1) Enforcing property rights in an economy will

Select one:

a. decrease the level of foreign portfolio investment.

b. cause the market system to work less efficiently.

c. raise the level of investment.

d. encourage corruption and expand the underground economy.

2) How can economic growth help a country combat "brain drain"?

Select one:

a. Economic growth allows highly skilled persons to earn more in a foreign country than in their native country.

b. Economic growth combined with decreasing returns to human capital require workers to achieve steadily higher and higher levels of education over time.

c. Economic growth opens up opportunities for better jobs and higher incomes for skilled workers.

d. Economic growth increases the incomes of low-skilled workers relative to high-skilled workers.

3) An unplanned increase in inventories results from

Select one:

a.

actual investment that is greater than planned investment.

b.

actual investment that is less than planned investment.

c.

an increase in planned investment.

d.

a decrease in planned investment.

4) Goods that have been produced but not yet sold are referred to as

Select one:

a. inventories.

b. pre-sold goods.

c. capital goods.

d. understocks.

If national income increases by $20 million and consumption increases by $5 million, the marginal propensity to consume is

Select one:

a. 0.25.

b .0.5.

c. 4.

d. 0.75.

5) Investment spending will decrease when

Select one:

a. business cash flow decreases.

b. the corporate income tax decreases.

c. the interest rate falls.

d. firms become more optimistic about earning future profits