Question 1

The Earned Income Tax Credit provides a tax credit or rebate to

Accepted Answer

A)  businesses that undertake investment expenditures. 
B)  taxpayers with incomes greater than $100,000. 
C)  persons with low incomes who are working. 
D)  single parent families when the parent stays home to take care of the children. 
A)  businesses that undertake investment expenditures. 
B)  taxpayers with incomes greater than $100,000. 
C)  persons with low incomes who are working. 
D)  single parent families when the parent stays home to take care of the children.

Question 2

Investors are often willing to pay positive prices for shares of firms that have never earned a profit because the investors

Accepted Answer

A)  do not know the firms have never earned a profit. 
B)  expect the firms to have positive net earnings in the future. 
C)  expect that interest rates will rise in the future. 
D)  expect that higher rates of inflation will push stock prices higher in the future. 
A)  do not know the firms have never earned a profit. 
B)  expect the firms to have positive net earnings in the future. 
C)  expect that interest rates will rise in the future. 
D)  expect that higher rates of inflation will push stock prices higher in the future.

Question 3

A tax dollar collected from an individual or a business costs the private economy more than a dollar because

Accepted Answer

A)  the administration and enforcement of the tax system is costly. 
B)  record keeping and the other elements of compliance cost are sizable. 
C)  the taxes will eliminate some productive exchanges (and cause people to undertake some counterproductive activities). 
D)  All of the above are correct. 
A)  the administration and enforcement of the tax system is costly. 
B)  record keeping and the other elements of compliance cost are sizable. 
C)  the taxes will eliminate some productive exchanges (and cause people to undertake some counterproductive activities). 
D)  All of the above are correct.

Question 4

By 2030, the number of workers per Social Security beneficiary will be approximately

Accepted Answer

A)  two. 
B)  three. 
C)  four. 
D)  six. 
A)  two. 
B)  three. 
C)  four. 
D)  six.

Question 5

On average, persons with more education tend to draw Social Security benefits for a

Accepted Answer

A)  longer period of time than average 
B)  shorter period of time than average 
C)  period of time that is comparable to the U.S. average 
D)  longer period of time if they have a master's degree but a shorter period of time if they have a Ph.D. 
A)  longer period of time than average 
B)  shorter period of time than average 
C)  period of time that is comparable to the U.S. average 
D)  longer period of time if they have a master's degree but a shorter period of time if they have a Ph.D.

Question 6

Based on the experience of the Great Depression and the New Deal, which one of the following strategies would be most likely to stimulate recovery from a serious economic recession?

Accepted Answer

A)  Increase trade restrictions and tariffs to save jobs and enhance tax revenue. 
B)  A reduction in the money supply in order to strengthen the dollar and combat inflation. 
C)  Keep taxes low in order to stimulate production and minimize the decline in personal and business income. 
D)  Institute frequent policy changes in order to search for and find the policy combination that would be most effective. 
A)  Increase trade restrictions and tariffs to save jobs and enhance tax revenue. 
B)  A reduction in the money supply in order to strengthen the dollar and combat inflation. 
C)  Keep taxes low in order to stimulate production and minimize the decline in personal and business income. 
D)  Institute frequent policy changes in order to search for and find the policy combination that would be most effective.

Question 7

Which of the following groups derive the highest rate of return from the taxes they pay into the Social Security retirement system?

Accepted Answer

A)  Blacks. 
B)  Whites. 
C)  Hispanics. 
D)  Married women working full-time. 
A)  Blacks. 
B)  Whites. 
C)  Hispanics. 
D)  Married women working full-time.

Question 8

Which of the following is an example of how incentive structures contributed to the collapse of investment banks?

Accepted Answer

A)  The bonus structures of most executives were tied to short-term profitability. 
B)  The rating agencies acted independently in assigning ratings to mortgage-backed securities and had no incentive to understate the risks. 
C)  Mortgage-backed securities were closely scrutinized in order to minimize risk and obtain higher ratings. 
D)  Despite SEC regulations, investment banks kept leverage ratios low in order to increase profits. 
A)  The bonus structures of most executives were tied to short-term profitability. 
B)  The rating agencies acted independently in assigning ratings to mortgage-backed securities and had no incentive to understate the risks. 
C)  Mortgage-backed securities were closely scrutinized in order to minimize risk and obtain higher ratings. 
D)  Despite SEC regulations, investment banks kept leverage ratios low in order to increase profits.

Question 9

The increase of sub-prime (including Alt-A) loans as a share of the total from 2001-2005 was an important contributing factor to the economic crisis of 2008 because

Accepted Answer

A)  these loans initially reduced the demand for housing. 
B)  these loans initially reduced housing prices. 
C)  the default and foreclosure rates on these loans are several times higher than conventional loans to prime borrowers. 
D)  the default and foreclosure rates on these loans are considerably lower than conventional loans to prime borrowers. 
A)  these loans initially reduced the demand for housing. 
B)  these loans initially reduced housing prices. 
C)  the default and foreclosure rates on these loans are several times higher than conventional loans to prime borrowers. 
D)  the default and foreclosure rates on these loans are considerably lower than conventional loans to prime borrowers.

Question 10

What percentage of personal income tax revenue was collected from the top 1 percent of earners in 2013?

Accepted Answer

A)  Less than 10 percent. 
B)  Approximately 15 percent. 
C)  Approximately 20 percent. 
D)  More than 35 percent. 
A)  Less than 10 percent. 
B)  Approximately 15 percent. 
C)  Approximately 20 percent. 
D)  More than 35 percent.

Question 11

In 2015, the number of workers per Social Security beneficiary was approximately ____; by the year 2030, this figure is expected to ____.

Accepted Answer

A)  5; increase to approximately 8 
B)  2.8; fall to approximately 2.2 
C)  2.2; increase to approximately 3.2 
D)  8; fall to approximately 5 
A)  5; increase to approximately 8 
B)  2.8; fall to approximately 2.2 
C)  2.2; increase to approximately 3.2 
D)  8; fall to approximately 5

Question 12

Since 1802, the average annual compound return for stock holdings, adjusted for inflation, has been approximately

Accepted Answer

A)  2 percent. 
B)  7 percent. 
C)  15 percent. 
D)  30 percent. 
A)  2 percent. 
B)  7 percent. 
C)  15 percent. 
D)  30 percent.

Question 13

Which of the following contributed to the severity of the Great Depression?

Accepted Answer

A)  The substantial budget surpluses run during the Hoover administration. 
B)  A sharp increase in tariff rates in 1930. 
C)  The large reduction in tax rates under the Hoover administration. 
D)  A highly expansionary monetary policy followed by the Fed in the late 1920s and early 1930s. 
A)  The substantial budget surpluses run during the Hoover administration. 
B)  A sharp increase in tariff rates in 1930. 
C)  The large reduction in tax rates under the Hoover administration. 
D)  A highly expansionary monetary policy followed by the Fed in the late 1920s and early 1930s.

Question 14

Sound economic policy is policy that is consistent with

Accepted Answer

A)  good intentions. 
B)  quick action and frequent policy changes until positive results are achieved. 
C)  monetary stability, free trade, and low tax rates. 
D)  saving jobs, protecting domestic industry, and increasing tax revenue. 
A)  good intentions. 
B)  quick action and frequent policy changes until positive results are achieved. 
C)  monetary stability, free trade, and low tax rates. 
D)  saving jobs, protecting domestic industry, and increasing tax revenue.

Question 15

As government becomes larger and larger as a share of the economy, economic growth is likely to decline because

Accepted Answer

A)  taxes are reduced to levels that are inconsistent with economic efficiency. 
B)  governments are involved in many activities for which they are ill-suited. 
C)  tax-transfer activities are reduced and sometimes virtually eliminated. 
D)  governments do not spend enough on the provision of key public goods like education. 
A)  taxes are reduced to levels that are inconsistent with economic efficiency. 
B)  governments are involved in many activities for which they are ill-suited. 
C)  tax-transfer activities are reduced and sometimes virtually eliminated. 
D)  governments do not spend enough on the provision of key public goods like education.

Question 16

Which of the following has enhanced the ability of investors, without any special business skills, to benefit from the ownership of corporate America?

Accepted Answer

A)  the increased availability of mutual funds that make it possible for even small investors to purchase a diverse stock portfolio at a low cost 
B)  an increased tendency of small investors to buy and sell stock frequently, using stock tips from investment experts 
C)  the virtual disappearance of business failures among corporations with publicly traded stock shares 
D)  all of the above 
A)  the increased availability of mutual funds that make it possible for even small investors to purchase a diverse stock portfolio at a low cost 
B)  an increased tendency of small investors to buy and sell stock frequently, using stock tips from investment experts 
C)  the virtual disappearance of business failures among corporations with publicly traded stock shares 
D)  all of the above

Question 17

The leverage ratio of an investment firm refers to

Accepted Answer

A)  the ratio of its investment holdings relative to its vault cash. 
B)  the ratio of its investment holdings relative to its capital. 
C)  the percentage of deposits held by the firm relative to its deposits with Federal Reserve banks. 
D)  the percentage of down payments made to the investment firm relative to the size of mortgages issued by the firm. 
A)  the ratio of its investment holdings relative to its vault cash. 
B)  the ratio of its investment holdings relative to its capital. 
C)  the percentage of deposits held by the firm relative to its deposits with Federal Reserve banks. 
D)  the percentage of down payments made to the investment firm relative to the size of mortgages issued by the firm.

Question 18

In 1960, spending on income transfers and health care accounted for 21.5 percent of the federal budget. Today these two items account for

Accepted Answer

A)  less than 15 percent of the federal budget. 
B)  approximately 25 percent of the federal budget. 
C)  approximately 36 percent of the federal budget. 
D)  approximately 66 percent of the federal budget. 
A)  less than 15 percent of the federal budget. 
B)  approximately 25 percent of the federal budget. 
C)  approximately 36 percent of the federal budget. 
D)  approximately 66 percent of the federal budget.

Question 19

Which of the following is true of equity funds?

Accepted Answer

A)  Managed equity funds generally outperform indexed equity mutual funds. 
B)  Managed equity funds merely hold stocks in the same proportion they are represented in a broad stock market index such as the Standard & Poor's 500. 
C)  Indexed equity funds generally have lower management and operating costs than managed funds. 
D)  Indexed equity funds generally engage in more stock trading than managed funds. 
A)  Managed equity funds generally outperform indexed equity mutual funds. 
B)  Managed equity funds merely hold stocks in the same proportion they are represented in a broad stock market index such as the Standard & Poor's 500. 
C)  Indexed equity funds generally have lower management and operating costs than managed funds. 
D)  Indexed equity funds generally engage in more stock trading than managed funds.

Question 20

Which of the following about stock is true?

Accepted Answer

A)  The stock market provides investors with an opportunity to own a fractional share of the firm's future profits. 
B)  A new stock issue is often an excellent way for a firm to raise funds for future expansion. 
C)  Changes in stock prices provide information about what investors think of various business decisions. 
D)  All of the above are true. 
A)  The stock market provides investors with an opportunity to own a fractional share of the firm's future profits. 
B)  A new stock issue is often an excellent way for a firm to raise funds for future expansion. 
C)  Changes in stock prices provide information about what investors think of various business decisions. 
D)  All of the above are true.

The Earned Income Tax Credit provides a tax credit or rebate to

Investors are often willing to pay positive prices for shares of firms that have never earned a profit because the investors

A tax dollar collected from an individual or a business costs the private economy more than a dollar because

By 2030, the number of workers per Social Security beneficiary will be approximately

On average, persons with more education tend to draw Social Security benefits for a

Based on the experience of the Great Depression and the New Deal, which one of the following strategies would be most likely to stimulate recovery from a serious economic recession?

Which of the following groups derive the highest rate of return from the taxes they pay into the Social Security retirement system?

Which of the following is an example of how incentive structures contributed to the collapse of investment banks?

The increase of sub-prime (including Alt-A) loans as a share of the total from 2001-2005 was an important contributing factor to the economic crisis of 2008 because

What percentage of personal income tax revenue was collected from the top 1 percent of earners in 2013?

In 2015, the number of workers per Social Security beneficiary was approximately ; by the year 2030, this figure is expected to .

Since 1802, the average annual compound return for stock holdings, adjusted for inflation, has been approximately

Which of the following contributed to the severity of the Great Depression?

Sound economic policy is policy that is consistent with

As government becomes larger and larger as a share of the economy, economic growth is likely to decline because

Which of the following has enhanced the ability of investors, without any special business skills, to benefit from the ownership of corporate America?

The leverage ratio of an investment firm refers to

In 1960, spending on income transfers and health care accounted for 21.5 percent of the federal budget. Today these two items account for

Which of the following is true of equity funds?

Which of the following about stock is true?

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

The Earned Income Tax Credit provides a tax credit or rebate to

Investors are often willing to pay positive prices for shares of firms that have never earned a profit because the investors

A tax dollar collected from an individual or a business costs the private economy more than a dollar because

By 2030, the number of workers per Social Security beneficiary will be approximately

On average, persons with more education tend to draw Social Security benefits for a

Based on the experience of the Great Depression and the New Deal, which one of the following strategies would be most likely to stimulate recovery from a serious economic recession?

Which of the following groups derive the highest rate of return from the taxes they pay into the Social Security retirement system?

Which of the following is an example of how incentive structures contributed to the collapse of investment banks?

The increase of sub-prime (including Alt-A) loans as a share of the total from 2001-2005 was an important contributing factor to the economic crisis of 2008 because

What percentage of personal income tax revenue was collected from the top 1 percent of earners in 2013?

In 2015, the number of workers per Social Security beneficiary was approximately ____; by the year 2030, this figure is expected to ____.

Since 1802, the average annual compound return for stock holdings, adjusted for inflation, has been approximately

Which of the following contributed to the severity of the Great Depression?

Sound economic policy is policy that is consistent with

As government becomes larger and larger as a share of the economy, economic growth is likely to decline because

Which of the following has enhanced the ability of investors, without any special business skills, to benefit from the ownership of corporate America?

The leverage ratio of an investment firm refers to

In 1960, spending on income transfers and health care accounted for 21.5 percent of the federal budget. Today these two items account for

Which of the following is true of equity funds?

Which of the following about stock is true?

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

In 2015, the number of workers per Social Security beneficiary was approximately ; by the year 2030, this figure is expected to .