Governments may intervene in private markets through
A) rationing by political power.
B) price floors.
C) price ceilings.
D) all of the above.
Ques. 2Borrowing to finance the increases in government expenditures
A) reduces current private investment expenditures.
B) increases interest rates.
C) reduces growth in the nation's private capital stock.
D) all of the above.
Ques. 3Refer to the above figure. Which of the following points indicates an inefficient use of resources?
A) a
B) d
C) e
D) More information is needed to answer the question.
Ques. 4Economic freedom is
A) the right to vote in an election for a political leader.
B) the right to own private property and to exchange goods with minimal government interference.
C) the amount of control that the government has in a market.
D) present as long as private individuals own businesses.
Ques. 5The relationship between the interest rate and the asset demand for money is
A) positive.
B) inverse.
C) positive sometimes and inverse other times.
D) nonexistent.
Ques. 6According to Say's law
A) supply creates its own demand.
B) demand creates supply.
C) changes in supply create supply-side inflation.
D) changes in demand create demand-side inflation.
Ques. 7The rights to own private property and to exchange goods with minimal government interference is
A) capital freedom.
B) population freedom.
C) economic freedom.
D) political freedom.
Ques. 8The government imposes a unit excise tax on bubble gum. What happens as a result?
A) The equilibrium quantity of bubble gum increases.
B) At the original market price, there will be a bubble gum surplus so price decreases.
C) At the original market price, there is a bubble gum shortage and so price rises.
D) There will be no change in either the market price or equilibrium quantity as long as the excise tax rate is 5 percent or less.
Ques. 9A price floor set above a market equilibrium price causes
A) a surplus.
B) a shortage.
C) producers to receive lower prices.
D) consumers to pay lower prices.
Ques. 10Which one of the following would cause a rightward shift in the demand curve of digital cameras?
A) Digital cameras become easier to use.
B) The price of digital cameras decreases.
C) Production methods are modified to make production of digital cameras more efficient.
D) Government regulations are imposed to limit the number of digital cameras imported.
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