10. Which of the following is a positive statement?
a. I think we should pass a constitutional amendment to reduce the deficit.
b. President Obama's way of dealing with the economy is better than President Trump's.
c. I hope interest rates come down soon.
d. If taxes are raised, unemployment will drop. 16. Other things being equal, the effect of a tariff charged on imported steel on the domestic market will
be
a. a leftward shift in the supply curve for steel.
b. an upward movement along the supply curve for steel
c. a rightward shift in the supply curve for steel.
d. a downward movement along the supply curve for steel. Use the charts and policy parameters from the table below to answer these questions.
#37 As a signer of the treaty, how much will Denmark pay in CO2 tax if they take no action?
A) $0 B) $700 C) $1300 D) $1,378 E)$2,280
#38 What is Denmark’s optimal level of Oak trees planted?
A) 0 Tracts B) 2 Tracts C) 3 Tracts D) 6 Tracts
#39 What is the total cost of abatements for Denmark?
A) $476 B) $76 C) $98 D) $705
#40 What is the reason CO2 is targeted in Copenhagen?
A) CO2 is a greenhouse gas
B) CO2 is an externality of industrialization
C) CO2 emissions are a macro‐economic problem
D) All of the above 47. The CPI is a weak indicator of the cost of living because it only measures prices in population centers
a. Technology bias
b. Substitution bias
c. Urban bias
d. none of these. 48. Which of the following is NOT a lagging or trailing indicator?:
a. Current Unemployment rate this week
b. Dow Jones Industrial Stock Index
c. S+P 500 Stock Index
d. Mortgage rates for new projects
e. all of these. 49. When a firm buys new machines to improve productivity, the purchase is considered part of:
A) M
B) G
C) C
D) I
E) X 53. Economic Indicators are to the national economy as
a. Scores are to the sports page
b. Customers are to the business
c. Money is to the bank
d. Vital signs are to the patient
e. Tulips are to the garden
54. Alexander recently received a 6% pay raise for the same year the inflation rate is 4%. We conclude:
a. Nominal increase in rate of pay is 6% but Real rate increased 2%
b. Real increase in rate of pay is 2% but Nominal rate increased 10%
c. Nominal increase in rate of pay is 10% but Real rate increased 6%
d. Real increase in rate of pay is 6% but Nominal rate decreased 2%
e. None of the above
55. What group offered no money down, balloon payments, “No credit=No Problem”, and aggressive
sales tactics?
(during the build‐up of the housing bubble of the past decade)
A. Fannie Mae
B. Institutional Investors
C. The Derivative Market
D. Mortgage Brokers
E. Borrowers
56. Which bias inherent in the CPI describes the lack of a mechanism to adjust for differences in buying
behavior across different demographic segments?
a. Urban Bias
b. Technology Bias
c. Consumer Bias
d. Substitution Bias 62. Which statement is supported by the facts?
A. Fannie Mae caused the great recession by bad policy
B. Institutional Investors caused the great recession by being overly aggressive
C. The Derivative Market caused the great recession by properly evaluate risk
D. Mortgage Brokers delayed the great recession by exacerbating the housing bubble
E. Borrowers caused the great recession by buying homes
63. The CPI is a measure of ____________ and is known as the “_________________”.
a. inflation, standard of living
b. real, nominal
c. production, standard of living
d. production, cost of living
e. inflation, cost of living 75. How many classical economists should the government hire to change a lightbulb?
a. None, because economics is more fun in the dark.
b. None, because the classical economists assert the lightbulb will be changed without government
intervention.
c. All of the available economists should be hired because they brighten up a room with their bright
ideas.
d. All of the available economists should be hired to decrease unemployment and boost aggregate
demand.
76. Which statement is supported by the facts?
A. Fannie Mae caused the great recession by bad policy
B. Institutional Investors caused the great recession by being overly aggressive
C. The Derivative Market caused the great recession by properly evaluate risk
D. Mortgage Brokers delayed the great recession by exacerbating the housing bubble
E. Borrowers caused the great recession by buying homes 77. Which of the following tax systems is progressive?
Person X’s Income is $10,000, Person Z’s Income is $100,000
A. Tax system A: X pay’s $1000 and Z pay’s $10,000
B. Tax system B: X pay’s $1000 and Z pay’s $5,000
C. Tax system C: X pay’s $1000 and Z pay’s $11,000
D. Tax system D: X pay’s $1000 and Z pay’s $1,000
E. None of the above
78. What term best describes student activity fees, whereby colleges will often charge $100 per year to
all students?
A. Progressive Tax
B. Regressive Tax
C. Proportional Tax
D. Dead Weight Loss
79. Carla is a full‐time college student, single tax ‐filing status and her 2 ‐year ‐old child lives with her.
Carla also works weekends delivering take‐out for Wings over Albany. When she receives tips in cash
she doesn’t declare it as income to the IRS because she feels that she earned the money and
needs every penny more than the government does.
A. The italicized phrase is an example of tax evasion and tax avoidance.
B. The italicized phrase is an example of tax evasion only.
C. The italicized phrase is an example of tax avoidance only.
D. The italicized phrase is an example of taxation without representation.
80. Melanie is a full‐time college student, single tax ‐filing status and her 2 ‐year ‐old child lives with her.
Melanie also works weekends delivering take‐out for Sushi Express. When she receives tips in cash she
always declares every penny to the IRS so that she can maximize her EITC. She also is
wondering if she is eligible for any other tax incentives.
A. The italicized phrase is an example of tax evasion and tax avoidance.
B. The italicized phrase is an example of tax evasion only.
C. The italicized phrase is an example of tax avoidance only.
D. The italicized phrase is an example of taxation without representation.
81. Consider Melanie’s situation as a full‐time college student, single tax ‐filing status and her 2 ‐year ‐old
child lives with her. Melanie also works weekends delivering take ‐out for Sushi Express. Which of the
following strategies will give her
the largest tax refund?
A. File for EITC and AOTC
B. She owes no taxes so she shouldn’t have to file the 1040. She should write EXEMPT on her W ‐4 form.
C. She should deduct the mileage on her car she uses to make deliveries.
D. She should itemize her deductions. 82. Ethan avoids taxes by always shopping for major purchases out of state, using offshore accounts to
minimize taxation, and has hired a professional to use other tax loopholes written into the tax code.
Which statement is supported by these marginal behaviors of Ethan?
A. Ethan is probably a high income individual and has a disincentive to avoid taxes.
B. Ethan is probably a low income individual and has additional incentive to avoid taxes.
C. Ethan’s tax avoidance behavior is an example of the regressive nature of tax loopholes.
D. Ethan’s tax evasion schemes favor the 1% and hurt the 99%. 84. How can evaluating dead‐weight loss help in creating efcient tax policy?
A. If a tax causes more dead weight loss than tax revenue, then the tax is efcient.
B. If a tax causes less dead weight loss than tax revenue, then the tax is efcient.
C. If tax revenue is used to help people then it is an efcient tax.
D. If a tax causes less dead weight loss than tax revenue, then the tax is inefcient .
85. How can the efciency of a spending program be improved?
A. Sub‐optimal programs can become more efcient by using less resources for the same outcome.
B. Sub‐optimal programs can become less efcient by using less resources for the same outcome.
C. Sub‐optimal programs can become more efcient by using more resources for the same outcome.
D. Sub‐optimal programs can become more efcient by using the same resources for the same outcome.
86. If the Fed determines that a small adjustment is needed today to decrease the money supply, it will
A. Increase Interest Rates
B. Decrease Interest Rates
C. Sell Treasuries in the Open Market
D. Buy Treasuries in the Open Market 89. The three components of a financial system are:
A) Banks, The Fed and Lenders D) Banks, The Fed and Depositors
B) Banks, Lenders and Borrowers E) Depositors, Lenders and Borrowers
C) The Fed, Depositors and Borrowers
90. When the Fed implements contractionary monetary policy, the money supply ____, interest rates
around the world _____, the price level ______, and unemployment ______.
a. decreases, increases, decreases, increases
b. increases, decreases, increases, decreases
c. decreases, decreases, increases, increases
91. The Goldsmiths of yore were antecedents to modern banks in several ways. The warehouse receipts
they issued depositors were traded because they were “as good as gold”. These receipts are an early
example of _________?
a. Reserves
b. Loans
c. Securities
d. Owner’s Equity
e. Currency
92. All other things being equal among the banks below, which bank is the MOST likely to become
insolvent (bankrupt)?
a. Bank A with assets of $100 million and liabilities of $80 million.
b. Bank B with assets of $200 million and liabilities of $170 million.
c. Bank C with assets of $200 million and liabilities of $180 million.
d. Bank D with assets of $200 million and liabilities of $150 million.
e. Bank E with assets of $400 million and liabilities of $340 million. 93. Which of the following statements is consistent with the Phillips curve?
a. The Fed cannot alter the Reserve Ratio without drastically impacting the economy
b. Expansionary fiscal policy is coordinated with expansionary monetary policy
c. Tax rate increases result in diminishing marginal tax revenue increases
d. The government faces a short run trade ‐off between inflation and unemployment
e. Milk of Magnesia consumption is directly proportional to gastro ‐intestinal distress 94. Over the past year, the Euro has lost value against the US Dollar. Whereas, it used to take $15 US
Dollars to buy what 10 Euros could in 2016; now $10 US will buy what 10 Euros can. Based on this
information, which of the following is true?
A. There is now an incentive for Europeans to buy American goods.
B. The rate of European inflation is steady with US inflation.
C. Prices in the US are going up slower than prices in Europe.
D. The US Dollar buys less in Europe now than it did last year.
E. There is now an incentive for Americans to buy European goods. 96. Bob believes the risk of a bad event happening is 5%. If this bad thing happens it will cause a
$100,000 loss to Bob.
What is the most Bob should be willing to pay for insurance against this bad thing happening?
A) $100,000
B) $50,000
C) $5,000
D) $1,000
E) $500 97. The ____________ benefits and costs must be ______________ to make the best decision in any
situation.
A) overall; considered
B) total; compared
C) marginal; compared
D) opportunity; added
98. The US healthcare system ranks poorly in regards to ______________________.
A) equity and healthy living
B) equity and freedom
C) quality and healthy living
D) quality and freedom
99. When a tariff against imported automobiles was passed in the 1960’s, the policy ‐makers did not
anticipate:
A. a decrease in the sales of imports
B. an in increase in the price of imports
C. an increase in the profits of domestic automobile manufacturers
D. the tariff would act as an incentive for the makers of imports to innovate
E. the tariff would act as a disincentive for the makers of imports to innovate
100. Which of the following statements is true? (The millionaire method)
A) Investing $40/week at 10% interest for 40 years will compound into more than $1,000,000.
B) Investing $50/week at 10% interest for 30 years will compound into more than $1,000,000.
C) Investing $60/week at 10% interest for 20 years will compound into more than $1,000,000.
D) Investing $400/week at 10% interest for 10 years will compound into more than $1,000,000.

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