Economics Final Exam review

Economics Final Exam review Chapter 1  Question 1 Which of the following statements is correct? Correct Answer: All else constant, a monopoly firm has more market power than a monopolistically competitive firm.  Question 2 Which of the following statements is false? In the circular flow model: Correct Answer: factor payments are made to business firms.  Question 3 Which of the following would be considered an example of a macroeconomic problem? Correct Answer: Should the federal government extend the eligibility period for unemployment benefits?  Question 4 Which of the following is not included in gross private domestic investment spending? Correct Answer: Household spending on durable goods.  Question 5 Which of the following is not a characteristic of a perfectly competitive market? Correct Answer: Limited information is available to all market participants.  Question 6 Which of the following statements is correct? Correct Answer: Managerial decisions are affected by both microeconomic and macroeconomic forces.  Question 7 Which of the following statements about monopoly is false? Correct Because there is a single firm serving the entire market, the monopolist can Answer: charge whatever price it wants to for its output.  Question 8 The key characteristic of an oligopolistic market is: Correct Answer: mutual interdependence among firms in the market.  Question 9 Which of the following statements is false? Correct Answer: While managers must understand how output prices are determined, determination of input prices is irrelevant because it is beyond the manager's control.  Question 10 The type of policy that involves interest rates and the availability of loanable funds is known as: Correct Answer: monetary policy.  Question 11 If a country's central bank wants to stimulate spending in the economy, it should: Correct Answer: lower interest rates.  Question 12 Which of the following would be an illustration of a microeconomic issue affecting U.S. auto manufacturers? Correct Answer: An introduction of new, more fuel efficient models by Japanese competitors.  Question 13 Which of the following would have the greatest positive impact on a country's domestic economy? Correct Answer: An increase in spending by foreigners on the country's exports.  Question 14 If a country's national government wants to stimulate spending in the economy, it should: Correct Answer: decrease taxes and increase government spending.  Question 15 Within the circular flow model, which of the following is not represented as a flow of funds into firms? Correct Answer: Income payments.  Question 16 Firms are considered to be price searchers, as opposed to price takers, in all of the following market types except: Correct Answer: perfect competition.  Question 17 Which of the following statements is correct? Correct Answer: Consumer and business confidence is extremely important and can have a great impact on future economic activity.  Question 18 The type of policy that involves changes in taxes or spending by the federal government is known as: Correct Answer: fiscal policy.  Question 19 Assume that with existing tax and spending laws, government spending exceeds government tax revenues. To cover the resulting shortfall, the government must: Correct Answer: Borrow money in the financial markets.  Question 20 All else constant, the choice of whether to use a labor-intensive production process or a capitalintensive one is depends on: Correct the relative prices of Answer: capital labor.  Question 21 Which of the following statements about the circular flow model is false? Correct Answer: Business firms buy goods and services from the household sector.  Question 22 Gross Domestic Product (GDP) is defined as the market value of: Correct Answer: all final goods and services produced within the boundaries of an economy during the year by domestic and foreign-supplied resources.  Question 23 Which of the following conditions ensures that excess profits cannot persist in a perfectly competitive market over the long run? Correct Answer: