Question 1

The New Deal policies of the Great Depression resulted in

Accepted Answer

A)  a reduction in unemployment and an increase in real output. 
B)  a stable economic environment and an increase in investment. 
C)  economic uncertainty and prolonged unemployment. 
D)  a quick end to the depression once the policies had taken effect. 
A)  a reduction in unemployment and an increase in real output. 
B)  a stable economic environment and an increase in investment. 
C)  economic uncertainty and prolonged unemployment. 
D)  a quick end to the depression once the policies had taken effect.

Question 2

Which of the following countries have moved toward a retirement system based more on personal retirement accounts (and savings and investment principles) rather than pay-as-you-go principles?

Accepted Answer

A)  United Kingdom 
B)  Canada 
C)  France 
D)  Japan 
A)  United Kingdom 
B)  Canada 
C)  France 
D)  Japan

Question 3

The theory that stock prices reflect all available information and that the future movement of stock prices is unpredictable is called the

Accepted Answer

A)  random walk theory. 
B)  inefficient market theory. 
C)  technical analysis theory. 
D)  charting theory. 
A)  random walk theory. 
B)  inefficient market theory. 
C)  technical analysis theory. 
D)  charting theory.

Question 4

What best explains why so many children attend public schools, instead of private schools?\

Accepted Answer

A)  Public schools provide a significantly better education, as measured by SAT scores. 
B)  Public schools have nicer facilities and better sports programs. 
C)  When a student attends a public school they do not have to pay tuition. 
D)  Private schools have catered only to the wealthy and therefore ordinary Americans would not be welcome in private schools. 
A)  Public schools provide a significantly better education, as measured by SAT scores. 
B)  Public schools have nicer facilities and better sports programs. 
C)  When a student attends a public school they do not have to pay tuition. 
D)  Private schools have catered only to the wealthy and therefore ordinary Americans would not be welcome in private schools.

Question 5

During the last four decades, the share of health-care expenditures paid for by third parties (either the government or insurance companies)

Accepted Answer

A)  has remained relatively constant. 
B)  fell from approximately 60 percent in 1960 to 30 percent in 2007. 
C)  increased from approximately 45 percent in 1960 to over 85 percent in 2007. 
D)  declined during the 15 years following the passage of Medicare but has been increasing since 1980. 
A)  has remained relatively constant. 
B)  fell from approximately 60 percent in 1960 to 30 percent in 2007. 
C)  increased from approximately 45 percent in 1960 to over 85 percent in 2007. 
D)  declined during the 15 years following the passage of Medicare but has been increasing since 1980.

Question 6

The Social Security system is currently generating tax revenues that exceed the benefits paid to recipients. This surplus is

Accepted Answer

A)  being invested in foreign bonds, which will provide Americans with a source of income when the baby boom generation retires. 
B)  being invested in government bonds, which will require an increase in general tax revenues when the bonds come due. 
C)  separated from other government revenue so politicians will not spend the money during the current period. 
D)  being channeled into earmarked private savings accounts. 
A)  being invested in foreign bonds, which will provide Americans with a source of income when the baby boom generation retires. 
B)  being invested in government bonds, which will require an increase in general tax revenues when the bonds come due. 
C)  separated from other government revenue so politicians will not spend the money during the current period. 
D)  being channeled into earmarked private savings accounts.

Question 7

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 8

Which of the following resulted from Fed policy that first kept short-term interest rates extremely low during 2002-2004, and then pushed them up substantially during 2005-2006?

Accepted Answer

A)  a reduction in housing prices because variable rate mortgages were unattractive throughout this period 
B)  upward pressure on housing prices when the interest rates were low, but downward pressure on the price of housing as the interest rates rose 
C)  lower default rates on adjustable rate mortgages as the interest rates peaked during 2006 
D)  downward pressure on housing prices when the interest rates were low, but upward pressure on the price of housing as the interest rates rose 
A)  a reduction in housing prices because variable rate mortgages were unattractive throughout this period 
B)  upward pressure on housing prices when the interest rates were low, but downward pressure on the price of housing as the interest rates rose 
C)  lower default rates on adjustable rate mortgages as the interest rates peaked during 2006 
D)  downward pressure on housing prices when the interest rates were low, but upward pressure on the price of housing as the interest rates rose

Question 9

The Great Depression illustrates that monetary policy is

Accepted Answer

A)  effective against inflation but incapable of dealing with a decline in output. 
B)  a source of economic instability if utilized inappropriately. 
C)  incapable of reversing an economic downturn when the money supply is increasing at a constant rate. 
D)  incapable of reversing a major downturn unless the recession stems from inflation. 
A)  effective against inflation but incapable of dealing with a decline in output. 
B)  a source of economic instability if utilized inappropriately. 
C)  incapable of reversing an economic downturn when the money supply is increasing at a constant rate. 
D)  incapable of reversing a major downturn unless the recession stems from inflation.

Question 10

Which of the following reforms could help to improve the operation and efficiency of health-care markets?

Accepted Answer

A)  equalizing the tax treatment of out-of-pocket medical expenses and the direct purchase of health insurance with that of health insurance purchased through an employer 
B)  encouraging consumer use of health savings accounts and the direct payment of medical bills from the accounts 
C)  encouraging the purchase of catastrophic health insurance and discouraging the purchase of policies with first-dollar coverage and small co-payments 
D)  All of the reforms listed above could help to improve the situation. 
A)  equalizing the tax treatment of out-of-pocket medical expenses and the direct purchase of health insurance with that of health insurance purchased through an employer 
B)  encouraging consumer use of health savings accounts and the direct payment of medical bills from the accounts 
C)  encouraging the purchase of catastrophic health insurance and discouraging the purchase of policies with first-dollar coverage and small co-payments 
D)  All of the reforms listed above could help to improve the situation.

Question 11

During the last four decades, defense expenditures have

Accepted Answer

A)  accounted for approximately one-half of federal expenditures. 
B)  accounted for less than 10 percent of federal expenditures. 
C)  been increasing as a share of federal expenditures. 
D)  been declining as a share of federal expenditures. 
A)  accounted for approximately one-half of federal expenditures. 
B)  accounted for less than 10 percent of federal expenditures. 
C)  been increasing as a share of federal expenditures. 
D)  been declining as a share of federal expenditures.

Question 12

During 1979-2005, the mortgage default rate

Accepted Answer

A)  was less than the foreclosure rate. 
B)  soared to more than 5 percent during recessions but declined sharply during economic expansions. 
C)  soared to more than 5 percent during expansions but declined sharply during economic recessions. 
D)  was generally between 1 and 2 percent. 
A)  was less than the foreclosure rate. 
B)  soared to more than 5 percent during recessions but declined sharply during economic expansions. 
C)  soared to more than 5 percent during expansions but declined sharply during economic recessions. 
D)  was generally between 1 and 2 percent.

Question 13

As real incomes grow, what happens to federal tax revenues as a share of the economy?

Accepted Answer

The tax system of the United States is p

Question 14

Women earn less on average than men. Which of the following would be the logical conclusion?

Accepted Answer

A)  Women must be the victim of employment discrimination. 
B)  Women must be less productive. 
C)  Men must be more highly motivated and materialistic. 
D)  Without consideration of preferences and productivity factors, differences in unadjusted mean earnings do not necessarily reflect employment discrimination. 
A)  Women must be the victim of employment discrimination. 
B)  Women must be less productive. 
C)  Men must be more highly motivated and materialistic. 
D)  Without consideration of preferences and productivity factors, differences in unadjusted mean earnings do not necessarily reflect employment discrimination.

Question 15

Data on world reserves of minerals, gathered by Blackman and Baumol, show that between 1950 and 2000, production of most minerals

Accepted Answer

A)  greatly exceeded the reserves available in 1950. 
B)  declined as depletion occurred. 
C)  greatly reduced the reserves available in 2000. 
D)  was limited to a fraction of the reserves available in 1950. 
A)  greatly exceeded the reserves available in 1950. 
B)  declined as depletion occurred. 
C)  greatly reduced the reserves available in 2000. 
D)  was limited to a fraction of the reserves available in 1950.

Question 16

According to Friedrich Hayek and his followers, the booms and busts of the business cycle are primarily the result of

Accepted Answer

A)  fluctuations in aggregate demand. 
B)  the "animal spirits" of private investors. 
C)  excessive credit expansion and artificially low interest rates that trigger malinvestment. 
D)  the unwillingness of political decision-makers to follow the advice of macroeconomists who know how to alter fiscal policy in a manner that would virtually eliminate the ups and downs of the business cycle. 
A)  fluctuations in aggregate demand. 
B)  the "animal spirits" of private investors. 
C)  excessive credit expansion and artificially low interest rates that trigger malinvestment. 
D)  the unwillingness of political decision-makers to follow the advice of macroeconomists who know how to alter fiscal policy in a manner that would virtually eliminate the ups and downs of the business cycle.

Question 17

Given the traditional responsibility for monetary earnings in the family, men were more likely than women to

Accepted Answer

A)  have continuous labor force participation. 
B)  move in order to get a higher-paying job. 
C)  accept jobs with long hours, uncertain schedules, and out-of-town travel. 
D)  do all of the above. 
A)  have continuous labor force participation. 
B)  move in order to get a higher-paying job. 
C)  accept jobs with long hours, uncertain schedules, and out-of-town travel. 
D)  do all of the above.

Question 18

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 19

The percent of workers belonging to a union in the United States

Accepted Answer

A)  has been continuously declining since the 1950s. 
B)  has been continuously increasing since the 1950s. 
C)  has remained fairly constant since the 1950s. 
D)  rose sharply from 1950 to 1970 but has declined since. 
A)  has been continuously declining since the 1950s. 
B)  has been continuously increasing since the 1950s. 
C)  has remained fairly constant since the 1950s. 
D)  rose sharply from 1950 to 1970 but has declined since.

Question 20

Adjustable rate mortgages became increasingly attractive and grew as a percentage of total outstanding mortgages during 2002 to 2004 because

Accepted Answer

A)  interest rates were kept artificially low during this period. 
B)  interest rates rose sharply during this period. 
C)  lending standards were tightened during this period. 
D)  housing prices declined during this period. 
A)  interest rates were kept artificially low during this period. 
B)  interest rates rose sharply during this period. 
C)  lending standards were tightened during this period. 
D)  housing prices declined during this period.

The New Deal policies of the Great Depression resulted in

Which of the following countries have moved toward a retirement system based more on personal retirement accounts (and savings and investment principles) rather than pay-as-you-go principles?

The theory that stock prices reflect all available information and that the future movement of stock prices is unpredictable is called the

What best explains why so many children attend public schools, instead of private schools?\

During the last four decades, the share of health-care expenditures paid for by third parties (either the government or insurance companies)

The Social Security system is currently generating tax revenues that exceed the benefits paid to recipients. This surplus is

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

Which of the following resulted from Fed policy that first kept short-term interest rates extremely low during 2002-2004, and then pushed them up substantially during 2005-2006?

The Great Depression illustrates that monetary policy is

Which of the following reforms could help to improve the operation and efficiency of health-care markets?

During the last four decades, defense expenditures have

During 1979-2005, the mortgage default rate

As real incomes grow, what happens to federal tax revenues as a share of the economy?

Women earn less on average than men. Which of the following would be the logical conclusion?

Data on world reserves of minerals, gathered by Blackman and Baumol, show that between 1950 and 2000, production of most minerals

According to Friedrich Hayek and his followers, the booms and busts of the business cycle are primarily the result of

Given the traditional responsibility for monetary earnings in the family, men were more likely than women to

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

The percent of workers belonging to a union in the United States

Adjustable rate mortgages became increasingly attractive and grew as a percentage of total outstanding mortgages during 2002 to 2004 because

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

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Filters

Exam 16: Applying the Basics: Special Topics in Economics

The New Deal policies of the Great Depression resulted in

Which of the following countries have moved toward a retirement system based more on personal retirement accounts (and savings and investment principles) rather than pay-as-you-go principles?

The theory that stock prices reflect all available information and that the future movement of stock prices is unpredictable is called the

What best explains why so many children attend public schools, instead of private schools?\

During the last four decades, the share of health-care expenditures paid for by third parties (either the government or insurance companies)

The Social Security system is currently generating tax revenues that exceed the benefits paid to recipients. This surplus is

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

Which of the following resulted from Fed policy that first kept short-term interest rates extremely low during 2002-2004, and then pushed them up substantially during 2005-2006?

The Great Depression illustrates that monetary policy is

Which of the following reforms could help to improve the operation and efficiency of health-care markets?

During the last four decades, defense expenditures have

During 1979-2005, the mortgage default rate

As real incomes grow, what happens to federal tax revenues as a share of the economy?

Women earn less on average than men. Which of the following would be the logical conclusion?

Data on world reserves of minerals, gathered by Blackman and Baumol, show that between 1950 and 2000, production of most minerals

According to Friedrich Hayek and his followers, the booms and busts of the business cycle are primarily the result of

Given the traditional responsibility for monetary earnings in the family, men were more likely than women to

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

The percent of workers belonging to a union in the United States

Adjustable rate mortgages became increasingly attractive and grew as a percentage of total outstanding mortgages during 2002 to 2004 because

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

Consumer Choice and Elasticity

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Filters