Question 1

A major advantage of the corporate form of business organization is the limited personal liability of the owners.

Accepted Answer

A) True 
 B)False

Question 2

If left to market forces, activities that produce external benefits will be overproduced.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following taxes is based on the ability-to-pay principle?

Accepted Answer

A)  toll on a bridge 
B)  income taxes 
C)  tax on gasoline 
D)  property taxes 
E)  user fees that collect the same amount from each person 
A)  toll on a bridge 
B)  income taxes 
C)  tax on gasoline 
D)  property taxes 
E)  user fees that collect the same amount from each person

Question 4

Other revenue sources for the federal government include _____

Accepted Answer

A)  borrowings. 
B)  interest expenditures. 
C)  defense. 
D)  Social Security. 
E)  Medicare. 
A)  borrowings. 
B)  interest expenditures. 
C)  defense. 
D)  Social Security. 
E)  Medicare.

Question 5

Economic units formed by profit-seeking entrepreneurs who employ resources to produce goods and services for sale are known as _____

Accepted Answer

A)  sole proprietorships. 
B)  partnerships. 
C)  firms. 
D)  nonprofit organizations. 
E)  producer cooperatives. 
A)  sole proprietorships. 
B)  partnerships. 
C)  firms. 
D)  nonprofit organizations. 
E)  producer cooperatives.

Question 6

Habib teaches mathematics at Camford University and receives $40,000 per year. His spouse, Amal, works as a self-employed computer programmer and charges $40 per hour. Which of the following is true?

Accepted Answer

A)  Habib's income is his personal interest income; Amal's is wages. 
B)  Habib's income is his salary; Amal's is personal interest income. 
C)  Both Habib and Amal receive proprietor's income. 
D)  Both Habib and Amal receive wage or salary income. 
E)  Habib's income is his salary, and Amal's income is proprietor's income. 
A)  Habib's income is his personal interest income; Amal's is wages. 
B)  Habib's income is his salary; Amal's is personal interest income. 
C)  Both Habib and Amal receive proprietor's income. 
D)  Both Habib and Amal receive wage or salary income. 
E)  Habib's income is his salary, and Amal's income is proprietor's income.

Question 7

Profit equals ______

Accepted Answer

A)  revenue - cost. 
B)  revenue - liabilities. 
C)  revenue - dividends. 
D)  revenue + opportunity cost. 
E)  revenue - retained earnings. 
A)  revenue - cost. 
B)  revenue - liabilities. 
C)  revenue - dividends. 
D)  revenue + opportunity cost. 
E)  revenue - retained earnings.

Question 8

The Salvation Army is an example of a(n) ______

Accepted Answer

A)  military organization. 
B)  not-for-profit organization. 
C)  partnership. 
D)  S corporation. 
E)  U.S. government agency. 
A)  military organization. 
B)  not-for-profit organization. 
C)  partnership. 
D)  S corporation. 
E)  U.S. government agency.

Question 9

The change spawned by the microchip and the Internet which has also enhanced the acquisition, analysis, and transmission of information is known as _____

Accepted Answer

A)  the Information Revolution. 
B)  the Innovation Revolution. 
C)  the Manufacturing Revolution. 
D)  the Industrial Revolution. 
E)  the Agricultural Revolution. 
A)  the Information Revolution. 
B)  the Innovation Revolution. 
C)  the Manufacturing Revolution. 
D)  the Industrial Revolution. 
E)  the Agricultural Revolution.

Question 10

The development of large-scale factory production that promoted a more efficient division of labor, allowed for the direct supervision of production, reduced transportation costs, and facilitated the use of big machinery is known as _____

Accepted Answer

A)  the Information Revolution. 
B)  the Innovation Revolution. 
C)  the Manufacturing Revolution. 
D)  the Industrial Revolution. 
E)  the Agricultural Revolution. 
A)  the Information Revolution. 
B)  the Innovation Revolution. 
C)  the Manufacturing Revolution. 
D)  the Industrial Revolution. 
E)  the Agricultural Revolution.

Question 11

Market activity differs from government activity because _____

Accepted Answer

A)  markets generally force prices to below-cost levels. 
B)  governments never charge for the services they provide. 
C)  markets do not use voluntary exchange mechanisms. 
D)  markets provide a direct link between benefits and costs. 
E)  governments have strong incentives to keep costs under strict control. 
A)  markets generally force prices to below-cost levels. 
B)  governments never charge for the services they provide. 
C)  markets do not use voluntary exchange mechanisms. 
D)  markets provide a direct link between benefits and costs. 
E)  governments have strong incentives to keep costs under strict control.

Question 12

If 1 euro is equal to $1.10, then a bottle of wine selling for $10 U.S. dollars will cost _____ euros.

Accepted Answer

A)  10.00 
B)  11.00 
C)  9.09 
D)  0.90 
E)  12.10 
A)  10.00 
B)  11.00 
C)  9.09 
D)  0.90 
E)  12.10

Question 13

How is the merchandise trade balance calculated?

Accepted Answer

A)  the total value of the economy's goods minus the value of exported goods 
B)  the total value of the economy's goods minus the value of imported goods 
C)  the value of imported goods minus the value of exported goods 
D)  the value of exported goods minus the value of imported goods 
E)  the value of exported goods plus the value of imported goods 
A)  the total value of the economy's goods minus the value of exported goods 
B)  the total value of the economy's goods minus the value of imported goods 
C)  the value of imported goods minus the value of exported goods 
D)  the value of exported goods minus the value of imported goods 
E)  the value of exported goods plus the value of imported goods

Question 14

The change in the labor force participation rate of married women in the United States is most often explained by _____

Accepted Answer

A)  declining productivity in agricultural production. 
B)  a rise in average household size. 
C)  increased education and an increased demand for labor. 
D)  the decreased opportunity cost of working in the home. 
E)  declining productivity in household production. 
A)  declining productivity in agricultural production. 
B)  a rise in average household size. 
C)  increased education and an increased demand for labor. 
D)  the decreased opportunity cost of working in the home. 
E)  declining productivity in household production.

Question 15

Which of the following is a justification for taxes?

Accepted Answer

A)  the ability-to-pay principle 
B)  the progressive tax principle 
C)  the proportional tax principle 
D)  the regressive tax principle 
E)  the desire of the government to spend more funds 
A)  the ability-to-pay principle 
B)  the progressive tax principle 
C)  the proportional tax principle 
D)  the regressive tax principle 
E)  the desire of the government to spend more funds

Question 16

A household consists of _____

Accepted Answer

A)  a house. 
B)  an apartment. 
C)  a family. 
D)  a single decision maker. 
E)  a minority. 
A)  a house. 
B)  an apartment. 
C)  a family. 
D)  a single decision maker. 
E)  a minority.

Question 17

The value during a given period of a country's exported goods minus the value of its imported goods is known as the _____

Accepted Answer

A)  balance of payments. 
B)  merchandise trade balance. 
C)  foreign direct investment. 
D)  current account deficit. 
E)  current account surplus. 
A)  balance of payments. 
B)  merchandise trade balance. 
C)  foreign direct investment. 
D)  current account deficit. 
E)  current account surplus.

Question 18

Which of the following is true of progressive taxation?

Accepted Answer

A)  People who make more money pay less in total taxes. 
B)  The marginal tax rate increases as income increases. 
C)  The percentage of income paid in taxes decreases as income increases. 
D)  People who are poor receive the proceeds of the tax. 
E)  The percentage of income paid in taxes increases as income decreases 
A)  People who make more money pay less in total taxes. 
B)  The marginal tax rate increases as income increases. 
C)  The percentage of income paid in taxes decreases as income increases. 
D)  People who are poor receive the proceeds of the tax. 
E)  The percentage of income paid in taxes increases as income decreases

Question 19

A tariff is _____

Accepted Answer

A)  a tax on imports. 
B)  a legal limit on the quantities of goods that can be imported. 
C)  a voluntary limit on the quantities of goods that can be imported. 
D)  a quality restriction on imports. 
E)  a subsidy for exports. 
A)  a tax on imports. 
B)  a legal limit on the quantities of goods that can be imported. 
C)  a voluntary limit on the quantities of goods that can be imported. 
D)  a quality restriction on imports. 
E)  a subsidy for exports.

Question 20

Under a regressive income tax system, individuals with higher incomes have higher marginal tax rates.

Accepted Answer

A) True 
 B)False

A major advantage of the corporate form of business organization is the limited personal liability of the owners.

If left to market forces, activities that produce external benefits will be overproduced.

Which of the following taxes is based on the ability-to-pay principle?

Other revenue sources for the federal government include _____

Economic units formed by profit-seeking entrepreneurs who employ resources to produce goods and services for sale are known as _____

Habib teaches mathematics at Camford University and receives $40,000 per year. His spouse, Amal, works as a self-employed computer programmer and charges $40 per hour. Which of the following is true?

Profit equals ______

The Salvation Army is an example of a(n) ______

The change spawned by the microchip and the Internet which has also enhanced the acquisition, analysis, and transmission of information is known as _____

The development of large-scale factory production that promoted a more efficient division of labor, allowed for the direct supervision of production, reduced transportation costs, and facilitated the use of big machinery is known as _____

Market activity differs from government activity because _____

If 1 euro is equal to $1.10, then a bottle of wine selling for $10 U.S. dollars will cost _____ euros.

How is the merchandise trade balance calculated?

The change in the labor force participation rate of married women in the United States is most often explained by _____

Which of the following is a justification for taxes?

A household consists of _____

The value during a given period of a country's exported goods minus the value of its imported goods is known as the _____

Which of the following is true of progressive taxation?

A tariff is _____

Under a regressive income tax system, individuals with higher incomes have higher marginal tax rates.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

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.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters

Exam 3: Economic Decision Makers.

A major advantage of the corporate form of business organization is the limited personal liability of the owners.

If left to market forces, activities that produce external benefits will be overproduced.

Which of the following taxes is based on the ability-to-pay principle?

Other revenue sources for the federal government include _____

Economic units formed by profit-seeking entrepreneurs who employ resources to produce goods and services for sale are known as _____

Habib teaches mathematics at Camford University and receives $40,000 per year. His spouse, Amal, works as a self-employed computer programmer and charges $40 per hour. Which of the following is true?

Profit equals ______

The Salvation Army is an example of a(n) ______

The change spawned by the microchip and the Internet which has also enhanced the acquisition, analysis, and transmission of information is known as _____

The development of large-scale factory production that promoted a more efficient division of labor, allowed for the direct supervision of production, reduced transportation costs, and facilitated the use of big machinery is known as _____

Market activity differs from government activity because _____

If 1 euro is equal to $1.10, then a bottle of wine selling for $10 U.S. dollars will cost _____ euros.

How is the merchandise trade balance calculated?

The change in the labor force participation rate of married women in the United States is most often explained by _____

Which of the following is a justification for taxes?

A household consists of _____

The value during a given period of a country's exported goods minus the value of its imported goods is known as the _____

Which of the following is true of progressive taxation?

A tariff is _____

Under a regressive income tax system, individuals with higher incomes have higher marginal tax rates.

The Art and Science of Economic Analysis.

Economic Tools and Economic Systems.

Demand, Supply, and Markets.

Introduction to Macroeconomics.

Tracking the U. S. Economy.

Unemployment and Inflation.

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.

Macro Policy Debate: Active or Passive?

International Trade.

International Finance.

Economic Development.

Filters