Chapter 1—Introduction and Overview
MULTIPLE CHOICE
1. The study of economics is most concerned with which of the following?
a. What gets produced, how it gets produced and who gets what
b. How to make a lot of money
c. Why stock prices fluctuate
d. What determines who owns the capital in society
ANS: A
2. The study of economics is least concerned with which of the following?
a. What gets produced, how it gets produced and who gets what
b. How to make a lot of money
c. Why stock prices fluctuate
d. What determines who owns the capital in society
ANS: D
3. Microeconomics is most concerned with which of the following?
a. The Federal Reserve System
b. The overall price level
c. The individual decision making processes of business firms and households
d. Business cycles and unemployment
ANS: C
,4. Macroeconomics is most concerned with which of the following?
a. Consumer decision making
b. The level of economic activity in the aggregate economy
c. International Business Machines
d. The individual decision making processes of business firms
ANS: B
5. The best definition of finance is that it is concerned primarily with
a. game theoretic microeconomic behavior
b. the rules of the game
c. the study of the financial or monetary aspects of the production, spending,
borrowing, and lending decisions of an economy.
d. the way the “invisible hand” allocates resources in a command economy
ANS: C
6. What do financial regulators do?
a. promote competition and efficiency in the system
b. preserve safety and soundness
c. establish wage and price controls
d. both a and b
ANS: D
7. The removing or phasing out of regulations is referred to as
a. irregularity
b. deflation
, c. deregulation
d. reregulation
ANS: C
8. Which of the following is true of money?
a. it must be issued by a central bank
b. it is something that is acceptable in payment
c. government must authorize its use
d. must be a physical commodity
ANS: B
9. Which of the following is not true of money?
a. it must be issued by a central bank
b. it is something that is acceptable in payment
c. government must authorize its use
d. it must be issued by a central bank and government must authorize its use
ANS: D
10. Which of the following is not a depository institution?
a. Insurance companies
b. Mutual savings banks
c. Savings and loan associations
d. Commercial banks
ANS: A
, 11. Which of the following is a depository institution?
a. Insurance companies
b. Mutual savings banks
c. Savings and loan associations
d. Commercial banks
ANS: D
12. Saving is
a. income not spent on consumption.
b. income spent on investment goods and financial assets.
c. income invested in financial assets only.
d. equal to over 15 percent of U.S. disposable income.
ANS: A
13. Consumption is
a. income not saved.
b. income spent on investment goods and financial assets.
c. income invested in financial assets only.
d. equal to over 15 percent of U.S. disposable income.
ANS: A
14. A net lender is which of the following?
a. A person or firm that spends less than the income received on consumption or
investment
MULTIPLE CHOICE
1. The study of economics is most concerned with which of the following?
a. What gets produced, how it gets produced and who gets what
b. How to make a lot of money
c. Why stock prices fluctuate
d. What determines who owns the capital in society
ANS: A
2. The study of economics is least concerned with which of the following?
a. What gets produced, how it gets produced and who gets what
b. How to make a lot of money
c. Why stock prices fluctuate
d. What determines who owns the capital in society
ANS: D
3. Microeconomics is most concerned with which of the following?
a. The Federal Reserve System
b. The overall price level
c. The individual decision making processes of business firms and households
d. Business cycles and unemployment
ANS: C
,4. Macroeconomics is most concerned with which of the following?
a. Consumer decision making
b. The level of economic activity in the aggregate economy
c. International Business Machines
d. The individual decision making processes of business firms
ANS: B
5. The best definition of finance is that it is concerned primarily with
a. game theoretic microeconomic behavior
b. the rules of the game
c. the study of the financial or monetary aspects of the production, spending,
borrowing, and lending decisions of an economy.
d. the way the “invisible hand” allocates resources in a command economy
ANS: C
6. What do financial regulators do?
a. promote competition and efficiency in the system
b. preserve safety and soundness
c. establish wage and price controls
d. both a and b
ANS: D
7. The removing or phasing out of regulations is referred to as
a. irregularity
b. deflation
, c. deregulation
d. reregulation
ANS: C
8. Which of the following is true of money?
a. it must be issued by a central bank
b. it is something that is acceptable in payment
c. government must authorize its use
d. must be a physical commodity
ANS: B
9. Which of the following is not true of money?
a. it must be issued by a central bank
b. it is something that is acceptable in payment
c. government must authorize its use
d. it must be issued by a central bank and government must authorize its use
ANS: D
10. Which of the following is not a depository institution?
a. Insurance companies
b. Mutual savings banks
c. Savings and loan associations
d. Commercial banks
ANS: A
, 11. Which of the following is a depository institution?
a. Insurance companies
b. Mutual savings banks
c. Savings and loan associations
d. Commercial banks
ANS: D
12. Saving is
a. income not spent on consumption.
b. income spent on investment goods and financial assets.
c. income invested in financial assets only.
d. equal to over 15 percent of U.S. disposable income.
ANS: A
13. Consumption is
a. income not saved.
b. income spent on investment goods and financial assets.
c. income invested in financial assets only.
d. equal to over 15 percent of U.S. disposable income.
ANS: A
14. A net lender is which of the following?
a. A person or firm that spends less than the income received on consumption or
investment
