Exam: 050472RR - INTRODUCTION TO ECOMONICS AND THE ECONOM 1. Which one of the following statements about the competitive market system is correct? A. The competitive market system encourages innovation because successful innovators are rewarded with economic profits. B. The competitive market system encourages innovation because government provides tax breaks and subsidies to those who develop new products or new productive techniques. C. The competitive market system discourages innovation because firms want to get all the profits possible from existing machinery and equipment. D. The competitive market system discourages innovation because it's difficult to acquire additional capital in the form of new machinery and equipment. 2. The major source of tax revenue for the United States federal government is _______ taxes. A. sales and excise
 B. personal income C. corporate income D. property 3. Which one of the following statements about protective tariffs is correct?
 A. Protective tariffs are licensing requirements, unreasonable quality standards, and the like designed to impede imports. B. Protective tariffs are maximum limits on the quantity or total value of specific products imported to a nation.
C. Protective tariffs are excise taxes or duties placed on imported products.
D. Protective tariffs are government payments to domestic producers to reduce the world prices of exported goods. End of exam Exam: 050473RR - GDP, GROWTH, AND STABILITY When you have completed your exam and reviewed your answers, click Submit Exam. Answers will not be recorded until you hit Submit Exam. If you need to exit before completing the exam, click Cancel Exam. Questions 1 to 20: Select the best answer to each question. Note that a question and its answers may be split across a page break, so be sure that you have seen the entire question and all the answers before choosing an answer. 1. Which one of the following is not considered to be a growth-promoting institutional structure? A. A competitive market system
 B. Strong government restrictions on international trade
 C. Well-established and enforced property rights D. Financial institutions that effectively link savers to investors 2. If the prices of all goods and services rose, but the quantity produced remain ...

1. Exam: 050472RR - INTRODUCTION TO ECOMONICS AND
THE ECONOM
1. Which one of the following statements about the competitive
market system is correct? A.
The competitive market system encourages innovation because
successful innovators are rewarded with economic profits.
B. The competitive market system encourages innovation
because government provides tax breaks and subsidies to those
who develop new products or new productive techniques.
C. The competitive market system discourages innovation
because firms want to get all the profits possible from existing
machinery and equipment.
D. The competitive market system discourages innovation
because it's difficult to acquire additional capital in the form of
new machinery and equipment.
2. The major source of tax revenue for the United States federal
government is _______ taxes. A. sales
and excise
B. personal income
C. corporate income
D. property
3. Which one of the following statements about protective
tariffs is correct?
A. Protective tariffs are licensing requirements, unreasonable
quality standards, and the like designed to impede imports. B.
Protective tariffs are maximum limits on the quantity or total
value of specific products imported to a nation. C. Protective
tariffs are excise taxes or duties placed on imported
products. D. Protective tariffs are government payments to
domestic producers to reduce the world prices of exported
goods.
End of exam

2. Exam: 050473RR - GDP, GROWTH, AND STABILITY
When you have completed your exam and reviewed your
answers, click Submit Exam. Answers will not be recorded until
you hit Submit Exam. If you need to exit before completing the
exam, click Cancel Exam.
Questions 1 to 20: Select the best answer to each question. Note
that a question and its answers may be split across a page break,
so be sure that you have seen the entire question and all the
answers before choosing an answer.
1. Which one of the following is not considered to be a growth-
promoting institutional structure? A.
A competitive market system
B. Strong government restrictions on international trade
C. Well-established and enforced property rights
D. Financial institutions that effectively link savers to investors
2. If the prices of all goods and services rose, but the quantity
produced remained unchanged, what would happen to nominal
and real GDP?
A. Nominal and real GDP would both be unchanged.
B. Nominal GDP would rise, but real GDP would be unchanged.
C. Real GDP would rise, but nominal GDP would be unchanged.
D. Nominal and real GDP would both rise.
3. Which one of the following statements about GDP is correct?
A. GDP excludes positive changes in inventories.
B. GDP excludes the market value of unpaid work in the home.
C. GDP excludes the production of nondurable goods.
D. GDP excludes the production of services.
4. Which one of the following statements about national income
is correct?
A. National income is the market value of the annual output net
of consumption of fixed capital.
B. National income is the income received by households less

3. personal taxes.
C. National income is the income earned by U.S. resource
suppliers plus taxes on production and imports.
D. National income is the before-tax income received by
households.
5. The percentage of the working-age population in the labor
force is called the
A. employment-population ratio.
B. labor force participation rate.
C. work-activity rate.
D. work-nonwork ratio.
6. Melissa voluntarily quit her job as an insurance agent to
return to school full-time to earn an MBA
degree. With degree in hand, she's now searching for a position
in management. At the present time, Melissa is considered to be
A. cyclically unemployed.
B. frictionally unemployed.
C. not a member of the labor force.
D. structurally unemployed.
7. Which one of the following statements about demand-pull
inflation is correct?
A. Demand-pull inflation occurs only when the economy has
reached its absolute production capacity.
B. Demand-pull inflation occurs when total spending exceeds
the economy's ability to provide output at the existing price
level. C. Demand-pull inflation is also called cost-push
inflation.
D. Demand-pull inflation occurs when prices of resources rise,
pushing up costs and the price level.
8. In which phase of the business cycle will the economy most
likely experience rising real output and falling unemployment
rates?
A. Expansion
B. Recession
C. Trough

4. D. Peak
9. Recurring upswings and downswings in an economy's real
GDP over
time are called
A. output yo-yos.
B. recessions.
C. business cycles.
D. total product oscillations.
10. Suppose the total monetary value of all final goods and
services produced in a particular country in 2008 is $500 billion
and the total monetary value of final goods and services sold is
$450 billion. We can conclude that
A. inventories in 2008 fell by $50 billion.
B. GDP in 2008 is $450 billion.
C. GDP in 2008 is $500 billion.
D. NDP in 2008 is $450 billion.
11. The system that measures the economy's overall
performance is formally known as
A. business cycle measurement.
B. final output and income statistics.
C. GDP assessment.
D. national income accounting.
12. Unemployment involving a mismatch of the skills of
unemployed workers and the skills required for available jobs is
called _______ unemployment.
A. structural
B. cyclical
C. frictional
D. compositional
13. For every 1 percentage point that the actual unemployment
rate exceeds the natural rate, a 2 percentage point negative GDP
gap occurs. This is a statement of
A. the Coase theorem.
B. Taylor's rule.
C. Okun's law.

5. D. Say's law.
14. The industries or sectors of the economy in which business
cycle fluctuations tend to affect output the most are
A. military goods and capital goods.
B. services and nondurable consumer goods.
C. clothing and education.
D. capital goods and durable consumer goods.
15. Countries that have experienced modern economic growth
have also tended to
A. have less leisure time for sport and artistic activities.
B. adopt feudalistic institutions.
C. move toward more democratic forms of government.
D. restrict women and minorities from holding certain economic
and political positions.
16. The business cycle depicts
A. the phases a business goes through from when it first opens
to when it finally closes.
B. the evolution of technology over time.
C. short-run fluctuations in output and employment.
D. fluctuations in the general price level.
17. Which one of the following statements best explains why
prices tend to be inflexible even when demand changes?
A. Firms may be reluctant to change prices for fear of setting
off a price war or losing customers to rivals.
B. Production costs don't tend to change when a firm varies its
level of output.
C. In most industries, the profit-maximizing price doesn't
change even when demand changes.
D. Government regulations limit the number of times a firm can
change prices in a year.
18. The historical reallocation of labor from agriculture to
manufacturing in the United States has
A. reduced the average productivity of labor.
B. increased the average productivity of labor.
C. been inflationary.
D. had no effect on the average productivity of labor.

6. 19. Which one of the following is used to measure directly the
average standard of living across countries?
A. GDP per person
B. Nominal GDP
C. Real GDP
D. Purchasing power parity
20. Which one of the following is the correct definition of
inflation?
A. Inflation is a situation in which all prices in the economy
rise simultaneously.
B. Inflation is an increase in the overall level of prices.
C. Inflation is the rate of growth in nominal GDP.
D. Inflation is the growth phase of the business cycle.
End of exam