Multiple Choice – Section 03: Economic Growth and Public Policy 1.Considerthreeimaginarycountries.InAziria,savingamountsto$3,000andconsumptionamountsto$7,000;inGraniva,savingamountsto$2,000andconsumptionamountsto$8,000;andinTanistan,savingamountsto$4,500andconsumptionamountsto$10,500.Thesavingrateis a.higherinAziriathaninTanistan,anditishigherinTanistanthaninGraniva. b.higherinGranivathaninTanistan,anditishigherinTanistanthaninAziria. c.higherinTanistanthaninGraniva,anditisthesameinGranivaandAziria. d.higherinAziriathaninGraniva,anditisthesameinAziriaandTanistan. 2.Considerthreeimaginarycountries.InAire,savingamountsto$4,000andconsumptionamountsto$12,000;inBovina,savingamountsto$3,000andconsumptionamountsto$24,000;andinCartar,savingamountsto$10,000andconsumptionamountsto$50,000.Thesavingrateis a.higherinAirethaninCartar,anditishigherinCartarthaninBovina. b.higherinCartarthaninAire,anditishigherinAirethaninBovina. c.higherinCartarthaninBovina,anditisthesameinBovinaandAire. d.higherinAirethaninBovina,anditisthesameinAireandCartar. 3.OneoftheTenPrinciplesofEconomicsinChapter1isthatpeoplefacetradeoffs.Thegrowththatarisesfromcapitalaccumulationisnotafreelunch.Itrequiresthatsociety a.conserveresourcesforfuturegenerations. b.sacrificeconsumptiongoodsandservicesnowinordertoenjoymoreconsumptioninthefuture. c.recycleresourcessothatfuturegenerationscanproducegoodsandserviceswiththeaccumulatedcapital. d.Noneoftheaboveiscorrect. 4.Inaneconomywherenetexportsarezero,ifsavingrisesinsomeperiod,theninthatperiod a.consumptionandinvestmentfall. b.consumptionfallsandinvestmentrises. c.consumptionrisesandinvestmentfalls. d.consumptionrisesandinvestmentfalls. 5.Otherthingsthesame,whenaneconomyincreasesitssavingrate a.consumptionandproductionrisenow. b.consumptionrisesnowandproductionriseslater c.consumptionfallsnowandproductionriseslater. d.consumptionfallsnowandproductionfallslater. 6.Whenasocietydecidestoincreaseitsquantityofphysicalcapital,thesociety a.canavoidtheusualneedtofacetrade-offs. b.isapparentlynotveryconcernedaboutitsrateofeconomicgrowthinthefuture. c.isineffectdecidingtoconsumefewergoodsandservicesinthepresent. d.isineffectdecidingtosavelessofitscurrentincomeinthepresent. 7.Accumulatingcapital a.requiresthatsocietysacrificeconsumptiongoodsinthepresent. b.allowssocietytoconsumemoreinthepresent. c.decreasessavingrates. d.involvesnotradeoffs. 8.“Whenworkersalreadyhavealargequantityofcapitaltouseinproducinggoodsandservices,givingthemanadditionalunitofcapitalincreasestheirproductivityonlyslightly.”Thisstatement a.representsthetraditionalviewoftheproductionprocess. b.isanassertionthatcapitalissubjecttodiminishingreturns. c.ismadeundertheassumptionthatthequantitiesofhumancapital,naturalresources,andtechnologyarebeingheldconstant. d.Alloftheabovearecorrect. 9.“Whenworkersalreadyhavealargequantityofcapitaltouseinproducinggoodsandservices,givingthemanadditionalunitofcapitalincreasestheirproductivityonlyslightly.”Thisstatement a.representsanunconventionalviewoftheproductionprocess. b.isanassertionthatcapitalissubjecttoincreasingreturns. c.ismadeundertheassumptionthatthequantitiesofhumancapital,naturalresources,andtechnologyarebeingheldconstant. d.Alloftheabovearecorrect. 10.“Whenworkershavearelativelysmallquantityofcapitaltouseinproducinggoodsandservices,givingthemanadditionalunitofcapitalincreasestheirproductivitybyarelativelylargeamount.”Thisstatement a.isanassertionthatproductionfunctionshavethepropertyofconstantreturnstoscale. b.isconsistentwiththeviewthatcapitalissubjecttodiminishingreturns. c.isinconsistentwiththeviewthatitiseasierforacountrytogrowfastifitstartsoutrelativelypoor. d.Alloftheabovearecorrect.    

  58.Which of the following types of resistance to change is a strategy to “prove” that the decision is wrong or that the change agent is incompetent?  A.Direct costs B.Saving face C.Fear of the unknown D.Breaking routines E.Incongruent organizational systems 59.Increasing the restraining forces and reducing or removing the driving forces would:  A.make the change process more difficult to implement. B.remove any resistance to change. […]

    41) Some economists have proposed making the tax treatment of employer-provided health insurance the same as the tax treatment of individually purchased health insurance and out-of-pocket health care spending. Such changes would make it more likely that A) consumers would pay prices closer to the actual costs for routine medical care. B) employers would provide more generous medical coverage to their employees. C) […]

  61) When a product is taxed, A) part of the initial consumer surplus goes to the government as revenue. B) part of the initial consumer surplus becomes a deadweight loss. C) the producer surplus never changes because consumers pay taxes, not producers. D) Both answers A and B are correct. E) Both answers B and C are correct. 62) The size of the deadweight […]

  61) If the current account balance is -$450 billion, the capital and financial account balance is $440 billion, then the official settlements balance is A) $10 billion. B) -$10 billion. C) $890 billion. D) -$890 billion. E) $0 because it is always zero. 62) Between 1981 and 2012, the United States A) had a current account deficit almost every year. B) had a current […]

    41.When you eat pizza, the body will respond to the high sodium intake in the ingredients by: a.controlling water movement tightly to prevent any fluctuations in body weight. b.turning off the thirst signal to reduce additional intake of fluids. c.signaling the kidneys to immediately begin removing fluid from the body. d.shifting water back into the bloodstream to reduce the sodium concentration.   42.When […]

    61) At any point in time, a single bank can loan an amount equal to A) its excess reserves. B) its required reserves. C) its government securities. D) the amount of loans the bank made in the past. E) its total reserves. Answer:  A Topic:  Money creation process Skill:  Level 2: Using definitions Section:  Checkpoint 11.4 Status:  TPS   62) Assume First Central […]

  Table 2-31     Cell Phone Lumber (board feet) Estonia 20 hours 5 hours Finland 18 hours 4 hours   168) Refer to Table 2-31.  This table shows the number of labor hours required to produce a cell phone and a board foot of lumber in Estonia and Finland.   a. Which country has an absolute advantage in the production of cell phones? b. […]

  53) If the government eliminates a tax on a good with a perfectly elastic supply, who benefits most? A) buyers B) sellers C) buyers if the demand is also perfectly elastic, otherwise sellers D) buyers if the demand is unit elastic, otherwise sellers E) Buyers and sellers benefit equally.   54) If the elasticity of demand for a product equals 3 and the supply […]

  111.When social unrest and disorder in a country causes drastic changes in its business environment that adversely affect the profit and other goals of a business enterprise, the business enterprise is said to be facing a(n) _____ risk.   A. political B. demographic C. ethical D. technological E. physiological 112.Which of the following factors in a country is most likely to cause a political risk for an international business?   A. The presence of […]