BUSN 9th Edition By Kelly - Test Bank - Updated 2025

True / False

1. ​An economy is one that includes a financial system and excludes a social system.

2. ​In the context of fiscal strategies, most economists agree that higher taxes can boost the economy by leaving more money with the government to spend during an economic crisis.

3. ​If spending is lower than revenue, the government incurs a budget deficit and must borrow money to cover the shortfall.

4. ​The discount rate is the interest rate the Fed charges on its loans to commercial banks.

5. ​When the Fed reduces the discount rate, banks can obtain funds at a lower cost and use these funds to make more loans to their own customers.

6. The Fed requires that all of its member banks hold funds called “reserves,” equal to a stated percentage of the deposits held by their customers. This percentage is called the reserve requirement.

7. ​Countries that adopted communism in the 1900s—most notably the former Soviet Union, China, Cuba, North Korea, and Vietnam—thrived and prospered more than all the other countries in the world.

8. ​Gross Domestic Product measures the total value of all final goods and services produced within a nation's physical boundaries over a given period of time.

9. ​The amount of input divided by the amount of output equals productivity.

10. ​Gross Domestic Product (GDP) tends to overstate the amount of output produced by a nation's economy.

11. ​In most nations, the unemployment rate includes only individuals over the age of 21 who were involuntarily laid off or terminated from their previous jobs.

Multiple Choice

12. ​Macroeconomics is primarily engaged in the study of:

13. ​Identify a true statement about macroeconomics.

14. ​Macroeconomics focuses on:

15. ​Microeconomics focuses on: