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Managerial Economics 1. According to economists, economic self-interest: A) is a reality that underlies economic behavior. B) has the same meaning as...

Managerial Economics
1. According to economists, economic self-interest:
A) is a reality that underlies economic behavior.
B) has the same meaning as "selfishness."
C) is more characteristic of men than of women.
D) is usually self-defeating.
2. The study of economics is primarily concerned with:
A) keeping private businesses from losing money.
B) demonstrating that capitalistic economies are superior to socialistic economies.
C) choices that are made in seeking to use scarce resources efficiently.
D) determining the most equitable distribution of society's output.
3. The economizing problem is one of deciding how to make the best use of:
A) virtually unlimited resources to satisfy virtually unlimited wants.
B) limited resources to satisfy virtually unlimited wants.
C) unlimited resources to satisfy limited wants.
D) limited resources to satisfy limited wants.
4. The study of economics exists because:
A) government interferes with the efficient allocation of scarce resources.
B) resources are scarce in relation to economic wants.
C) the market system is an obstacle to the efficient use of plentiful resources to satisfy constrained wants.
D) resources are overly abundant as compared to wants; thus, an allocation problem exists.
5. If an economy produces its most wanted goods but uses outdated production methods, it is:
A) achieving productive efficiency, but not allocative efficiency.
B) not achieving productive efficiency.
C) achieving both productive and allocative efficiency.
D) engaged in "roundabout" production.
6. A market:
A) reflects upsloping demand and downsloping supply curves.
B) entails the exchange of goods, but not services.
C) is an institution that brings together buyers and sellers.
D) always entails face-to-face contact between buyer and seller.
7. Tennis rackets and ballpoint pens are:
A) substitute goods.
B) complementary goods.
C) inferior goods.
D) independent goods.
8. Which of the following is not a characteristic of the market system?
A) private property
B) freedom of enterprise
C) government ownership of the major industries
D) competition in product and resource markets
9. Specialization--the division of labor--enhances productivity and efficiency by:
A) allowing workers to take advantage of existing differences in their abilities and skills.
B) avoiding the time loss involved in shifting from one production task to another.
C) allowing workers to develop skills by working on one, or a limited number, of tasks.
D) all of the above means.
10. The personal distribution of income refers to the:
A) division of income between personal taxes, consumption expenditures, and saving.
B) division of income on the basis of industry sources, for example, agriculture,
transportation, and mining.
C) distribution of income to basic resource classes, that is, wages, rents, interest, and profits.
D) way income is distributed among specific households or spending units.
11. Government lotteries are:
A) used by a large number of states to supplement their tax revenues.
B) illegal in the United States, but are a common source of revenue in other countries.
C) used by local governments, but not by state governments.
D) a form of progressive taxation.
12.The physical export of motorcycles from the United States to Mexico best illustrates a(n):
A) trade flow.
B) resource flow.
C) financial flow.
D) technology flow.
13. Most of the United States' international trade is with:
A) other industrially advanced capitalist countries.
B) the OPEC countries.
C) developing countries.
D) Russia and China.
14. A nation's gross domestic product (GDP):
A) is the dollar value of the total output produced within the borders of the
nation.
B) is the dollar value of the total output produced by its citizens, regardless of
where they are living.
C) can be found by summing C + In + S + Xn.
D) is always some amount less than its C + Ig + G + Xn.
15. In national income accounting, consumption expenditures include purchases of:
A) both new and used consumer goods.
B) automobiles for personal use, but not houses.
C) consumer durable and nondurable goods, but not services.
D) consumer nondurable goods and services, but not consumer durable goods.
16. Economic growth is best defined as an increase in:
A) either real GDP or real GDP per capita.
B) nominal GDP.
C) total consumption expenditures.
D) wealth in the economy.
17. The production possibilities curve illustrates the basic principle that:
A) the production of more of any one good will in time requires smaller and
smaller sacrifices of other goods.
B) an economy will automatically obtain full employment of its resources.
C) if all the resources of an economy are in use, more of one good can be
produced only if less of another good is produced.
D) an economy's capacity to produce increases in proportion to its population
size.
18. The most important determinant of consumer spending is:
A) the level of household debt.
B) consumer expectations.
C) the stock of wealth.
D) the level of income.
19. Investment and saving are, respectively:
A) income and wealth.
B) stocks and flows.
C) injections and leakages.
D) leakages and injections.
20. The multiplier effect means that:
A) consumption is typically several times as large as saving.
B) a small change in consumption can cause a much larger increase in investment.
C) a small increase in investment can cause GDP to change by a larger amount.
D) a small decline in the MPC can cause equilibrium GDP to rise by several times that amount.
21. Which one of the following is not a shortcoming of the aggregate expenditures
model?
A) failure to show price level changes
B) failure to allow for premature demand-pull inflation
C) failure to account for cost-push inflation
D) failure to account for cyclical unemployment
22. In the Employment Act of 1946, the Federal government:
A) applied the unemployment compensation program to intrastate workers.
B) agreed to subsidize unemployed workers to the extent of 50 percent of their
average incomes.
C) committed itself to accept some degree of responsibility for the general levels
of employment and prices.
D) agreed to hire, through public works programs, any employees who cannot
find jobs with private industry.
23. Supply-side economists argue that tax rate cuts will:
A) always reduce tax revenues.
B) may increase tax revenues.
C) always increase budget deficits.
D) have no effect on tax revenues.
24. To say money is socially defined means that:
A) money has been defined in a Constitutional amendment.
B) whatever performs the functions of money to a high degree is included in the
money supply.
C) the money supply includes all public and private securities purchased by
society.
D) society, acting through Congress, specifies what shall be included in the
money supply.
25.Plastic cards that contain computer chips that store account balances are known as:
A) credit cards.
B) smart cards.
C) debit cards.
D) E-cards.
26. Which of the following statements is correct?
A) The actual reserves of a commercial bank equal its excess reserves minus its
required reserves.
B) A bank's liabilities plus its net worth equal its assets.
C) When borrowers repay bank loans, the supply of money increases.
D) A single commercial bank can safely lend a multiple amount of its excess
reserves.
27. When an economist says that the demand for a product has increased, this means
that:
A) consumers are now willing to purchase more of this product at each possible
price.
B) the product has become particularly scarce for some reason.
C) product price has fallen and as a consequence consumers are buying a larger
quantity of the product.
D) the demand curve has shifted to the left.
28. Which of the following is an asset on the consolidated balance sheet of the
Federal Reserve Banks?
A) loans to commercial banks
B) Federal Reserve Notes in circulation
C) Treasury deposits
D) reserves of commercial banks
29. Other things equal, a reduction in income taxes would:
A) reduce productivity and reduce aggregate supply.
B) increase consumption and increase aggregate demand.
C) increase the supply of money and reduce investment.
D) increase government spending and increase aggregate demand.
30. In terms of aggregate supply, a period in which nominal wages and other input
prices are constant is called the:
A) long run.
B) short run.
C) immediate market period.
D) very long run.
31. Critics of supply-side economics:
A) argue that a tax cut will increase aggregate supply by more than it increases
aggregate demand.
B) contend that the relationship between tax rates and economic incentives is
small and of uncertain direction.
C) believe that a decline in tax rates will increase tax revenues.
D) point out that tax cuts enable households to "buy more leisure" by working
less.
BA540 - Economics Proctored Exam 6
Version A
32. Which of the following is not a supply factor in economic growth?
A) the stock of capital
B) technological advance
C) the size and quality of the labor force
D) aggregate expenditures
33. Proponents of economic growth make all of the following arguments except:
A) Growth is the basic means of improving living standards.
B) It is easier to reduce poverty when the economy is growing than when it is
not.
C) There is a direct relationship between a growing real GDP and pollution.
D) Growth provides an economic environment favorable to education and selffulfillment.
34. The U.S. public debt:
A) refers to the debts of all units of government--Federal, state, and local.
B) consists of the total debt of U.S. households, businesses, and government.
C) refers to the collective amount that U.S. citizens and businesses owe to
foreigners.
D) consists of the historical accumulation of all Federal government deficits and
surpluses.
35. Advocates of using budget surpluses to bolster the social security trust fund say
that:
A) the number of older Americans will increase substantially over the next
several decades, eventually straining the social security system.
B) this policy would boost interest rates, increase saving, and increase private
investment.
C) this policy would enable deep cuts in the payroll tax used to finance social
security.
D) without such a policy, the social security system will go bankrupt in 2010.
36. In its simplest form, Keynesian theory views the aggregate supply curve as being:
A) upsloping and quite steep.
B) horizontal.
C) vertical.
D) downsloping.
37. Mainstream economists favor:
A) the use of discretionary monetary policy and fiscal policy.
B) a monetary rule.
C) a balance-budget amendment.
D) wage and price controls.
38. Other things equal, an increase in the price level will:
A) shift the aggregate supply curve to the right.
B) shift the aggregate demand curve to the right.
C) cause a movement up along a short-run aggregate supply curve.
D) cause a movement down an aggregate demand curve.
39. Which of the following is a true statement?
A) Under normal conditions there is a short-run tradeoff between inflation and
unemployment.
B) There is a long-run tradeoff between inflation and unemployment.
C) The short-run Phillips Curve is vertical.
D) The long-run Phillips Curve is horizontal.
40.A politically liberal economist who favored expanded government would
recommend:
A) tax cuts during recession and reductions in government spending during
inflation.
B) tax increases during recession and tax cuts during inflation.
C) tax cuts during recession and tax increases during inflation.
D) increases in government spending during recession and tax increases during
inflation.
41. Built-in stability means that:
A) an annually balanced budget will offset the procyclical tendencies created by
state and local finance and thereby stabilize the economy.
B) with given tax rates and expenditures policies, a rise in domestic income will
reduce a budget deficit or produce a budget surplus while a decline in income
will result in a deficit or a lower budget surplus.
C) Congress will automatically change the tax structure and expenditure
programs to correct upswings and downswings in business activity.
D) government expenditures and tax receipts automatically balance over the
business cycle, though they may be out of balance in any single year.
42. Growth is advantageous to a nation because it:
A) promotes faster population growth.
B) lessens the burden of scarcity.
C) eliminates the economizing problem.
D) slows the growth of wants.
43. The immediate determinant of the volume of output and employment is the:
A) composition of consumer spending.
B) ratio of public goods to private goods production.
C) level of total spending.
D) size of the labor force.
44. A recession is a period in which:
A) cost-push inflation is present.
B) nominal domestic output falls.
C) demand-pull inflation is present.
D) real domestic output falls.
45. According to the concept of comparative advantage, a good should be produced in
that nation where:
A) its domestic opportunity cost is greatest.
B) money is used as a medium of exchange.
C) its domestic opportunity cost is least.
D) the terms of trade are maximized.
46. All else being equal, depreciation of the Mexican peso relative to the U.S. dollar
would make a trip by:
A) an American to Mexico more expensive.
B) a Mexican to the United States less expensive.
C) an American to Mexico less expensive.
D) an Australian to the United States more expensive.
47. The Reciprocal Trade Agreements Act:
A) exempted American exporters from the Sherman Antitrust Act.
B) provided technological assistance to developing countries.
C) brought about considerable reductions in American trade barriers.
D) eliminated American subsidies to agricultural exports.
48. Copyrights and trademarks are examples of:
A) capital goods.
B) human capital.
C) property rights.
D) public goods.
49. Normal profit is:
A) a cost because any excess of total receipts over total costs will go to the businessperson.
B) a cost because they represent payments made for the resources which the
businessperson owns and supplies in his or her own enterprise.
C) not a cost because a firm can avoid this payment by temporarily closing down.
D) not a cost of production because it need not be realized for a firm to retain
entrepreneurial ability.
50. The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.
A) direct, inverse
B) inverse, direct
C) inverse, inverse
D) direct, direct

Managerial Economics
1. According to economists, economic self-interest:
A) is a reality that underlies economic behavior.
B) has the same meaning as "selfishness."
C) is more characteristic of men than of women.
D) is usually self-defeating.
2. The study of economics is primarily concerned with:
A) keeping private businesses from losing money.
B) demonstrating that capitalistic economies are superior to socialistic
economies.
C) choices that are made in seeking to use scarce resources efficiently.
D) determining the most equitable distribution of society's output.
3. The economizing problem is one of deciding how to make the best use
of:
A) virtually unlimited resources to satisfy virtually unlimited wants.
B) limited resources to satisfy virtually unlimited wants.
C) unlimited resources to satisfy limited wants.
D) limited resources to satisfy limited wants.
4. The study of economics exists because:
A) government interferes with the efficient allocation of scarce
resources.
B) resources are scarce in relation to economic wants.
C) the market system is an obstacle to the efficient use of plentiful
resources to satisfy constrained wants.
D) resources are overly abundant as compared to wants; thus, an
allocation problem exists.
5. If an economy produces its most wanted goods but uses outdated
production methods, it is:
A) achieving productive efficiency, but not allocative efficiency.
B) not achieving productive efficiency.
C) achieving both productive and allocative efficiency.
D) engaged in "roundabout" production.
6. A market:
A) reflects upsloping demand and downsloping supply curves.
B) entails the exchange of goods, but not services.
C) is an institution that brings together buyers and sellers.
D) always entails face-to-face contact between buyer and seller.
7. Tennis rackets and ballpoint pens are:
A) substitute goods.
B) complementary goods.
C) inferior goods.
D) independent goods.
8. Which of the following is not a characteristic of the market system?
A) private property
B) freedom of enterprise
C) government ownership of the major industries
D) competition in product and resource markets
9. Specialization--the division of labor--enhances productivity and
efficiency by:
A) allowing workers to take advantage of existing differences in their
abilities and skills.
B) avoiding the time loss involved in shifting from one production task
to another.
C) allowing workers to develop skills by working on one, or a limited
number, of tasks.
D) all of the above means.
10. The personal distribution of income refers to the:
A) division of income between personal taxes, consumption expenditures,
and saving.
B) division of income on the basis of industry sources, for example,
agriculture,
transportation, and mining.
C) distribution of income to basic resource classes, that is, wages,
rents, interest, and profits.
D) way income is distributed among specific households or spending
units.
11. Government lotteries are:
A) used by a large number of states to supplement their tax revenues.
B) illegal in the United States, but are a common source of revenue in
other countries.
C) used by local governments, but not by state governments.
D) a form of progressive taxation.
12.The physical export of motorcycles from the United States to Mexico
best illustrates a(n):
A) trade flow.
B) resource flow.
C) financial flow.
D) technology flow.
13. Most of the United States' international trade is with:
A) other industrially advanced capitalist countries.
B) the OPEC countries.
C) developing countries.
D) Russia and China.
14. A nation's gross domestic product (GDP):
A) is the dollar value of the total output produced within the borders
of the
nation.
B) is the dollar value of the total output produced by its citizens,
regardless of
where they are living.
C) can be found by summing C + In + S + Xn.
D) is always some amount less than its C + Ig + G + Xn.
15. In national income accounting, consumption expenditures include
purchases of:
A) both new and used consumer goods.
B) automobiles for personal use, but not houses.
C) consumer durable and nondurable goods, but not services.
D) consumer nondurable goods and services, but not consumer durable
goods.
16. Economic growth is best defined as an increase in:
A) either real GDP or real GDP per capita.
B) nominal GDP.
C) total consumption expenditures.
D) wealth in the economy.
17. The production possibilities curve illustrates the basic principle
that:
A) the production of more of any one good will in time requires smaller
and
smaller sacrifices of other goods.
B) an economy will automatically obtain full employment of its
resources.
C) if all the resources of an economy are in use, more of one good can
be
produced only if less of another good is produced.
D) an economy's capacity to produce increases in proportion to its
population
size.
18. The most important determinant of consumer spending is:
A) the level of household debt.
B) consumer expectations.
C) the stock of wealth.
D) the level of income.
19. Investment and saving are, respectively:
A) income and wealth.
B) stocks and flows.
C) injections and leakages.
D) leakages and injections.
20. The multiplier effect means that:
A) consumption is typically several times as large as saving.
B) a small change in consumption can cause a much larger increase in
investment.
C) a small increase in investment can cause GDP to change by a larger
amount.
D) a small decline in the MPC can cause equilibrium GDP to rise by
several times that amount.
21. Which one of the following is not a shortcoming of the aggregate
expenditures
model?
A) failure to show price level changes
B) failure to allow for premature demand-pull inflation
C) failure to account for cost-push inflation
D) failure to account for cyclical unemployment
22. In the Employment Act of 1946, the Federal government:
A) applied the unemployment compensation program to intrastate workers.
B) agreed to subsidize unemployed workers to the extent of 50 percent of
their
average incomes.
C) committed itself to accept some degree of responsibility for the
general levels
of employment and prices.
D) agreed to hire, through public works programs, any employees who
cannot
find jobs with private industry.
23. Supply-side economists argue that tax rate cuts will:
A) always reduce tax revenues.
B) may increase tax revenues.
C) always increase budget deficits.
D) have no effect on tax revenues.
24. To say money is socially defined means that:
A) money has been defined in a Constitutional amendment.
B) whatever performs the functions of money to a high degree is included
in the
money supply.
C) the money supply includes all public and private securities purchased
by
society.
D) society, acting through Congress, specifies what shall be included in
the
money supply.
25.Plastic cards that contain computer chips that store account balances
are known as:
A) credit cards.
B) smart cards.
C) debit cards.
D) E-cards.
26. Which of the following statements is correct?
A) The actual reserves of a commercial bank equal its excess reserves
minus its
required reserves.
B) A bank's liabilities plus its net worth equal its assets.
C) When borrowers repay bank loans, the supply of money increases.
D) A single commercial bank can safely lend a multiple amount of its
excess
reserves.
27. When an economist says that the demand for a product has increased,
this means
that:
A) consumers are now willing to purchase more of this product at each
possible
price.
B) the product has become particularly scarce for some reason.
C) product price has fallen and as a consequence consumers are buying a
larger
quantity of the product.
D) the demand curve has shifted to the left.
28. Which of the following is an asset on the consolidated balance sheet
of the
Federal Reserve Banks?
A) loans to commercial banks
B) Federal Reserve Notes in circulation
C) Treasury deposits
D) reserves of commercial banks
29. Other things equal, a reduction in income taxes would:
A) reduce productivity and reduce aggregate supply.
B) increase consumption and increase aggregate demand.
C) increase the supply of money and reduce investment.
D) increase government spending and increase aggregate demand.
30. In terms of aggregate supply, a period in which nominal wages and
other input
prices are constant is called the:
A) long run.
B) short run.
C) immediate market period.
D) very long run.
31. Critics of supply-side economics:
A) argue that a tax cut will increase aggregate supply by more than it
increases
aggregate demand.
B) contend that the relationship between tax rates and economic
incentives is
small and of uncertain direction.
C) believe that a decline in tax rates will increase tax revenues.
D) point out that tax cuts enable households to "buy more leisure" by
working
less.
BA540 - Economics Proctored Exam 6
Version A
32. Which of the following is not a supply factor in economic growth?
A) the stock of capital
B) technological advance
C) the size and quality of the labor force
D) aggregate expenditures
33. Proponents of economic growth make all of the following arguments
except:
A) Growth is the basic means of improving living standards.
B) It is easier to reduce poverty when the economy is growing than when
it is
not.
C) There is a direct relationship between a growing real GDP and
pollution.
D) Growth provides an economic environment favorable to education and
selffulfillment.
34. The U.S. public debt:
A) refers to the debts of all units of government--Federal, state, and
local.
B) consists of the total debt of U.S. households, businesses, and
government.
C) refers to the collective amount that U.S. citizens and businesses owe
to
foreigners.
D) consists of the historical accumulation of all Federal government
deficits and
surpluses.
35. Advocates of using budget surpluses to bolster the social security
trust fund say
that:
A) the number of older Americans will increase substantially over the
next
several decades, eventually straining the social security system.
B) this policy would boost interest rates, increase saving, and increase
private
investment.
C) this policy would enable deep cuts in the payroll tax used to finance
social
security.
D) without such a policy, the social security system will go bankrupt in
2010.
36. In its simplest form, Keynesian theory views the aggregate supply
curve as being:
A) upsloping and quite steep.
B) horizontal.
C) vertical.
D) downsloping.
37. Mainstream economists favor:
A) the use of discretionary monetary policy and fiscal policy.
B) a monetary rule.
C) a balance-budget amendment.
D) wage and price controls.
38. Other things equal, an increase in the price level will:
A) shift the aggregate supply curve to the right.
B) shift the aggregate demand curve to the right.
C) cause a movement up along a short-run aggregate supply curve.
D) cause a movement down an aggregate demand curve.
39. Which of the following is a true statement?
A) Under normal conditions there is a short-run tradeoff between
inflation and
unemployment.
B) There is a long-run tradeoff between inflation and unemployment.
C) The short-run Phillips Curve is vertical.
D) The long-run Phillips Curve is horizontal.
40.A politically liberal economist who favored expanded government would
recommend:
A) tax cuts during recession and reductions in government spending
during
inflation.
B) tax increases during recession and tax cuts during inflation.
C) tax cuts during recession and tax increases during inflation.
D) increases in government spending during recession and tax increases
during
inflation.
41. Built-in stability means that:
A) an annually balanced budget will offset the procyclical tendencies
created by
state and local finance and thereby stabilize the economy.
B) with given tax rates and expenditures policies, a rise in domestic
income will
reduce a budget deficit or produce a budget surplus while a decline in
income
will result in a deficit or a lower budget surplus.
C) Congress will automatically change the tax structure and expenditure
programs to correct upswings and downswings in business activity.
D) government expenditures and tax receipts automatically balance over
the
business cycle, though they may be out of balance in any single year.
42. Growth is advantageous to a nation because it:
A) promotes faster population growth.
B) lessens the burden of scarcity.
C) eliminates the economizing problem.
D) slows the growth of wants.
43. The immediate determinant of the volume of output and employment is
the:
A) composition of consumer spending.
B) ratio of public goods to private goods production.
C) level of total spending.
D) size of the labor force.
44. A recession is a period in which:
A) cost-push inflation is present.
B) nominal domestic output falls.
C) demand-pull inflation is present.
D) real domestic output falls.
45. According to the concept of comparative advantage, a good should be
produced in
that nation where:
A) its domestic opportunity cost is greatest.
B) money is used as a medium of exchange.
C) its domestic opportunity cost is least.
D) the terms of trade are maximized.
46. All else being equal, depreciation of the Mexican peso relative to
the U.S. dollar
would make a trip by:
A) an American to Mexico more expensive.
B) a Mexican to the United States less expensive.
C) an American to Mexico less expensive.
D) an Australian to the United States more expensive.
47. The Reciprocal Trade Agreements Act:
A) exempted American exporters from the Sherman Antitrust Act.
B) provided technological assistance to developing countries.
C) brought about considerable reductions in American trade barriers.
D) eliminated American subsidies to agricultural exports.
48. Copyrights and trademarks are examples of:
A) capital goods.
B) human capital.
C) property rights.
D) public goods.
49. Normal profit is:
A) a cost because any excess of total receipts over total costs will go
to the businessperson.
B) a cost because they represent payments made for the resources which
the
businessperson owns and supplies in his or her own enterprise.
C) not a cost because a firm can avoid this payment by temporarily
closing down.
D) not a cost of production because it need not be realized for a firm
to retain
entrepreneurial ability.
50. The relationship between quantity supplied and price is _____ and
the relationship between quantity demanded and price is _____.
A) direct, inverse
B) inverse, direct
C) inverse, inverse
D) direct, direct

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