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Econ 104
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Questions in this quiz (100)
11) Which of the following is not one of the questions that all economies must answer?
- AWhat to produce?
- BHow to produce?
- CWhat price to produce
- DNone of the above
22) Opportunity costs are,
- AAlways present in any action
- BThe lost benefit of the best forgone alternative action
- CAre important to understanding the concept of comparative advantage
- DAll of the above
3Factors of production,
- Aa. Earn income in the factor market
- Bb. Include Land, Labor, and Capital
- Cc. Are inputs to production
- Dd. All of the above
4Institutions are collective understanding the influence individual action.
- ATrue
- BFalse
- CUncertain
5Almost all modern economies are referred to as ‘Mixed-Market’ economies because
- Aa. They combine aspects of capitalism, socialism, and traditional economic systems
- Bb. The operation of markets is complicated
- Cc. There are many different types of markets
- Dd. None of the above
6When we speak of ‘Real’ values in economics we refer to;
- AThe nominal value of economic output.
- Bb. The estimated change in actual economic output.
- Cc. The rate of expected inflation.
- Dd. None of the above.
7Which of the following people is in the labor force?
- Aa. A 32-year-old taxi driver who has just lost his job but is looking for a new one.
- Bb. A 22-year-old college graduate who just started looking for a job.
- Cc. A 40 year old stay at home parent.
- Dd. Both A and B above.
8A Division of Labor refers to,
- Aa. Negotiations over the wage rate
- Bb. Different people doing different jobs
- Cc. Separating different working into different departments
- Dd. None of the above
9If we wanted to find data about local labor markets a good place to find this information would be,
- Aa. The Bureau of Labor Statistics (BLS)
- Bb. The Bureau of Economic Analysis (BEA)
- Cc. The Economic Report of the President
- Dd. None of the above
10When we break down GDP expenditures into categories we find that the largest share is ‘Consumption Spending’. This refers to,
- Aa. Spending by households and businesses
- Bb. Spending by households, businesses, and government.
- Cc. Spending by households.
- Dd. None of the above
11For per person economic growth to occur and be sustainable there must also be,
- Aa. An increase in money
- Bb. An increase in productivity
- Cc. An increase in both a and b
- Dd. None of the above
12Economic Analysis cannot be done if there is no formal data.
- ATrue
- BFalse
- CUncertain
13Gross Domestic Product (GDP) is a measure of,
- Aa. Economic Aggregate Expenditures or Income
- Bb. Total wage income
- Cc. Spending by households
- Dd. None of the above
14Which of the following would not be included in United States GDP?
- AWage income earned at your job
- BYour tuition expenditures
- CSpending by foreign citizens on services produced inside the United States.
- DNone of the above
15If we could perfectly measure all economic activity then,
- Aa. GDP would equal GNP
- Bb. GDP would equal total wages
- Cc. GDP incomes would equal GDP expenditures
- Dd. None of the above
16Which of the following would be included in GDP as government spending?
- Aa. Spending on roads
- Bb. Spending on social security
- Cc. Spending on the police services
- Dd. Both a and c above
17When economists talk about investment they are referring to,
- Aa. Spending by business on plant and equipment
- Bb. Spending by households on goods and services
- Cc. Purchases of financial assets
- Dd. None of the above
18If the economy only has a household sector and a business sector then for the household sector to have sustainable savings the business sector must,
- Aa. Consistently earn a profit.
- Bb. Consistently run deficits (borrow).
- Cc. Employ all the people in the society.
- Dd. None of the above.
19Demand Pull and Costs Push inflation can happen at the same time.
- ATrue
- BFalse
- CUncertain
20Everybody is employed, there is a general shortage of products at the stores due to excess demand we should expect,
- Aa. Cost – Push inflation
- Bb. Deflation
- Cc. Demand – Pull inflation
- Dd. A recession to occur
21The PPI is,
- Aa. A way of measuring inflation
- Bb. Reflects the change in the price of a weighted basket of producer goods
- Cc. Can predict or forecast changes in consumer prices
- Dd. All of the above
22If you are given the following CPI numbers 2001 = 100, 2002 = 103.5, 2003 = 104.5, 2004 = 105. Then the annual rate of inflation in 2003 (using the CPI) was,
- A3.5%
- B4.5%
- C.96%
- DNone of the above
23The CPI perfectly reflects the spending and price patterns of all households.
- ATrue
- BFalse
- CUncertain
24I just resigned from my job to look for another full time. I am,
- Aa. Cyclically Unemployed
- Bb. Fictionally Unemployed
- Cc. Structurally Unemployed
- Dd. Seasonally Unemployed
25I lost my job because a robot now does the work. I am,
- Aa. Cyclically Unemployed
- Bb. Frictionally Unemployed
- Cc. Structurally Unemployed
- Dd. Seasonally Unemployed
26The circular flow diagram captures,
- AEconomic flows
- BEconomic stocks
- CEconomic bonds
- Dnone of the above
27Households provide ___________ to the factor market
- AFinished goods and services
- BIncome
- CFactors of production
- DAll of the above
28Household expenditures equals household incomes minus,
- AConsumption and taxes
- BSavings and taxes
- CConsumption and investment
- DTaxes
29Over time total expenditures must equal,
- ATotal incomes
- BTotal investment
- CBusiness income
- DNone of the above
30In our model of business investment we hypothesized that,
- Aa. Business would investment more if government spending increased
- Bb. Business would invest less if the rate of interest increased
- Cc. Business sometimes don’t invest at all.
- Dd. All of the above
31If total autonomous spending is $10,000 and the multiplier is 3 then equilibrium incomes are,
- A$10,000
- B$3,333
- C$30,000
- DNone of the above
32In the above question we referred ‘autonomous spending’ this,
- Aa. Is an injection
- Bb. Is the amount of spending that occurs for reasons outside our model
- Cc. Both of the above
- Dd. None of the above
33Data about the characteristics of U.S. households is best found at,
- Aa. The Census
- Bb. The Bureau of Economic Analysis
- Cc. The Federal Reserve
- Dd. None of the above
34When households defer spending that amount becomes an economic
- AInjection
- BLeakage
- CGovernment spending
- DAll of the above
35Factors of production, in competitive markets, earn;
- Aa. Income
- Bb. The marginal value of what they produce
- Cc. The value that people put on the factor’s output
- Dd. All of the above
3611) The term ‘labor share’ refers to,
- Aa. The share of total incomes paid out in wages
- Bb. The share of profits that go to labor
- Cc. Collective bargaining
- Dd. None of the above
37If we have an economy made up of only households and businesses (No Financial Sector, Government, or Foreign Sector) then household savings must equal _______ for the economy to be in equilibrium.
- ATaxes
- BImports
- CBusiness Debt
- DAll of the above
38If we find that the total amount injected into an economic system is $20,000 and the total amount leaked from that system is $6,000 then the derived multiplier will be;
- A2
- B3
- C4
- D6
39In the equation C = c0+c1(Y-t) The value of c1 tells us;
- Aa. How C changes as Y Changes
- Bb. How Households’ Spending increases as their income increases
- Cc. The Marginal Propensity to Consume
- Dd. All of the above
40If we can assume that saving is the only leakage from an economic system and we know the MPC is .5 then we also know that the multiplier effect will be;
- A1
- B2
- C4
- D6
41Which of the following would decrease the value of your answer above?
- AAn increase in taxes
- BA decrease in taxes
- CA reduction in the MPC
- DBoth b and c above
42Over the last 40 years most increases in household income, and thus economic growth, has gone to households;
- Aa. Equally across all incomes
- Bb. Mostly to the Middle Classes (20% - 80% percentile)
- Cc. Mostly to the Lower Classes (0 – 20% percentile)
- Dd. Mostly to the Upper Classes (>80% Percentile)
43The Tastes and Preferences of households,
- Aa. Are mostly not a matter for economics
- Bb. Have institutional context
- Cc. Are not considered as ‘good’ or ‘bad’ by economists
- Dd. All of the above
44When on says the labor contract is ‘At Will’ it means;
- Aa. The people want to work
- Bb. That they cannot be fired
- Cc. That the contract can be terminated by either party at any time
- Dd. Any of the above
45Business Investment is,
- AA form of expenditure
- BIs borrowing on expected future business revenues
- CMakes it possible to have positive aggregate savings by households
- DAll of the above
46In market exchanges,
- ASellers generally value the revenue they receive more than the item they have sold
- BBuyers generally value the item they’ve bought more than the money they have spent.
- CAll parties are better off after the transaction than they were before.
- DAll of the above
47The price of a good and its value to you are the same thing.
- Atrue
- Bfalse
48In our household model from class (and the text) we said that households,
- Aa. Consume, save, and pay taxes
- Bb. Eat, drink, and sleep
- Cc. Consume, Invest, and pay taxes
- Dd. None of the above
49If taxes increase we should expect,
- AHousehold savings to fall
- BHousehold spending to fall
- CHousehold spending to rise
- DBoth A and B above
50If there is a reduction in Government deficit spending we should expect,
- AHousehold savings to fall
- BHousehold spending to fall
- CHousehold spending to rise
- DBoth A and B above
51Which of the following is NOT considered to be one of the functions of the FED?
- AConducting Monetary Policy
- BMaintaining the Money Supply
- CActing as the Bank of the Federal Government (U.S.)
- DNone of the above
52The final asset that backs the U.S. dollar is,
- AFaith in the FED
- BThe willingness and ability of the U.S. Government to pay its debts (and collect taxes).
- CGold
- DNone of the above
53Which of the following two economic problems are the basis of the FED’s ‘dual mandate’?
- AInflation and deflation
- BGDP and GMP
- CInflation and Unemployment
- DExports and Imports
54If required reserves are 10% and the FED sells 1 million dollars of Government securities (Bonds) then,
- AThe supply of money supply will fall
- BThe supply of money supply will increase
- CThe money supply will stay the same
- DNone of the above
55Which of the following is not one of the conventional tools of the FED?
- AThe reserve Requirement
- BThe Discount rate
- COpen market Operations
- DNone of the above
56When banks make loans they are effectively
- AReducing unemployment
- Bcreating credit
- CReducing purchasing power
- DAll of the above
57The ‘right amount’ of money is the amount that
- AMaintains inflation
- BMaintains full employment and price stability
- CLimits GDP
- DNone of the above
58When the FED buys bonds from the banking system it
- Aa) Reduces banking liquidity
- Bb) Increases banking liquidity
- Cc) Sells bonds to the banking system
- De) None of the above
59Which of the following is NOT a function of money?
- AStore of value
- BMeans of Exchange
- CUnit of account
- DNone of the above
60The Discount Rate is
- AThe interest rate paid on reserve loans from the FED
- BThe interest rate paid on reserve loans issued between banks
- CThe rate of interest paid by large banking customers
- DNone of the above
61What is the present value of $10,000 payable as a lump sum one year from now? (Assume the rate of interest is 5% over the year.)
- A$9523
- B$10500
- C$10000
- DNone of the above
62During the recent financial crisis the FED began purchasing,
- ATreasury bonds
- BMortgage backed securities
- CDebt that people had defaulted on
- DNone of the above
63If the required reserve ratio is 10% and a bank has $100,000 in deposits and $20,000 in its vault which of the following is true?
- AIt can make more loans
- BIt has more reserves than it needs (excess reserves)
- CIt has at least $100,000 in liabilities
- DAll of the above
64The _________ is set by the FED.
- ADiscount rate
- BFED funds rate
- CReserve requirement
- DAll of the above
65In a conventional open market operation the FED is,
- AAdjusting the amount of liquidity in the banking system
- BIncreasing the value of banking system assets
- CBuying up loans that the bank has made
- DNone of the above
66When a loans is repaid it has the effect of,
- ACreating money
- BCreating credit
- CDestroying credit
- DNone of the above
67The FED sets the federal funds rate.
- Atrue
- Bfalse
- CUncertain
68The FED conducts open market operations by,
- Aa) Purchasing and selling non-liquid assets to the banking system
- Bb) Purchasing and selling non-liquid assets from the Federal Government
- Cc) Purchasing and selling non-liquid assets on the foreign exchange
- Dd. None of the above
69The U.S. Dollar is an example of ‘Commodity Money’.
- ATrue
- BFalse
- CUncertain
70For a conventional bank, demand deposits are,
- AA liability
- BAn asset
- Ccould be either
- Dnone of that above
71The Discount Window refers to the ability of banks to,
- Aa) Borrow reserves from the FED
- Bb) Borrow reserves from each other
- Cc) The order window at McDonalds
- Dd) None of the above
72Relative to the last 40 years interest rates today are relatively,
- ALow
- BHigh
- CAt about average
- DUnknown
73The decision for businesses to invest is a choice between,
- AProfit and loss
- BRevenues today versus revenues in the future
- CFuture expenditures
- DNone of the above
74What is the correct relationship between NAICS industry code 114 and 1142?
- Aa) 114 is more specific than 1142
- Bb) 1142 is unrelated to 114
- Cc) Both represent manufacturing industries
- Dd) industry 1142 is a subset of industry 114
75Normally we would say that a higher interest rate;
- Aa) Makes it more expensive for business to invest.
- Bb) Makes it more beneficial for households to save for the future.
- Cc) Makes it harder for households to spend today.
- Dd) All of the above
76The Government, by setting the rules, determines the limits within economic activity must occur.
- Atrue
- Bfalse
- CUncertain
77The Government requires a fund of tax revenues in order to spend.
- Atrue
- Bfalse
- Cuncertain
78When the Government taxes its citizen it also
- AIncreases their income
- BIncreases GDP
- CLowers consumption spending
- DNone of the above
79Which of the following would be entered as a negative (-) on the current account?
- Aa. A foreign bank purchasing U.S. Government debt
- Bb. A U.S. automaker building a new factory in Mexico
- Cc. The domestic purchase of a Honda car made in Japan
- Dd. None of the above
80The Financial Account (international trade) is a measure of,
- Aa. The international flow of incomes
- Bb. The international transfer of assets
- Cc. The total value of international trade
- Dd. All of the above
81When we say that a nation has a trade deficit it means,
- Aa. That nation has a current account deficit
- Bb. That nation has a net goods and service inflow
- Cc. That nation has a net income outflow
- Dd. All of the above
82Which of the following would be an advantage of a flexible exchange rate?
- Aa. Price stability in the Foreign Sector
- Bb. High cost to maintain
- Cc. Ability to conduct domestic monetary policy
- Dd. All of the above
838) Which of the following would be an advantage of a fixed exchange rate?
- Aa. Price stability in the Foreign Sector
- Bb. High cost to maintain
- Cc. Ability to conduct domestic monetary policy
- Dd. All of the above
84Tax policy changes GDP through
- Aa. Changes in household consumption spending
- Bb. Changes in government spending
- Cc. Change in tax incomes
- Dd. None of the above
85A fundamental problem with public sector spending is,
- AIt involves compromise
- BIt produces waste
- CIt is Inefficient
- DNone of the above
86If we expect a foreign currency to appreciate relative to our own,
- Aa. It will increase the overall return of that nation’s assets in terms of our currency.
- Bb. It will decrease the overall return of that nation’s assets in terms of our currency.
- Cc. We should expect our exports to that nation to decrease.
- Dd. We should expect imports from that nation to increase.
87It would be difficult for a nation to reduce its trade deficit significantly if,
- Aa. There is strong demand for that nation’s assets.
- Bb. There is weak demand for that nation’s assets.
- Cc. Domestic interest rates are low.
- Dd. None of the above
88If a Canadian citizen purchases a house in the United States the value of that house would be entered on,
- AThe current account
- BThe Financial account
- CThe Capital account
- DU.S GDP
8914) In modern economies the State,
- Aa. Sets both the rules and is a consumer of goods and service
- Bb. Sets both the rules and the exchange rate
- Cc. Sets both sets the exchange rate and the rate of interest
- Dd. All of the above
9015) Debt and Deficit are the same concept.
- Atrue
- Bfalse
- Cuncertain
91Today the rate of interest paid by the U.S. Government on its debt is about,
- A2-3%
- B3-5%
- C8-10%
- Dover 10%
9217) A common form for U.S. Government debt is,
- AFED bonds
- BMUNI's
- CTreasury bonds
- DAll of the above
93Which of the following would be an example of an ‘automatic stabilizer’?
- AIncome tax
- BMedicade
- CUnemployment insurance
- DAll of the above
94A Current Account deficit implies,
- Aa. A Financial Account Surplus
- Bb. A net financial outflow
- Cc. A net goods outflow
- Dd. None of the above
95If a nation’s currency is relatively strong (Compared to other currencies) then,
- AImports will be expensive
- BExports from that nation will be inexpensive overseas
- CExport markets will thrive
- DNone of the above
96If a nation’s currency is relatively weak which of the following could be true?
- AThe economy is weak
- BThe government is unstable
- CNone of the above
- DBoth A and B above
97When the dollar appreciates what is also true?
- AExports from the U.S. are more expensive
- BImports from the U.S. are cheaper
- CBoth of the above
- DNeither A or B
98If the value of a nation’s currency is falling relative to other currencies then what else is going to be true about that nation?
- AAny trade deficit will eventually fall
- BImports are going to become more expensive
- CExport markets can be expected to pick up
- DAll of the above
99Under the Bretton-Woods system of exchange rates
- AThe Dollar was pegged to the price of Gold
- BThe Pound was pegged to the price of Gold
- CThe Euro was pegged to the price of Gold
- DNone of the above
100If interest rates were to increase in the United States relative to other nations we would expect the value of the dollar on the foreign exchange to
- AIncrease
- BDecrease
- CRemain the same
- DUncertain
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- Quiz on Econ 104, created by Will Ullrich on 15/05/2018.
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- Will Ullrich
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