The difference between the economic and political functions of government is that
A) the economic function is concerned with the Federal Taxation system while the political function is not.
B) the economic function is concerned with correcting for market failures while the political function is not.
C) the economic function is concerned with the reallocation of income while the political function is not.
D) the economic function encourages merit goods while the political function discourages demerit goods.
Ques. 2The number of firms in a monopolistically competitive market means that
A) all firms will have substantial monopoly power since there are so few firms in the industry.
B) each firm has a relatively small share of the total market since there are many firms in the industry.
C) the firms will be likely to collude since there are only a few firms in the industry.
D) firms will have a hard time earning non-negative profits since there are many firms in the industry.
Ques. 3When a society takes increasing amounts of resources and applies them to the production of a specific good, resulting in increasing opportunity costs for each additional unit produced, which of the following applies?
A) the law of demand
B) the law of supply
C) the law of scarcity
D) the law of increasing additional costs
Ques. 4A price ceiling set above the equilibrium price will cause which of the following?
A) an increase in supply
B) a surplus
C) a shortage
D) no effect on either the price or quantity
Ques. 5There is a(n) ________ relationship between a nation's rate of growth in real GDP per capita and bureaucratic inefficiency.
A) direct
B) inverse
C) proportional
D) undefined
Ques. 6A movement along a supply curve is induced by a change in
A) input prices.
B) taxes and subsidies.
C) price expectations.
D) the product's own price.
Ques. 7Suppose the economy is initially experiencing a short-run recessionary gap. An increase in the size of the budget deficit will
A) increase the size of the recessionary gap.
B) reduce the size of the recessionary gap.
C) lead to an increase in prices with no increase in real GDP.
D) lead to a decrease in prices with an increase in real GDP.
Ques. 8A higher rate of saving should lead to
A) higher current consumption.
B) less growth.
C) more investment, higher capital growth, and more future consumption.
D) a higher price level and reduced future consumption.
Ques. 9The Keynesian portion of the short-run aggregate supply (SRAS) curve
A) is horizontal.
B) is vertical.
C) slopes upward.
D) slopes downward.
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