Principles of Economics

1. In economics, the pleasure, happiness, or satisfaction received from a product is called:
A. marginal cost.
B. rational outcome.
C. status fulfillment.
D. utility.

D. utility.

2. When economists say that people act rationally in their self interest, they mean that individuals:
A. look for and pursue opportunities to increase their utility.
B. generally disregard the interests of others.
C. are mainly creatures of habit.
D. are unpredictable.

A. look for and pursue opportunities to increase their utility.

3. According to economists, economic self-interest:
A. is a reality that underlies economic behavior.
B. has the same meaning as selfishness.
C. is more characteristic of men than of women.
D. is usually self-defeating.

A. is a reality that underlies economic behavior.

4. When entering a building, Sam diverts his path to go through an open door rather than make the physical effort to open the closed door that is directly in his path. This is an example of:
A. irrational behavior.
B. a lazy person.
C. marginal benefit-marginal cost analysis.
D. programmed learning.

C. marginal benefit-marginal cost analysis.

5. Joe sold gold coins for $1000 that he bought a year ago for $1000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money, because he could have received a 3 percent return on the $1000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of:
A. opportunity costs.
B. marginal benefits that exceed marginal costs.
C. imperfect information.
D. normative economics.

A. opportunity costs.

6. Economics may best be defined as the:
A. interaction between macro and micro considerations.
B. social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.
C. empirical testing of value judgments through the use of logic.
D. use of policy to refute facts and hypotheses.

B. social science concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.

7. The economic perspective refers to:
A. macroeconomic phenomena, but not microeconomic phenomena.
B. microeconomic phenomena, but not macroeconomic phenomena.
C. the making of purposeful decisions in a context of marginal costs and marginal benefits.
D. unlimited resources in a context of limited economic wants.

C. the making of purposeful decisions in a context of marginal costs and marginal benefits.

8. Economics involves marginal analysis because:
A. most decisions involve changes from the present situation.
B. marginal benefits always exceed marginal costs.
C. marginal costs always exceed marginal benefits.
D. much economic behavior is irrational.

A. most decisions involve changes from the present situation.

9. The assertion that "There is no free lunch" means that:
A. there are always tradeoffs between economic goals.
B. all production involves the use of scarce resources and thus the sacrifice of alternative goods.
C. marginal analysis is not used in economic reasoning.
D. choices need not be made if behavior is rational.

B. all production involves the use of scarce resources and thus the sacrifice of alternative goods.

10. If someone produced too much of a good, this would suggest that:
A. rational choice cannot be applied to many economic decisions.
B. the good was produced to the point where its marginal cost exceeded its marginal benefit.
C. certain goods and services such as education and health care are inherently desirable and should be produced regardless of costs and benefits.
D. the good was produced to the point where its marginal benefit exceeded its marginal cost.

B. the good was produced to the point where its marginal cost exceeded its marginal benefit.

11. Even though local newspapers are very inexpensive, people rarely buy more than one of them each day. This fact:
A. is an example of irrational behavior.
B. implies that reading should be taught through phonics rather than the whole language method.
C. contradicts the economic perspective.
D. implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.

D. implies that, for most people, the marginal benefit of reading a second newspaper is less than the marginal cost.

12. Which one of the following expressions best states the idea of opportunity cost?
A. "A penny saved is a penny earned."
B. "He who hesitates is lost."
C. "There is no such thing as a free lunch."
D. "All that glitters is not gold."

C. "There is no such thing as a free lunch."

13. Which of the following is an economic explanation for why most college-aged movie stars do not attend college.
A. they are too dumb to get into college
B. they would find college life boring
C. the opportunity cost in terms of reduced income is too great
D. they cannot afford the room, board, and tuition fees most colleges charge

C. the opportunity cost in terms of reduced income is too great

14. Economists contend that most economic decisions are:
A. random
B. chaotic
C. spontaneous
D. purposeful

D. purposeful

15. An economic hypothesis:
A. has the same meaning as an economic principal or economic law.
B. is usually a normative statement.
C. is a possible explanation of cause and effect.
D. is a stronger generalization than an economic law.

C. is a possible explanation of cause and effect.

16. The basic purpose of the other-things-equal assumption is to:
A. allow one to reason about the relationship between variables X and Y without the intrusion of variable Z.
B. allow one to focus upon micro variables by ignoring macro variables.
C. allow one to focus upon macro variables by ignoring micro variables.
D. determine whether X causes Y or vice versa.

A. allow one to reason about the relationship between variables X and Y without the intrusion of variable Z.

17. Which of the following is a macroeconomic statement?
A. The gross profits of all U.S. businesses were $182 billion last year.
B. The price of beef declined by 3 percent last year.
C. General Motors' profits increased last year.
D. The productivity of steelworkers increased by 1 percent last year.

A. The gross profits of all U.S. businesses were $182 billion last year.

18. Which of the following is a microeconomic statement?
A. The real domestic output increased by 2.5 percent last year.
B. Unemployment was 6.8 percent of the labor force last year.
C. The price of personal computers declined last year.
D. The general price level increased by 4 percent last year.

C. The price of personal computers declined last year.

19. Which of the following is a normative statement?
A. The temperature is high today.
B. The humidity is high today.
C. It is too hot to play tennis today.
D. It will cool off later this evening.

C. It is too hot to play tennis today.

20. Which of the following is a positive statement?
A. The humidity is too high today.
B. It is too hot to jog today.
C. The temperature is 92 degrees today.
D. Summer evenings are nice when it cools off.

C. The temperature is 92 degrees today.

21. Most of the disagreement among economists involves:
A. facts.
B. principles.
C. positive statements.
D. normative statements.

D. normative statements.

22. The economizing problem is:
A. the need to make choices because economic wants exceed economic means.
B. how to distribute resources equally amongst all members of society.
C. that people's means often exceed their wants.
D. that people do not know how to rationally allocate resources.

A. the need to make choices because economic wants exceed economic means.

25. In moving along a given budget line:
A. the prices of both products and money income are assumed to be constant.
B. each point on the line will be equally satisfactory to consumers.
C. money income varies, but the prices of the two goods are constant.
D. the prices of both products are assumed to vary, but money income is constant

A. the prices of both products and money income are assumed to be constant.

26. An increase in money income:
A. shifts the consumer's budget line to the right.
B. shifts the consumer's budget line to the left.
C. increases the slope of the budget line.
D. has no effect on the budget line.

A. shifts the consumer's budget line to the right.

27. Any combination of goods lying outside of the budget line:
A. implies that the consumer is not spending all his income.
B. yields less utility than any point on the budget line.
C. yields less utility than any point inside the budget line.
D. is unattainable, given the consumer's income.

D. is unattainable, given the consumer's income.

28. Which of the following is a land resource?
A. a computer programmer
B. a computer
C. silicon (sand) used to make computer chips
D. a piece of software used by a firm

C. silicon (sand) used to make computer chips

31. Which of the following would not be classified as an economic resource by economists?
A. a professional soccer player
B. water in a town's reservoir
C. money in a business checking account
D. the manager of the local hamburger restaurant

C. money in a business checking account

32. The production possibilities curve illustrates the basic principle that:
A. the production of more of any one good will in time require smaller and smaller sacrifices of other goods.
B. an economy will automatically obtain full employment of its resources.
C. if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.
D. an economy's capacity to produce increases in proportion to its population size.

C. if all the resources of an economy are in use, more of one good can be produced only if less of another good is produced.

33. Which of the following will not produce an outward shift of the production possibilities curve?
A. an upgrading of the quality of a nation's human resources
B. the reduction of unemployment
C. an increase in the quantity of a society's labor force
D. the improvement of a society's technological knowledge

B. the reduction of unemployment

34. Unemployment:
A. causes the production possibilities curve to shift outward.
B. can exist at any point on a production possibilities curve.
C. is illustrated by a point outside the production possibilities curve.
D. is illustrated by a point inside the production possibilities curve.

D. is illustrated by a point inside the production possibilities curve.

35. If the production possibilities curve is a straight line:
A. the two products will sell at the same market prices.
B. economic resources are perfectly substitutable between the production of the two products.
C. the two products are equally important to consumers.
D. equal quantities of the two products will be produced at each possible point on the curve.

B. economic resources are perfectly substitutable between the production of the two products.

39. Any point inside the production possibilities curve indicates:
A. the presence of technological change.
B. that resources are imperfectly substitutable among alternative uses.
C. the presence of inflationary pressures.
D. that more output could be produced with available resources.

D. that more output could be produced with available resources.

40. The law of increasing opportunity costs states that:
A. if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so.
B. the sum of the costs of producing a particular good cannot rise above the current market price of that good.
C. if the sum of the costs of producing a particular good rises by a specified percent, the price of that good must rise by a greater relative amount.
D. if the prices of all the resources used to produce goods increase, the cost of producing any particular good will increase at the same rate.

A. if society wants to produce more of a particular good, it must sacrifice larger and larger amounts of other goods to do so.

41. The two general types of economic systems that exist today are:
A. market systems and capitalism.
B. socialism and central planning.
C. market systems and command systems.
D. laissez faire systems and pure command systems.

C. market systems and command systems.

42. Which of the following is a distinguishing feature of a command system?
A. private ownership of all capital.
B. central planning.
C. heavy reliance on markets.
D. wide-spread dispersion of economic power.

B. central planning.

43. Of the following countries, the one that best exhibits the characteristics of a market economy is:
A. Canada.
B. Cuba.
C. North Korea.
D. China.

A. Canada.

44. An economic system:
A. requires a grouping of private markets linked to one another.
B. is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.
C. requires some sort of centralized authority (such as government) to coordinate economic activity.
D. is a plan or scheme that allows a firm to make money at some other firm's expense.

B. is a particular set of institutional arrangements and a coordinating mechanism used to respond to the economizing problem.

45. The term laissez-faire suggests that:
A. land and other natural resources should be privately owned, but capital should be publicly owned.
B. land and other natural resources should be publicly owned, but capital equipment should be privately owned.
C. government should not interfere with the operation of the economy.
D. government action is necessary if the economy is to achieve full employment and full production.

C. government should not interfere with the operation of the economy.

46. If consumer desire for product X increases, all of the following will occur except:
A. an increase in the profits of industry X.
B. an increase in the quantity of resources employed by industry X.
C. an increase in the output of industry X.
D. a decrease in the quantity of resources employed in industry X.

D. a decrease in the quantity of resources employed in industry X.

47. If a competitive industry is neither expanding nor contracting, we would expect:
A. total revenue to be zero.
B. economic profits to be zero.
C. total opportunity cost to be zero.
D. more resources to flow to that industry.

B. economic profits to be zero.

48. The economic function of profits and losses is to:
A. bring about a more equal distribution of income.
B. signal that resources should be reallocated.
C. eliminate small firms and reduce competition.
D. tell government which industries need to be subsidized.

B. signal that resources should be reallocated.

49. If competitive industry Y is incurring substantial losses, output will:
A. expand as resources move toward industry Y.
B. contract as resources move toward industry Y.
C. contract as resources move away from industry Y.
D. expand as resources move away from industry Y.

C. contract as resources move away from industry Y.

50. Economic profits in an industry suggest the industry:
A. can earn more profits by increasing product price.
B. should be larger to better satisfy consumers' desire for the product.
C. has excess production capacity.
D. is the size that consumers want it to be.

B. should be larger to better satisfy consumers' desire for the product.

51. From society's point of view the economic function of profits and losses is to:
A. promote the equal distribution of real assets and wealth.
B. achieve full employment and price level stability.
C. contribute to a more equal distribution of income.
D. reallocate resources from less desired to more desired uses.

D. reallocate resources from less desired to more desired uses.

52. Which of the following is not an economic cost?
A. wages.
B. rents.
C. economic profits.
D. payments made to the entrepreneur for organizing production.

C. economic profits.

53. Which of the following characteristics is least unique to a market system?
A. private ownership of property resources
B. competition among buyers and sellers pursuing monetary returns
C. the widespread use of money
D. freedom of enterprise and choice

C. the widespread use of money

54. The presence of market failures implies that:
A. money is not an effective tool for exchange in a market system.
B. there is an active role for government, even in a market system.
C. individuals and firms should strive to be self-sufficient rather than specialize.
D. command systems are superior to market systems in the allocation of resources.

B. there is an active role for government, even in a market system.

57. The invisible-hand concept suggests that:
A. market failures imply the need for a national economic plan.
B. big businesses are inherently more efficient than small businesses.
C. the competitiveness of a capitalistic market economy invariably diminishes over time.
D. assuming competition, private and public interests will coincide.

D. assuming competition, private and public interests will coincide.

58. Economists use the term "demand" to refer to:
A. a particular price-quantity combination on a stable demand curve.
B. the total amount spent on a particular commodity over a stipulated time period.
C. an upsloping line on a graph that relates consumer purchases and product price.
D. a schedule of various combinations of market prices and amounts demanded.

D. a schedule of various combinations of market prices and amounts demanded.

59. The relationship between quantity supplied and price is _____ and the relationship between quantity demanded and price is _____.
A. direct, inverse
B. inverse, direct
C. inverse, inverse
D. direct, direct

A. direct, inverse

60. When the price of a product increases, a consumer is able to buy less of it with a given money income. This describes:
A. the cost effect.
B. the inflationary effect.
C. the income effect.
D. the substitution effect.

C. the income effect.

61. In presenting the idea of a demand curve, economists presume that the most important variable in determining the quantity demanded is:
A. the price of the product itself.
B. consumer income.
C. the prices of related goods.
D. consumer tastes.

A. the price of the product itself.

62. The income and substitution effects account for:
A. the upward sloping supply curve.
B. the downward sloping demand curve.
C. movements along a given supply curve.
D. the "other things equal" assumption.

B. the downward sloping demand curve.

63. Which of the following would not shift the demand curve for beef?
A. a widely publicized study that indicates beef increases one's cholesterol
B. a reduction in the price of cattle feed
C. an effective advertising campaign by pork producers
D. a change in the incomes of beef consumers

B. a reduction in the price of cattle feed

64. A rightward shift in the demand curve for product C might be caused by:
A. an increase in income if C is an inferior good.
B. a decrease in income if C is a normal good.
C. a decrease in the price of a product that is a close substitute for C.
D. a decrease in the price of a product that is complementary to C.

D. a decrease in the price of a product that is complementary to C.

67. College students living off-campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese. When they finish school and start their careers, their consumption of both goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese are:
A. inferior goods.
B. normal goods.
C. complementary goods.
D. substitute goods.

A. inferior goods.

68. Other things equal, which of the following might shift the demand curve for gasoline to the left?
A. the discovery of vast new oil reserves in Montana
B. the development of a low-cost electric automobile
C. an increase in the price of train and air transportation
D. a large decline in the price of automobiles

B. the development of a low-cost electric automobile

69. Suppose an excise tax is imposed on product X. We would expect this tax to:
A. increase the demand for complementary good Y and decrease the demand for substitute product Z.
B. decrease the demand for complementary good Y and increase the demand for substitute product Z.
C. increase the demands for both complementary good Y and substitute product Z.
D. decrease the demands for both complementary good Y and substitute product Z.

B. decrease the demand for complementary good Y and increase the demand for substitute product Z.

70. "In the corn market, demand often exceeds supply and supply sometimes exceeds demand." "The price of corn rises and falls in response to changes in supply and demand." In which of these two statements are the terms demand and supply being used correctly?
A. in neither statement.
B. in the second statement.
C. in the first statement.
D. in both statements.

B. in the second statement.

71. In moving along a stable demand curve which of the following is not held constant?
A. the price of the product for which the demand curve is relevant.
B. price expectations.
C. consumer incomes.
D. the prices of complementary goods.

A. the price of the product for which the demand curve is relevant.

72. The rationing function of prices refers to the:
A. tendency of supply and demand to shift in opposite directions.
B. fact that ration coupons are needed to alleviate wartime shortages of goods.
C. capacity of a competitive market to equate the quantity demanded and the quantity supplied.
D. ability of the market system to generate an equitable distribution of income.

C. capacity of a competitive market to equate the quantity demanded and the quantity supplied.

73. In a competitive market the equilibrium price and quantity occur where:
A. the downsloping demand curve intersects the upsloping supply curve.
B. the upsloping demand curve intersects the downsloping supply curve.
C. consumers and suppliers bargain to a mutually acceptable price.
D. quantity demanded exceeds quantity supplied or vice versa.

A. the downsloping demand curve intersects the upsloping supply curve.

74. Price floors and ceiling prices:
A. both cause shortages.
B. both cause surpluses.
C. cause the supply and demand curves to shift until equilibrium is established.
D. interfere with the rationing function of prices.

D. interfere with the rationing function of prices.

75. In which of the following instances will the effect on equilibrium price be dependent on the magnitude of the shifts in supply and demand?
A. demand rises and supply rises.
B. supply falls and demand remains constant.
C. demand rises and supply falls.
D. supply rises and demand falls.

A. demand rises and supply rises.

(Advanced analysis) Answer the next question(s) on the basis of the following information. The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.
89. Refer to the above information. The equilibrium quantity is:
A. 10.
B. 20.
C. 15.
D. 30.

B. 20.

(Advanced analysis) Answer the next question(s) on the basis of the following information. The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.
90. Refer to the above information. The equilibrium price for X is:
A. $2.
B. $4.
C. $6.
D. $7.

C. $6.

(Advanced analysis) Answer the next question(s) on the basis of the following information. The demand for commodity X is represented by the equation P = 10 - 0.2Q and supply by the equation P = 2 + 0.2Q.
91. Refer to the above information. If demand changed from P = 10 - .2Q to P = 7 - .3Q, we can conclude that:
A. demand has increased.
B. demand has decreased.
C. supply will increase.
D. supply will decrease.

B. demand has decreased.

92. The personal distribution of income refers to the:
A. division of income between personal taxes, consumption expenditures, and saving.
B. division of income on the basis of industry sources, for example, agriculture, transportation, and mining.
C. distribution of income to basic resource classes, that is, wages, rents, interest, and profits.
D. way income is distributed among specific households or spending units.

D. way income is distributed among specific households or spending units.

93. Income data that show the percentage of total income received by each fifth of all households describe the:
A. functional distribution of income.
B. horizontal distribution of income.
C. personal distribution of income.
D. vertical distribution of income.

C. personal distribution of income.

94. Households in the aggregate use the largest share of their total income to:
A. pay taxes.
B. consume.
C. save.
D. buy capital goods.

B. consume.

95. In economics, an organization that employs resources to produce goods and services for profit and operates one or more plants is called a(n):
A. industry.
B. shop.
C. conglomerate.
D. firm.

D. firm.

96. Eclectic Enterprises is a single firm that sells goods and services in the markets for health food, furniture, electric energy, and toys. Eclectic Enterprises is best described as a(n):
A. conglomerate.
B. horizontally integrated firm.
C. vertically integrated firm.
D. industry.

A. conglomerate.

97. The division of U.S. businesses into the categories of proprietorships, partnerships, and corporations is based on:
A. generally accepted accounting principles.
B. legal considerations.
C. the judgment of the American Economic Association.
D. an executive order of the President.

B. legal considerations.

98. The Sherman Act of 1890 is an example of:
A. transfer payments.
B. government attempting to redistribute income.
C. government attempting to maintain competition.
D. government providing public goods.

C. government attempting to maintain competition.

99. The economic policies and programs of government affect all of the following except:
A. the distribution of income.
B. the allocation of resources.
C. the composition of output.
D. the underlying motives of consumers, workers, and firms.

D. the underlying motives of consumers, workers, and firms.

100. Government may lessen income inequality by:
A. providing transfer payments to the poor.
B. directly modifying market prices as, for example, by establishing a legal minimum wage.
C. using the tax system to tax the wealthy relatively more heavily than the poor.
D. doing All of these.

D. doing All of these.

101. When externalities cause substantial positive benefits for third parties, a competitive market:
A. underallocates resources to the production of the good.
B. overallocates resources to the production of the good.
C. is allocatively efficient.
D. compensates people for the value of the benefits that these third parties receive.

A. underallocates resources to the production of the good.

102. If a market is competitive but externalities are present, the resulting equilibrium output:
A. will also be the most efficient output.
B. will always be less than the most efficient output.
C. will always be greater than the most efficient output.
D. may be either larger or smaller than the most efficient output.

D. may be either larger or smaller than the most efficient output.

103. As it relates to a public good, nonrivalry means that:
A. the public sector is able to provide the good profitably.
B. there is no need or demand for the good.
C. either the public sector or the public sector can produce the good, but not both.
D. one person's benefit from the good does not reduce the benefit available to others.

D. one person's benefit from the good does not reduce the benefit available to others.

104. The stabilization function of government involves government's efforts to:
A. alter the output of specific goods when external costs or benefits are present.
B. reduce the after-tax incomes of the rich and increase the after-tax incomes of the poor.
C. deal with the problems of substantial unemployment and rapid inflation.
D. provide the socially desired output of public goods.

C. deal with the problems of substantial unemployment and rapid inflation.

105. Which of the following is a shortcoming of the market system?
A. It leads to firms that are too large to achieve productive efficiency.
B. Certain goods will not be produced because there is no way of excluding nonpaying ("free-rider") individuals from the associated benefits.
C. The resulting distribution of personal incomes might be too equal to maintain incentives.
D. It is controlled by a handful of multinational corporations.

B. Certain goods will not be produced because there is no way of excluding nonpaying ("free-rider") individuals from the associated benefits.

106. The free-rider problem is associated with:
A. all market goods.
B. the structure of airline fares.
C. producing goods that have characteristics of public goods.
D. the overallocation of the resources to transportation facilities.

C. producing goods that have characteristics of public goods.

107. A quasi-public good is:
A. a public good that is produced profitably by private firms, without government subsidy.
B. one characterized by nonrivalry and nonexcludability.
C. one characterized by rivalry but not excludability.
D. a good for which exclusion could take place but that has such large spillover benefits that government provides it to prevent an underallocation of resources.

D. a good for which exclusion could take place but that has such large spillover benefits that government provides it to prevent an underallocation of resources.

108. Which list provides, in order, examples of a private good, a public good, and a quasi-public good?
A. national defense, a national park, an automobile
B. an automobile, national defense, a national park
C. a national park, an automobile, national defense
D. national defense, an automobile, a national park

B. an automobile, national defense, a national park

109. In a full-employment economy government can reallocate resources from private to public employment by:
A. reducing taxes and increasing government expenditures.
B. reducing taxes and reducing government expenditures.
C. increasing taxes and reducing government expenditures.
D. increasing taxes and increasing government expenditures.

D. increasing taxes and increasing government expenditures.

110. Government transfer payments:
A. have been virtually eliminated by Federal revenue sharing.
B. have virtually no effect on the distribution of income.
C. make the distribution of income less equal.
D. make the distribution of income less unequal.

D. make the distribution of income less unequal.

116. Which of the following would not be appropriate if government were trying to reduce high unemployment?
A. an increase in tax rates
B. an increase in subsidies to businesses
C. an increase in transfer payments to households
D. an increase in government spending

A. an increase in tax rates

117. In performing its stabilization function, it may be appropriate for the nation's central bank (the Federal Reserve in the United States) to:
A. raise taxes to reduce inflation.
B. increase government spending to reduce unemployment.
C. increase subsidies to businesses to reduce unemployment.
D. lower interest rates to stimulate private spending and reduce unemployment.

D. lower interest rates to stimulate private spending and reduce unemployment.

118. Fiscal policy:
A. is enacted by the nation's central bank (the Federal Reserve in the U.S.).
B. refers to government spending and taxation policies aimed at promoting price stability and full employment.
C. directly raises or lowers the level of interest rates to promote levels of spending consistent with full employment and price stability.
D. is only used to reduce unemployment rates that are too high.

B. refers to government spending and taxation policies aimed at promoting price stability and full employment.

119. Which of the following is an example of monetary policy?
A. Raising taxes to reduce inflation.
B. Increasing government spending to reduce unemployment and stimulate production.
C. Lowering interest rates to encourage spending and promote full employment.
D. Cutting food stamps and other transfer payment programs during periods of rapid growth and high inflation.

C. Lowering interest rates to encourage spending and promote full employment.

120. Which of the following is an exhaustive governmental outlay?
A. a Federal $5,000 subsidy check to an Illinois farmer
B. a Temporary Assistance to Needy Families payment made by the state of New York
C. a NASA payment to Boeing Corporation for space hardware
D. a Federal old age insurance payment to a retired coal miner

C. a NASA payment to Boeing Corporation for space hardware