Question 1

The movement of households from rural to urban settings reduced the degree of specialization in household production.

Accepted Answer

A) True 
 B)False

Question 2

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 dollars 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 dollars that the United States uses to buy goods from other countries

Question 3

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 4

In the United States,the individual income tax is best described as a

Accepted Answer

A) regressive tax 
B) proportional tax 
C) flat tax 
D) progressive tax 
E) repressive tax 
A) regressive tax 
B) proportional tax 
C) flat tax 
D) progressive tax 
E) repressive tax

Question 5

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 6

The partnership is the least common form of business organization in the United States.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is not a reason why some production continues in households?

Accepted Answer

A) Some household production requires many specialized resources 
B) The opportunity cost of household production has decreased over time 
C) Household production avoids taxes 
D) There have been important technological advances in household production 
E) Some households prefer the ability to control production 
A) Some household production requires many specialized resources 
B) The opportunity cost of household production has decreased over time 
C) Household production avoids taxes 
D) There have been important technological advances in household production 
E) Some households prefer the ability to control production

Question 8

Which of the following is a defining characteristic of a public good?

Accepted Answer

A) It is produced and distributed by the government. 
B) The decision to produce it is made by the public through the voting process. 
C) It is produced and distributed by private firms according to government regulations. 
D) It is freely available to everyone once it is produced. 
E) It is purchased by one government agency from another government agency. 
A) It is produced and distributed by the government. 
B) The decision to produce it is made by the public through the voting process. 
C) It is produced and distributed by private firms according to government regulations. 
D) It is freely available to everyone once it is produced. 
E) It is purchased by one government agency from another government agency.

Question 9

Messitt and McNulty spend $50,000 each to form a law partnership.On the first day someone trips over a potted plant in their lobby and sues them for $400,000.Which of the following is true?

Accepted Answer

A) If a $400,000 judgment is against the partnership,then each partner will have to pay $200,000. 
B) If a $400,000 judgment is against the partnership and if McNulty cannot afford to pay any of it,then Messitt is liable for $400,000. 
C) Messitt's liability is limited to $300,000 because she owns three quarters of the firm. 
D) Each individual partner cannot be sued for more than $200,000. 
E) Only McNulty is personally responsible for the damages because he was the one who put the potted plant in the office. 
A) If a $400,000 judgment is against the partnership,then each partner will have to pay $200,000. 
B) If a $400,000 judgment is against the partnership and if McNulty cannot afford to pay any of it,then Messitt is liable for $400,000. 
C) Messitt's liability is limited to $300,000 because she owns three quarters of the firm. 
D) Each individual partner cannot be sued for more than $200,000. 
E) Only McNulty is personally responsible for the damages because he was the one who put the potted plant in the office.

Question 10

Which of the four types of economic decision makers is most important?

Accepted Answer

A) firms,because they produce all goods and services in the economy 
B) households,because they demand goods and services and supply resources 
C) government,because it ultimately sets and enforces the "rules of the game" 
D) government,because it steps in when there is market failure 
E) the rest of the world,because there are over 150 countries 
A) firms,because they produce all goods and services in the economy 
B) households,because they demand goods and services and supply resources 
C) government,because it ultimately sets and enforces the "rules of the game" 
D) government,because it steps in when there is market failure 
E) the rest of the world,because there are over 150 countries

Question 11

Which of the following accounts for the largest percentage of spending by households in the United States?

Accepted Answer

A) durable goods 
B) nondurable goods 
C) services 
D) insurance payments 
E) underground activities (e.g.,illegal activities) 
A) durable goods 
B) nondurable goods 
C) services 
D) insurance payments 
E) underground activities (e.g.,illegal activities)

Question 12

Households act as suppliers when they provide

Accepted Answer

A) goods and services to firms and governments 
B) resources to firms and governments 
C) tax payments to governments 
D) the demand for only what firms supply or make available 
E) money to firms in exchange for goods and services 
A) goods and services to firms and governments 
B) resources to firms and governments 
C) tax payments to governments 
D) the demand for only what firms supply or make available 
E) money to firms in exchange for goods and services

Question 13

A progressive tax means

Accepted Answer

A) people who make more money pay less total taxes 
B) the marginal tax rate increases as income increases 
C) the percentage of income paid out decreases as income increases 
D) people who are poor receive the proceeds of the tax 
E) the same thing as a flat-rate tax 
A) people who make more money pay less total taxes 
B) the marginal tax rate increases as income increases 
C) the percentage of income paid out decreases as income increases 
D) people who are poor receive the proceeds of the tax 
E) the same thing as a flat-rate tax

Question 14

You are more likely to hire your teenage child to cut your lawn than a landscaping firm

Accepted Answer

A) since the teenager is paid each time when she finishes and the landscaping firm bills your credit card each month 
B) if the teenager has a lower opportunity cost of cutting the lawn than the landscaping firm does 
C) because the teenager is less likely to have the specialized tools necessary to complete the job quickly 
D) due to the bounded rationality of the diversified landscaping firm 
E) when it does not take a substantial amount of time and effort to find a reputable landscaping firm to do the job 
A) since the teenager is paid each time when she finishes and the landscaping firm bills your credit card each month 
B) if the teenager has a lower opportunity cost of cutting the lawn than the landscaping firm does 
C) because the teenager is less likely to have the specialized tools necessary to complete the job quickly 
D) due to the bounded rationality of the diversified landscaping firm 
E) when it does not take a substantial amount of time and effort to find a reputable landscaping firm to do the job

Question 15

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 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

Question 16

Gross Domestic Product is the market value of

Accepted Answer

A) all exchanges made during the course of a year 
B) all final goods produced during the course of a year 
C) all monetary transactions during the course of a year 
D) all the goods produced during the course of a year over and above what is required to maintain the population and the stock of capital 
E) all final goods sold during the course of a year 
A) all exchanges made during the course of a year 
B) all final goods produced during the course of a year 
C) all monetary transactions during the course of a year 
D) all the goods produced during the course of a year over and above what is required to maintain the population and the stock of capital 
E) all final goods sold during the course of a year

Question 17

Which form of business organization is the least common in the United States?

Accepted Answer

A) sole proprietorship 
B) partnership 
C) corporation 
D) nonprofit organization 
E) conglomerate 
A) sole proprietorship 
B) partnership 
C) corporation 
D) nonprofit organization 
E) conglomerate

Question 18

In recent years defense expenditures has fallen as a share of federal government outlays.

Accepted Answer

A) True 
 B)False

Question 19

The least common form of business organization in the United States is the partnership.

Accepted Answer

A) True 
 B)False

Question 20

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

Exam 3: Economic Decision Makers

The movement of households from rural to urban settings reduced the degree of specialization in household production.

Which of the following best defines foreign exchange?

Market activity differs from government activity because

In the United States,the individual income tax is best described as a

The Salvation Army is an example of a(n)

The partnership is the least common form of business organization in the United States.

Which of the following is not a reason why some production continues in households?

Which of the following is a defining characteristic of a public good?

Messitt and McNulty spend $50,000 each to form a law partnership.On the first day someone trips over a potted plant in their lobby and sues them for $400,000.Which of the following is true?

Which of the four types of economic decision makers is most important?

Which of the following accounts for the largest percentage of spending by households in the United States?

Households act as suppliers when they provide

A progressive tax means

You are more likely to hire your teenage child to cut your lawn than a landscaping firm

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 bankruptcy,what amount of personal assets do you stand to lose?

Gross Domestic Product is the market value of

Which form of business organization is the least common in the United States?

In recent years defense expenditures has fallen as a share of federal government outlays.

The least common form of business organization in the United States is the partnership.

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

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and 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

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

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