1. The largest component of GDP is: a) net exports. b) investment. c) consumption. d) government purchases.
2. The consumption function:
a) is a relationship between annual consumption and annual disposable income in an economy.
b)will shift upward if aggregate household wealth declines.
c) implies that annual consumption in an economy will be zero if disposable income is zero.
d) is a flat line with zero slope.
3. How much is autonomous consumption when disposable income is $800 billion?
a) $0 b)$2 Trillion c) $4 Trillion d)$6 Trillion
4. Autonomous consumption is NOT influenced by: (Points: 5)
a) aggregate household wealth. b) expectations of future income and wealth. c) Aggregate household debt. d)disposable income.
5. The lunch you buy in your school cafeteria is classified as: a) a consumer durable. b) a consumer nondurable. c) a service. d)either a consumer nondurable or a service because it fits into both categories.
6. Which one of these would NOT constitute investment? a)Someone buys 100 shares of Exxon-Mobil b)Exxon-Mobil purchases 20 new oil rigs c) General Motors builds a new assembly plant d)Macy's remodels its stores
7. Net investment: a)plus depreciation equals gross investment. b) minus depreciation equals gross investment. c) equals gross investment plus depreciation. d)plus gross investment equals depreciation.
8. In the Islamic Middle East inheritance laws were: a)designed to keep land in units large enough to sustain a family. b)conducive to the formation of accumulation of capital. c)designed to easily and quickly divide up partitioned goods. d)flexible enough to accommodate new economic conditions.  Not sure. I think option-a is correct.
9. Investment includes the purchase of: a)stock options of Enron. b)software by an accounting firm. c)global positioning units for cruise missiles by the government. d)new chalk by a local school board.
10. The most important reason that corporations developed in Western Europe earlier than in the Middle Eastern countries was because of: a) the type of business. b) religious differences. c)the transportation system. d)the stages of economic development.
11. The largest source of federal tax revenue comes from: a)individual income taxes. b)social insurance receipts. c)corporation income taxes. d)excise taxes.

12. The Social Security tax is:
direct and progressive.
direct and regressive.
indirect and progressive.
indirect and regressive.


13. An excise tax is a(n):
tax on earnings.
tax on profits.
income tax.
sales tax.


14. Which of the following is a transfer payment? (Points: 5)
The president's salary
Veterans' benefits
The NASA budget
Provision of national parks


15. An example of a tax that is generally regarded to be progressive is the: (Points: 5)
federal income tax.
excise tax on gasoline.
state sales tax.
payroll tax.


16. The most-favored nation clause of the WTO agreement stipulates that: (Points: 5)
no member nation may impose a tariff on the goods of any other member nation.
all member nations must offer all other member countries the same trade concessions as any other member country.
each member may designate another member as a favored nation, providing that nation with trade concessions.
all member nations must sell their goods to other member nations at cost.


17. If more foreign tourists visited the United States, this would: (Points: 5)
lower our merchandise trade imbalance.
lower our overall trade imbalance.
raise our merchandise trade imbalance.
raise our overall trade imbalance.


18. Each of the following is a characteristic of the European Union EXCEPT that: (Points: 5)
workers from any EU country could seek work in any other member country.
is the fourth largest integrated market.
its population and GDP are comparable to those of the United States.
freight is able to move anywhere within the EU without checkpoint delays and paperwork.


19. The trading bloc that has eliminated all internal tariffs is: (Points: 5)
the European Union.
NAFTA.
Mercosur.
The World Trade Organization.


20. Which statement is true? (Points: 5)
Since the early 1990s the U.S. trade deficit has risen slightly.
Net exports has always been positive.
The U.S. exports more services than merchandise (in terms of dollars).
The U.S. balance of trade was positive for most of the 20th century.