Question 1

Which of the following did not occur during the Industrial Revolution?

Accepted Answer

A) Production became more reliant on highly specialized equipment. 
B) A more efficient division of labor was promoted. 
C) Workers bore much of the costs of production. 
D) The transaction costs of contracting with individual resource owners were reduced. 
E) Technological development increased the productivity of most workers. 
A) Production became more reliant on highly specialized equipment. 
B) A more efficient division of labor was promoted. 
C) Workers bore much of the costs of production. 
D) The transaction costs of contracting with individual resource owners were reduced. 
E) Technological development increased the productivity of most workers.

Question 2

The term fiscal policy refers to:

Accepted Answer

A) the amount of physical output produced by firms. 
B) the means by which government policy makes firms more productive. 
C) the avenue by which government influences credit markets. 
D) spending and taxing by governments. 
E) a tool of government that works in the opposite direction of monetary policy. 
A) the amount of physical output produced by firms. 
B) the means by which government policy makes firms more productive. 
C) the avenue by which government influences credit markets. 
D) spending and taxing by governments. 
E) a tool of government that works in the opposite direction of monetary policy.

Question 3

A major disadvantage of the corporate form of business is limited liability.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following would indicate that income tax is progressive?

Accepted Answer

A) High-income people pay $3,000 in taxes;low-income people pay $1,000. 
B) Low-income people pay $3,000 in taxes;high-income people pay $1,000. 
C) Both high-income and low-income people pay $1,000 each in taxes. 
D) High-income people pay 20 percent of their income in taxes;low-income people pay 10 percent. 
E) Both high-income and low-income people pay 10 percent of their income in taxes. 
A) High-income people pay $3,000 in taxes;low-income people pay $1,000. 
B) Low-income people pay $3,000 in taxes;high-income people pay $1,000. 
C) Both high-income and low-income people pay $1,000 each in taxes. 
D) High-income people pay 20 percent of their income in taxes;low-income people pay 10 percent. 
E) Both high-income and low-income people pay 10 percent of their income in taxes.

Question 5

Nonprofit,or not-for-profit,firms:

Accepted Answer

A) maximize revenue instead of profit. 
B) minimize cost rather than maximize profit. 
C) often pursue goals other than profit maximization. 
D) pursue profit as their main goal despite their name. 
E) have no incentive to produce efficiently. 
A) maximize revenue instead of profit. 
B) minimize cost rather than maximize profit. 
C) often pursue goals other than profit maximization. 
D) pursue profit as their main goal despite their name. 
E) have no incentive to produce efficiently.

Question 6

The personal income tax is based on the benefits-received principle of taxation.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following did not occur during the Industrial Revolution?

Accepted Answer

A) Worker productivity increased. 
B) Factories became larger. 
C) Direct supervision of labor decreased. 
D) Division of labor increased. 
E) Fewer stages of production were organized in the household. 
A) Worker productivity increased. 
B) Factories became larger. 
C) Direct supervision of labor decreased. 
D) Division of labor increased. 
E) Fewer stages of production were organized in the household.

Question 8

Externalities are defined as:

Accepted Answer

A) any transaction external to the firm. 
B) costs or benefits that fall on third parties. 
C) policies that firms adopt to sell products outside the country. 
D) managers' dealings with stockholders outside the firm. 
E) costs of maintaining plant and equipment to avoid the scrutiny of external auditors. 
A) any transaction external to the firm. 
B) costs or benefits that fall on third parties. 
C) policies that firms adopt to sell products outside the country. 
D) managers' dealings with stockholders outside the firm. 
E) costs of maintaining plant and equipment to avoid the scrutiny of external auditors.

Question 9

Which of the following is an example of an in-kind transfer?

Accepted Answer

A) Welfare payments 
B) Most Social Security benefits 
C) Unemployment compensation payments 
D) Food stamps 
E) Charitable contributions 
A) Welfare payments 
B) Most Social Security benefits 
C) Unemployment compensation payments 
D) Food stamps 
E) Charitable contributions

Question 10

Which of the following is not based on the benefits-received principle of taxation?

Accepted Answer

A) Charging a fee for use of public golf courses 
B) Differences between residential and out-of-state college tuition 
C) The excise tax on gasoline 
D) Toll booths on a highway 
E) Charging a fee per bag to haul away garbage 
A) Charging a fee for use of public golf courses 
B) Differences between residential and out-of-state college tuition 
C) The excise tax on gasoline 
D) Toll booths on a highway 
E) Charging a fee per bag to haul away garbage

Question 11

Households supply four basic types of resources.They include all of the following except:

Accepted Answer

A) natural resources. 
B) final goods and services. 
C) capital. 
D) entrepreneurial ability. 
E) labor. 
A) natural resources. 
B) final goods and services. 
C) capital. 
D) entrepreneurial ability. 
E) labor.

Question 12

When the government sells something it produces,_____.

Accepted Answer

A) revenue received must be greater than cost to justify government production 
B) revenue received must equal cost because government is a nonprofit organization 
C) the price does not always reflect the cost of producing the good 
D) the price charged is an accurate measure of the benefits generated 
E) it prices the good the same way a natural monopolist would 
A) revenue received must be greater than cost to justify government production 
B) revenue received must equal cost because government is a nonprofit organization 
C) the price does not always reflect the cost of producing the good 
D) the price charged is an accurate measure of the benefits generated 
E) it prices the good the same way a natural monopolist would

Question 13

Which of the following best defines foreign exchange?

Accepted Answer

A) A trade between two countries 
B) The market where exporting and importing activities take place 
C) The price of a currency relative to another currency 
D) The currency of another country used for trading 
E) The currency that the United States uses to buy goods from other countries 
A) A trade between two countries 
B) The market where exporting and importing activities take place 
C) The price of a currency relative to another currency 
D) The currency of another country used for trading 
E) The currency that the United States uses to buy goods from other countries

Question 14

In the United States since World War II,there has been:

Accepted Answer

A) a dramatic increase in the population living in rural areas. 
B) a decline in the number of women in the labor force. 
C) a decrease in the opportunity cost of working in the home. 
D) more specialization of production within households. 
E) a dramatic increase in the number of married women in the labor force. 
A) a dramatic increase in the population living in rural areas. 
B) a decline in the number of women in the labor force. 
C) a decrease in the opportunity cost of working in the home. 
D) more specialization of production within households. 
E) a dramatic increase in the number of married women in the labor force.

Question 15

A family with an income of $25,000 pays taxes of $3,000 per year and a family with an income of $50,000 pays taxes of $4,000 per year.The tax plan is:

Accepted Answer

A) regressive. 
B) proportional for all income levels. 
C) progressive. 
D) based on the ability-to-pay principle. 
E) proportional for income levels between $25,000 and $50,000. 
A) regressive. 
B) proportional for all income levels. 
C) progressive. 
D) based on the ability-to-pay principle. 
E) proportional for income levels between $25,000 and $50,000.

Question 16

Household production is more likely to occur when:

Accepted Answer

A) it requires many specialized resources. 
B) technology makes it more costly than market production. 
C) tax avoidance is undesirable. 
D) less control over the final product is desirable. 
E) the opportunity cost of household work is relatively small. 
A) it requires many specialized resources. 
B) technology makes it more costly than market production. 
C) tax avoidance is undesirable. 
D) less control over the final product is desirable. 
E) the opportunity cost of household work is relatively small.

Question 17

Economists generally assume that:

Accepted Answer

A) firms act to maximize the dividends paid to stockholders. 
B) households act to maximize their wealth. 
C) households act to maximize utility. 
D) firms act to maximize revenue. 
E) both households and firms act to minimize expenditures. 
A) firms act to maximize the dividends paid to stockholders. 
B) households act to maximize their wealth. 
C) households act to maximize utility. 
D) firms act to maximize revenue. 
E) both households and firms act to minimize expenditures.

Question 18

Harold,a delivery man,washes and irons his own shirts.Sarah,his boss,sends her clothes to a laundry.Which is the most plausible economic explanation for this difference?

Accepted Answer

A) Harold must enjoy ironing more than Sarah does. 
B) Harold must be better at ironing than Sarah is. 
C) The opportunity cost of ironing is greater for Harold. 
D) Harold probably has an absolute advantage in ironing. 
E) Sarah has a higher opportunity cost of washing and ironing her clothes than Harold does. 
A) Harold must enjoy ironing more than Sarah does. 
B) Harold must be better at ironing than Sarah is. 
C) The opportunity cost of ironing is greater for Harold. 
D) Harold probably has an absolute advantage in ironing. 
E) Sarah has a higher opportunity cost of washing and ironing her clothes than Harold does.

Question 19

The term "utility" means:

Accepted Answer

A) satisfaction. 
B) a low-valued good. 
C) productivity. 
D) adaptability. 
E) efficiency. 
A) satisfaction. 
B) a low-valued good. 
C) productivity. 
D) adaptability. 
E) efficiency.

Question 20

Suppose you own a proprietorship that is in serious financial difficulty.The assets of the company are $100,000 but liabilities are $175,000.You also have,however,stock in General Motors worth $200,000.If you file for bankruptcy,what amount of personal assets do you stand to lose?

Accepted Answer

A) $100,000 
B) $75,000 
C) $200,000 
D) $275,000 
E) $375,000 
A) $100,000 
B) $75,000 
C) $200,000 
D) $275,000 
E) $375,000

Which of the following did not occur during the Industrial Revolution?

The term fiscal policy refers to:

A major disadvantage of the corporate form of business is limited liability.

Which of the following would indicate that income tax is progressive?

Nonprofit,or not-for-profit,firms:

The personal income tax is based on the benefits-received principle of taxation.

Which of the following did not occur during the Industrial Revolution?

Externalities are defined as:

Which of the following is an example of an in-kind transfer?

Which of the following is not based on the benefits-received principle of taxation?

Households supply four basic types of resources.They include all of the following except:

When the government sells something it produces,_____.

Which of the following best defines foreign exchange?

In the United States since World War II,there has been:

A family with an income of $25,000 pays taxes of $3,000 per year and a family with an income of $50,000 pays taxes of $4,000 per year.The tax plan is:

Household production is more likely to occur when:

Economists generally assume that:

Harold,a delivery man,washes and irons his own shirts.Sarah,his boss,sends her clothes to a laundry.Which is the most plausible economic explanation for this difference?

The term "utility" means:

Suppose you own a proprietorship that is in serious financial difficulty.The assets of the company are $100,000 but liabilities are $175,000.You also have,however,stock in General Motors worth $200,000.If you file for bankruptcy,what amount of personal assets do you stand to lose?

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters

Exam 3: Economic Decision Makers

Which of the following did not occur during the Industrial Revolution?

The term fiscal policy refers to:

A major disadvantage of the corporate form of business is limited liability.

Which of the following would indicate that income tax is progressive?

Nonprofit,or not-for-profit,firms:

The personal income tax is based on the benefits-received principle of taxation.

Which of the following did not occur during the Industrial Revolution?

Externalities are defined as:

Which of the following is an example of an in-kind transfer?

Which of the following is not based on the benefits-received principle of taxation?

Households supply four basic types of resources.They include all of the following except:

When the government sells something it produces,_____.

Which of the following best defines foreign exchange?

In the United States since World War II,there has been:

A family with an income of $25,000 pays taxes of $3,000 per year and a family with an income of $50,000 pays taxes of $4,000 per year.The tax plan is:

Household production is more likely to occur when:

Economists generally assume that:

Harold,a delivery man,washes and irons his own shirts.Sarah,his boss,sends her clothes to a laundry.Which is the most plausible economic explanation for this difference?

The term "utility" means:

Suppose you own a proprietorship that is in serious financial difficulty.The assets of the company are $100,000 but liabilities are $175,000.You also have,however,stock in General Motors worth $200,000.If you file for bankruptcy,what amount of personal assets do you stand to lose?

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters