
c. an increase in autonomous consumption.
d. an increase in the durable goods expenditures.
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54.
(Points: 5)
At very low levels of disposable income,

a. consumption is greater than disposable income.
b. disposable income is greater than consumption.
c. people save most of their incomes.
d. consumption is negative.
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55.
(Points: 5)
At the point where C line crosses the 45-degree line, saving is
a. positive.
b. negative.
c. zero.
d. there is not enough information to know this.
Save Answer
56.
(Points: 5)

The consumption function is associated with
a. John Maynard Keynes.
b. Karl Marx.
c. Milton Friedman.
d. Adam Smith.
e. Thorstein Veblen.
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57.
(Points: 5)
Autonomous consumption is always
a. positive.
b. zero.
c. negative.
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58.
(Points: 5)
A corporation is owned by its
a. board of directors
b. stockholders
c. officers
d. bondholders
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59.
(Points: 5)
Statement I. Inventory investment can be negative. Statement II.
Inventory investment in the U.S. fluctuates a great deal from
one year to the next.

Save Answer
60.
(Points: 5)
In the U.S., gross investment is ___________ larger than net
investment.
a. always
b. usually
c. sometimes
d. never
Save Answer
61.
(Points: 5)
Statement I. The purchase of 100 shares of Apple Corporation
stock adds directly to plant and equipment. Statement II. The
purchase of 100 shares of Apple Corporation stock is not an
investment, but merely a financial transaction.

Save Answer
62.
(Points: 5)
During a recession, inventory investment
a. goes up.
b. is steady.
c. goes down.
d. is negative.
Save Answer
63.
(Points: 5)
Each of these is a determinant of the level of I except the

a. capacity utilization rate.
b. margin rate.
c. sales outlook.
d. interest rate.
e. expected profit rate.
Save Answer
64.
(Points: 5)
Which of the following might be used to acquire capital?
a. working less
b. consuming more
c. borrowing
d. all the choices
Save Answer
65.
(Points: 5)

The marginal efficiency of capital is another term for
a. the expected profit rate.
b. the expected interest rate.
c. the expected efficiency of plant and equipment.
d. the expected return on government investment projects.
Save Answer
66.
(Points: 5)
If the going rate of interest were 10 percent and the expected
profit rate were 18 percent, then the opportunity cost of a firm
carrying out a $100,000 project for one year with its own funds
would be
a. 0.
b. $8,000.
c. $10,000.
d. $18,000.

Save Answer
67.
(Points: 5)
Economists define investment to include
a. any increase in business inventories.
b. the addition of cash to a savings account.
c. the purchase of common or preferred stock.
d. the purchase of any durable good, e.g., an automobile or a
refrigerator.
Save Answer
68.
(Points: 5)
Limited liability means that
a. creditors have no legal claim on the personal assets of a
proprietor.
b. corporations cannot be sued.
c. creditors have no legal claims.

d. creditors have no legal claim on the personal assets of a
corporate stockholder.
e. corporations have a legal life independent of their owners and
managers.
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69.
(Points: 5)
Each of the following is a basic economic role of the
government except
a. tax collection.
b. spending money.
c. regulation of the economy.
d. owning most of the means of production.
Save Answer
70.
(Points: 5)
In modern free enterprise economies, which of the following is
not an economic role of government?

a. Stabilization of national income, employment, and the price
level
b. Promotion and maintenance of competitive markets
c. Altering the allocation of resources to provide for public
demands efficiently
d. Providing a reasonably certain legal, social, and business
environment for stable economic growth
e. Planning the production and distribution of most economic
goods
Save Answer
71.
(Points: 5)
Which of the following is a transfer payment?
a. The president's salary
b. Veterans' benefits
c. The NASA budget
d. Schoolteachers' salaries
e. Provision of national parks

Save Answer
72.
(Points: 5)
The money that pays Social Security benefits is raised by
a. taxes that workers pay.
b. taxes that employers pay.
c. taxes that both workers and employers pay.
d. the personal income tax.
Save Answer
73.
(Points: 5)
The essential difference between sales and excise taxes is that
a. sales taxes apply to a wide range of products, while excise
taxes apply only to a select group of products.
b. excise taxes apply to a wide range of products, while sales
taxes apply only to a select group of products.

c. sales taxes are consumption taxes, while excise are not.
d. excise taxes are consumption taxes, while sales are not.
Save Answer
74.
(Points: 5)
If your taxable income rises from $35,000 to $45,000, and the
taxes you pay rise from $12,000 to $15,000, your marginal tax
rate is
a. 10 percent.
b. 20 percent.
c. 30 percent.
d. 40 percent.
e. Impossible to determine.
Save Answer
75.
(Points: 5)
Statement I: Most Americans pay more in Social Security tax

than in personal income tax. Statement II: A tax on cigarettes is
more regressive than a tax on long distance phone calls.
Save Answer
76.
(Points: 5)
The federal budget is prepared and passed by
a. the president.
b. Congress.
c. the president and Congress.
d. neither the president nor Congress.
Save Answer

77.
(Points: 5)
a. State and local governments are expected to provide more and
more services while their tax bases are limited.
b. State and local governments are expected to provide less and
less services while their tax bases are relatively unlimited.
c. Public education has traditionally been the role of the federal
government.
d. None of these statements is true.
Save Answer
78.
(Points: 5)
In 2010, a person earning $300,000 would pay Social Security
tax on
a. none of her income.
b. all of her income.
c. nearly all of her income.

d. less than half of her income.
Save Answer
79.
(Points: 5)
The most important source of state tax revenue is the _____ tax.
a. property
b. income
c. excise
d. sales
Save Answer
80.
(Points: 5)
Until 2004, the largest exporter in the world was?
a. Japan
b. Germany

c. United States
d. China
Save Answer
81.
(Points: 5)
Statement I: The International Monetary Fund (IMF) was set up
as a lender of last resort to discourage member nations from
devaluating their currency. Statement II: The World Bank was
created in the same year as the IMF for the purpose of making
long-term, low-interest loans to developing countries, mainly to
build highways, bridges, dams, power generators, and water
supply systems.
Save Answer
82.
(Points: 5)

Modern, highly productive economies
a. have virtually no specialization.
b. have a small degree of specialization.
c. have a substantial degree of specialization.
d. have a high degree of specialization.
Save Answer
83.
(Points: 5)
Statement I: In modern economies, virtually everyone
specializes. Statement II: A family that tries to be self-
sufficient will have a relatively low standard of living.
Save Answer

84.
(Points: 5)
Statement I: The most potent argument against globalization is
that workers in poorer countries are exploited to produce goods
that are shipped to relatively rich countries. Statement II: Most
economists are against globalization.
Save Answer
85.
(Points: 5)
According to Nobel Prize winning economist Joseph Stiglitz
a. over the years the IMF has markedly changed.
b. the IMF was founded on the belief that markets often worked
badly.
c. the IMF now champions the free market as the best way to

run an economy.
d. All of the choices are true.
Save Answer
86.
(Points: 5)
GDP = C + I + G + Xn. From the outbreak of World War I
(1914) until the 1970s, if Xn were not included our GDP would
be
a. higher.
b. about the same.
c. lower.
Save Answer
87.
(Points: 5)
We run a trade ________ on goods and a trade _________ on
services.
a. deficit, deficit

b. surplus, surplus
c. surplus, deficit
d. deficit, surplus
Save Answer
88.
(Points: 5)
Net exports is a negative figure whenever
a. a nation's exports of goods and services exceed its imports.
b. a nation's imports of goods and services exceed its exports.
c. inventories dwindle.
d. gross savings is greater than net investment.
Save Answer
89.
(Points: 5)
The NAFTA agreement affects our trade with

a. Asia.
b. North America.
c. Africa.
d. The OPEC nations.
e. The European Common Market.
Save Answer
90.
(Points: 5)
The basis for international trade is
a. self-sufficiency.
b. specialization.
c. amassing national wealth at the expense of trading partners.
d. maximizing your exports and minimizing your imports.
false
false
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false
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false
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false
false
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