ECON 400 FINAL EXAM QUESTIONS & ANSWERS
Investment in both physical and human capital tends to enhance economic growth
because it generally
a. increases consumption during the current period.
b. makes it possible for individuals to produce more goods and services per hour
worked.
c. encourages firms to expand output by employing more low productivity workers.
d. encourages workers to unionize and thereby fight for higher wages. - Answers - b.
makes it possible for individuals to produce more goods and services per hour worked.
Which of the following is most important if the living standards of people residing in a
country are going to improve?
a. growth of population
b. growth of per capita GDP
c. growth of the money supply
d. growth of government expenditures as a share of GDP - Answers - b. growth of per
capita GDP
The sum of all past budget deficits and surpluses of the federal government is the
a. budget deficit.
b. budget surplus.
c. national debt.
d. trade deficit. - Answers - c. national debt
When government debt is financed domestically, future generations of Americans will
a. inherit a higher tax liability without additional interest income.
b. inherit neither higher taxes nor additional interest income.
c. inherit both higher taxes and additional interest income.
d. receive lower interest income and a lower tax liability. - Answers - c. inherit both
higher taxes and additional interest income
The privately held government debt is that portion of the national debt that
a. must be paid off at some point in the future.
b. is owed to domestic and foreign investors.
c. cannot be refinanced by issuing new debt.
d. is owned by agencies of the federal government. - Answers - b. is owed to domestic
and foreign investors
The index of leading indicators was developed to provide more reliable information on
, a. the expected future direction of the economy.
b. the future profitability of the leading companies in various industries.
c. where the economy has been in the recent past.
d. the extent to which the economy's existing plant and equipment capacity is being
used. - Answers - a. the expected future direction of the economy
Which of the following is likely to push the federal debt increasingly higher in the coming
decades?
a. A strong rebound from the economic weakness of 2008-2019
b. Increased expenditures on the Social Security and Medicare programs
c. An increase in tax revenues as the baby boom generation retires
d. Increased political pressure to balance federal budgets - Answers - b. Increased
expenditures on the Social Security and Medicare programs
Which of the following best reflects the nonactivist view of stabilization policy?
a. Monetary and fiscal policies exert little impact on the economy.
b. Discretionary policy changes often make matters worse.
c. Fiscal policy should be used to help stabilize the economy; monetary policy should
not.
d. Expansionary monetary policy is the primary source of rapid economic growth. -
Answers - b. Discretionary policy changes often make matters worse.
Those who favor active use of monetary and fiscal policy believe that
a. the M1 money supply should be increased at a steady rate annually.
b. taxes should be increased during a recession in order to balance the federal budget.
c. the economy's self-correcting mechanism, if not stifled by perverse policies, will
prevent prolonged periods of high unemployment.
d. discretionary changes in macroeconomic policy can help smooth the business cycle
of a market economy. - Answers - d. discretionary changes in macroeconomic policy
can help smooth the business cycle of a market economy.
In recent years, wireless cellular telephones have been replacing land-line phone
service. This is an example of
a. economies of scale.
b. division of labor.
c. creative destruction.
d. entry barriers into a market. - Answers - c. creative destruction.
Prior to World War II,
a. the growth of real GDP was more stable than has been the case since the war.
Investment in both physical and human capital tends to enhance economic growth
because it generally
a. increases consumption during the current period.
b. makes it possible for individuals to produce more goods and services per hour
worked.
c. encourages firms to expand output by employing more low productivity workers.
d. encourages workers to unionize and thereby fight for higher wages. - Answers - b.
makes it possible for individuals to produce more goods and services per hour worked.
Which of the following is most important if the living standards of people residing in a
country are going to improve?
a. growth of population
b. growth of per capita GDP
c. growth of the money supply
d. growth of government expenditures as a share of GDP - Answers - b. growth of per
capita GDP
The sum of all past budget deficits and surpluses of the federal government is the
a. budget deficit.
b. budget surplus.
c. national debt.
d. trade deficit. - Answers - c. national debt
When government debt is financed domestically, future generations of Americans will
a. inherit a higher tax liability without additional interest income.
b. inherit neither higher taxes nor additional interest income.
c. inherit both higher taxes and additional interest income.
d. receive lower interest income and a lower tax liability. - Answers - c. inherit both
higher taxes and additional interest income
The privately held government debt is that portion of the national debt that
a. must be paid off at some point in the future.
b. is owed to domestic and foreign investors.
c. cannot be refinanced by issuing new debt.
d. is owned by agencies of the federal government. - Answers - b. is owed to domestic
and foreign investors
The index of leading indicators was developed to provide more reliable information on
, a. the expected future direction of the economy.
b. the future profitability of the leading companies in various industries.
c. where the economy has been in the recent past.
d. the extent to which the economy's existing plant and equipment capacity is being
used. - Answers - a. the expected future direction of the economy
Which of the following is likely to push the federal debt increasingly higher in the coming
decades?
a. A strong rebound from the economic weakness of 2008-2019
b. Increased expenditures on the Social Security and Medicare programs
c. An increase in tax revenues as the baby boom generation retires
d. Increased political pressure to balance federal budgets - Answers - b. Increased
expenditures on the Social Security and Medicare programs
Which of the following best reflects the nonactivist view of stabilization policy?
a. Monetary and fiscal policies exert little impact on the economy.
b. Discretionary policy changes often make matters worse.
c. Fiscal policy should be used to help stabilize the economy; monetary policy should
not.
d. Expansionary monetary policy is the primary source of rapid economic growth. -
Answers - b. Discretionary policy changes often make matters worse.
Those who favor active use of monetary and fiscal policy believe that
a. the M1 money supply should be increased at a steady rate annually.
b. taxes should be increased during a recession in order to balance the federal budget.
c. the economy's self-correcting mechanism, if not stifled by perverse policies, will
prevent prolonged periods of high unemployment.
d. discretionary changes in macroeconomic policy can help smooth the business cycle
of a market economy. - Answers - d. discretionary changes in macroeconomic policy
can help smooth the business cycle of a market economy.
In recent years, wireless cellular telephones have been replacing land-line phone
service. This is an example of
a. economies of scale.
b. division of labor.
c. creative destruction.
d. entry barriers into a market. - Answers - c. creative destruction.
Prior to World War II,
a. the growth of real GDP was more stable than has been the case since the war.
