A technological improvement that lowers production costs for Good A will shift:
a. the supply curve for A to the left.
b. the demand curve for A to the left.
c. the demand curve for A to the right.
d. the supply curve for A to the right.
Question 2The marginal propensity to consume plus the marginal propensity to save must always equal 1.
a. True
b. False
Indicate whether the statement is true or false
Question 3Which of the following constitutes a transfer payment?
a. Income taxes
b. Corporate salaries
c. Fiscal spending
d. Dividend payments
e. Welfare benefits
Question 4Which of the following would be least likely to affect the supply of automobiles?
a. higher prices for steel and other resources used in producing automobiles
b. a successful physical fitness plan encouraging Americans to walk rather than drive to their destinations
c. a technological improvement reducing the production costs of automobiles
d. increased wages for members of the United Auto Workers union
Question 5The marginal propensity to consume is a measure of the additional consumption that results from a one-dollar increase in disposable income.
a. True
b. False
Indicate whether the statement is true or false
Question 6Which of the following is true about automatic stabilizers?
a. Automatic stabilizers are a part of discretionary fiscal policy.
b. The federal funds rate is an example of an automatic stabilizer.
c. An automatic stabilizer is any program that responds to fluctuations in the business cycle in a way that moderates the effects of those fluctuations.
d. Any kind of trade policy adopted by the government will be considered as an automatic stabilizer.
e. When income rises, automatic stabilizers increase/boost spending.
Question 7According to the law of supply:
a. there is an inverse relationship between price and quantity demanded.
b. there is a direct relationship between price and quantity demanded.
c. there is an inverse relationship between price and the quantity supplied.
d. there is a direct relationship between price and the quantity supplied.
Question 8Discuss the impact of efficiency wages on unemployment and wage inflexibility.
Question 9Ceteris paribus, the greater the foreign holdings of the U.S. treasury securities:
a. the lower the value of the U.S. dollar in the foreign exchange market.
b. the higher the interest rate in the U.S.
c. the greater the level of U.S. imports.
d. the lower the wealth of the U.S. citizens.
e. the lower the tax rate in the U.S. economy.
Question 10A supply curve illustrates a(n) ____ relationship between ____ and ____.
a. direct; price; supply
b. direct; price; quantity demanded
c. direct; price; quantity supplied
d. inverse; price; quantity demanded
Question 11Discuss some of the reasons behind downward stickiness of wages and prices.
Question 12If all U.S. government bonds are held by U.S. citizens, then:
a. the bondholders will not earn interest on the bonds.
b. there is no tax liability for funding the U.S. government's debt.
c. there is no net change in national wealth when the national debt changes.
d. the tax liability for funding the debt is not offset by the interest earnings of bondholders.
e. the tax rates are not increased to repay the outstanding debts.
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