An economic system characterized by private ownership of the factors of production and economic activity coordinated through a system of markets and prices is called:
a. capitalism. b. socialism.
c. communism. d. none of these.
QUESTION 2If the spending multiplier is equal to 4, then a 25 initial increase in investment spending will lead to a:
a. 25 increase in real GDP.
b. 1 decrease in real GDP.
c. 1 increase in real GDP.
d. 100 decrease in real GDP.
e. 100 increase in real GDP.
QUESTION 3Decisions regarding purchases and sales of government securities by the Fed are made by the:
a. Federal Funds Committee.
b. Discount Committee.
c. Federal Open Market Committee.
d. FDIC.
QUESTION 4Which of the following is not a characteristic of capitalism?
a. Private ownership of resources.
b. Decentralized decision-making using markets.
c. Representative democracy.
d. Consumer sovereignty.
QUESTION 5If the spending multiplier is equal to 5, then a 1 initial increase in investment spending will lead to a:
a. 5 percent decrease in real GDP.
b. 5 percent increase in real GDP.
c. 5 decrease in real GDP.
d. 5 increase in real GDP.
e. 0.05 percent increase in real GDP.
QUESTION 6The number of presidentially appointed members who sit on the Federal Reserve Board of Governors is:
a. none.
b. seven.
c. nine.
d. twelve.
QUESTION 7Which of the following is one common criticism of capitalism?
a. Poor product quality and little product diversity.
b. Inefficiency of nationalized industries.
c. Inability to adjust quickly to changing economic conditions.
d. Inadequate environmental protection.
QUESTION 8A 2,000 decrease in investment will shift the aggregate expenditures curve down by:
a. exactly 2,000 and will decrease the equilibrium level of real GDP by exactly 2,000.
b. exactly 2,000 and will decrease the equilibrium level of real GDP by less than 2,000.
c. exactly 2,000 and will decrease the equilibrium level of real GDP by more than 2,000.
d. less than 2,000 and will decrease the equilibrium level of real GDP by less than 2,000.
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