Which of the following is not an advantage of starting a new business as a sole proprietorship?
A) the initial cost in setting up the business
B) limited control over the operation of the business
C) separation of ownership and business liability
D) possibility of double taxation
C
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If the money supply in the economy were at MS2, to engage in contractionary policy the Federal Reserve Bank would use open market operation to move money supply to:
A. MS1
B. MS3
C. MS4
D. it would stay at MS2
If a government has an active surplus and is below full employment, then:
a. The actual deficit must be less than the passive deficit. b. The actual deficit must be greater than the passive deficit. c. The actual deficit must be greater than the active surplus. d. Fiscal policy must be stimulatory and moving the nation closer to full employment.
Which of the following is the best example of an automatic stabilizer?
A. welfare payments B. foreign aid C. defense spending D. highway construction
Exhibit 4-2 Supply and demand curves
In Exhibit 4-2 an increase in supply would cause a movement from which equilibrium point to another, other things being equal?
A. E1 to E2. B. E1 to E3. C. E4 to E1. D. E3 to E4.