Which of the following best represents a contractionary fiscal policy?

C. A freeze in discretionary government spending.

A. Public spending on a high-speed railway.

B. A temporary suspension of payroll taxes.

Which of the following equations is a consequence of the Fisher effect?

A. Nominal interest rate = Real interest rate + Expected rate of inflation.

B. Real interest rate = Nominal interest rate + Expected rate of inflation.

C. Nominal interest rate = Real interest rate + Market risk premium.

All else remaining equal, a decline in the average duration of unemployment most likely indicates that an economic:

B. upturn has already occurred.

A decrease in a country’s total imports is most likely caused by:

C. persistent currency depreciation relative to primary trading partners.

A. an increase in the pace of domestic GDP growth.

B. a cyclical downturn in the economies of primary trading partners.

Price elasticity of demand for a good will most likely be greater if:

B. consumers consider the good as discretionary.

A. there are no substitutes for the good

C. consumers spend a small portion of their budget on the good.

Convergence of incomes over time between emerging market countries and developed countries is most likely due to:

B. diminishing marginal productivity of capital.

C. the exhaustion of non-renewable resources.

Which of the following is most likely to cause the long-run aggregate supply curve to shift to the left?

C. An increase in corporate taxes.

The sustainable growth rate is best estimated as:

B. growth in the labor force plus growth of labor productivity.

A. the weighted average of capital and labor growth rates.

C. growth in total factor productivity plus growth in the capital-to-labor ratio.

Which of the following is most likely to lead to a recessionary gap?

B. Declining consumer confidence

Which of the following factors is most likely to lead to economies of scale?

B. Duplication of product lines

Which of the following statements is most accurate concerning the sum-of-value-added method used to determine GDP based on expenditures?

A. The method involves summing the income created at each stage of the production and distribution process.

B. The method shows a larger GDP value compared with the value-of-final-output method.

C. The method is based on the prices consumers pay for the products and services.

Which of the following economic developments is most likely to cause cost-push inflation?

C. A shortage of trained workers emerges throughout the economy.

A. Industrial capacity utilization rises to a very high level.

B. Labor productivity increases faster than hourly labor costs.

Which of the following statements is the best description of the characteristics of economic indicators?

C. A combination of leading and coincident indicators can offer effective forecasts.

A. Leading indicators are important because they track the entire economy.

B. Lagging indicators in measuring past conditions do not require revisions.

A wireless phone manufacturer introduced a next-generation phone that received a high level of positive publicity. Despite running several high-speed production assembly lines, the manufacturer is still falling short in meeting demand for the phone nine months after introduction. Which of the following statements is the most plausible explanation for the demand/supply imbalance?

A. The phone price is low relative to the equilibrium price.

B. Competitors introduced next-generation phones at a similar price.

C. Consumer incomes grew faster than the manufacturer anticipated.

Econs 1.5 Test

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Professional Development

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40 questions

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MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Which of the following is most likely to cause a shift to the right in the aggregate demand curve?

A. Boom in the stock market

B. Increase in taxes

C. Decrease in real estate values

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Which of the following best describes a fundamental assumption when monetary policy is used to influence the economy?

A. Financial markets are efficient.

B. Money is not neutral in the short run.

C. Official rates do not affect exchange rates.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

According to the theory of money neutrality, money supply growth does not affect variables such as real output and employment in:

A. the long run.

B. the short run.

C. the long and short run.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

In theory, setting the policy rate equal to the neutral interest rate should promote:

A. stable inflation.

B. balanced budgets.

C. greater employment.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

An advantage of indirect taxes as a fiscal policy tool is that such taxes:

A. have a greater impact on aggregate spending and output than direct government spending.

B. can be adjusted almost immediately.

C. minimize interference with consumer choices.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

If the GDP deflator values for year 1 and year 2 were 190 and 212.8, respectively, which of the following best describes the annual growth rate of the overall price level?

A. 5.8%.

B. 6%.

C. 12%.

MULTIPLE CHOICE QUESTION

2 mins • 1 pt

Monetarists favor a limited role for the government because they argue:

A. government policy responses may lag.

B. firms take time to adjust to systemic shocks to the economy.

C. resource use is efficient with marginal revenue and cost equal.

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Econs 1.5 Test

Which of the following is most likely to cause a shift to the right in the aggregate demand curve?

Which of the following best describes a fundamental assumption when monetary policy is used to influence the economy?

According to the theory of money neutrality, money supply growth does not affect variables such as real output and employment in:

In theory, setting the policy rate equal to the neutral interest rate should promote:

An advantage of indirect taxes as a fiscal policy tool is that such taxes:

If the GDP deflator values for year 1 and year 2 were 190 and 212.8, respectively, which of the following best describes the annual growth rate of the overall price level?

Monetarists favor a limited role for the government because they argue:

Which of the following best represents a contractionary fiscal policy?

Which of the following equations is a consequence of the Fisher effect?

Suppose a painting is produced and sold in 2018 for £5,000. The expenses involved in producing the painting amounted to £2,000. According to the sum-of-value-added method of calculating GDP, the value added by the final step of creating the painting was:

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