Choose the right answer from a, b, c and d

1.Suppose you want to realize a future value of $150,000 in 30 years on an investment you make. The average annual rate of return is 8.75%. What will be the present value of your investment?

$1,857,673

$12,112

$163,125

$150,000

2.The three major pillars of the financial sector are the:

a. stock market, the bond market, and the banks.

b. foreign exchange market, the bond market, and the government.

c. stock market, the labor market, and the bond market.

d. banks, the goods market, and the labor market.

3.The fundamental value of a business is the:

a. present value of the future profits it will earn.

b. earnings per share.

c. stock price.

d. value of the forecasted future profits.

4.Which of the following is a narrow indicator?

a. Non-farm payrolls

b. Real GDI

c. The consumer price index

d. The stock price for JPMorgan Chase & Co

5.Whichof the following will fall when the economy is expanding?

a. Business confidence

b. Applications for unemployment benefits

c. Nonfarm payrolls

d. Consumer confidence

6.Which economic indicator tells you how fast wages and benefits are rising?

a. Business confidence

b. S&P 500

c. Nonfarm payrolls

d. The employment cost index

7.Which of the following would lead to a slowdown in economic growth?

a. an increase in capital accumulation coupled with technological advancement

b. a reduction in the birth rate coupled with an increase in the retirement rate of a population

c. the institution of a savings tax credit

d. an increase in innovation in the economy

8.Which of the following countries enjoyed significant catch-up economic growth in the second half of the twentieth century?

a. United States

b. Spain

c. South Korea

d. Argentina

10.In 2010, Canada's GDP was approximately $1,357 billion, and its population was about 34.12 million. What was Canada's approximate GDP per person in 2010?

a. $39,770

b. $46,060

c. $3,980

d. $26,246

11.What is the difference between spending from a microeconomic standpoint versus spending from a macroeconomic standpoint?

a. In microeconomics, spending refers to expenditure on consumer goods only, whereas in macroeconomics, spending refers to business expenditures only.

b. In microeconomics, spending refers to domestic spending, whereas in macroeconomics, spending refers to foreign spending.

c. In microeconomics, spending refers to spending by you, or your family, or your company, whereas in macroeconomics, spending refers to the spending by all consumers, all businesses, and the government in the economy.

d. In microeconomics, spending refers to one individual's spending, whereas in macroeconomics, spending refers to government expenditure.

13.You have four friends. Which of your friends can be described as "cyclically unemployed"?

a. Martha, who is a full-time stay-at-home parent

b. Arthur, who quit his job to look for a better job

c. Regan, who is in a nursing home

d. Keele, who lost her job after her company lost a lot of customers during an economic downturn

14.Suppose a labor market is described by the demand equation,Qd= 60 - 2w, and the supply equation,Qs= -10 +w, whereQdis the quantity demanded of labor,Qsis the quantity supplied of labor, andwis the wage (in dollars). If the government institutes a minimum wage of $25, how many workers will be willing to work in this market?

a. 15,000,000

b. 10,000,000

c. 20,000,000

d. 5,000,000

16.Which of the following lists the functions of money?

a. store of value, store of interest, and buffer against inflation

b. medium of exchange, measure of inflation, and benchmark of quality

c. medium of exchange, store of value, and unit of account

d. carrier of exchange, unit of account, and measure of inflation

17.If you see that inflation between last year and this year is 3%, this means that:

a. on average, prices went up across the economy by 3%.

b. the prices of each and every good and service went up by 3%.

c. economic growth is also 3%.

d. the consumer price index rose by 3% more than the producer price index.

18.Which of the following correctly shows the steps needed to calculate the inflation rate?

a. Collect prices from the stores where people shop, assess the substitution that people make from low inflation to high inflation products, and calculate the difference in the prices that people pay.

b. Tally up the cost of the basket of goods and services, subtract the value of goods and services that are no longer counted in the basket, and then calculate the inflation rate.

c. Find the total value of the basket of goods and services, assess quality changes from one period to the next, and measure the inflation rate.

d. Find out what people typically buy, collect the prices from the stores where people shop, tally up the cost of the basket of goods and services, and calculate the inflation rate.

19.Aggregate expenditure is the sum of:

a. consumption, planned investment, imports, and taxes.

b. planned Investment, government expenditure, exports, and imports.

c. consumption, exports, and planned investment.

d. consumption, planned investment, government expenditure, and net exports.

21.The higher the GDP deflator in an economy, the:

(i) higher the purchasing power of the currency.

(ii) lower the real wealth in the economy.

(iii) higher the real wealth in an economy.

(iv) more expensive the country's exports.

a. (i), (ii), (iii), and (iv)

b. (i), (iii), and (iv)

c. (ii) and (iv)

d. (i) only

22.If the output gap is positive, the Federal Reserve will _____ the real interest rate to _____.

a. lower; cool inflationary pressures

b. raise; reduce unemployment

c. raise; cool inflationary pressures

d. lower; reduce unemployment

23.A bank run occurs when:

a. too many borrowers want to take out loans from a bank, and the bank is unable to meet loan demands.

b. consumers increase their deposits at banks faster than the bank can loan out the funds.

c. interest rates are too high.

d. many people want to withdraw their savings from a bank at the same time, and the bank does not have enough cash on hand.

24.If the output gap is positive, then the Federal Reserve will use its floor framework to _____ the federal funds rate, influence short- and long-term interest rates _____, and _____ total spending in the economy.

a. lower; downward; decrease

b. raise; upward; decrease

c. raise; upward; increase

d. lower; downward; increase

25.Which of the following is NOT a trade cost?

a. the hassle of working across language barriers

b. dealing with foreign laws

c. the cost of producing a good

d. adapting to different ways of doing business

26.Countries benefit from trade by exporting goods in which their opportunity costs are relatively _____ and importing goods in which their opportunity costs are relatively _____.

a. high; high

b. low; high

c. low; low

d. high; low

27.Which of the following services are provided by local government?

a. bus services

b. Pell grants

c. Medicare

d. military defense

28.With a progressive tax, those with _____ income tend to pay a _____.

a. more; flat tax rate

b. more; lower share of their income in taxes

c. less; higher share of their income in taxes

d. more; higher share of their income in taxes

29.The Affordable Care Act is an example of:

a. health care spending.

b. discretionary spending.

c. mandatory spending.

d. military defense spending.