MTEL prep economic questions

Two adjoining nations will most often become economically interdependent when:

• each country has similar topographical conditions and material resources.

• the labor force of each country is well educated and highly productive.

• each country specializes in the production of different types of goods.

• the government of each country is committed to economic diversification.

  
  

Which argument is typically associated with classical economists?

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  A market economy is self-correcting and thus will not remain in a recession indefinitely

  
  

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  A market economy has stable prices and thus is usually free from inflation

  
  

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  A market economy requires a strong government to ensure that the market meets the needs of the people

  
  

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  A market economy eventually results in monopolies in both the input and output markets

  
  

In a Keynesian model, an expansionary monetary policy will lead to

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  lower real interest rates and more investment

  
  

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  lower real interest rates and lower prices

  
  

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  higher real interest rates and lower prices.

  
  

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  higher real interest rates and higher real income

  
  

Under which of the following conditions would a restrictive monetary policy be most appropriate?

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  high inflation

  
  

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  high unemployment

  
  

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  full employment and stable prices

  
  

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  low interest rates

  
  

The federal government redistributes income primarily by

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  setting up planning commissions to set wage rates

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  taxing different income levels at different rates

  
  

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  guaranteeing every person a minimum income through minimum-wage laws

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  relocating and retraining structurally unemployed people

An increase in which of the following will increase aggregate demand?

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  taxes

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  government spending

  
  

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  the federal funds rate

  
  

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  the discount rate

  
  

The unemployment rate measures the percentage of people

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  in the labor force who do not have jobs

  
  

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  in the labor force who have part-time jobs but are looking for full-time jobs

  
  

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  who do not have jobs and have given up looking for work

  
  

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  in the adult population who do not have jobs

Budget deficits occur when

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  more money is being spent on entitlement programs than has been allocated.

  
  

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  the I.R.S. spends more than it collects in taxes in a given year

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  the federal government spends more than it collects in taxes in a given year

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  interest payments on the national debt increase one year to the next

Entrepreneurship can best be defined as the ability to:

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  recognize profitable ways of organizing land, labor and capital

  
  

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  create economic initiatives that balance private interests and the public good

  
  

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  reduce the operating costs of a business enterprise

  
  

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  make a profit by buying, combining, and selling inefficient or redundant economic units

The most important policy recommendations of the British economist John Maynard Keynes were based on the belief that:

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  nations pass through predictable stages of growth to achieve a state of stable economic prosperity.

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  market determination of prices and wages provides the surest foundation for economic growth.

  
  

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  new products and production processes cause regular fluctuations in the level of business activity.

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  government spending is often necessary to maintain employment and consumption in market economies.