Archive for February 2017

Which is the most accurate statement?

Naim 21:46

Which is the most accurate statement?





a. the chinese stimulus package was more successful than the american stimulus package
b. the american stimulus package was more successful than the chinese stimulus package
c. the chinese and american stimulus packages were equally succsful






Answer: A

The $787 billion stimulus package

Naim 21:46

The $787 billion stimulus package



a. had little effect on ending the Great Recession
b. ended the great recession almost immediately
c. was basically a Keynesian strategy to end the recession
d. had little effect on the federal budget deficit






Answer: C

Each of the following is a reason why the deficit is bad except that___

Naim 21:46

Each of the following is a reason why the deficit is bad except that___




a. this money might otherwise have gone to pay for other government services
b. like the national debt we owe it to ourselves
c. we have become increasingly dependent on foreigners to finance it
d it tends to raise interest rates








Answer: B

The automatic stabilizers____

Naim 21:45

The automatic stabilizers____



a. moderate the extremes of the business cycle
b. make the business cycle more extreme
c. have virtually no effect on the business cycle








Answer: A

Dynamic scoring is closely related to___

Naim 21:45

Dynamic scoring is closely related to___




a. the crowding out effect
b. the crowding in effect
c. both the crowding out and crowding in effect
d. neither the crowding out or the crowding in effect






Answer: B

In 2006 and 2007 we had

Naim 21:44

In 2006 and 2007 we had




a a recessionary gap
b. neither an inflationary gap nor a recessionary gap
c. an inflationary gap







Answer: C

The most valid argument against the size of the national debt is that it

Naim 21:44

The most valid argument against the size of the national debt is that it




a. will ruin the nation when we have to pay it back
b. is owed mainly to foreigners
c. leaves future generations less plant, equipment, and housing than would be left had there been a smaller debt.
d. will bankrupt the nation because there is a limit as to how much we can borrow









Answer: C

A major advantage of the automatic stabilizers is that they____.

Naim 21:44

A major advantage of the automatic stabilizers is that they____.





a. simultaneously stabilize the economy and tend to reduce the size of the public debt
b. guarantee that the federal budget will be balanced over the course of the business cycle
c.automatically produce surpluses during recessions and deficits during inflations
d. require no legislative action by congress to be made effective






Answer: D

The main feature of 2008 economic stimulus package was

Naim 21:43

The main feature of 2008 economic stimulus package was





a. taxpayer rebates
b. an across the board tax cut
c. an increase in spending on food stamps and unemployment benefits
c. an increase in spending on food stamps and unemployment benefits
d. a large highway building program




Answer: A

Which statement is true?

Naim 21:43

Which statement is true?




a. the public debt is larger than our GDP
b. The public debt is the sum of our deficits minus our surpluses over the years since the beginning of the country
c. we have had budget deficits only during recession years and wartime
d. none of these statements is true







Answer: B

During times of inflation we want to

Naim 21:43

During times of inflation we want to 




a. raise taxes and run budget deficits
b. raise taxes and run budget surpluses
c. lower taxes and run budget surpluses
d. lower taxes and run budget deficits







Answer: B

Which statement is true?

Naim 21:42

Which statement is true?





a. the national debt is larger than GDP
b. The national debt will have to be paid off eventually
c. most of the national debt is held by foreigners
d. none of these statements is true







Answer: D

Which statement is true?

Naim 21:42

Which statement is true?



a. about one third of the national debt is rolled over or refinanced every year
b. the national debt is doubling every 10 years
c. unless we balance the budget within the next five years, the united states stands a good chance of going bankrupt
d. none of these statements is true






Answer: A

The fiscal policy recognition lag

Naim 21:42

The fiscal policy recognition lag




a. is always very short
b. is always very long
c. is always longer than the decision and impact lags combined
d. can very considerably in length






Answer: D

Statement 1: A tax cut will have the same impact on the recessionary gap as an increase in G only if people spend the entire tax cut statement 2:The paradox of thrift is more relevant today, when savings are so low, than it was back in the 1950s and 1960s.

Naim 21:41

Statement 1: A tax cut will have the same impact on the recessionary gap as an increase in G only if people spend the entire tax cut
statement 2:The paradox of thrift is more relevant today, when savings are so low, than it was back in the 1950s and 1960s.



a. Statement 1 is true and statement 2 is false
b. Statement 2 is true and statement 1 is false
c. both statements are true
d. both statements are false








Answer: A

The requirement to override a presidential veto is

Naim 21:40

The requirement to override a presidential veto is




a. a majority vote in each house of Congress
b. a two thirds vote in each house of congress
c. a three quarters vote in each house of congress
d.a majority vote of both houses of congress combined





Answer: B

Fiscal policy is made by

Naim 21:40

Fiscal policy is made by 



a. the president only
b. congress only
c. both the president and congress
d. neither the president nor congress






Answer: C

Which of the following is an example of crowding out?

Naim 21:40

Which of the following is an example of crowding out?




a. Federal government spending causes changes in state and local government spending
b. government spending reduces private spending
c. tax changes perceived as temporary are largely ignored
d. government spending causes the price level to rise








Answer: B

The automatic stabilizers

Naim 21:40

The automatic stabilizers



a. help smooth out the business cycle
b. make the business cycle worse
c. eliminate the business cycle






Answer: A

The crowding in effect is

Naim 21:39

The crowding in effect is



a. much stronger during a recession than during prosperity
b. much stronger during prosperity than during a recession
c. equally strong during a recession and prosperity







Answer: C

Fiscal policy and monetary policy are ___

Naim 21:38

Fiscal policy and monetary policy are ___




a. different means used to attain different goals
b. different means used to attain the same goals
c. the same means to attain the same goals
d. the same means to attain different goals






Answer: B

There is an inflationary gap when

Naim 21:38

There is an inflationary gap when



a. equilibrium GDP is equal to full employment GDP
b. equilibrium GDP is smaller than full employment GDP
c. equilibrium GDP is larger than full employment GDP
d. none of these occur






Answer: C

Which one of these would be the most accurate statement?

Naim 21:37

Which one of these would be the most accurate statement?




a. There was a very short fiscal policy decision lag in 2008
b. There was virtually no fiscal policy impact lag in 2008
c. In 2008 rebate checks were sent out within weeks after the beginning of the economic slowdown
d. President George W. Bush and the leaders of Congress were very slow to act after recognizing that there was an economic slowdown in early 2008





Answer: A

Keynes and the classical economics would agree that ___

Naim 13:36

Keynes and the classical economics would agree that ___




a. our economy is always at equilibrium or tending toward equilibrium
b. our economy is never at or tending toward equilibrium
c. the prime mover of our economy is aggregate supply
d. the prime mover of our economy is aggregate demand







Answer: A

If we are operating in the classical range of the aggregate supply curve and aggregate demand rose, then___

Naim 13:36

If we are operating in the classical range of the aggregate supply curve and aggregate demand rose, then___




a. output would rise and the price level would remain the same
b. output would remain the same and the price level would rise
c. output would rise and the price level would rise
d. output would remain the same and the price level would remain the same





Answer: B

Which of the following is the most accurate statement about meeting our current economic needs?

Naim 13:35

Which of the following is the most accurate statement about meeting our current economic needs?



a. John Maynard Keynes, rather than Jean baptiste Say, is providing the economic answers we need.
b. Say, rather than Keynes, is providing the economic answers we need.
c. Neither Keynes nor say is providing the economic answers we need
d. together, Keynes and Say are providing the economic answers we need.







Answer: C

Which of the following anti recession programs would not be one that John Maynard Keynes would have prescribed?

Naim 13:35

Which of the following anti recession programs would not be one that John Maynard Keynes would have prescribed? 



a. the New Deal under President Franklin Roosevelt
b. the one trillion dollar Japanese public works program of the 1990s
c. Letting the forces of supply and demand allow the economy to reattain full employment
d. burying bottles containing bank notes








Answer: C

As the price level rises, ___

Naim 13:34

As the price level rises, ___




a. the quantity of goods and services demanded falls
b. the quantity of goods and services demanded rises
c. the quantity of goods and services demanded stays the same
d. none of the above is correct






Answer: A

When the economy is in disequilibrium, ___

Naim 13:34

When the economy is in disequilibrium, ___




a. production automatically rises
b. production automatically falls
c. it automatically moves back into equilibrium
d. it stays in disequilibrium permanently






Answer: C

When aggregate demand is greater than aggregate supply, _____.

Naim 13:34

When aggregate demand is greater than aggregate supply, _____. 



a. inventories get depleted and output rises
b. inventories get depleted and output falls
c. inventories rise and output rises
d. inventories rise and output falls








Answer: A

Keynes was concerned mainly with ___

Naim 13:34

Keynes was concerned mainly with ___



a. aggregate supply
b. aggregate demand
c. the interest rate
d. inflation







Answer: B

Which statement best describes the classical theory of employment?

Naim 13:33

Which statement best describes the classical theory of employment?




a. we will always have a great deal of unemployment
b. We will usually have a great deal of unemployment
c. We will occasionally have some unemployment, but our economy will automatically move back toward full employment
d. We never have any unemployment







Answer: C

The classical economists' aggregate supply curve is vertical____

Naim 13:32

The classical economists' aggregate supply curve is vertical____



a. both in the short run and in the long run
b. in neither the short run nor the long run
c. in the short run, but not in the long run
d. in the long run, but not in the short run









Answer: D

Keynes said___

Naim 13:32

Keynes said___



a. the expected profit rate was more important than the interest rate
b. the interest rate was more important than the expected profit rate
c. the expected profit rate and the interest rate were equally important
d. neither the expected profit rate nor the interest rate was important.








Answer: A

Our economy is definitely at equilibrium in each case except when___

Naim 13:32

Our economy is definitely at equilibrium in each case except when___




a. saving equals investment
b. aggregate demand equals aggregate supply
c. the amount people are willing to spend equals the amount that producers are producing
d. equilibrium GDP equals full employment GDP





Answer: C


According to the classical economists, if the amount of money people are planning to invest is greater than the amount that people want to save, _____

Naim 13:31

According to the classical economists, if the amount of money people are planning to invest is greater than the amount that people want to save, _____




a. interest rates will rise and saving will rise
b. interest rates will fall and saving will fall
c. interest rates will fall and saving will rise
d. interest rates will rise and saving will fall





Answer: A

Keynes believed ____

Naim 13:31

Keynes believed ____



a. recessions were temporary
b. once a recession began, it would always turn into a depression
c. the real problem that modern economies faced was inflation
d. none of these







Answer: D

According to the classical economists,____

Naim 13:30

According to the classical economists,____



a. people will always spend all their money
b. any money that is saved will be invested
c. saving will always be greater than investment
d. saving will always be smaller than investment






Answer: B

Say's law states that ___

Naim 13:30

Say's law states that ___




a. we can have an inflation or recession, but never both at the same time
b. the normal state of economic affairs is recession
c. demand creates its own supply
d. supply creates its own demand







Answer: D

The classical economists believed in ___

Naim 13:30

The classical economists believed in ___



a. strong government intervention
b. laissez-faire
c. rapid growth in the money supply
d. none of these







Answer: B

During the 1970s, we experienced __________.

Naim 13:29

During the 1970s, we experienced __________.






A. high inflation and high unemployment
B. low inflation and low unemployment
C. high inflation and low unemployment
D. low inflation and high unemployment









Answer: A

If there are 90 million people employed, 10 million unemployed, 5 million collecting unemployment insurance, and 5 million discouraged workers, there are _______ in the labor force.

Naim 13:28

If there are 90 million people employed, 10 million unemployed, 5 million collecting unemployment insurance, and 5 million discouraged workers, there are _______ in the labor force.



A. 90 million
B. 95 million
C. 100 million
D. 105 million
E. 110 million







Answer: C

Which would be the most accurate statement?

Naim 13:28

Which would be the most accurate statement?



A. Most business owners prefer deflation to inflation.
B. In recent years Japan has suffered from deflation.
C. Deflation is very likely in the United States over the next few years.
D. Deflation is a form of disinflation





Answer: A

Disinflation generally occurs during:

Naim 13:27

Disinflation generally occurs during:




A. recessions
B. economic booms
C. periods of hyperinflation
D. times of deflation





Answer: A

Which one of the following statements would you agree with?

Naim 00:14

Which one of the following statements would you agree with?



a. GDP includes only market transactions, while GPI includes both market transactions and other factors affecting our national well-being.
b. GPI is a very accurate measure of national well-being
c. As a measure of national well being, GDP has no major shortcomings.
d. GDP takes into account many more economic, social, and environmental activities than GPI.







Answer: A

Which of the following is the most accurate statement?

Naim 00:13

Which of the following is the most accurate statement?



a. on a per capita basis, GPI is greater than GDP
b. GPI has more than doubled over the last 40 years
c. the difference between GDP and GPI is the annual rate of inflation
d. GPI is about one quarter of GDP on a per capita basis





Answer: D

GDP is ___ GPI.

Naim 00:13

GDP is ___ GPI.




a. much higher than
b. about the same size as
c. much lower than





Answer: A

Which statement is most accurate?

Naim 00:13

Which statement is most accurate?






a. we may be underestimating our GDP by as much as 50 percent by not taking into account the underground economy.
b. Bartered goods and services are generally counted in GDP
c. within the next five years, China will have a larger GDP than the US
d. Although GDP has many shortcomings, it is still a very useful economic concept.






Answer: D

Which would be the most valid statement?

Naim 00:13

Which would be the most valid statement?




a. the American standard of living is, by far, the highest in the world.
b. the standard of living of the average American is about twice that of the average Russian.
c. The standard of living of the average American is comparable to that of the average person in Switzerland, Germany, and Japan.
d. If the underground economy, illegal production, and household production were accurately measured and added to GDP our GDP would probably rise by less than 1 percent.








Answer: C

Which is the most accurate statement about the underground economy?

Naim 00:12

Which is the most accurate statement about the underground economy?




a. It adds hundreds of billions of dollars to our GDP
b. it provides employment to hundreds of thousands of illegal immigrants
c. it is run almost entirely by organized crime.
d. it makes the rich richer and the poor poorer






Answer: B

C + I+ G +Xn is ____ approaches to GDP.

Naim 00:12

C + I+ G +Xn is ____ approaches to GDP.



a. the flow of income
b. the expenditures
c. both the expenditures and the flow of income
d. neither the expenditures nor the flow of income






Answer: B

Per capita real GDP is found by____.

Naim 00:12

Per capita real GDP is found by____.



a. dividing population by real GDP
b. dividing real GDP by population
c. adding population to real GDP
d. multiplying real GDP by population







Answer: B

Suppose the GDP of Argentina were 10 times that of Uruguay. Which statement would be most accurate?

Naim 00:11

Suppose the GDP of Argentina were 10 times that of Uruguay. Which statement would be most accurate?




a. there is no way of comparing the output of Argentina and Uruguay.
b. Argentina's output is greater than that of Uruguay
c. Argentina's output is probably around 10 times that of Uruguay
d. Argentina's output is 10 times that of Uruguay






Answer: C & B.

Which of the following is counted in GDP?

Naim 00:10

Which of the following is counted in GDP?




a. household production
b. illegal production
c. leisure time
d. government spending
e. voluntary work





Answer: D

When there is inflation _____.

Naim 00:09

When there is inflation _____.



a. real GDP increases faster than GDP
b. GDP increases faster than real GDP
c. GDP and real GDP increase at the same rate
d. there is no way of telling whether GDP or real GDP increases faster








Answer: B

Which one of these goes into the investment sector of GDP?

Naim 00:09

Which one of these goes into the investment sector of GDP?




a. the purchase of a new factory
b. the purchase of 100 shares of Intel stock
c. the purchase of a 10-year old office building
d. the purchase of a U.S. savings bond






Answer: A

Which is not counted in GDP?

Naim 00:09

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






Answer: A

The largest sector of GDP is______

Naim 00:08

The largest sector of GDP is______




a. investment
b. government spending
c. net exports
d. consumer spending






Answer: D

Which of the following statements is true?

Naim 00:08

Which of the following statements is true?



a. the United States has the world's largest GDP and per capita GDP
b. the United States has the world's largest GDP, but not the world's largest per capita GDP.
c. the United States has the world largest per capita GDP, but not the world's largest GDP
d. the United States has neither the world's largest GDP nor the world's largest per capita GDP








Answer: B

In declining order of size, which of these is the proper ranking?

Naim 00:08

In declining order of size, which of these is the proper ranking?




a. GDP,NDP, national income
b. NDP, GDP, national income
c. National income, GDP, NDP
d. National income, NDP, GDP
e. GDP, national income, NDP
f. NDP, national income, GDP







Answer: A

Pirated CDs and videos are______

Naim 00:08

Pirated CDs and videos are______



a. part of the underground economy
b. sold only in other countries
c. sold by recording studios and Hollywood movie producers
d. encouraged by the federal government because their manufacture and sale provides tens of thousands of jobs to marginal workers








Answer: A

In 2030 Nigeria had a GDP of $700 billion and depreciation of $100 billion. The price level did not rise in 2031, but its GDP rose to $710 billion and its depreciation rose to $180 billion. Most economists would say that _____.

Naim 00:07

In 2030 Nigeria had a GDP of $700 billion and depreciation of $100 billion. The price level did not rise in 2031, but its GDP rose to $710 billion and its depreciation rose to $180 billion. Most economists would say that _____.



a. the Nigerian economy did better in 2030
b. the Nigerian economy did better in 2031
c. there is no way of determining which year was better






Answer: A

Which would be the most accurate statement?

Naim 00:07

Which would be the most accurate statement?



a. there is almost no underground economy in the United States
b. Nearly half the goods and services that Americans consume are produced by the underground economy.
c. most of our lawn maintenance and domestic help is supplied by the underground economy
d. the production of the underground economy is included in our GDp







Answer: C

GDP may be found by_____.

Naim 00:07

GDP may be found by_____.



a. adding together money spent on goods and services and incomes received by the factors of production.
b.subtracting incomes received by the factors of production from the money spent on goods and services.
c. subtracting the money spent on goods and services from the incomes received by the factors of production.
d. adding the money spent on final goods and services







Answer: D

Which of the following statements is the most accurate?

Naim 00:05

Which of the following statements is the most accurate?





a. free trade zones rarely lower tariff barriers
b. most large industrial nations are members of a free trade zone
c. NAFTA is, by far, the largest free trade zone in terms of imports and exports
d. over the last 10 years, more nations have been leaving free trade zones than joining them.







Answer: B

Which one of these is the most accurate statement that can be made about the issue of buying a product that is made with sweatshop labor?

Naim 00:05

Which one of these is the most accurate statement that can be made about the issue of buying a product that is made with sweatshop labor?




a. all products made with sweatshop labor should be boycotted
b. everyone should be encouraged to buy products made with sweatshop labor
c. virtually all the goods we import are made with sweatshop labor
d. although wages in sweatshops are very low, they are generally higher than workers could earn in other jobs







Answer: D

Which statement would you agree with?

Naim 00:04

Which statement would you agree with?



a. the exchange rate between the dollar and foreign currencies has no effect on our standard of living
b. the exchange rate between the dollar and foreign currencies affects our standard of living only when we travel abroad
c. our standard of living is raised when we can get more yen, yuan, pounds, and euros for our dollars
d. Most Americans closely follow changes in the exchange rate between the dollar and foreign currencies




Answer: C




Which is the most accurate statement?

Naim 00:04

Which is the most accurate statement?



a. the agricultural subsidies paid to American and European farmers have benefited farmers in poorer countries as well
b. agricultural subsidies have been largely phased out since the turn of the century
c. agricultural subsidies are a matter of great contention between rich and poor nations
d. agricultural subsidies are paid by rich nations to poor nations








Answer: C

Which statement is true about the European Union?

Naim 00:04

Which statement is true about the European Union?




a. It has not taken in any new member nations since its formation
b. all of its members must use the euro as its official currency
c. it is essentially a free trade area
d. it has been basically a failure







Answer: C

A characteristic of a modern economy is ____

Naim 00:03

A characteristic of a modern economy is ____




a. self sufficiency
b. specialization and exchange
c. a high percentage of people who make their living as jacks of all trades
d. a high proportion of people employed in agriculture








Answer: B

Which would be the most accurate statement?

Naim 00:03

Which would be the most accurate statement?




a. globalization has helped almost everyone and hurt almost no one
b. aside from a few malcontents who turn up at demonstrations, there is almost no opposition to globalization in the United States
c. It can be argued that globalization has hurt many poorer countries
d. globalization is an unmitigated economic disaster and should be reversed








Answer: C

The main criticism Joseph Stiglitz levels at the IMF is that_____.

Naim 00:02

The main criticism Joseph Stiglitz levels at the IMF is that_____. 




a. it provides too many loans that are not repaid
b. it no longer promotes economic growth, but rather contraction
c. it does not provide enough loans
d. it does not sufficiently promote the market system







Answer: B

Which statement is false?

Naim 00:02

Which statement is false?




a. During World War I and World War II, the sum of our imports and exports as a percent of GDP rose sharply.
b. Foreign trade in goods is much more important to the American economy than foreign trade in services
c. Because the American economy is much larger than any other economy, we can continue running larger and larger trade deficits for as long as we like.
d. we pay for a large chunk of our trade deficit with U.S. dollars






Answer: C

Which statement would best describe the situation of the American economy?

Naim 00:02

Which statement would best describe the situation of the American economy?




a. we are more dependent on foreign trade than most other nations
b. we are much more dependent on foreign trade than we were 30 years ago
c. we are much less dependent on foreign trade than we were 30 years ago
d. we are virtually self sufficient








Answer: B

Which was NOT an argument of the protesters against the IMF, WTO, and world bank?

Naim 00:02

Which was NOT an argument of the protesters against the IMF, WTO, and world bank?




a. we are exploiting factory workers in poor countries
b. our subsidized grain exports are sold below cost in poor countries, driving local farmers out of business
c. globalization is hurting the American standard of living
d. globalization is lowering American wages and exporting high paying jobs








Answer: C

Which one of these statements best describes the complaints of the protestors at meetings of the WTO, IMF, and World bank?

Naim 00:02

Which one of these statements best describes the complaints of the protestors at meetings of the WTO, IMF, and World bank?






a. they opposed military aid to third world dictatorships
b. they opposed trade with poor countries because of the exploitative nature of that trade
c. they opposed free trade with those nations whose people worked under sweatshop conditions and opposed ceding national sovereignty to an international group
d. the opposed strict environmental standards, which they felt would increase our cost of living.







Answer: C

Each of the following is a characteristic of the European Union EXCEPT that ___

Naim 00:01

Each of the following is a characteristic of the European Union EXCEPT that ___



a. workers from any EU country can seek work in any other member country
b. the euro replaced the domestic currencies in 1999
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







Answer: B

Which one of these statements is true?

Naim 00:01

Which one of these statements is true?





a. to save money, most colleges manufacture their own sweatshirts
b. most college administrators are well informed about the pay and working conditions of the people who sew their college's sweatshirts
c. most of the people who sew college sweatshirts work in what may be termed sweatshops
d. manufacturers of college sweatshirts in poor countries are usually under strict supervision to ensure that they don't violate local laws regulating pay overtime hours and working conditions







Answer: C

Statement I: The United States has a much less self sufficient economy than those countries in western europe Statement II: Mexico send the United States more than 80 percent of its exports.

Naim 00:00

Statement I: The United States has a much less self sufficient economy than those countries in western europe
Statement II: Mexico send the United States more than 80 percent of its exports.





a. statement I is true and statement II is false
b. statement II is true and statement I is false
c. both statements are true
d. both statements are false








Answer: B

Statement I: Since the late 1990s, our negative balance of trade has become much larger. Statement II: the United States has the worlds largest negative balance of trade.

Naim 23:59

Statement I: Since the late 1990s, our negative balance of trade has become much larger.
Statement II: the United States has the worlds largest negative balance of trade.





a. Statement I is true, and statement II is false
b. statement II is true, and statement I is false
c. both statements are true
d. both statements are false







Answer: C

Which statement is true?

Naim 23:59

Which statement is true?




a. Xn has always been positive
b. Xn has always been negative
c. Xn had been positive from the turn of the century until the 1970s
d. Xn had been negative from the turn of the century until the 1970s
e. none of these statements is true








Answer: C

Statement I: Our trade deficit, although still high, is lower than it was five years ago. Statement II: Taken together, our imports and exports are over one quarter of our GDP.

Naim 23:59

Statement I: Our trade deficit, although still high, is lower than it was five years ago.
Statement II: Taken together, our imports and exports are over one quarter of our GDP.




a. statement I is true and statement II is false
b. statement II is true, and statement I is false
c. both statements are true
d. both statements are false






Answer: B

Statement I: The United States has a much larger population and GDP than the European Union. Statement II: The European Union has attained a higher degree of economic integration than NAFTA.

Naim 23:58

Statement I: The United States has a much larger population and GDP than the European Union.
Statement II: The European Union has attained a higher degree of economic integration than NAFTA.




a. Statement I is true and statement II is false
b. statement II is true and statement I is false
c. both statements are true
d. both statements are false







Answer: B

The most favored nation clause of the WTO agreement stipulates that

Naim 23:58

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 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







Answer: B

Adam smith believed that ____

Naim 23:57

Adam smith believed that ____




a. people should never buy anything if they can make it themselves
b. what makes sense in the conduct of a private family's economic endeavors also makes sense in those of a nation
c. trading with other nations promotes full employment
d. a nation will gain if its citizens trade among themselves, but it will probably lose if it trades with other nations





Answer: B

The basis for international trade is that ___.

Naim 23:57

The basis for international trade is that ___.




a. a nation can import a particular good or service at a lower cost than if it were produced domestically
b. we stand to gain if we can sell more to other nations than they buy form us
c. there are winners and losers
d. it pays to trade, provided we remain independent by producing all our necessities







Answer: A

Statement I: The European Union was formed as a trading counterweight to NAFTA Statement II: Since the formation of NAFTA, the United States has lost millions of jobs to Mexico.

Naim 23:56

Statement I: The European Union was formed as a trading counterweight to NAFTA
Statement II: Since the formation of NAFTA, the United States has lost millions of jobs to Mexico.





a. statement I is true, and statement II is false
b. Statement II is true, and statement I is false
c. both statements are true
d. both statements are false





Answer: D


Which is the most accurate statement?

Naim 23:55

Which is the most accurate statement?



a. Our trade deficit has narrowed since 1995
b. we export more merchandise than services
c. The largest service purchase that foreigners make from the United States is educational services
d. in recent years foreigners have generally refused to accept US dollars in payment for their goods and services







Answer: B

Which statement is true?

Naim 23:55

Which statement is true?




a. offshoring is a type of outsourcing
b. outsourcing is a type of offshoring
c. outsourcing and offshoring are identical concepts
d. outsourcing is the opposite of offshoring








Answer: A

Which is the most accurate statement?

Naim 18:15

Which is the most accurate statement?




a. in middle eastern islamic countries, the typical partnership consisted of just two members, who pooled their resources for perhaps a single trade mission.
b. In virtually all countries, partnerships dissolve with the death of a member
c. inheritance laws in western europe and in islamic middle eastern countries each have the effect of keeping large fortunes intact.
d. The large partnership became the engine of economic growth in the second half of the 19 th century throughout western europe







Answer: A

Statement 1: Inventory computerization has tended to reduce inventory levels. Statement 2: Inventory investment tends to rise during recessions

Naim 18:15

Statement 1: Inventory computerization has tended to reduce inventory levels.
Statement 2: Inventory investment tends to rise during recessions



a. Statement 1 is true and statement 2 is false
b. statement 2 is true and statement 1 is false
c. both statements are true
d. both statements are false





Answer: A

Which statement is the most accurate?

Naim 18:14

Which statement is the most accurate?




a. Almost all corporations are very large.
b. if you want to be your own boss and don't want to share any of the decision making, the business form that would best suit you is a proprietorship.
c. It is very expensive to form a corporation
d. most business firms are partnerships





Answer: B

Firms will most likely borrow money for investment when ____.

Naim 18:14

Firms will most likely borrow money for investment when ____. 



a. interest rates are low
b. interest rates are high
c. the interest rate is higher than the expected profit rate.
d. the expected profit rate is higher than the interest rate







Answer: D

Which is the least stable

Naim 18:13

Which is the least stable




a.. investment in plant and equipment
b. investment in residential housing
c. investment in inventory
d. overall investment







Answer: A

Gross investment ____

Naim 18:12

Gross investment ____





a. plus depreciation equals net investment
b. minus depreciation equals net investment
c. plus net investment equals depreciation
d. equals net investment minus depreciation.





Answer: B

Inventory investment is ____

Naim 18:04

Inventory investment is ____



a. very stable
b. fairly stable
c. fairly unstable
d. very unstable







Answer: D

Inventory investment is ___

Naim 18:04

Inventory investment is ___




a. always positive
b. always negative
c. can be either positive or negative
d. can be neither positive nor negative







Answer: C

Which is not investment?

Naim 18:04

Which is not investment?



a. the purchase of 100 shares of IBM
b. the construction of a new factory
c. the purchase of a new delivery truck
d. the purchase of inventory






Answer: A


Ownership of a corporation is based on ____.

Naim 18:03

Ownership of a corporation is based on ____.




a. whether you work for the company
b. whether you buy from the company
c. whether you hold the bonds of the company
d. whether you hold stock in the company






Answer: D

A key disadvantage of incorporating is that ____.

Naim 18:02

A key disadvantage of incorporating is that ____.




a. you will have to pay corporate income tax
b. you will have to charge sales tax
c. you will have to sell stock
d. you will have to reorganize the corporation whenever an officer resigns or dies






Answer: A

Most corporations are_____.

Naim 18:02

Most corporations are_____.




a. publicly held
b. very large
c. very small
d. none of these







Answer: C

A ____ is a legal person.

Naim 18:02

A ____ is a legal person.




a. proprietorship
b. partnership
c. corporation
d. business firm





Answer: C

A partnership____.

Naim 18:01

A partnership____.




a. must have exactly two owners
b. must have more than two owners
c. must have more than one owner
d. may have more than one owner





Answer: C

Which one of these statements is false?

Naim 18:00

Which one of these statements is false?



a. Education spending is not officially classified as investment spending.
b. Education spending is officially classified as investment spending
c. education spending is classified as a form of consumption spending
d. a case could be made to consider education spending as an investment








Answer: B

Which of these is not investment?

Naim 18:00

Which of these is not investment?




a. additional inventory
b. the building of a county courthouse
b. the building of a shopping mall
d. the building of an automobile assembly line






Answer: B

In the United States, investment is done ____.

Naim 18:00

In the United States, investment is done ____.



a. entirely by the government
b. mostly by the government
c. about half by the government and half by private enterprise
d. mainly by private enterprises






Answer: D

Which statement is true?

Naim 17:59

Which statement is true?


a. Americans save much more of their incomes than they did 20 years ago
b. The basic long term trend in consumption spending as a percentage of GDP has been downward
c. Although the U.S. does not have the highest saving rate in the world, Americans save more money than the citizens of every other country.
d. Our APS has been negative since the early 1990s


Answer: B

Which statement is true?


a. consumption spending accounts for about 60 percent of our GDP
b. The basic long term trend in consumption spending as a percentage of GDP has been downward
c. The wealth effect accounts for some additional consumption when people perceive themselves to be wealthier
d. Were it not for the wealth effect, most Americans, especially those who owned homes and corporate stock, would have cut back on their consumption even more, making the Great Recession more severe.


Answer: C

Which on of the following statements is the most accurate?

Naim 17:59

Which on of the following statements is the most accurate?




a. The American consumer was largely responsible for Japan's economic resurgence since World war II.
b. China, as the world's most populous country, has the world's largest consumer market
c. Although there are some who call the American consumer a world class shopper, most Americans save substantial parts of their incomes
d. Since we import most of our goods, the American economy has only a small impact on the world's other large economies.







Answer: A

Boyd and Dianne Call earn $100,000 a year. They went deeply into debt after paying $75,000 for their daughter Chelsea's wedding and $50,000 for their daughter Kaylynn's sweet sixteen party. Their behavior might best be described by____

Naim 17:58

Boyd and Dianne Call earn $100,000 a year. They went deeply into debt after paying $75,000 for their daughter Chelsea's wedding and $50,000 for their daughter Kaylynn's sweet sixteen party. Their behavior might best be described by____




a.  Milton Friedman
b. John Maynard Keynes
c. Bruce Steinberg
d. Thorstein Veblen







Answer: D

The average propensity to save ____

Naim 17:56

The average propensity to save ____



a. is disposable income divided by savings
b. is a measure of the additional saving generated by additional income
c. is negative at very high income levels
d. varies directly with income; as income rises, the APS rises







Answer: D

Autonomous consumption expenditures are ____

Naim 17:56

Autonomous consumption expenditures are ____




a. equal to induced consumption expenditures
b. proportional to disposable income
c. not influenced by income
d. influenced primarily by the saving function






Answer: C

Induced consumption expenditures

Naim 17:56

Induced consumption expenditures



a. fall as income rises
b. are always equal to autonomous consumption expenditures
c. plus saving equals total consumption expenditures
d. represent consumption that is independent of income
e. are influenced mainly by income








Answer: E

When income is equal to consumption, saving is

Naim 17:55

When income is equal to consumption, saving is





a. negative
b. zero
c. positive
d. impossible to calculate because there is insufficient information








Answer: B

The largest component of C is

Naim 17:55

The largest component of C is




a. durable goods
b. services
c. non durable goods






Answer: B

The largest component of GDP is

Naim 17:54

The largest component of GDP is 




a. net exports
b. investment
c. consumption
d. government purchases







Answer: C

As disposable income rises,

Naim 17:54

As disposable income rises, 



a. autonomous C rises
b. autonomous C falls
c. induced C rises
d. induced C falls








Answer: C
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