1. The largest component of GDP is:
A. net exports.
D. government purchases.
2. The consumption function:
A. is a relationship between annual consumption and annual disposable income in an economy.
B. will shift upward if aggregate household wealth declines.
C. implies that annual consumption in an economy will be zero if disposable income is zero.
D. is a flat line with zero slope.
3. How much is autonomous consumption when disposable income is $800 billion?
B. $2 Trillion
C. $4 Trillion
D. $6 Trillion
4. Autonomous consumption is NOT influenced by:
A. aggregate household wealth.
B. expectations of future income and wealth.
C. aggregate household debt.
D. disposable income.
5. The lunch you buy in your school cafeteria is classified as:
A. a consumer durable.
B. a consumer nondurable.
C. a service.
D. either a consumer nondurable or a service because it fits into both categories.
6. Which one of these would NOT constitute investment?
A. Someone buys 100 shares of Exxon-Mobil
B. Exxon-Mobil purchases 20 new oil rigs
C. General Motors builds a new assembly plant
D. Macy's remodels its stores
7. Net investment:
A. plus depreciation equals gross investment.
B. minus depreciation equals gross investment.
C. equals gross investment plus depreciation.
D. plus gross investment equals depreciation.
8. In the Islamic Middle East inheritance laws were:
A. designed to keep land in units large enough to sustain a family.
B. conducive to the formation of accumulation of capital.
C. designed to easily and quickly divide up partitioned goods.
D. flexible enough to accommodate new economic conditions.
9. Investment includes the purchase of:
A. stock options of Enron.
B. software by an accounting firm.
C. global positioning units for cruise missiles by the government.
D. new chalk by a local school board
10. The most important reason that corporations developed in Western Europe earlier than in the Middle Eastern countries was because of:
A. the type of business.
B. religious differences.
C. the transportation system.
D. the stages of economic development.
11. The largest source of federal tax revenue comes from:
A. individual income taxes.
B. social insurance receipts.
C. corporation income taxes.
D. excise taxes.
12. The Social Security tax is:
A. direct and progressive.
B. direct and regressive.
C. indirect and progressive.
D. indirect and regressive.
13. An excise tax is a(n):
A. tax on earnings.
B. tax on profits.
C. income tax.
D. sales tax.
14. Which of the following is a transfer payment?
A. The president's salary
B. Veterans' benefits
C. The NASA budget
D. Provision of national parks
15. An example of a tax that is generally regarded to be progressive is the:
A. federal income tax.
B. excise tax on gasoline.
C. state sales tax.
D. payroll tax.
16. The most-favored nation clause of the WTO agreement stipulates that:
A. no member nation may impose a tariff on the goods of any other member nation.
B. all member nations must offer all other member countries the same trade concessions as any other member country.
C. each member may designate another member as a favored nation, providing that nation with trade concessions.
D. all member nations must sell their goods to other member nations at cost.
17. If more foreign tourists visited the United States, this would:
A. lower our merchandise trade imbalance.
B. lower our overall trade imbalance
C. raise our merchandise trade imbalance.
D. raise our overall trade imbalance.
18. Each of the following is a characteristic of the European Union EXCEPT that:
A. workers from any EU country could seek work in any other member country.
B. is the fourth largest integrated market.
C. its population and GDP are comparable to those of the United States.
D. freight is able to move anywhere within the EU without checkpoint delays and paperwork.
19. The trading bloc that has eliminated all internal tariffs is:
A. the European Union.
D. The World Trade Organization.
20. Which statement is true?
A. Since the early 1990s the U.S. trade deficit has risen slightly.
B. Net exports has always been positive.
C. The U.S. exports more services than merchandise (in terms of dollars).
D. The U.S. balance of trade was positive for most of the 20th century
21. the GDP is the value of all final goods and services produced:
A. within the nations boundaries.
B. by domestically owned companies.
C. by citizens of the country.
D. by domestically controlled companies.
22.Net domestic product is usually preferred to GDP by economists because net national product:
A. includes depreciation.
B. excludes depreciation.
C. includes indirect business taxes.
D. excludes indirect business taxes.
23.The largest item amount among those listed here is:
A. national income.
B. net interest.
C. net domestic product.
D. corporate profits.
24.Which is NOT counted in GDP?
A. A Social Security check sent to a retiree
B. Government spending on highway building
C. Money spent on an airline ticket
D. Money spent by a company to build a new office park
25.The smallest component of national income is:
D. salaries and wages.
26.Our GDP includes all the output produced by Americans:
A. and foreigners within our borders.
B. within our borders.
C. within our borders and abroad.
D. within our borders and by American-owned, multinational companies with offices and factories abroad.
27.Which of the following is the best example of an intermediate product?
A. A road
D. A TV set
28.Which of the following would increase GDP?
A. More imports
B. Additional leisure time
C. Government removing more litter
D. People engaging in more "do-it-yourself" projects
29.National income accountants can avoid multiple accounting by:
A. including transfers in their calculations.
B. counting both intermediate and final goods.
C. only counting final goods.
D. only counting intermediate goods.
30.The concept of "net domestic investment" refers to:
A. the amount of machinery and equipment used up in producing the GDP in a given year.
B. the difference between the market value and book value of outstanding capital stock.
C. gross domestic investment less net exports.
D. total investment less the amount of investment goods used up in accomplishing the year's production.
31.GDP can increase at a faster rate than real GDP only if:
A. there is inflation.
B. the unemployment rate is increasing.
C. the value of the dollar is stable.
D. the population is growing.
32.Which statement is true?
A. GDP is a virtually perfect measure of national output.
B. GDP takes into account pollution, crime, and even personal satisfaction.
C. GDP is a single number that seeks to measure our national output.
D. There is no relationship between our GDP and our national output.
33.Which of the following is an intermediate good or service?
A. A paint gun purchased by Handy Andy
B. A dozen boxes of Girl Scout cookies purchased by your instructor
C. A computer purchased by a farmer in Smallville, Kansas
D. Glue purchased by McGraw-Hill to bind your textbook
34.__________ is the market value of a firm’s output less the value of the inputs the firm has bought from the previous seller.
A. Value added
B. Net Domestic Product
C. Real GDP
D. Genuine Progress Index
35.Which is the smallest?
A. Net domestic product
B. National income
C. Government expenditures
D. Net exports
36.GDP is a less than perfect measure of economic well-being. It may be faulted for each of these practices EXCEPT that it:
A. does not take leisure time into account.
B. involves multiple counting.
C. does not take psychic costs into account.
D. does not take psychic income into account.
37.Net domestic product is equal to:
A. gross national product.
B. the inflation rate.
C. national income (NI) plus corporate profits taxes.
D. NI plus indirect business taxes.
38.We do NOT count __________ as part of GOP
A. price increases
B. transfer payments
C. final goods
39.About seven out of ten dollars of our GDP is spent on:
A. government purchases.
B. net exports.
C. investment spending.
D. consumer goods.
40.The value actually earned by members of households who supply the inputs necessary to produce GDP is called:
A. net investment
B. national income
C. personal income
D. disposable income
41.Virtually all LDCs spend a major part of their budgets on
A. medical care.
B. family planning programs.
C. implementing improved technology.
42.Leaders in the lower level underdeveloped countries can enhance per capita income by
A. providing better health care
B. encouraging citizens to leave the cities and enter agricultural production
C. encouraging smaller families
D. implementing a social security program
43.In 2006, which one of these would have been considered the poorest country in the world?
44.Which statement is true?
A. Because of their large populations, India and China have relatively high per capita GDPs
B. The only way to industrialize is to build up capital in the form of new plant and equipment.
C. The NICs have the highest per capita GDPs in the world.
D. We find GDP per capita by dividing GDP into population.
45.Which statement is true about the Malthusian theory?
A. It predicts that famine can easily be averted.
B. It is an application of the law of diminishing returns.
C. It is unduly optimistic.
D. It has proven true in most countries.
46.The age of mass consumption truly arrived in the
47.Each of the following would be an example of technological change, except
A. increases in output due to increases in capital.
B. improvements in the qualities of resources.
C. improved knowledge about how to combine resources.
D. the introduction of totally new production processes.
48.Through the 1970s and 1980s most of our productivity was in the _________ sector.
49.Which of the following would not be expected to increase labor productivity?
A. Technological advance
B. The acquisition of more education and training by the labor force
C. An increase in the size of the labor force
D. The realization of economies of scale
50.According to Thomas Robert Malthus, the wage rate would be depressed to the subsistence level because of
A. the power of monopolies.
B. the desire of capitalists to exploit the working class.
C. the natural tendency of population to grow more rapidly than the production of food.
D. the long-run downward trend in investment.
51.The lowest the poverty rate during the last 40 years was in
52.Charles Murray believed that the antipoverty programs of the 1960s and 1970s
A. drastically reduced the level of poverty.
B. slightly reduced the level of poverty.
C. had no impact on the level of poverty.
D. caused more poverty.
53.William Julius Wilson believes that the rise of black urban poverty was caused by each of the following except
A. the rise of welfare dependency.
C. the decline of smokestack industries.
D. the exodus from the ghettos of the black middle and working classes.
54.Between 1994 and 2005 our welfare rolls
A. rose sharply.
B. stayed about the same.
C. declined somewhat.
D. declined sharply.
55.A study by Kathryn Edin and Laura Lein found that
A. virtually all single mothers—whether working or receiving public assistance—had to supplement their income with money from relatives, boyfriends, or the absent father of their children.
B. most welfare families lived very comfortably on their public assistance checks, supplemented by Medicaid, public housing, and food stamps.
C. only half the number of Americans officially below the poverty line were actually poor.
D. government assistance hurt the poor much more than it helped the poor.
56.The conservative theory of poverty blames _____ for welfare dependency.
A. the poor
B. the government
C. both the poor and the government
D. neither the poor nor the government
57.Which group has the highest poverty rate from among these groups?
A. Children under 18
B. Persons over 65
C. White males
D. Members of working class families
58._________________ breeds poverty.
59.The biggest anti-poverty program in the united states is
A. public assistance payment
B. unemployment insurance benefits
C. social security benefits
D. the negative income
60.Almost half of the world’s population lives on less then _________ dollar per day .