1. Which of the following was not among the fiscal policy measures undertaken in Australia during the COVID-19 contraction and recession of 2020?

Select one:

a.

A decrease in individual income taxes.

b.

An increase in government spending on transport infrastructure.

c.

An increase in transfer payments to job seekers.

d.

An increase in purchases of government bonds.

2. Which of the following is most likely to reduce 'structural unemployment'?

Select one:

a.

The establishment of vocational training centres to help unemployed people learn marketable skills.

b.

Advertising job opportunities on the Internet to improve communication between employers and job seekers.

c.

Reducing unemployment benefits to workers who do not actively seek employment.

d.

Lowering interest rates to stimulate investment.

3.Only one of the following statements is correct. The statements compare perfectly competitive (PC) markets and monopolistically competitive (MC) markets. Which statement is correct?

Select one:

a.

Productive efficiency is achieved in both PC and MC markets. Allocative efficiency is achieved only in MC markets.

b.

Allocative efficiency is achieved in both PC and MC markets. Productive efficiency is achieved only in PC markets.

c.

Productive efficiency and allocative efficiency are both achieved in PC markets. Neither is achieved in MC markets.

d.

Allocative efficiency is achieved only in PC markets. Productive efficiency is achieved only in MC markets.

4. The cost borne by a producer in the production of a good or service is called ________.

Select one:

a.

private cost

b.

public cost

c.

social cost

d.

internal cost

5. The social cost of cutting trees for firewood in a government forest is ________.

Select one:

a.

the increased likelihood of flooding as more trees are cut

b.

the marginal costs of cutting the last tree

c.

opportunity cost to the individual of cutting the wood

d.

the increased likelihood of flooding as more trees are cut, plus the private cost of cutting the trees

6. Which of the following is an example of a 'transfer payment'?

Select one:

a.

A teacher's pay being transferred electronically from the government to the teacher.

b.

An unemployment benefit.

c.

The interest repayments on a loan.

d.

The purchase of a new government office block.

7. Why does the short-run aggregate supply curve shift to the left in the long run, following an increase in aggregate demand?

Select one:

a.

Workers and firms adjust their expectations of wages and prices downward and they accept lower wages and prices.

b.

Workers and firms adjust their expectations of wages and prices downward and they push for higher wages and prices.

c.

Workers and firms adjust their expectations of wages and prices upward and they accept lower wages and prices.

d.

Workers and firms adjust their expectations of wages and prices upward and they push for higher wages and prices.

8. Which of the following is considered 'expansionary fiscal policy'?

Select one:

a.

The government decreases the income tax rate.

b.

The government increases defence spending due to a change in priorities.

c.

Legislation that increases education expense deductions from federal income taxes.

d.

A state (not federal) government cuts highway spending to balance its budget.

9. Which of the following is counted in GDP?

Select one:

a.

The value of goods and services produced in the underground economy.

b.

The value of do-it-yourself work.

c.

The cost of a speed boat purchased at Bob's Boats used by drug smugglers.

d.

The value of leisure.

10.Research has shown that most economic profits from selling a prescription drug are eliminated 20 years after the drug is first offered for sale. The main reason for the elimination of profits is:

Select one:

a.

After 20 years most people who have taken the drug have passed away or are cured of the illness the drug was intended to treat.

b.

Firms sell their patent rights to other firms so that they can concentrate on finding drugs to treat new illnesses.

c.

The quantity demanded of the drug has increased enough that the demand becomes inelastic and revenue falls.

d.

After 20 years patent protection is ended, and other firms can produce less expensive generic versions of the drug.

11. If the interest rate increases, then

Select one:

a.

there will be an upward movement along the money demand curve.

b.

there will be a downward movement along the money demand curve.

c.

the money demand curve will shift to the right.

d.

the money demand curve will shift to the left.

12. Government deficits tend to increase during _________.

Select one:

a.

recessions and booms

b.

periods of economic contraction and recession

c.

periods of below- or above-average growth

d.

periods of increased financial uncertainty

13.The 'underground economy' can be described as ________.

Select one:

a.

production of intermediate goods and services

b.

economic production that includes mining

c.

economic activity that is hidden from the government to avoid taxes or because the activity is illegal

d.

production of infrastructure that spurs growth in the rest of the economy

14. How do changes in income tax policies affect aggregate demand?

Select one:

a.

Higher taxes increase disposable income, consumption, and aggregate demand.

b.

Higher taxes reduce disposable income, consumption, and aggregate demand.

c.

Higher taxes increase corporate investment and aggregate demand.

d.

Higher taxes increase aggregate supply and thus increase aggregate demand as well