Question 1 Select one: in all circular flow diagrams. C a. The value of output is equal to income C b. The trade deficit always equals payments for resource services C C c. Foreign net output is included C d. The value of private production always equals the value of household income e. Net exports must be positive Question 2 Proprietorships account for the largest portion of revenue in the U.S. economy. Select one: True False Question 3 According to the text, what makes health care different from any other good or service is that Select one: a. people feel that they have an inalienable right to health care. b. the supply of health care does not slope up. c. people do not have to make choices when it comes to health care. d. there is no scarcity of health care. e. the demand curve for health care does not slope down. Question 4 Question text Government spending and taxation is the focus of Select one: a. public policy. b. foreign policy. c. fiscal policy. d. monetary policy. e. political policy. Question 5 The summary measure of a country's current and financial account is referred to as the balance of trade account. Select one: True False Question 6 All natural resources are Select one: C C C C C C a. renewable. C e. nonrenewable. Question 7 is policy directed toward government spending and taxation. Select one: b. classified as renewable or nonrenewable c. nonexhaustible. C d. exhaustible. a. Public choice policy b. Urban policy c. Monetary policy d. Fiscal policy e. Microeconomic policy Question 8 For clarity, economists usually group individual buyers and sellers into sectors. Which is not a component in the model? Select one: a. Government b. Households c. Homeland Security C d. Foreign Countries e. Firms Question 9 A in the value of a currency is called an appreciation of the currency; a currency is called a depreciation of the currency. Select one: a. fall; rise b. fall; fall c. The answer cannot be determined from the information given. d. rise; fall e. rise; rise Question 10 Question text The observation that in many occupations only green people are employed while in others only purple people are employed is evidence that statistical discrimination has forced the purples and greens into the different occupations. Select one: True in the value of a False Question 11 Table 10.2 Table 10.2: Price Data Year 1 (base year) 2 13 14 C O In Table 10.2, what is the price index for the base year? Select one: a. 112.5 b. 100 C c. 125 d. 150 e. 137.5 Question 12 Base-Year Soda Price $.40 $.40 $.40 $.40 True Current Soda Price $.40 $.45 $.55 $.60 Per capita income is the criterion by which the World Bank classifies countries into industrial and developing countries. Select one: C False Question 13 Figure 9.1 Figure 7.1 C $10,000 Households $35,000 a. $6,500 Financial Intermediaries. b. $7,500 c. $1,500 d. $3,500 Foreign Countries $7,500 Refer to Figure 9.1. Assume investment spending decreases by $4,000. Everything else being the same, what must the new value of net trade flows be to maintain total expenditures on business firms' output at $35,000? Select one: $2,500 Firms e. $2,500 Question 14 All of the following are reasons that the supply of medical care has decreased except Select one: C C a. that physicians are charging higher fees. C b. advertising restrictions imposed by the American Medical Association (AMA). C c. increased usage of expensive, high-tech medical equipment and procedures. d. that the demand for medical services has increased. e. a decrease in the number of hospital beds. Question 15 Since 1970, federal spending has been growing more rapidly than state and local spending. Select one: True False Question 16 The health care restrictions and regulations prevent the entry and exit of firms and prevent the effect of competition on prices. Select one: True False Question 17 A negative balance in the merchandise account would be indicated by Select one: O a. a deficit balance on investment income. C C C b. exports that exceed imports. c. imports that exceed exports. d. a current account deficit. C e. decreasing transfer payments. Question 18 The most common measure of a country's output and output growth is the consumer price index. Select one: True False Question 19 A foreign exchange rate constitutes the Select one: a. dollar value of imports and exports undertaken in the world economy during one year. b. dollar value of U.S. international trade. c. price of foreign currency as it is determined by the World Bank. 4 d. price of foreign currency as it is established by the relative amount of tourism. e. price of one country's currency in terms of another country's currency. Question 20 All of the following are reasons for health care expenditures in the U.S. rising except: Select one: a. the supply of physicians is restricted by the American Medical Association b. the demand for health care has risen. c. the government (FDA) restricts entry of drugs to the U.S. marketplace d. the federal government has had such a small role in health care. e. health insurance is regulated on a state-by-state basis so someone cannot buy a less expensive policy from an insurer in another state Question 21 The laws of economics do apply to the medical arena, but they have simply not been allowed to operate fully. Select one: C True False Question 22 The market for natural resources can allocate resources to their highest valued uses as long as private property rights are well defined and enforced. Select one: C Question 23 A country that is a net creditor Select one: True C False C b. sells more bonds to the rest of the world than it buys from the rest of the world. C c. receives more tax revenue from its citizens than it returns in transfer payments. C a. shows a deficit in its current account. C C e. shows a surplus in its financial account. Question 24 Households interact with business firms by Select one: a. paying business firms for land. b. providing their services or resources in exchange for money payments. c. paying business firms for capital. d. lends more funds to foreigners than it borrows. C d. selling commodities to business firms. C e. buying resources from business firms. Question 25 4 The market for medical care is a free, unregulated market. Select one: True False Question 26 A cotton farmer sells cotton to a textile mill for $3; the textile mill sells cloth to a shirt manufacturer, adding $2 to the value of the final shirt; the manufacturer sells the shirt to the retail store, adding $10 to the value of the final shirt; the retail store sells to a customer, adding $12 to the value of the final shirt. What is the retail price of the shirt, the price the customer pays? Select one: a. $27 b. $12 c. $30 d. $24 e. $22 Question 27 Table 10.3 Table 10.3 German 2001 Transactions Financial inflows Exports of goods Imports of services Billions of Euros 142 75 43 Investment income receipts Investment income payments Unilateral transfers Exports of services Imports of goods Financial outflows In Table 10.3, the financial account balance for Germany is Select one: C C a. None of these b. 50. e. 80. Question 28 C c. 4. C d. 17. form. Select one: are the main source of U.S. business income and a. corporations; proprietorships 40 67 -47 34 79 92 b. corporations; partnerships c. corporations; corporations d. proprietorships; corporations are the most prevalent U.S. business e. partnerships; corporations Question 29 The GDP underestimates the value of the nation's output. Select one: True False Question 30 According to the text, changes to eliminate most of the problems the United States is experiencing in the market for health insurance would include all of the following except: Select one: a. eliminating restrictions on doctors competing across state lines b. replacing the employer-based system c. instituting a centrally-planned system. d. eliminating the state health insurance regulations that prevent people from purchasing health plans available in other states e. eliminating the third-party payer system.