Question 1

As the size of government increases as a share of the economy,

Accepted Answer

A)  the burden of deadweight losses of taxation generally diminishes. 
B)  the rate of return derived from projects undertaken by the government will tend to increase. 
C)  the government generally becomes more heavily involved in unproductive and even counterproductive activities. 
D)  the activities of government are generally limited to protective functions such as public safety , national defense, and provision of a limited set of public goods. 
A)  the burden of deadweight losses of taxation generally diminishes. 
B)  the rate of return derived from projects undertaken by the government will tend to increase. 
C)  the government generally becomes more heavily involved in unproductive and even counterproductive activities. 
D)  the activities of government are generally limited to protective functions such as public safety , national defense, and provision of a limited set of public goods.

Question 2

Economic theory indicates that, the size of government will be

Accepted Answer

A)  unrelated to economic growth. 
B)  negatively related to economic growth at all possible sizes of government. 
C)  positively related to economic growth at all possible sizes of government. 
D)  positively related to economic growth at small levels of government but is negatively related to economic growth as government becomes larger and larger. 
A)  unrelated to economic growth. 
B)  negatively related to economic growth at all possible sizes of government. 
C)  positively related to economic growth at all possible sizes of government. 
D)  positively related to economic growth at small levels of government but is negatively related to economic growth as government becomes larger and larger.

Question 3

Briefly explain why the Social Security system will face a "crisis" in the coming years.

Accepted Answer

The pay-as-you-go Social Security system

Question 4

Which of the following contributed to the soaring housing prices during 2002-2004?

Accepted Answer

A)  The Fed's high-interest rate policy. 
B)  The tightening of loan standards by commercial lenders. 
C)  The increasing popularity of fixed-rate, long-term loans to lock in low interest rates. 
D)  The Fed's low-interest rate policy. 
A)  The Fed's high-interest rate policy. 
B)  The tightening of loan standards by commercial lenders. 
C)  The increasing popularity of fixed-rate, long-term loans to lock in low interest rates. 
D)  The Fed's low-interest rate policy.

Question 5

During the quarter of a century prior to 2000, between 66 percent and 71 percent of Americans age 18 and older paid personal income taxes.  What happened to the share of adult Americans with a personal income tax liability between 2000 and 2013?

Accepted Answer

A)  It rose to nearly 90 percent. 
B)  It rose to approximately 80 percent. 
C)  It was virtually constant at approximately 70 percent. 
D)  It fell to approximately 55 percent. 
A)  It rose to nearly 90 percent. 
B)  It rose to approximately 80 percent. 
C)  It was virtually constant at approximately 70 percent. 
D)  It fell to approximately 55 percent.

Question 6

During the 1980s and 1990s, the Federal Reserve's monetary policy focused primarily on

Accepted Answer

A)  keeping short-term interest rates low in order to stimulate real output and economic growth. 
B)  a variety of factors, such as unemployment and real GDP, resulting in variable inflation rates throughout this period. 
C)  keeping inflation low and the general price level relatively stable. 
D)  monetary expansion in order to reduce unemployment. 
A)  keeping short-term interest rates low in order to stimulate real output and economic growth. 
B)  a variety of factors, such as unemployment and real GDP, resulting in variable inflation rates throughout this period. 
C)  keeping inflation low and the general price level relatively stable. 
D)  monetary expansion in order to reduce unemployment.

Question 7

During the first 125 years of the United States,

Accepted Answer

A)  there were no constitutional constraints on the spending of the federal government. 
B)  real spending per person by the federal government rose by a factor of 60. 
C)  most of the government spending was undertaken at the state and local levels. 
D)  most of the government spending was undertaken at the federal level. 
A)  there were no constitutional constraints on the spending of the federal government. 
B)  real spending per person by the federal government rose by a factor of 60. 
C)  most of the government spending was undertaken at the state and local levels. 
D)  most of the government spending was undertaken at the federal level.

Question 8

The previous surplus of the Social Security system is expected to become a deficit because the

Accepted Answer

A)  payroll tax rate is scheduled to decline at that time. 
B)  number of workers relative to the number of Social Security recipients will decline as the baby boom generation moves into the retirement phase of life. 
C)  stock market is not expected to perform nearly as well during the next two decades as was the case during the 1980s and 1990s. 
D)  growth rate of the U.S. economy is expected to slow during the next two decades. 
A)  payroll tax rate is scheduled to decline at that time. 
B)  number of workers relative to the number of Social Security recipients will decline as the baby boom generation moves into the retirement phase of life. 
C)  stock market is not expected to perform nearly as well during the next two decades as was the case during the 1980s and 1990s. 
D)  growth rate of the U.S. economy is expected to slow during the next two decades.

Question 9

The current Social Security system works to the disadvantage of blacks primarily because the

Accepted Answer

A)  average annual earnings of blacks are generally lower than other groups. 
B)  average life expectancy of blacks is generally less than other groups. 
C)  Social Security tax rates imposed on blacks are higher than those imposed on other groups. 
D)  Social Security benefit formula is disadvantageous to blacks. 
A)  average annual earnings of blacks are generally lower than other groups. 
B)  average life expectancy of blacks is generally less than other groups. 
C)  Social Security tax rates imposed on blacks are higher than those imposed on other groups. 
D)  Social Security benefit formula is disadvantageous to blacks.

Question 10

If the interest rate were 12.5 percent, how much would people be willing to pay for a stock that was certain to yield a $20 per share stream of net earnings continuously in the future?

Accepted Answer

A)  $20 
B)  $25 
C)  $160 
D)  $250 
A)  $20 
B)  $25 
C)  $160 
D)  $250

Question 11

Jane states that "Social Security is an unfair program. It discriminates against married women in the workforce and middle-income recipients." Evaluate this view.

Accepted Answer

Social Security discriminates against ma

Question 12

Which of the following about Social Security is true?

Accepted Answer

A)  The regressive nature of the Social Security benefit formula works to the advantage of groups with below average earnings. 
B)  Groups with an below average life expectancy gain from Social Security because they will typically draw retirement benefits over a more lengthy period of time. 
C)  The life expectancy of Hispanics at age 20 is generally lower than the figures for whites and blacks. 
D)  Hispanics derive a higher return from their Social Security taxes than whites, and substantially higher than blacks. 
A)  The regressive nature of the Social Security benefit formula works to the advantage of groups with below average earnings. 
B)  Groups with an below average life expectancy gain from Social Security because they will typically draw retirement benefits over a more lengthy period of time. 
C)  The life expectancy of Hispanics at age 20 is generally lower than the figures for whites and blacks. 
D)  Hispanics derive a higher return from their Social Security taxes than whites, and substantially higher than blacks.

Question 13

Which of the following perspectives exerted the most impact on fiscal policy during the Great Depression?

Accepted Answer

A)  The Keynesian view. 
B)  The supply-side view. 
C)  The view that the federal government should maintain a balanced budget. 
D)  The new classical view that fiscal policy exerts little impact on demand and output. 
A)  The Keynesian view. 
B)  The supply-side view. 
C)  The view that the federal government should maintain a balanced budget. 
D)  The new classical view that fiscal policy exerts little impact on demand and output.

Question 14

When the tax structure of a nation is progressive, as real incomes increase, the tax revenues of the government will

Accepted Answer

A)  decline. 
B)  increase by the same proportion as the increase in real income. 
C)  increase by a larger proportion than the increase in real income. 
D)  remain unchanged unless legislative action is undertaken. 
A)  decline. 
B)  increase by the same proportion as the increase in real income. 
C)  increase by a larger proportion than the increase in real income. 
D)  remain unchanged unless legislative action is undertaken.

Question 15

What was the original stated purpose of Fannie Mae and Freddie Mac?

Accepted Answer

A)  To allow the government to extend loans directly to low-income and minority households. 
B)  To help provide liquidity in the secondary mortgage markets. 
C)  To operate as non-profit entities that would provide competition for for-profit mortgage companies. 
D)  To take on mortgages going into default in order to prevent them from going into foreclosure. 
A)  To allow the government to extend loans directly to low-income and minority households. 
B)  To help provide liquidity in the secondary mortgage markets. 
C)  To operate as non-profit entities that would provide competition for for-profit mortgage companies. 
D)  To take on mortgages going into default in order to prevent them from going into foreclosure.

Question 16

Which of the following contributed to the soaring housing prices during 2002-2005?

Accepted Answer

A)  The Fed's low-interest rate policy. 
B)  Regulations that reduced the required down payment and other lending standards for home mortgages. 
C)  The increased leverage lending by Fannie Mae, Freddie Mac, and large investment banks. 
D)  All of the above. 
A)  The Fed's low-interest rate policy. 
B)  Regulations that reduced the required down payment and other lending standards for home mortgages. 
C)  The increased leverage lending by Fannie Mae, Freddie Mac, and large investment banks. 
D)  All of the above.

Question 17

"My broker studies the stock market and the management of specific firms. When he advises me to buy, I listen because he is an expert." Analyze this view.

Accepted Answer

Current stock prices already reflect the

Question 18

Which of the following indicates why the role of vigilant investors and investment fund managers is important for the efficient operation of an economy?

Accepted Answer

A)  These investors generally serve on the boards of directors of corporations. 
B)  These investors tend to buy and sell stocks in a way that rewards good management. 
C)  These investors help allocate capital efficiently among firms and among investment projects. 
D)  Both b and c are true. 
A)  These investors generally serve on the boards of directors of corporations. 
B)  These investors tend to buy and sell stocks in a way that rewards good management. 
C)  These investors help allocate capital efficiently among firms and among investment projects. 
D)  Both b and c are true.

Question 19

Which of the following is true of investments?

Accepted Answer

A)  The stock market helps channel the savings of individuals into business activities that create wealth. 
B)  Individual investors can reduce their risk by holding a large share of their wealth in the form of the stock ownership of a single company. 
C)  Historically, the long-term real rate of return of stocks has generally been less than that of bonds. 
D)  Mutual funds that have done well in the past are more likely to outperform the market average in the future. 
A)  The stock market helps channel the savings of individuals into business activities that create wealth. 
B)  Individual investors can reduce their risk by holding a large share of their wealth in the form of the stock ownership of a single company. 
C)  Historically, the long-term real rate of return of stocks has generally been less than that of bonds. 
D)  Mutual funds that have done well in the past are more likely to outperform the market average in the future.

Question 20

The substantial increase in household debt relative to income since the mid 1980s meant that in 2008 many households

Accepted Answer

A)  had little savings or other reserve assets for use to deal with unexpected expenditures. 
B)  could safely afford to purchase larger homes because housing is always a good investment. 
C)  could spend everything they earned because their interest obligations on outstanding credit were low. 
D)  would be able to easily adjust their current spending if their monthly payments on adjustable rate mortgages rose. 
A)  had little savings or other reserve assets for use to deal with unexpected expenditures. 
B)  could safely afford to purchase larger homes because housing is always a good investment. 
C)  could spend everything they earned because their interest obligations on outstanding credit were low. 
D)  would be able to easily adjust their current spending if their monthly payments on adjustable rate mortgages rose.

As the size of government increases as a share of the economy,

Economic theory indicates that, the size of government will be

Briefly explain why the Social Security system will face a "crisis" in the coming years.

Which of the following contributed to the soaring housing prices during 2002-2004?

During the quarter of a century prior to 2000, between 66 percent and 71 percent of Americans age 18 and older paid personal income taxes. What happened to the share of adult Americans with a personal income tax liability between 2000 and 2013?

During the 1980s and 1990s, the Federal Reserve's monetary policy focused primarily on

During the first 125 years of the United States,

The previous surplus of the Social Security system is expected to become a deficit because the

The current Social Security system works to the disadvantage of blacks primarily because the

If the interest rate were 12.5 percent, how much would people be willing to pay for a stock that was certain to yield a $20 per share stream of net earnings continuously in the future?

Jane states that "Social Security is an unfair program. It discriminates against married women in the workforce and middle-income recipients." Evaluate this view.

Which of the following about Social Security is true?

Which of the following perspectives exerted the most impact on fiscal policy during the Great Depression?

When the tax structure of a nation is progressive, as real incomes increase, the tax revenues of the government will

What was the original stated purpose of Fannie Mae and Freddie Mac?

Which of the following contributed to the soaring housing prices during 2002-2005?

"My broker studies the stock market and the management of specific firms. When he advises me to buy, I listen because he is an expert." Analyze this view.

Which of the following indicates why the role of vigilant investors and investment fund managers is important for the efficient operation of an economy?

Which of the following is true of investments?

The substantial increase in household debt relative to income since the mid 1980s meant that in 2008 many households

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters

Exam 20: Special Topics

As the size of government increases as a share of the economy,

Economic theory indicates that, the size of government will be

Briefly explain why the Social Security system will face a "crisis" in the coming years.

Which of the following contributed to the soaring housing prices during 2002-2004?

During the quarter of a century prior to 2000, between 66 percent and 71 percent of Americans age 18 and older paid personal income taxes. What happened to the share of adult Americans with a personal income tax liability between 2000 and 2013?

During the 1980s and 1990s, the Federal Reserve's monetary policy focused primarily on

During the first 125 years of the United States,

The previous surplus of the Social Security system is expected to become a deficit because the

The current Social Security system works to the disadvantage of blacks primarily because the

If the interest rate were 12.5 percent, how much would people be willing to pay for a stock that was certain to yield a $20 per share stream of net earnings continuously in the future?

Jane states that "Social Security is an unfair program. It discriminates against married women in the workforce and middle-income recipients." Evaluate this view.

Which of the following about Social Security is true?

Which of the following perspectives exerted the most impact on fiscal policy during the Great Depression?

When the tax structure of a nation is progressive, as real incomes increase, the tax revenues of the government will

What was the original stated purpose of Fannie Mae and Freddie Mac?

Which of the following contributed to the soaring housing prices during 2002-2005?

"My broker studies the stock market and the management of specific firms. When he advises me to buy, I listen because he is an expert." Analyze this view.

Which of the following indicates why the role of vigilant investors and investment fund managers is important for the efficient operation of an economy?

Which of the following is true of investments?

The substantial increase in household debt relative to income since the mid 1980s meant that in 2008 many households

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Taking the Nations Economic Pulse

Economic Fluctuations, Unemployment, and Inflation

An Introduction to Basic Macroeconomic Markets

Dynamic Change, Economic Fluctuations, and the Ad--As Model

Fiscal Policy: The Keynesian View and the Historical Development of Macroeconomics

Fiscal Policy: Incentives, and Secondary Effects

Money and the Banking System

Modern Macroeconomics and Monetary Policy

Stabilization Policy, Output, and Employment

Creating an Environment for Growth and Prosperity

Institutions, Policies, and Cross-Country Differences in Income and Growth

Gaining From International Trade

International Finance and the Foreign Exchange Market

Filters