Transcript Unit 5 Practice MC Questions

Mr.
Weiss
Unit 5
5. Business cycles in the United States
a.
b.
c.
d.
occur about every 6 years.
occur irregularly.
always follow the same pattern.
are always preceded by periods of
mild inflation.
Mr.
Weiss
Unit 5
5. Business cycles in the United States
a.
b.
c.
d.
occur about every 6 years.
occur irregularly.
always follow the same pattern.
are always preceded by periods of
mild inflation.
Mr.
Weiss
Unit 5
10. Which of the following
events could cause this curve to
shift to the right?
a.
b.
c.
d.
an increase in taxes
a decrease in interest rates
an increase in the price for foreign oil
a decrease in the price level
Mr.
Weiss
Unit 5
10. Which of the following
events could cause this curve to
shift to the right?
a.
b.
c.
d.
an increase in taxes
a decrease in interest rates
an increase in the price for foreign oil
a decrease in the price level
Mr.
Weiss
Unit 5
15.The producer price index measures
a. changes in the prices producers charge for the
goods they sell.
b. changes in the prices producers pay for the
goods they buy.
c. changes in the prices producers pay for salary
wages.
d. changes in the volume of producer sales.
Mr.
Weiss
Unit 5
15.The producer price index measures
a. changes in the prices producers charge for the
goods they sell.
b. changes in the prices producers pay for the
goods they buy.
c. changes in the prices producers pay for salary
wages.
d. changes in the volume of producer sales.
Mr.
Weiss
Unit 5
20. It will take a few years for the global economy to achieve a new equilibrium between
manufacturing production and consumer demand. Many goods are now in oversupply,
and consumer demand is impaired by falling currencies and growth-inhibiting
governmental policies. . . . But these are cyclical imbalances of the sort that have
occurred for decades and will keep recurring from time to time.
Source: Kiplinger’s Personal Finance Magazine, November 1998.
This passage is describing
a.
b.
c.
d.
a shift in aggregate demand.
a shift in aggregate supply.
a global economic boom.
equilibrium between aggregate supply and demand.
Mr.
Weiss
Unit 5
20. It will take a few years for the global economy to achieve a new equilibrium between
manufacturing production and consumer demand. Many goods are now in oversupply,
and consumer demand is impaired by falling currencies and growth-inhibiting
governmental policies. . . . But these are cyclical imbalances of the sort that have
occurred for decades and will keep recurring from time to time.
Source: Kiplinger’s Personal Finance Magazine, November 1998.
This passage is describing
a.
b.
c.
d.
a shift in aggregate demand.
a shift in aggregate supply.
a global economic boom.
equilibrium between aggregate supply and demand.
Mr.
Weiss
Unit 5
25.One of the drawbacks of electronic funds
transfer is
a. it can take longer than manual transfers.
b. the possibility of tampering is increased because
records are stored in a computer.
c. ATMs cannot always handle electronic funds
transfers.
d. not all banks are equipped to handle electronic
funds transfer.
Mr.
Weiss
Unit 5
25.One of the drawbacks of electronic funds
transfer is
a. it can take longer than manual transfers.
b. the possibility of tampering is increased because
records are stored in a computer.
c. ATMs cannot always handle electronic funds
transfers.
d. not all banks are equipped to handle electronic
funds transfer.
Mr.
Weiss
Unit 5
30.Representative money is money that is
a. backed by a valuable item, such as gold.
b. used in comparison for the values of goods
and services.
c. accepted in payment for private debts.
d. coins and bills.
Mr.
Weiss
Unit 5
30.Representative money is money that is
a. backed by a valuable item, such as gold.
b. used in comparison for the values of goods
and services.
c. accepted in payment for private debts.
d. coins and bills.
Mr.
Weiss
Unit 5
34.When you use the item shown in the
illustration, you are using
a.
b.
money.
c.
near money. d.
fiat money.
borrowed money.
Mr.
Weiss
Unit 5
34.When you use the item shown in the
illustration, you are using
a.
b.
money.
c.
near money. d.
fiat money.
borrowed money.
Unit 5
Mr.
Weiss
The Federal Reserve, confronted with a global stock sell-off fanned by increased
fears of a recession, cut a key interest rate by three-quarters of a percentage point on
Tuesday.
The Fed said it was cutting the federal funds rate, the interest that banks charge each
other on overnight loans, to 3.5 percent, down by three-fourths of a percentage point
from 4.25 percent.
The Fed action was the most dramatic signal it can send that it is concerned about a
potential recession in the U.S. It marked the biggest one-day move by the central
bank in recent memory. Source: “The Fed Cuts Rates,” businessweek.com, January 22, 2008.
40. According to the passage, the Fed pushed
what rate to its lowest level since 1961?
a. discount rate
c.
prime rate
b. federal funds rate d. reserve rate
Unit 5
Mr.
Weiss
The Federal Reserve, confronted with a global stock sell-off fanned by increased
fears of a recession, cut a key interest rate by three-quarters of a percentage point on
Tuesday.
The Fed said it was cutting the federal funds rate, the interest that banks charge each
other on overnight loans, to 3.5 percent, down by three-fourths of a percentage point
from 4.25 percent.
The Fed action was the most dramatic signal it can send that it is concerned about a
potential recession in the U.S. It marked the biggest one-day move by the central
bank in recent memory. Source: “The Fed Cuts Rates,” businessweek.com, January 22, 2008.
40. According to the passage, the Fed pushed
what rate to its lowest level since 1961?
a. discount rate
c.
prime rate
b. federal funds rate d. reserve rate
Mr.
Weiss
Unit 5
45. The main tool the Fed uses to affect
interest rates is
a.
b.
c.
d.
a loose money policy.
a tight money policy.
open market operations.
check clearing.
Mr.
Weiss
Unit 5
45. The main tool the Fed uses to affect
interest rates is
a.
b.
c.
d.
a loose money policy.
a tight money policy.
open market operations.
check clearing.
Mr.
Weiss
Unit 5
50. Which of the following is affected by
decisions of the Federal Open Market
Committee?
a.
b.
c.
d.
check clearing
interest rates
Congress’s ability to mint coins
the amount of individual loans
Mr.
Weiss
Unit 5
50. Which of the following is affected by
decisions of the Federal Open Market
Committee?
a.
b.
c.
d.
check clearing
interest rates
Congress’s ability to mint coins
the amount of individual loans
Mr.
Weiss
Unit 5
55. According to the graph,
government spending
accounted for about what
portion of the total value of
the nation’s output between
1980 and 2000?
a.
b.
c.
d.
about a quarter
about a third
about half
about two thirds
Mr.
Weiss
Unit 5
55. According to the graph,
government spending
accounted for about what
portion of the total value of
the nation’s output between
1980 and 2000?
a.
b.
c.
d.
about a quarter
about a third
about half
about two thirds
Mr.
Weiss
Unit 5
60.According to the graph,
about what percentage of
total spending did the
federal government spend
in 2007 for the privilege of
using borrowed money?
a.
b.
c.
d.
a little more than 10%
a little less than 10%
a little more than 20%
about 15%
Mr.
Weiss
Unit 5
60.According to the graph,
about what percentage of
total spending did the
federal government spend
in 2007 for the privilege of
using borrowed money?
a.
b.
c.
d.
a little more than 10%
a little less than 10%
a little more than 20%
about 15%
Mr.
Weiss
Unit 5
65. Every year at this time, Congress discovers, with a great public show of dismay and
indignation, the existence of the American tax code and the agency that administers it, the
Internal Revenue Service. There are high-minded calls for abolishing the current tax system
and replacing it....
Around April 15, Congress likes to pretend that the tax code just sort of appeared or [just]
happened. But the Constitution puts the burden of taxes solely, exclusively and entirely on
Congress’ shoulders. The tax code is the way it is because a majority of Congress wants it that
way. Source: “How the Tax Code Got This Way,” Denver Rocky Mountain News, April 16, 1999.
Based on this passage, members of Congress probably like to
pretend that the tax code just “sort of appeared” because they
a. are not happy with the code.
b. don’t want voters to associate them with taxes.
c. feel the Internal Revenue Service does not administer taxes fairly.
d. cannot fix the unfairness in the tax code.
Mr.
Weiss
Unit 5
65. Every year at this time, Congress discovers, with a great public show of dismay and
indignation, the existence of the American tax code and the agency that administers it, the
Internal Revenue Service. There are high-minded calls for abolishing the current tax system
and replacing it....
Around April 15, Congress likes to pretend that the tax code just sort of appeared or [just]
happened. But the Constitution puts the burden of taxes solely, exclusively and entirely on
Congress’ shoulders. The tax code is the way it is because a majority of Congress wants it that
way. Source: “How the Tax Code Got This Way,” Denver Rocky Mountain News, April 16, 1999.
Based on this passage, members of Congress probably like to
pretend that the tax code just “sort of appeared” because they
a. are not happy with the code.
b. don’t want voters to associate them with taxes.
c. feel the Internal Revenue Service does not administer taxes fairly.
d. cannot fix the unfairness in the tax code.
Mr.
Weiss
Unit 5
70. Some people oppose government
assistance because they believe it
a. discourages personal responsibility.
b. should be handled by large companies.
c. increases tax revenues.
d. shields citizens from the harmful effects
of unemployment.
Mr.
Weiss
Unit 5
70. Some people oppose government
assistance because they believe it
a. discourages personal responsibility.
b. should be handled by large companies.
c. increases tax revenues.
d. shields citizens from the harmful effects
of unemployment.
Mr.
Weiss
Unit 5
75. Deficit financing is
a.
b.
c.
d.
a type of proportional tax.
a public assistance program.
balanced budgeting.
government overspending.
Mr.
Weiss
Unit 5
75. Deficit financing is
a.
b.
c.
d.
a type of proportional tax.
a public assistance program.
balanced budgeting.
government overspending.
Mr.
Weiss
Unit 5
Back in 1940, when the Social Security program was just getting under way, average life
expectancy was less than 64 years. The program’s designers expected that most people would
contribute to the program most of their lives and die before collecting a dime in retirement
benefits.... Today, average life expectancy in the United States is more than 75 years.... As life
expectancy has soared, birthrates have declined, leaving fewer and fewer workers to support
the ballooning number of retirees. In 1950, [the system] was solidly supported with 16 workers
paying for each retiree; today, there are just over three workers per beneficiary.
Source: Carrie Lips, Cato Institute’s Project on Social Security Privatization.
80.According to the passage, the increase in average life expectancy has created a
problem for the Social Security system because
a.
b.
c.
d.
people are remaining in the workforce longer.
more people are collecting retirement benefits for longer.
younger workers are having a harder time finding jobs.
people are retiring at a younger age.
Mr.
Weiss
Unit 5
Back in 1940, when the Social Security program was just getting under way, average life
expectancy was less than 64 years. The program’s designers expected that most people would
contribute to the program most of their lives and die before collecting a dime in retirement
benefits.... Today, average life expectancy in the United States is more than 75 years.... As life
expectancy has soared, birthrates have declined, leaving fewer and fewer workers to support
the ballooning number of retirees. In 1950, [the system] was solidly supported with 16 workers
paying for each retiree; today, there are just over three workers per beneficiary.
Source: Carrie Lips, Cato Institute’s Project on Social Security Privatization.
80.According to the passage, the increase in average life expectancy has created a
problem for the Social Security system because
a.
b.
c.
d.
people are remaining in the workforce longer.
more people are collecting retirement benefits for longer.
younger workers are having a harder time finding jobs.
people are retiring at a younger age.
Mr.
Weiss
Unit 5
85. Unemployment caused by up and down
fluctuations in the business cycle is
called
a.
b.
c.
d.
cyclical unemployment.
structural unemployment
seasonal unemployment.
frictional unemployment.
Mr.
Weiss
Unit 5
85. Unemployment caused by up and down
fluctuations in the business cycle is
called
a.
b.
c.
d.
cyclical unemployment.
structural unemployment
seasonal unemployment.
frictional unemployment.
Mr.
Weiss
Unit 5
90. With economic growth slowing, the unemployment rate would rise to between
4.8 percent and 4.9 percent next year [which is] still low by historical standards. A
previous forecast estimated the unemployment rate next year would be about 4.75
percent. For all of last year, the jobless rate dipped to 4.6 percent, a six-year low.
The Fed said the "unemployment rate would increase modestly" in 2008, stabilize
in 2009 and then decline slightly in 2010. Source: “Fed Forecasts Unemployment Bump in
2008,”ABC News, Nov 20, 2007.
According to the passage, what was the highest projected level of
unemployment in 2008?
a.
b.
4.6 percent
4.75 percent
c.
d.
4.8 percent
4.9 percent
Mr.
Weiss
Unit 5
90. With economic growth slowing, the unemployment rate would rise to between
4.8 percent and 4.9 percent next year [which is] still low by historical standards. A
previous forecast estimated the unemployment rate next year would be about 4.75
percent. For all of last year, the jobless rate dipped to 4.6 percent, a six-year low.
The Fed said the "unemployment rate would increase modestly" in 2008, stabilize
in 2009 and then decline slightly in 2010. Source: “Fed Forecasts Unemployment Bump in
2008,”ABC News, Nov 20, 2007.
According to the passage, what was the highest projected level of
unemployment in 2008?
a.
b.
4.6 percent
4.75 percent
c.
d.
4.8 percent
4.9 percent
Mr.
Weiss
Unit 5
95.The main weaknesses of using fiscal policy
to stabilize the economy are
a. the underground economy and
monetarism.
b. high unemployment and stagflation.
c. the political process and time lags.
d. misguided economists and stubborn
politicians.
Mr.
Weiss
Unit 5
95.The main weaknesses of using fiscal policy
to stabilize the economy are
a. the underground economy and
monetarism.
b. high unemployment and stagflation.
c. the political process and time lags.
d. misguided economists and stubborn
politicians.
Mr.
Weiss
Unit 5