Baumol Ch.2 Exam Prep The Economy Myth And Reality

Indicate whether the statement is true or false.

1. Recessions are periods of declining economic activity.

2. An open economy is one in which exports and imports constitute a large share of GDP.

3. American households spend more of their incomes on goods than on services.

4. An open economy produces most of the goods and services that it needs, with few imports and exports.

5. The U.S. economy has become a less closed economy over the past 50 years.

6. The United States is one of the least “marketized” economies in the world.

7. Workers earn more than half of the income generated by the production process.

8. The percentage of the American workforce employed in the manufacturing sector has been steadily declining over the past 50 years.

9. Health and public welfare expenditures account for the largest share of state and local government spending.

10. A tax must be progressive if an individual with a higher income pays more dollars in taxes than an individual with a lower income.

11. A recession is a period of time in which the total output of the economy falls.

12. In a mixed economy, the government plays some role in the working of free markets.

13. The United States is an example of a mixed economy.

14. GDP is a measure of the total output of an economy.

15. Since the 1970s, the United States has had higher unemployment rates than most European countries.

16. Government spending plays no role in meeting our social and public needs.

17. Teenage workforce participation as a percentage of the total workforce has fallen in the United States in recent years.

18. In the United States, all property is privately owned.

19. The U.S. economy has grown constantly over the years.

20. Workers earn less than half of the income generated by the production process.

21. Unemployment in the United States varies considerably over time.

22. Investment spending accounts for nearly 60 percent of U.S. GDP.

23. Since the 1950s, the percentage of women working in the United States has held relatively steady.

24. Since 1960, per capita real GDP in the United States has nearly tripled.

25. A closed economy is one in which exports and imports constitute a large share of GDP.

26. A tax is progressive if the ratio of taxes to income rises as income rises.

27. The U.S. economy is unique for both its size and prosperity.

28. Prosperity in the United States is evenly distributed across the 50 states.

29. The United States relies heavily on markets and so cannot be characterized as a mixed economy.

30. Government in the United States spends more as a percentage of GDP than in most other industrialized nations.

31. National defense made up the largest portion of federal expenditures in 2009.

32. Workers in the United States receive significantly higher compensation than almost all other western European nations.

33. The U.S. economy is relatively open in terms of economic activity related to international trade.

34. Education accounts for the largest share of state and local government spending.

35. Real GDP per capita in the United States grows over time.

36. A tax is progressive if it raises a greater fraction of total tax revenue every year.

37. A recession is a period of time in which real GDP falls.

38. One important role for government as referee is in defining and enforcing property rights.

39. Government production accounts for about half of all GDP in the United States.

40. The U.S. economy rarely grows.

41. A recession is a period of time in which the total output of the economy rises.

42. The corporate income tax is the single largest source of revenue for the federal government.

43. The majority of American workers are employed in the manufacturing sector.

44. The federal government receives most of its revenue from personal income taxes and payroll taxes.

45. The factors of production include all goods and services produced in an economy.

46. Profits account for about 30 cents out of each dollar spent on goods in the United States.

47. The tax burden in the United States, measured as a percentage of GDP, represents a much larger share spend compared to most other industrialized nations.

48. A mixed economy is one that combines both public and private ownership of property.

49. Outputs include goods but not services.

50. Approximately 1 in 12 business firms fail each year in the Unites States.

51. Consumer spending accounts for nearly two-thirds percent of U.S. GDP.

52. The total market value of capital assets in the United States is about $30 trillion dollars.

53. During a recession, unemployment rises and total output of the economy rises.

54. A minority of American women work outside the home.

55. Population density varies little between the 50 states.

56. The U.S. economy has become a less open economy over the past 50 years.

57. A mixed economy blends private and public elements.

58. Gross domestic product is the money value of all final goods and services produced in an economy in a year.

59. Over the past several years and until recently, the United States has had lower unemployment rates than most European countries.

60. Roughly 160 million people in the United States hold jobs.

61. The personal income tax is the single largest source of revenue for the federal government.

62. There are about 5 million business firms in the Unites States.

63. Multinational businesses produce and sell goods around the world.

64. In 2017, per capita real GDP was roughly half its value in 1960.

65. The nationality of a company and a product is easily determined.

66. Economic growth in the United States has increased consistently since the 1950s.

67. The United States is the largest national economy in the world.

68. Teenage employment in the United States has risen in the past two decades.

69. There is no role for government in a free enterprise economy such as the United States.

70. Gross domestic product is the money value of manufacturing production in a year.

71. Approximately half of all U.S. workers are employed by various levels of government.

72. The majority of American workers are employed in the service sector of the economy.

73. Transfer payments are money received as grants from government.

74. The federal government employs more civilians than state and local governments.

75. The U.S. economy is relatively closed in terms of economic activity related to exports and imports.

76. The government’s budget accounts for about 80 percent of GDP in the United States.

77. Real GDP is the dollar value of all goods and services produced in an economy.

78. Consumer spending accounts for about 50 percent of GDP.

79. Currently, well over half of the American workforce is comprised of women.

80. The United States has the biggest national economy in the world solely because of the U.S. population. 

81. Expenditures on social programs, such as health care and income security, constitute more than half of U.S. federal expenditures in 2016.

82. The United States is one of the most “marketized” economies in the world.

83. Antitrust laws are designed to promote competition.

Indicate the answer choice that best completes the statement or answers the question.

84. Which of the following areas employed more workers as of 2016?

85. An industry can be defined as

86. The average hourly wage (excluding benefits) in the United States is currently around

87. Which of the following multinational firms would not be defined as strictly an American corporation?

88. The working population of the United States is approximately

89. A typical American family sends about _____ percent of its budget on services. 

90. How do the wages in the United States compare to those in northern Europe?

91. How does the United States compare to other advanced, industrialized economies on the issue of openness?

92. Which of the following illustrates government acting as a referee?

93. A firm that conducts business all over the world is called a(n)

94. Government ownership of property and resources in the United States is

95. Relative to the situation in many other nations, the United States government plays a _______ role in its economy.

96. A mixed economy is one in which

97. The United States provides a reasonable illustration of

98. Despite the outlays by the federal and state governments, many observers believe which of the following is true? 

99. Which of the following groups has had declining labor force participation over the past 30 years?

100. Which factor of production accounts for the highest percentage of the income that the production process generates in the United States?

101. Government plays a role in which type of economy?

102. The government redistributes income to the poor, primarily through

103. How does the U.S. economy rank in size?

104. Economic fluctuations are defined as

105. Economic progress is best measured by

106. Progressive income taxes are designed to

107. Why does unemployment tend to change when the level of output changes?

108. According to Robert Reich, Secretary of Labor in the Clinton administration,

109. Perhaps the best measure of economic progress is

110. Comparing the United States to other economies, the United States is one of the ____ economies in the world.

111. The largest single portion of the federal budget is devoted to

112. One of the most important changes in the composition of the labor force in the United States has been

113. Most Americans

114. In the United States, most workers now

115. Compared to people in other nations, people in the United States pay

116. A transfer payment is a sum of money

117. Which of the following is true about the United States?

118. Since the mid-1970s, compared to the United States, European unemployment rates are/is 

119. The U. S. budget has 

120. Gross domestic product is a measure of

121. Which of the following is a valid reason to consider government regulation?

122. Gross Domestic Product in 2017 is more than five times larger than it was in 1960 but it is important to note that

123. Antitrust laws are designed to

124. In a mixed economy,

125. Spending on items other than consumption represents about what percent of total output of goods and services?

126. The typical American family spends about ____ percent of its budget on goods and the remainder on services.

127. According to polling data, Americans believe that after-tax corporate profits are

128. All industrialized countries have become “service economies.” Which factor helps explain this shift?

129. What is the approximate number of Americans who have jobs?

130. As Americans have become more health conscious, rules about food labels have become more complex and stringent. This is an example of government acting as

131. The largest share of the typical American family budget goes to 

132. Since the 1970s, unemployment rates in the United States have generally been 

133. Most American workers

134. Which of the following is the best definition of openness?

135. Imports from China represent ____ of total U.S. imports.

136. In the United States each year, 

137. The payments to owners of capital include

138. The issue of inequality has become prominent because of 

139. A recession can best be defined as a period of time in which

140. According to the data on real U.S. GDP,

141. Which of the following is true about the United States?

142. What is the level of openness of the United States economy, based on 2016 data?

143. Among the nations listed, which of the following is the most closed economy?

144. If California were a separate nation, its economy would rank where among nations of the world?

145. Annual incomes of James, Jack, and Stanley are $30,000, $50,000, and $80,000 and their tax rates are 10 percent, 20 percent, and 30 percent respectively. Which tax structure is this an example of?

146. If total population is measured, where does the United States rank?

147. During fiscal year 2017, the most recent mentioned in the text, the federal government spent approximately

148. Among the nations listed, which of the following has the most open economy?

149. When government defines and enforces property rights, this is an example of government as

150. The largest single portion of state and local budgets is devoted to

151. Based on data from 2016, which of the following countries has the lowest tax burden?

152. Along with changes in the level of economic activity, measured by GDP, what other economic variable tends to rise and fall as a consequence?

153. The concept of government as redistributor is

154. Capitalism and free enterprise are common, and the United States

155. GDP tends to rise and fall during economic fluctuations but other measures follow the same pattern. One of these measures is

156. In the United States, most workers

157. Based on data from 2016, annual imports to the United States were approximately ____ and annual exports from the United States were approximately ____.

158. Consumer spending accounts for what share of GDP?

159. Inputs, or factors of production, include

160. Per capita GDP can be defined as

161. The proportion of income which is earned in the form of wages for labor is currently about

162. The role of government in a market economy would include all of the following except

163. For those workers who receive fringe benefits, such as health insurance and pensions, the additional income this results in—over and above the average hourly wage—is as much as (for some workers)

164. In 2017, about what percentage of goods and services sold in the United States was imported?

165. The United States produces ____ of what it consumes, and consumes ____ of what it produces.

166. American households spend about ____ of the average family budget on services, with the rest spent on goods.

167. The United States economy is

168. The United States has approximately

169. America’s antitrust laws are used to protect competition against possible encroachment by monopoly. This is an example of government as

170. All of the following are associated with a mixed economy except

171. One of the most important changes in the composition of the labor force in the United States has been

172. A reason that the United States has the largest economy in the world because

173. Which of the following nations can be called a mixed economy? 

174. What you mean by business cycles? What are their consequences?

175. How does the United States compare to other nations on a per capita scale as far as government production and taxation?

176. All industrialized countries have become “service economies” in recent decades. Explain the reasons behind this shift.

177. It is often asserted that the United States no longer manufactures anything, and that instead it imports manufactured goods from countries like China. Critically evaluate this claim.

178. Differentiate between an open and a closed economy? Do you agree that the U.S. economy is more open among the advanced industrial countries in the world?

179. List five major economic activities of government, and give an example of each.

180. A nation’s citizens often dislike the economy’s distribution of income. Explain two methods for creating a more equal distribution of income.

181. Between 1960 and 2017 U.S. GDP, measured in dollars of constant purchasing power, expanded by a factor of 5. However, the standard of living only increased by 3 times over this period. Explain the difference.

182. What important changes have occurred in the composition of the labor force since 1960? Is the popular image of the American worker as a factory worker accurate? Describe the types of jobs Americans are working in today.

183. Is the image of the typical American worker as a blue-collar worker true? Substantiate your answer with facts.

184. Define the following terms:

185. The U.S. economy is the largest in the world. What two factors primarily explain this? What makes the U.S. economy unique?