Archives

1) transfer payments are: a.excluded when calculating gdp because they only reflect inflation. b.excluded when calculating gdp because they do not reflect current production. c.included when calculating gdp because they are a category of investment spending. d.included when calculating gdp […]

1) the voluntary relocation of employable migrants from low-paying nations to high-paying nations reduces: a.wage rate disparities among nations. b.business or capitalist income in the world. c.labor productivity in the world. d. total wage income in the world. 2) the […]

1) refer to the above diagram. the concave shape of each production possibilities curve indicates that: a.resources are perfectly substitutable. b.wants are virtually unlimited. c.prices are constant. d.resources are not equally suited for alternative uses. 2) Currency speculators aid international […]

1) The textbook authors apply the metaphor ‘shooting yourself in the foot” to: A.trade wars and trade boycotts. B.fixed exchange rates. C.import quotas. D.voluntary export restraints. 2) (consider this) gross investment is a: a.flow, as is depreciation. b.flow, as is […]

1) utility: a.is synonymous with usefulness. b.is want-satisfying power. c.is easy to quantify. d.rarely varies from person to person. 2) All of the following are regulatory commissions dealing with social regulation (as distinct from industrial regulation) except the: A.Food and […]

1) The terms of trade reflect the: A.rate at which gold exchanges internationally for any domestic currency. B.ratio at which nations will exchange two goods. C.fact that the gains from trade will be equally divided. D.cost conditions embodied in a […]

1) refer to the above diagram. the slope of curve zz at point b is: a.infinity. b.zero. c.+1 d.-1 2) slopes of lines are especially important in economics because: a.they measure marginal changes. b.they always tell us something about profits. […]

1) the short-run profit maximizing position of an unregulated pure monopolist is characterized by: a.p = minimum atc. b.p = mc. c.mr = mc. d.mc = atc. 2) a firm reaches a break-even point (normal profit position) where: a.marginal revenue […]

1) central planning in the soviet union and pre-reform china emphasized the expansion of the production of consumer goods to raise the domestic standard of living. 2) The idea that the economy will ‘self-correct” when confronted with changes in aggregate […]

1) If the reserve requirement is 10 percent, how much excess reserves does a bank acquire when a business deposits a $500 check drawn on another bank? A.$450 B.$400 C.$5000 D.$550 2) the smallest component of aggregate spending in the […]

1) The bank panics of 1930-1933: A.resulted in the passage of the Smoot-Hawley Act. B.boosted the nation’s money supply, causing inflation. C.directly resulted in the Federal insured deposit program. D.caused a significant outflow of gold from the United States. 2) […]

1) refer to the above information. average fixed cost is: a. b. c. d. 2) according to emerson: “want is a growing giant whom the coat of have was never large enough to cover.” according to economists, “want” exceeds “have” […]

1) Refer to the above diagram, in which Qf is the full-employment output. The shift in the aggregate demand curve from AD3 to AD2 could result from which of the following fiscal policy actions? A.a tax reduction B.a tax reduction […]

1) If Kelly deposits $10,000 into an account that pays 8 percent interest, compounded annually, and she makes no further deposits or withdrawals, how much will Kelly have in her account at the end of 5 years? A.$14,000 B.$14,482 C.$14,693 […]

1) graphically, producer surplus is measured as the triangle: a.under the demand curve and below the actual price. b.under the demand curve and above the actual price. c.above the supply curve and above the actual price. d.above the supply curve […]

1) Refer to the above diagrams. Suppose that government undertakes fiscal policy designed to increase aggregate demand from AD1 to AD2 and thereby to increase GDP from X to Z. In terms of graph B, which of the following might […]

1) Capitalist income (corporate profits, interest, and rent) has: A.declined sharply since 1900 because of the growing strength of labor unions. B.remained approximately constant in this century. C.increased significantly because of rising rents. D.fallen in this century because of the […]

1) the following cost data for a firm that is selling in a purely competitive market. refer to the above data. if the market price for this firm’s product is $24, it will produce: a.4 units at a loss of […]

1) we would expect the cross elasticity of demand for pepsi in relation to other soft drinks to be greater than that for soft drinks generally because: a.soft drinks are normal goods. b.the income effect always exceeds the substitution effect. […]

1) the period in the u.s. economy from 1995 to 2007 is characterized by: a.a higher trend rate of saving. b.a higher natural rate of unemployment. c.a higher trend rate of productivity growth. d.the end of the business cycle. 2) […]

1) the smaller the number of good substitutes for a product, the greater will be the price elasticity of demand for it. 2) variable costs are costs that vary directly with output. Answer: true 3) Expansionary fiscal policy is so-named […]

1) Answer the next question(s) on the basis of the following table for a particular country in which C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports. All figures […]

1) Which of the following is a true statement? A.firms and resource suppliers generally find it easier to reduce prices than to raise them. B.as the price level increases, interest rates will rise and therefore consumption and investment spending will […]

1) The efficiency loss of a tax is the idea that: A.in addition to taking income from the citizenry, taxes also increase the rate of inflation. B.taxes cause a decline in output for which marginal benefit exceeds marginal cost. C.taxes […]

1) The following table contains hypothetical data for the 2010 U.S. balance of payments. Answer the next question(s) on the basis of this information. All figures are in billions of dollars. Refer to the above data. The U.S. balance on […]

1) value added can be determined by: a.summing the profits of all enterprises in the economy. b.subtracting the purchase of intermediate products from the value of the sales of final products. c.calculating the year-to-year changes in real gdp. d.deflating nominal […]

1) A “national bank holiday” that closed all banks for a week and resulted in Federal deposit insurance occurred in the United States in: A.1903, following the “Louisiana stampede.” B.1987, following the collapse of numerous savings and loan associations. C.1945, […]

1) economic research consistently finds that immigration negatively impacts the average american wage. 2) An increase in the price of capital will reduce the demand for labor if capital and labor are complementary resources. Answer: TRUE 3) Modernizing economies that […]

1) Research involving industrially advanced countries suggests that: A.the more independent the central bank, the lower the average annual growth of real GDP. B.the more independent the central bank, the higher the average annual growth of real GDP. C.there is […]

1) The equation of exchange suggests that, if the supply and velocity of money remain unchanged, an increase in the physical volume of goods and services produced will cause: A.the unemployment rate to rise. B.the Federal Reserve Banks to sell […]

1) Economist Arthur Laffer equated Robin Hood to: A.government and equated the people passing through Sherwood Forest to taxpayers. B.charitable organizations and equated the people passing through Sherwood Forest to poor people. C.businesses and equated the people passing through Sherwood […]

1) Other things being constant, what will be the effect of each of the following on disposable income (or real GDP)? (a)An increase in the amount of liquid assets consumers are holding (b)A sharp rise in stock prices (c)A rapid […]

1) assume an economy that is producing only one product. output and price data for a three-year period are as follows. answer the next question(s) on the basis of these data. refer to the above data. if year 2 is […]

1) (consider this) the main point of the consider this box about hypothetical countries slogo, sumgo, and speedo is that over several decades differing: a.inflation rates create large differences in real gdp per capita. b.economic growth rates create large differences […]

1) Refer to the above diagram. Rational expectations theory says that a fully anticipated shift in aggregate demand from AD1 to AD2 will: A.move the economy from a to b to c. B.move the economy directly from a to c. […]

1) health care costs have risen absolutely but remained constant as a percentage of gross domestic product. 2) exports are subtracted from imports in calculating u.s. gdp because exports are not available for domestic consumption. Answer: false 3) The principal […]

1) The differences in the per capita incomes of the IACs and the DVCs has diminished sharply since the Second World War because of U.S. aid programs. 2) Monetarists say that fiscal policy, such as a tax cut, will only […]

1) The number of U.S. banks has increased since 1990. 2) only the bondholders of a corporation have the right to vote for a corporation’s directors. Answer: false 3) a firm’s economic profit is usually higher than its accounting profit. […]

1) Assume the Standard Internet Company negotiates a loan for $5,000 from the Metro National Bank and receives a checkable deposit for that amount in exchange for its promissory note (IOU). As a result of this transaction: A.the supply of […]

1) Suppose the government cuts taxes to keep the economy’s standardized budget in balance when the economy is expanding. The government is engaging in a(n): A.contractionary fiscal policy. B.expansionary fiscal policy. C.low-interest rate policy. D.neutral fiscal policy. 2) negative externalities […]

1) if the aggregate income of households is $300 billion, consumption is $210 billion, and personal taxes are $60 billion, then personal saving: a.is $70 billion. b.is $30 billion. c.is $40 billion. d.cannot be determined from the information given. 2) […]

1) which of the following has been a significant factor in ipods replacing portable cd players? a.ipods are now less than one-half the price of cd players. b.a scarcity of production capacity has curtailed the manufacture of cd players. c.most […]

1) Refer to the above diagram and assume the economy is initially at point b1. The long-run relationship between the unemployment rate and the rate of inflation is represented by: A.the line connecting b1 and c1. B.the line through b1, […]

1) Answer the questions based on the following diagram. (a)Assume the economy is initially at point B1 and there is an increase in aggregate demand which results in a 4% increase in prices. Describe the short-run and long-run outcomes that […]

1) The legal cartel theory indicates that, in any industry where market demand and the long-run average total cost curve intersect close to the latter’s minimum, government regulation is mandatory and desirable. 2) Property rights over fish in the open […]

1) Refer to the above diagram. If this labor market is monopsonistic, the wage rate and level of employment respectively will be: A.D and E. B.C and F. C.B and F. D.A and F. 2) The economist who advocated a […]

1) refer to the above two diagrams for individual firms. figure 2 pertains to: a.a market characterized by government regulation of price and output. b.either an imperfectly competitive or a purely competitive seller. c.a purely competitive seller. d.an imperfectly competitive […]

1) Currency (paper money plus coins) constitutes about: A.81 percent of the U.S. M1 money supply. B.56 percent of the U.S. M1 money supply. C.46 percent of the U.S. M1 money supply. D.11 percent of the U.S. M1 money supply. […]

1) If a country has a total fertility rate of 1.8, then all else equal we would expect: A.population in that country to rise over time. B.population in that country to fall over time. C.the replacement rate to also equal […]

1) Refer to the above data. We can conclude from the information given that this firm is a: A.pure monopolist. B.discriminating monopolist. C.monopolistic competitor. D.pure competitor. 2) when diseconomies of scale occur: a.the long-run average total cost curve falls. b.marginal […]

1) A reduction in the collective discrimination coefficients of employers will increase the wage rate of those discriminated against, but reduce their employment. 2) Mainstream macroeconomics has incorporated some aspects of monetarism and rational expectations theory. Answer: FALSE 3) Process […]

1) susie buys two goods – rounds of golf and massages. suppose that the price of a round of golf is $20, and the price of a massage is $30. in a typical week susie will play two rounds of […]

1) “consumer sovereignty” means that: a.buyers can dictate the prices at which goods and services will be purchased. b.advertising is ineffective because consumers already know what they want. c.buyers control the quality of goods and services through regulatory agencies. d.buyers […]

1) Suppose that the economy is in the midst of a recession. Which of the following policies would most likely end the recession and stimulate output growth? A.a Congressional proposal to incur a Federal surplus to be used for the […]

1) Which of the following are included and which are excluded in calculating this years GDP? Explain in each instance. (a)A homeowner who mows her own lawn (b)A decline in the average hours worked per week (c)Business expenditures on pollution […]

1) elastic demand is analogous to a __________ and inelastic demand to a _________. a.normal wrench; socket wrench b.tight rubber band; loose rubber band c.ace bandage; firm rubber tie-down d.one-foot ruler; tape measure 2) The first discovery (as distinct from […]

1) The voice mechanism is important because it may: A.reduce worker turnover and increase productivity. B.increase worker mobility. C.increase the number of strikes. D.conflict with the Taft-Hartley Act. 2) Which of the following countries has the highest Gini ratio? A.Italy […]

1) real gdp refers to: a.the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income. b.gdp data that embody changes in the price level, but not changes in physical […]

1) a constant-cost industry is one in which: a.resource prices fall as output is increased. b.resource prices rise as output is increased. c.resource prices remain unchanged as output is increased. d.small and large levels of output entail the same total […]

1) The following balance sheet for the ABC National Bank in answering the next question(s). Assume the required reserve ratio is 20 percent. Refer to the above data. If the original balance sheet was for the commercial banking system, rather […]

1) The U.S. demand for euros is: A.downsloping because, at lower dollar prices for euros, Americans will want to buy more European goods and services. B.downsloping because, at higher dollar prices for euros, Americans will want to buy more European […]

1) assume that in the short run a firm is producing 100 units of output, has average total costs of $200, and average variable costs of $150. the firm’s total fixed costs are: a.$5,000. b.$500. c.$.50. d.$50. 2) Which one […]

1) When commercial banks use excess reserves to buy government securities from the public: A.new money is created. B.commercial bank reserves increase. C.the money supply falls. D.checkable deposits decline. 2) a market externality refers to: a.economic costs and benefits of […]

1) If the marginal propensity to consume is 0.9 in a private closed economy, a $20 billion decline in investment spending will decrease: A.GDP by $20 billion. B.GDP by $100 billion. C.saving by $20. D.consumption by $200 billion. 2) Fiscal […]

1) The crowding-out effect of the public debt may be dampened if the investment-demand curve is shifting to the right. 2) the entrepreneur’s sole function is to combine other resources (land, labor, and capital) in the production of some good […]

1) firms in a monopolistically competitive industry have no reason to engage in nonprice competition because their products are uniquely different from other sellers in the market. 2) a vertically integrated firm is a group of plants each operating at […]

1) Unions might support a higher minimum wage because: A.their constitutions obligate them to do so. B.they feel a higher minimum wage will lower labor’s tax payments for welfare programs. C.a higher minimum wage makes less-skilled workers less substitutable for […]

1) which of the following is correct? a.there is no relationship between mp and mc. b.when ap is rising mc is falling, and when ap is falling mc is rising. c.when mp is rising mc is rising, and when mp […]

1) Suppose interest rates fall sharply in the United States but are unchanged in Great Britain. Other things equal, under a system of freely floating exchange rates we can expect the demand for pounds in the United States to: A.decrease, […]

1) which of the following is most likely to be a variable cost? a.fuel and power payments b.interest on business loans c.rental payments on ibm equipment d.real estate taxes 2) the main purpose of hmos and ppos is to: a.reduce […]

1) The field of economics that analyzes government decision making, politics, and elections is called: A.public finance. B.public choice theory. C.collective economics. D.political economy. 2) if a purely competitive firm is producing at the mr = mc output level and […]

1) what percentage of the u.s. adult population has at least a high school education (as of 2007)? a.41 percent b.75 percent c.86 percent d.95 percent 2) the primary motivation for economic immigration is: a.the prospect of paying lower prices […]

1) The use of price support programs in agriculture has hastened the exodus of resources from agriculture. 2) The nation that has a comparative advantage in a particular product will be the only world exporter of that product. Answer: FALSE […]

1) The supply curve of loanable funds is upsloping because: A.businesses find more investments to be profitable at low interest rates than at high interest rates. B.households are willing to save more at high interest rates than they are at […]

1) If an unintended increase in business inventories occurs: A.we can expect aggregate production to be unaffected. B.we can expect businesses to increase the level of production. C.we can expect businesses to lower the level of production. D.aggregate expenditures must […]

1) about three-fourths of all health care costs are paid out-of-pocket by patients. 2) The equilibrium price level and equilibrium level of real GDP occur at the intersection of the aggregate demand curve and the aggregate supply curve. Answer: TRUE […]

1) Saving is always equal to: A.planned investment less unintended increases in inventories. B.actual investment. C.planned investment. D.unintended changes in inventories. 2) Which of the following is the best example of a market failure that would lead a firm to […]

1) Income mobility: A.makes lifetime income inequality among income receivers in the United States less than income inequality in any single year. B.is less in the United States than in most developing nations. C.is the movement of wage earners from […]

1) The following 2008 balance of payments statement for Transylvania. All figures are in billions of dollars. Refer to the above data. In 2008 Transylvania was a net recipient of transfers from the rest of the world. 2) which of […]

1) the long run is characterized by: a.the relevance of the law of diminishing returns. b.at least one fixed input. c.insufficient time for firms to enter or leave the industry. d.the ability of the firm to change its plant size. […]

1) Answer the next question(s) on the basis of the following table for a particular country in which C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports. All figures […]

1) Refer to the above market for money diagrams. The total demand for money is shown by: A.D1. B.D2. C.D3. D.S. 2) Suppose the firms in a five-firm industry have market shares of 30, 30, 20, 10, and 10 percent, […]

1) In which of the above market situations will the efficiency loss of an excise tax be the greatest? A.4 B.3 C.1 D.2 2) refer to the above diagram. realized economic growth is best represented by a: a.a move from […]

1) Under freely flexible (floating) exchange rates a U.S. trade deficit with Japan will eventually cause the dollar price of yen to rise. 2) Demand is the active and supply the passive determinant of land rent. Answer: TRUE 3) a […]

1) Refer to the above graph. Which of the lines in the above diagram represent(s) a progressive tax? A.both A and B. B.D only. C.C only. D.B only. 2) Gomez argues that we need to increase the nation’s output. Chang […]

1) The following information: The Fed is going to auction $30 billion in reserves using the term auction facility. It receives the following bids: Refer to the above information. As a result of the auction, how much and at what […]

1) Independent unions: A.have greater combined membership than the AFL-CIO. B.are not affiliated with the AFL-CIO. C.include the United Autoworkers and United Steelworkers. D.have about the same combined membership as the AFL-CIO. 2) Consider the following situations. Explain how prices […]

1) “Pork-barrel” legislation that contains funding for hundreds of earmarks throughout numerous states often reflects: A.the paradox of voting. B.logrolling. C.the benefits-received principle. D.the Coase theorem. 2) The equation underlying the mainstream view of macroeconomics is: A.MV = PQ. B.Ca […]

1) foreign currency exchanges and interest payments on foreign debt are examples of: a.financial flows. b.trade flows. c.capital flows. d.technology flows. 2) answer the next question(s) on the basis of the following data. all figures are in billions of dollars. […]

1) if the equilibrium exchange rate changes so that it takes more dollars to buy a british pound, then: a.the dollar has appreciated in value. b.americans will import more british goods. c.the british will buy fewer u.s. goods. d.the dollar […]

1) Refer to the above data. At $20 million of R&D expenditures, the: A.marginal cost of R&D exceeds the marginal benefit. B.expected total return from R&D is at a maximum. C.interest rate cost of funds is negative. D.marginal benefit of […]

1) a price floor means that: a.inflation is severe in this particular market. b.sellers are artificially restricting supply to raise price. c.government is imposing a maximum legal price that is typically below the equilibrium price. d.government is imposing a minimum […]

1) migrant workers who face imperfect skill transferability may: a.have to settle for a lower wage than they were expecting at the time of migration. b.overcome this problem through greater motivation and effort. c.return to their origin nation because the […]

1) Because majority voting fails to incorporate the strength of the preferences of individual voters, it: A.creates negative externalities. B.produces economically inefficient outcomes under some circumstances. C.leads to market failure. D.leads to politics dominated by special interest groups. 2) If […]

1) Refer to the above diagram. Which of the following would shift the aggregate demand curve from AD2 to AD1? A.a decline in personal income tax rates B.an increase in the international value of the dollar C.an increase in government […]

1) In the above diagram, the economy’s short-run AS curve is line ___ and its long-run AS curve is line ___. A.1; 3 B.2; 4 C.3; 4 D.2; 1 2) the gdp gap measures the difference between: a.ndp and gdp. […]

1) 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. 2) A farmer who has fixed amounts of land and capital […]

1) ITQs generate the most efficient use of resources when everyone keeps and fills their own quotas. 2) U.S. exports increase and U.S. imports decrease the supplies of foreign monies owned by U.S. banks. Answer: TRUE 3) consumer sovereignty means […]

1) In 2002, the United States announced its “Global Climate Change” initiative to reduce greenhouse gases per dollar of GDP by 18 percent by 2012. 2) International trade based on the principle of comparative advantage creates a more efficient allocation […]

1) Between 1990 and 2000, the United States significantly reduced its emissions of greenhouse gases and effectively eliminated the climate-change problem. 2) A rightward and upward shift of the Phillips Curve is consistent with the occurrence of stagflation. Answer: TRUE […]

1) Complete the accompanying table. (a)What is the break-even level of income? How is it possible for households to dissave at very low income levels? (b)If the proportion of total income consumed decreases and the proportion saved increases as income […]

1) (consider this) refer to the above diagram. suppose that point y represents the optimal combination of civilian goods and defense goods. we can conclude that at y the marginal benefit of defense goods: a.exceeds the marginal cost of defense […]

1) pure monopoly means: a.any market in which the demand curve to the firm is downsloping. b.a standardized product being produced by many firms. c.a single firm producing a product for which there are no close substitutes. d.a large number […]

1) A system of fixed exchange rates is more likely to result in exchange controls than is a system of flexible (floating) exchange rates. 2) growth of real gdp in the united states has averaged slightly more than 5 percent […]

1) Refer to the above diagrams. The solid lines are production possibilities curves; the dashed lines are trading possibilities curves. The data suggest that: A.West Lothian should specialize in, and export, beer. B.both countries will be better off if they […]

1) Marginal resource cost is: A.the increase in total resource cost associated with the production of one more unit of output. B.the increase in total resource cost associated with the hire of one more unit of the resource. C.total resource […]

1) a consumer is maximizing her utility with a particular money income when: a.the total utility derived from each product consumed is the same. b.mua/pa = mub/pb = muc/pc = … = mun/pn. c.mua = mub = muc = … […]

1) the optimal or allocatively efficient point on a production possibilities curve is achieved where: a.the smallest physical amounts of inputs are used to produce each good. b.each good is produced at a level where marginal benefits equal marginal costs. […]

1) the three most important sources of federal tax revenue in order of descending importance are: a.sales, payroll, and personal income taxes. b.personal income, corporate income, and sales taxes. c.personal income, corporate income, and payroll taxes. d.personal income, payroll, and […]

1) In the United States from 1929 to 1933, real GDP _____________, and the unemployment rate ________________. A.declined by 27 percent; rose to 25 percent. B.increased by 21 percent; fell to 2 percent. C.declined by 21 percent; rose to 27 […]

1) the above diagram shows the short-run average total cost curves for five different plant sizes of a firm. in the long run the firm should produce output 0x with a plant of size: a.#4. b.#3. c.#2. d.#1. 2) Economists […]

1) it is possible for a consumer’s indifference curves to intersect. 2) The capricious universe view is the idea that the IACs are exploiting the DVCs. Answer: FALSE 3) wages and salaries are the largest source of household income. Answer: […]

1) a market for human organs (rather than the current volunteer-donor system) would be expected to: a.reduce the quantity of organs supplied. b.increase total health care spending. c.decrease the demand for physicians who do transplants. d.create a surplus of organs. […]

1) the three basic legal forms of business enterprise are: a.monopolists, competitors, and enterprises. b.proprietorships, partnerships, and corporations. c.vertical, horizontal, and conglomerate corporations. d.conglomerates, multinationals, and partnerships. 2) which of the following nations is not a member of the euro […]

1) Suppose a person pays $80 of annual interest on a loan that has a 5 percent annual interest rate. The loan amount is: A.$400. B.$1,600. C.$160. D.$85. 2) Compensating differences in wages pay workers for: A.differences in worker training […]

1) Assume the Environmental Protection Agency imposes an excise tax on polluting firms. In which of the following situations would we expect the additional costs to be borne most heavily by consumers? A.demand is highly elastic and supply is highly […]

1) If in a certain year the indices of prices received and paid by farmers were 115 and 142 respectively, the parity ratio (in percentage terms) would be: A.123. B.81. C.69. D.27. 2) the smoot-hawley act: a.bound the world’s nations […]

1) unanticipated inflation benefits some groups in the economy. 2) the smaller the number of good substitutes for a product, the greater will be the price elasticity of demand for it. Answer: false 3) about two-thirds of all federal spending […]

1) households and businesses are: a.both buyers in the resource market. b.both sellers in the product market. c.sellers in the resource and product markets respectively. d.sellers in the product and resource markets respectively. 2) In exchange for a share of […]

1) assumptions: 1) employers in this market are willing and able to ignore minimum wage laws; 2) sd represents the supply of domestically-born (and legal immigrant) workers; 3) st represents the total supply of workers in this labor market (sd […]

1) Which of the following is not a feature of the Food, Conservation, and Energy Act of 2008? A.direct payments (direct subsidies) based on crops previously grown B.countercyclical payments C.marketing loans D.acreage allotments (restrictions on the number of acres that […]

1) Assuming that interest rates are positive, the present value of an $80 barrel of oil in 2 years is less than an $80 barrel today. 2) The principle that private negotiation can resolve potential externalities without resort to government […]

1) Economists consider governments to be “wasteful:” A.whenever they over- or underallocate resources to a project. B.only when they overallocate resources to a project. C.only when they underallocate resources to a project. D.whenever they attempt to correct a market failure. […]

1) the social security program in the united states faces a long-term funding crisis because: a.the social security trust fund was exhausted in 2006 b.the number of retirees receiving benefits is rising more rapidly than the number of workers paying […]

1) Forestry companies with secure property rights have a greater incentive to harvest and replant in a sustainable manner. 2) a progressive tax takes relatively more from the rich than it does from the poor. Answer: true 3) economic theory […]

1) since world war ii: a.north korea’s command economy has significantly outperformed south korea’s market economy. b.south korea’s command economy has significantly outperformed north korea’s market economy. c.north korea’s market economy has significantly outperformed south korea’s command economy. d.south korea’s […]

1) specialization may expand total output even though the individuals involved may have identical abilities. 2) the process by which capital goods are accumulated is known as investment. Answer: true 3) unemployment compensation payments are an example of a transfer […]

1) economists treat economic immigration as a human capital investment decision. 2) central planning is plagued with a coordination problem and an incentive problem. Answer: true 3) price and marginal revenue are identical for an individual purely competitive seller. Answer: […]

1) Which of the following represents a change in today’s banking policies that should prevent a recurrence of the bank panics of 1930-1933? A.banks are more cautious lenders B.banks keep large amounts of excess reserves on hand C.the FDIC insures […]

1) The wide imitation and spread of an innovation is called: A.innovation. B.invention. C.creative destruction. D.diffusion. 2) 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 […]

1) after all long-run adjustments have been completed, a firm in a competitive industry will produce that level of output where average total cost is at a minimum. 2) The optimal (economically-efficient) level of air pollution is zero emissions. Answer: […]

1) an example of a public good is: a.a movie theater. b.a freight train. c.the war on terrorism. d.disneyland. 2) if a nondiscriminating imperfectly competitive firm is selling its 100th unit of output for $35, its marginal revenue: a.may be […]

1) A major difference between social insurance and public assistance is that the: A.former is regarded as an earned right while the latter is public charity. B.latter is regarded as an earned right while the former is public charity. C.latter […]

1) a price index can rise from one year to the next even though: a.some individual prices in the economy fall. b.nominal gdp falls. c.real gdp falls. d.all of these occur. 2) effectively removing all illegal immigrants from u.s. labor […]

1) DVCs might increase their rates of economic growth through privatization of state industries, encouraging direct foreign investment, controlling population growth, and opening economies to international trade. 2) About 20 percent of the labor force is in agriculture. Answer: FALSE […]

1) although individual purely competitive firms can influence the price of their product, these firms as a group cannot influence market price. 2) indifference curves are linear and budget lines are convex to the origin. Answer: false 3) Mainstream economists […]

1) the rule of 70 is used to find how long it will take an economy to grow by 70 percent. 2) The Laffer Curve shows the tradeoff between the price level and tax rates. Answer: FALSE 3) The use […]

1) refer to the above diagram. if this is a competitive market, price and quantity will move toward: a.$60 and 100 respectively. b.$60 and 200 respectively. c.$40 and 150 respectively. d.$20 and 150 respectively. 2) The process by which new […]

1) by an increase in demand we mean that : a.product price has fallen so consumers move down to a new point on the demand curve. b.the quantity demanded at each price in a set of prices is greater. c.the […]

1) Answer the next question(s) on the basis of the following list of assets: 1> Large ($100,000 and over) time deposits 2> Noncheckable savings deposits 3> Currency (coins and paper money) 4> Small (under $100,000) time deposits 5> Stock certificates […]

1) variable costs are costs that vary directly with output. 2) Most of the DVCs of the world are located in Western Europe. Answer: FALSE 3) if market demand increases and market supply decreases, the change in equilibrium price is […]

1) The Federal Reserve Banks sell government securities to the public. As a result, the checkable deposits: A.of commercial banks are unchanged, but their reserves increase. B.and reserves of commercial banks both decrease. C.of commercial banks are unchanged, but their […]

1) The moral hazard problem is the tendency of some parties to a contract to alter their behavior as a result of the contract in ways which are costly to the other party. 2) changes in the average age of […]

1) The long-run trend of real wages: A.cannot be determined from available data on nominal wages and the price level. B.has been downward because the price level has risen faster than nominal wages. C.has been upward. D.has been downward because […]

1) the law of diminishing marginal utility states that: a.total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed. b.beyond some point additional units of a product will yield less and less […]

1) use the following table for a hypothetical single-product economy. refer to the above data. real gdp in year 3 is: a.$100. b.$450. c.$225. d.$150. 2) In which of the above market situations will the largest portion of an excise […]

1) Melanie and Oli are competing Pacific Halibut fishers. Both have been allocated ITQs that limit their catch to 1,000 tons of Pacific Halibut each. Melanie’s cost per ton is $20; Oli’s cost per ton is $28. Refer to the […]

1) Which of the following groups of economists is most likely to favor annually balanced Federal budgets? A.Mainstream economists B.Supply-side economists C.Rational expectations economists D.Functional finance economists 2) In the last half of the 1990s, the usual short-run tradeoff between […]

1) a market is in equilibrium: a.provided there is no surplus of the product. b.at all prices above that shown by the intersection of the supply and demand curves. c.if the amount producers want to sell is equal to the […]

1) Other things equal, an increase in the price level will: A.shift the aggregate supply curve to the right. B.shift the aggregate demand curve to the right. C.cause a movement up along a short-run aggregate supply curve. D.cause a movement […]

1) 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 […]

1) if the coefficient of income elasticity of demand is positive, the product is an inferior good. 2) After the implementation of TANF, the U.S. welfare rolls fell by more than one-half between 1996 and 2007. Answer: TRUE 3) The […]

1) refer to the above diagram. if price falls from $10 to $2, total revenue: a.rises from a + b to a+ b + d + c and demand is elastic. b.falls from a + d to b + c […]

1) The United States produces more than twice as much output per million BTUs of energy consumed than it did in 1950. 2) Anticompetitive mergers are illegal under provisions of the Clayton Act (as amended). Answer: TRUE 3) Refer to […]

1) The more inelastic is demand and supply the: A.larger is the efficiency loss of an excise tax. B.smaller is the efficiency loss of an excise tax. C.higher the proportion of an excise tax paid by consumers. D.smaller the proportion […]

1) along a supply curve, product price and producer surplus are inversely related. 2) an economy will always operate at some point on its production possibilities curve. Answer: false 3) A firm’s optimal amount of R&D occurs where the marginal […]

1) (Advanced analysis) Answer the next question(s) on the basis of the following information for a private closed economy. where S is saving, Ig is gross investment, i is the real interest rate, and Y is GDP. Refer to the […]

1) Public choice theorists point out that the political process: A.differs from the marketplace in that voters and congressional representatives often face limited and bundled choices. B.is less prone to failure than is the marketplace. C.is a much fairer way […]

1) in the above diagram it is assumed that: a.some costs are fixed and other costs are variable. b.all costs are variable. c.the law of diminishing returns determines the shape of the cost curve. d.marginal product first falls, but ultimately […]

1) (Last Word) According to economists Aryes and Levitt, the total benefits of Lojack and other car retrieval system are divided: A.90 percent to the owners and 10 percent to other car owners in the community. B.50 percent to the […]

1) The Overnight Construction Company has just signed a collective bargaining contract in which it agrees that all workers it hires must be union members in good standing at the time they are hired. This provision reflects: A.preferential hiring. B.a […]

1) an important economic problem associated with pure monopoly is that, at the profit maximizing outputs, resources are: a.overallocated because price exceeds marginal cost. b.overallocated because marginal cost exceeds price. c.underallocated because price exceeds marginal cost. d.underallocated because marginal cost […]

1) refer to the above diagram for a pure monopolist. if the monopolist is unregulated, it will maximize profits by charging: a.a price above p3 and selling a quantity less than q3. b.price p3 and producing output q3. c.price p2 […]

1) the following information: refer to the above data. the marginal product of the fourth worker: a.is 5 b.is 7 c.is 71/2 d.cannot be calculated from the information given. 2) when the percentage change in price is greater than the […]

1) Which diagram above best represents the problem faced by farms in the long-run? A.A B.B C.C D.D 2) The kinked-demand schedule that an oligopolist believes confronts the firm is given in the table below. Compute the oligopolists total revenue […]

1) illegal immigrants displace domestic-born workers on a one-for-one basis. 2) when the dollar price of yen rises, the dollar appreciates in value relative to the yen. Answer: false 3) Mainstream macroeconomists see two main sources of macroeconomic instability: changes […]

1) (Consider This) Owners of defective used cars have more information about the condition of their vehicles than potential buyers of those used cars. This is an example of: A.the moral hazard problem. B.a spillover cost. C.a positive externality. D.asymmetric […]

1) refer to the above supply and demand data for a certain elective surgical procedure. without health insurance, the equilibrium price and quantity would be: a.$5,000 and 2,000. b.$4,000 and 4,000. c.$3,000 and 7,000. d.$2,000 and 11,000. 2) the following […]

1) Graphically, cost-push inflation is shown as a: A.leftward shift of the AD curve. B.rightward shift of the AS curve. C.leftward shift of AS curve. D.rightward shift of the AD curve. 2) When the level of domestic output is $500 […]

1) The crowding-out effect of the public debt may be dampened if the investment-demand curve is shifting to the right. 2) Mainstream economists contend that use of stabilization policy has helped increase macro stability in the U.S. economy over the […]

1) Suppose Ron is considering developing an asset portfolio. He expects to receive a return of 15% and is willing to take on a maximum risk premium of 8%. (a)What is if? (b)If the Fed engages in open market operations […]

1) the production possibilities curve shows: a.the various combinations of two goods that can be produced when society employs all of its scarce resources. b.the minimum outputs of two goods that will sustain a society. c.the various combinations of two […]

1) which of the following statements is not correct? a.a reduction in money income will shift the budget line to the right. b.a reduction in money income accompanied by an increase in product prices will necessarily shift the budget line […]

1) Refer to the above diagram. If demand is D2, a tax of A per acre will: A.encourage the substitution of land for other productive resources. B.lower the cost of land to individual farmers. C.reduce the demand for land to, […]

1) which of the following constitute the types of unemployment occurring at the natural rate of unemployment? a.frictional and cyclical unemployment. b.structural and frictional unemployment. c.cyclical and structural unemployment. d.frictional, structural, and cyclical unemployment. 2) for a linear demand curve: […]

1) Which of the following is directly illegal under the Sherman Act? A.price discrimination B.tying contracts C.price fixing D.interlocking directorates 2) Critics of industrial regulation say that such regulation: A.benefits small firms at the expense of large firms. B.perpetuates monopoly […]

1) “International trade” refers to: A.purchasing or selling currently produced goods or services across an international border. B.any transaction across an international border. C.any financial transaction across an international border. D.buyer or selling of preexisting assets across an international border. […]

1) Refer to the above diagram. Assume that G and T1 are the relevant curves and that the economy is currently at B, which is its full-employment GDP. This economy has a: A.standardized budget surplus only. B.standardized budget deficit only. […]

1) the consumer demand curve for a product is downsloping because marginal utility is constant when price declines. 2) The U.S. poverty rate was considerably lower in 2006 than in 1960. Answer: TRUE 3) A change in the reserve ratio […]

1) Hiring the least-costly combination of resources ensures that profits will be maximized. 2) public goods are characterized by nonrivalry and nonexcludability. Answer: true 3) The higher the interest rate, the larger will be the amount of money demanded for […]

1) unanticipated inflation benefits debtors at the expense of creditors. 2) The U.S. poverty rate for African-Americans is substantially higher than that for Asians. Answer: TRUE 3) specialization may expand total output even though the individuals involved may have identical […]

1) which of the following statements is most accurate about the effects of migration? a.migration generally benefits the mover, but there is a net efficiency loss to the world. b.migration generally benefits everyone in both the origin and destination nation. […]

1) Commercial banks monetize claims when they sell securities to Federal Reserve Banks. 2) in a competitive market, every consumer willing to pay the market price can buy a product and every producer willing to sell the product at that […]

1) Right-to-work laws prohibit the formation of labor unions. 2) Total Allowable Catch policies promote economic efficiency better than Individual Transferable Quotas. Answer: FALSE 3) as it relates to public goods, nonexcludability means that nonpayers cannot be barred from obtaining […]

1) According to new classical economists, the: A.short-run demand for labor curve is vertical. B.short-run aggregate demand curve is vertical. C.long-run aggregate supply curve is horizontal. D.long-run aggregate supply curve is vertical. 2) which of the following is an example […]

1) The Financial Services Modernization Act of 1999: A.set limits on the fees that banks can charge for automatic teller machine (ATM) withdrawals. B.established a new dollar coin that will replace the dollar bill in 2008. C.permitted banks, thrifts, pension […]

1) The financial account balance is a nation’s: A.net investment income minus its net transfers. B.exports of goods and services minus its imports of goods and services. C.sale of real and financial assets to people living abroad minus its purchases […]

1) Refer to the above graphs, where the subscripts on the labels denote years 1 and 2. In year 1 the economy: A.is in long-run equilibrium at output Q1. B.is in short-run equilibrium at output Q1, but not in long-run […]

1) 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 […]

1) if a rational consumer is in equilibrium, which of the following conditions will hold true? a.mua = mub = muc = … = mun. b.the marginal utility of each good purchased will be zero. c.the marginal utility of the […]

1) If two nations have different per capita income levels and their rates of economic growth are identical, then the absolute per capita income differential: A.will remain constant. B.may either widen or diminish. C.will diminish. D.will widen. 2) if at […]

1) the presence of discouraged workers: a.increases the size of the labor force, but does not affect the unemployment rate. b.reduces the size of the labor force, but does not affect the unemployment rate. c.may cause the official unemployment rate […]

1) rosenbaum is purchasing products c and d in utility-maximizing amounts. if the price of c is $4 and the price of d is $2, then: a.the marginal utility of d is twice that of c b.the marginal utility of […]

1) the main characteristics of a public good are: a.nonrivalry and nonexcludability. b.nonexcludability and rising costs of production. c.nonrivalry and large external costs. d.production at constant cost and rising demand. 2) which of these groups of nations are all members […]

1) 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. 2) in a competitive market economy firms will select […]

1) Refer to the above data. The labor supply curve facing firms is: A.such that it does not intersect the labor demand curve. B.upsloping. C.perfectly inelastic. D.perfectly elastic. 2) Under the gold standard: A.nations can protect their domestic price and […]

1) refer to the above diagram. at p2, this firm will: a.produce 44 units and realize an economic profit. b.produce 44 units and earn only a normal profit. c.produce 66 units and earn only a normal profit. d.shut down in […]

1) the federal government requires automobile manufacturers to install pollution control equipment. this is an illustration of the: a.intrusion problem. b.production of public goods. c.internalization of external benefits. d.internalization of external costs. 2) the illinois central railroad once asked the […]

1) Which of the following is considered a renewable natural resource? A.aquifers. B.coal. C.petroleum. D.iron. 2) Refer to the above graph. Other things equal, an increase in labor productivity would cause a(n): A.move from a to b on D1. B.shift […]

1) In the United States and parts of Western Europe, the amount of land covered by forests is increasing. 2) immigration of workers is an example of a goods and services flow: Answer: false 3) If the MPC is .8 […]

1) refer to the above diagram. at the profit-maximizing output, total variable cost is equal to: a.0ahe b.0cfe c.0bge d.abgh 2) In which of the following U.S. occupations is the rate of unionization the lowest? A.transportation workers B.teachers C.legal workers […]

1) negative externalities arise: a.when firms pay more than the opportunity cost of resources. b.when the demand curve for a product is located too far to the left. c.when firms “use” resources without being compelled to pay for their full […]

1) assume a pure monopolist is currently operating at a price-quantity combination on the inelastic segment of its demand curve. if the monopolist is seeking maximum profits, it should: a.retain its current price-quantity combination. b.increase both price and quantity sold. […]

1) Environmentalists generally support price supports because these subsidies motivate additional farm production. 2) people who work part time, but desire to work full time, are considered to be officially unemployed. Answer: false 3) The equilibrium world price of a […]

1) Refer to the above market for money diagrams. If the interest rate was at 3 percent, people would: A.sell bonds, which would cause bond prices to fall and the interest rate to rise. B.buy bonds, which would cause bond […]

1) The assumption that the legal reserve ratio is 20 percent. Suppose that the Fed sells $500 of government securities to commercial banks (paid for out of commercial bank reserves) and buys $500 of securities from individuals, who deposit the […]

1) a nation has a comparative advantage in some product when it can produce that good at a lower domestic opportunity cost than can a potential trading partner. 2) The prime interest rate and the Federal funds rate normally change […]

1) For a firm selling its product in an imperfectly competitive market, the marginal revenue product of labor can be found by: A.adding marginal product to total product as one more unit of labor is employed. B.adding marginal revenue to […]

1) refer to the above table. if demand is represented by columns (3) and (2) and supply is represented by columns (3) and (5), equilibrium price and quantity will be: a.$10 and 60 units. b.$9 and 50 units. c.$8 and […]

1) a typical concave (to the origin) production possibilities curve implies: a.that economic resources are unlimited. b.that society must choose among various attainable combinations of goods. c.decreasing opportunity costs. d.that society is using a market system to allocate resources. 2) […]

1) refer to the above supply and demand data for a certain elective surgical procedure. if suppliers provide the quantity of health care demanded and insurance pays 50 percent of the remaining equilibrium price after a $1000 deductible is satisfied, […]

1) refer to the above diagram. if the budget line shifts from ab to ac the: a.consumer’s level of total utility will increase. b.consumer will purchase more of both j and k c.consumer will purchase less of both j and […]

1) Which of the following market structures do economists generally agree is the least conducive to R&D and innovation? A.monopolistic competition B.pure competition C.pure monopoly D.oligopoly 2) Farm groups spend considerable amounts of money to maintain and enlarge political support […]

1) in the short run a pure monopolist will charge the highest price the market will bear for its product. 2) Since the mid-1950s, union membership has declined as a percentage of employed wage and salary workers. Answer: TRUE 3) […]

1) since their introduction, prices of dvd players have fallen and the quantity purchased has increased. this statement: a.suggests that the supply of dvd players has increased. b.suggests that the demand for dvd players has increased. c.constitutes an exception to […]

1) The law of increasing opportunity costs limits international specialization. 2) If the reserve requirement is 10 percent, the monetary multiplier will be 10. Answer: TRUE 3) illegal immigrants displace domestic-born workers on a one-for-one basis. Answer: false 4) As […]

1) In 2004 the real per capita income in the average industrially advanced country was about $36,608 per year. The average in low-income developing countries was about $649 per year. (a)What is the gap in the average standards of living? […]

1) The Federal government has a large public debt that it finances through borrowing. As a result, real interest rates are higher than otherwise and the volume of private investment spending is lower. This illustrates the: A.equation-of-exchange effect. B.paradox of […]

1) 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 […]

1) Technological advance includes new and improved products, new and improved production techniques, and new and improved distribution methods. 2) The Federal government has not paid subsidies to farmers since passage of the Freedom to Farm Act in 1996. Answer: […]

1) alejandro scoobertini owns a store specializing in soccer jerseys. in 2008, he purchased $150,000 worth of jerseys from manufacturers, employed one worker for $40,000, purchased $20,000 worth of supplies from an office supply store, and sold jerseys for $280,000. […]

1) which of the following statements applies to a purely competitive producer? a.it will not advertise its product. b.in long-run equilibrium it will earn an economic profit. c.its product will have a brand name. d.its product is slightly different from […]

1) refer to the above data sets. which of the data sets would graph as an upsloping line? a.1 only. b.1, 2, and 3 only. c.4 and 5 only. d.1, 2, and 5 only. 2) Which of the following would […]

1) A decrease in the reserve ratio increases the: A.amount of actual reserves in the banking system. B.amount of excess reserves in the banking system. C.number of government securities held by the Federal Reserve Banks. D.ratio of coins to paper […]

1) Which of the following statements is correct? A.Economic profits can properly be regarded as the salaries received by the hired managers of corporations. B.Economic rent is a price paid for productive land resources whose supply is perfectly inelastic. C.Economic […]

1) some agricultural sub-saharan nations of africa have overfarmed and overgrazed their land to the extent that significant portions of it have turned into desert. this suggests that: a.the concavity of the production possibilities curves of such nations has increased. […]

1) answer the next question(s) on the basis of the following data. all figures are in billions of dollars. refer to the above data. gross domestic product is: a.$395. b.$380. c.$375. d.$360. 2) according to estimates, what percentage of construction […]

1) Development assistance as a percentage of GDP is greatest for which of the following industrialized nations (as of 2007)? A.U.S. B.Norway C.Canada D.Netherlands 2) Currently farm employment is about: A.15.8 percent of total employment. B.9.4 percent of total employment. […]

1) Which of the following explains why the aggregate demand schedule is downward sloping? A.the real-balances effect B.the interest-rate effect C.the foreign purchases effect D.all of these 2) when total product is diminishing, marginal product is: a.positive and increasing. b.positive […]

1) refer to the above data. assuming that the firm is motivated by self-interest and that the 20 units which can be produced with each technique can be sold for $2 per unit, the firm will: a.realize an economic profit […]

1) The Clean Air Act of 1990 established a program for trading emission rights. 2) economic research consistently finds that immigration negatively impacts the average american wage. Answer: false 3) Higher user costs imply that a resource should be extracted […]

1) a firm that produces a single product but owns plants in many different stages of the production process – for example, a steel producer that owns iron ore mines and rolling mills – best illustrates a: a.vertically integrated firm. […]

1) if x is a normal good, a rise in money income will shift the: a.supply curve for x to the left. b.supply curve for x to the right. c.demand curve for x to the left. d.demand curve for x […]

1) Suppose the domestic price (no-international-trade price) of copper is $1.20 a pound in the United States while the world price is $1.00 a pound. Assuming no transportation costs, the United States will: A.have a domestic surplus of copper. B.export […]

1) The desire to hold money for transactions purposes arises because: A.receipts of income and expenditures are not perfectly synchronized. B.people fear that prices will rise. C.households want money on hand in case a good financial investment opportunity arises. D.low […]

1) A $20 billion decrease in investment in a private closed economy that has an MPS of .5 will reduce saving by $10 billion once the multiplier process has ended. 2) illegal immigration helps improve the standard of living for […]

1) The table below summarizes the exchange market for the dollar and euro. Use this information to answer the following questions. (a)What is the equilibrium exchange rate and quantity? (b)Suppose the European Central Bank decides to counter rampant growth by […]

1) The per capita public debt doubled between 1990 and 2000. 2) A nation that imports more goods and services than it exports is necessarily realizing an international balance of payments deficit. Answer: FALSE 3) Excess reserves are the amount […]

1) answer the next question(s) on the basis of the following information for a specific year in a hypothetical economy for which okun’s law is applicable: refer to the above data. the amount of output being forgone by the above […]

1) refer to the above diagram. the movement from point b to point c can be achieved by: a.increasing taxes and increasing government spending. b.increasing taxes and decreasing government spending. c.decreasing taxes and increasing government spending. d.decreasing taxes and decreasing […]

1) depreciation of the dollar will: a.increase the prices of u.s. imports, but decrease the prices of u.s. exports. b.decrease the prices of u.s. imports, but increase the prices of u.s. exports. c.increase the prices of both u.s. imports and […]

1) Refer to the above table representing Kara’s bank account. Assuming that $2000 was deposited into her account at the beginning of year 1, and no further deposits or withdrawals were made, the value for cell D: A.is $662. B.is […]

1) refer to above data. marginal utility becomes negative beginning with the: a.first unit. b.second unit. c.third unit. d.fourth unit. 2) skeptics of the recent productivity acceleration say that: a.it is too early to predict whether recent boosts in u.s. […]

1) Suppose a technological improvement increases the productivity of a firm’s capital and, simultaneously, its workers’ union negotiates a wage increase. We can predict that: A.the firm will use relatively more capital and relatively less labor. B.the firm will use […]

1) the equilibrium price and quantity in a market usually produces allocative efficiency because: a.all consumers who want the good are satisfied. b.marginal benefit and marginal cost are equal at that point. c.equilibrium insures an equitable distribution of output. d.the […]

1) A merger between an automobile manufacturer and a maker of automobile tires is an example of a: A.conglomerate merger. B.horizontal merger. C.vertical merger. D.tying contract. 2) by an increase in demand we mean that : a.product price has fallen […]

1) Use the extreme points from a production possibilities schedule below to draw two straight line production possibilities curves for two nations, A and B using the below graphs. Assume constant costs. (a)What is the cost ratio for the two […]

1) the law of diminishing returns explains diseconomies of scale. 2) The present value of $4000 deposited today at 8 percent interest is $5038.85 three years from now. Answer: FALSE 3) Weak property rights encourage faster extraction than would otherwise […]

1) Elasticity of resource demand is measured by dividing “percentage change in resource price” by “percentage change in resource quantity.” 2) if the marginal cost curve lies below the average variable cost curve, the average-variable-cost curve must be falling. Answer: […]

1) in the depth of the great depression, the unemployment rate in the united states was about: a.15 percent. b.33 percent. c.25 percent. d.40 percent. 2) For a firm selling its product in a purely competitive market, the marginal revenue […]

1) Capitalist income (corporate profits, interest, and rent) has: A.declined sharply since 1900 because of the growing strength of labor unions. B.remained approximately constant in this century. C.increased significantly because of rising rents. D.fallen in this century because of the […]

1) which of the following is not considered to fall under government’s function of redistributing income? a.transfer payments b.taxation c.antimonopoly laws d.minimum wage laws 2) diminishing returns begin to occur with the hiring of the _________ unit of labor. a.first […]

1) Which of the following would contribute to a United States balance of payments surplus? A.the United States makes a unilateral tariff reduction on imported goods B.General Motors pays a dividend to a Swiss stockholder C.the United States cuts back […]

1) An individual bank can safely lend out a multiple of its excess reserves, but the banking system can safely lend out only an amount equal to the excess reserves in the banking system. 2) the short run is a […]

1) The M2 money supply may be larger or smaller than the M1 money supply depending on the size of small time deposit balances and Money Market Mutual Fund balances held by individuals. 2) In 2002, the United States announced […]

1) A $1 increase in government spending on goods and services will have a greater impact on the equilibrium GDP than will a $1 decline in taxes because: A.government spending is more employment-intensive than is either consumption or investment spending. […]

1) a decrease in the price of digital cameras will: a.cause the demand curve for memory cards to become vertical. b.shift the demand curve for memory cards to the right. c.shift the demand curve for memory cards to the left. […]

1) Over the past decade, U.S. per capita consumption of water: A.and energy have both increased. B.has increased, while per capita consumption of energy has fallen. C.and energy have leveled off or fallen. D.has fallen, while per capita consumption of […]

1) extensive network effects may drive a market toward natural monopoly because consumers tend to choose a common, standard product that everyone else is using. 2) increasing taxes and reducing government expenditures might be helpful in constraining inflation. Answer: true […]

1) refer to the above diagram. a government-set maximum permissible interest rate is best illustrated by: a.price b. b.quantity e. c.price c. d.price a. 2) refer to the above information. average total cost is: a. b. c. d. Answer: d […]

1) Measured in terms of farm employment and the number of farms, agriculture has been: A.a declining industry. B.an expanding industry. C.a stable industry. D.a volatile industry. 2) Bilateral monopoly occurs where: A.a monopsonistic employer bargains with an inclusive union. […]

1) refer to the above diagram. other things equal, this economy will achieve the most rapid rate of growth if: a.the ratio of capital to consumer goods is minimized. b.it chooses point c. c.it chooses point b. d.it chooses point […]

1) when a consumer shifts purchases from x to y, the marginal utility of x falls and the marginal utility of y rises. 2) Most of the DVCs of the world are located in Western Europe. Answer: FALSE 3) About […]

1) A special-interest issue is one whose passage yields: A.large private benefits compared to external benefits. B.large external benefits compared to private benefits. C.small economic losses to a small number of people and large economic losses to a large number […]

1) Thrifts are known as “banker’s banks” because they lend money to commercial banks. 2) ndp can be determined by adding taxes on production and imports to gdp. Answer: false 3) health care costs have risen absolutely but remained constant […]

1) Suppose that a firm introduces a highly profitable new product. If this new product offers less marginal utility per unit to consumers than existing substitute products, then the: A.laws of economics have been violated. B.new product must have increasing, […]

1) assumptions: (1) the demand for labor in alphania and betania are as shown by da and db, respectively; (2) alphania’s native labor force is f and that of betania is g; (3) wage l in alphania is equal to […]

1) the following production possibilities tables for countries alpha and beta: refer to the above tables. according to the concept of comparative advantage: a.alpha should specialize in x; beta in y b.beta should produce some x and some y c.alpha […]

1) The rising general level of real wages in the United States has occurred because growing population has increased the supply of labor relative to the demand for it. 2) Most developed countries have fertility rates less than 2.1. Answer: […]

1) refer to the above diagram. the equation that shows the relationship between y and x is: a.y = 50 + 1/4 x b.x = 1/4y c.y = .4x d.y = 1/4 x – 50 2) The interest rate that […]

1) if there are no statistical discrepancies, ndp is: a.ni minus net foreign factor income. b.ni plus corporate income taxes. c.gdp deflated for increases in the price level. d.gdp minus taxes on production and imports. 2) answer the next question(s) […]

1) Assume the atmosphere of an urban area is able to reabsorb 4000 tons of pollutants per year. The schedule below shows the price polluters would be willing to pay for the right to dispose of 1 ton of pollutants […]

1) Supply-side economist Arthur Laffer has argued that: A.there is no empirically proven relationship between tax rates and incentives. B.large reductions in personal and corporate income taxes will increase aggregate supply much more than aggregate demand. C.the only way to […]

1) The Sherman Act: A.was declared unconstitutional in 1895. B.provided for government regulation of the railroads. C.declared monopoly and restraints of trade to be illegal. D.exempted the railroad and communications industries from the antitrust laws. 2) in the simple circular […]

1) Refer to the above diagram where D and S are the United States’ demand for and supply of Swiss francs. At the equilibrium exchange rate, E, the United States’ balance of payments is in equilibrium. Under a system of […]

1) Checkable deposits held in saving and loan institutions, mutual savings banks, and credit unions are part of the M1 definition of the money supply. 2) Actual reserves equal required reserves plus excess reserves. Answer: TRUE 3) if you pay […]

1) In the 1990s, Congress passed legislation that: A.will eventually replace the $1 bill with a $1 coin. B.allows non-bank firms such as Chrysler and IBM to own large commercial banks or thrifts. C.replaces the twelve Federal Reserve Banks with […]

1) Unions prefer: A.open shops to agency shops. B.agency shops to closed shops. C.agency shops to union shops. D.union shops to agency shops. 2) assumptions: (1) the demand for labor in alphania and betania are as shown by da and […]

1) Refer to the above diagram. If net exports are Xn2, the GDP in the open economy will exceed GDP in the closed economy by: A.AB. B.AD. C.FG. D.BD. 2) opportunity cost is best defined as: a.the monetary price of […]

1) As a percentage of GDP, U.S. exports are: A.greater than U.S. imports. B.about 20 percent. C.considerably lower than in several other industrially advanced nations. D.higher than in Canada but lower than Mexico. 2) which of the following countries has […]

1) which of the following statements pertains to macroeconomics? a.because the minimum wage was raised, mrs. olsen decided to enter the labor force. b.a decline in the price of soybeans caused farmer wanek to plant more land in wheat. c.national […]

1) Tariffs create larger gains to domestic producers than losses to domestic consumers. 2) Permanent tax reductions are more likely to be expansionary than temporary tax reductions. Answer: TRUE 3) The real-business cycle theorists see aggregate supply as the “active” […]

1) which of the following is incorrect? a.total fixed cost does not change with output in the short run. b.fixed costs exist only in the short run. c.total fixed cost must be added to total variable cost to determine total […]

1) a tax is progressive if the average tax rate rises as income increases. 2) Economists agree that corporations always shift the corporate income tax to consumers by raising product prices. Answer: FALSE 3) the optimal level of immigration occurs […]

1) refer to the above diagram. if actual production and consumption occur at q3: a.efficiency is achieved. b.an efficiency loss (or deadweight loss) of e + f occurs. c.an efficiency loss (or deadweight loss) of a + b + c […]

1) Refer to the above diagrams. Assume that only wheat can be grown on the three grades of land shown in Figures a, b, and c. Also assume that identical amounts of labor, capital, and other needed inputs are used […]

1) in the circular flow model: a.households sell resources to firms. b.households receive income through the product market. c.households spend income in the resource market. d.businesses neither buy nor sell resources. 2) Other things equal, an increase of corporate bonds […]

1) AFL-CIO stands for: A.American Federation of Labor-Congress of Industrial Organizations. B.American Federation of Labor-Committee for Industrial Opportunity. C.Assembly of Factory Laborers-Congress of Industrial Organizations. D.Assembly of Factory Laborers-Committee for Industrial Opportunity. 2) The table below shows the quantity of […]

1) The labor demand curve of an imperfectly competitive seller is downward sloping: A.solely because of diminishing marginal utility. B.both because of diminishing returns and the necessity to lower price to sell more output. C.solely because product price must be […]

1) Suppose a familys annual disposable income is $8000 of which it saves $2000. (a)What is their APC? (b)If income rises to $10,000 and they plan to save $2800, what are MPS and MPC? (c)Did the familys APC rise or […]

1) which of the following will not hold true for a competitive firm in long-run equilibrium? a.p equals afc b.p equals minimum atc c.mc equals minimum atc d.p equals mc 2) refer to the above diagram. if actual production and […]

1) assumptions: 1) employers in this market are willing and able to ignore minimum wage laws; 2) sd represents the supply of domestically-born (and legal immigrant) workers; 3) st represents the total supply of workers in this labor market (sd […]

1) a perfectly inelastic demand schedule: a.rises upward and to the right, but has a constant slope. b.can be represented by a line parallel to the vertical axis. c.cannot be shown on a two-dimensional graph. d.can be represented by a […]

1) refer to the above diagrams. if $4 is firm b’s profit-maximizing price, its: a.atc must be $4. b.mc must be $4. c.mr must be $4. d.mc must be zero. 2) Other things being equal, what effect will each of […]

1) Many economists are critical of the minimum wage because they believe that it: A.hurts the efforts of labor unions. B.reduces the number of available job opportunities. C.conflicts with policies designed to equalize the distribution of income. D.causes labor shortages […]

1) (last word) the fallacy of composition is essentially the error of: a.omitting relevant variables in constructing a model. b.reasoning from the general to the particular. c.confusing cause and effect in economic relationships. d.generalizing from the particular to the general. […]

1) Refer to the above data. Suppose that the union that provides labor to firms in this market successfully negotiates an increase in the wage rate from $8 to $10. As a result of the wage increase, firms will hire: […]

1) In international financial transactions, what are the only two things that individuals and firms can exchange? A.currency and real assets. B.services and manufactured goods. C.preexisting assets and currently produced goods and services. D.currency and currently produced goods and services. […]

1) An increase in net exports will shift the AD curve to the: A.left by a multiple of the change in investment. B.left by the same amount as the change in investment. C.right by the same amount as the change […]

1) refer to the above diagrams. diagram (b) represents: a.the pure competition model. b.an industry in which there is allocative efficiency but not productive efficiency. c.the pure monopoly model. d.a long-run constant-cost industry. 2) Refer to the above table. If […]

1) Firms whose central business is providing individual account shares of collections of stocks, bonds, or both are known as: A.insurance companies. B.thrifts. C.commercial banks. D.mutual funds companies. 2) in drawing the production possibilities curve we assume that: a.technology is […]

1) refer to the above diagram, which shows demand and supply conditions in the competitive market for product x. given d0, if the supply curve moved from s0 to s1, then: a.supply has increased and equilibrium quantity has decreased. b.supply […]

1) An increase in aggregate expenditures resulting from some factor other than a change in the price level is equivalent to: A.a rightward shift of the aggregate demand curve in the AD-AS model. B.a leftward shift of the aggregate demand […]

1) refer to the above diagram. if the firm produced d units of output at price g, it would earn a normal profit. 2) The more elastic the demand for a product the less elastic will be the demand for […]

1) The term V in the equation of exchange is equal to: A.M/nominal GDP. B.nominal GDP/M. C.the reciprocal of the price level. D.nominal GDP/Q. 2) given the above information and assuming trade occurs between the three states we can expect: […]

1) When the Fed auctions reserves through the term auction facility, the interest rate is set by the rate offered by the highest bidder. 2) A side benefit of international trade is that it links national interests and increases the […]

1) the “after this, therefore because of this” fallacy states that: a.positive statements are always followed by normative judgments. b.positive statements can never be proven true or false. c.if one acts on one’s expectations, those expectations will always be fulfilled. […]

1) Answer the next three questions on the basis of the following data: (a)What type of tax is represented by the tax schedule? (b)What will your average tax rate be if your taxable income is $50,000? (c)If your taxable income […]

1) Refer to the above diagrams, in which AD1 and AS1are the “before” curves and AD2 and AS2 are the “after” curves. Growth, full-employment and price stability is depicted by: A.panel (A) only. B.panel (B) only. C.panel (C) only. D.panels […]

1) the present choice of position on the production possibilities curve will not influence the future location of the curve. 2) price discrimination is illegal in the united states under antitrust regulations. Answer: false 3) refer to the above diagram. […]

1) Consider the two diagrams below. Diagram A represents a typical firm in a purely competitive industry. Diagram B represents the supply and demand conditions in that industry. (a)Describe the price, output, and profit situation for the individual firm in […]

1) Refer to the above table, in which the values for columns (2) through (5) are in acres. If the relevant columns are (1), (2), and (5), land rent will be: A.$0 per acre. B.$100 per acre. C.$200 per acre. […]

1) The demographic transition concept suggests that: A.effective birth control is the primary prerequisite of DVC income growth. B.income growth must first occur before DVC birth rates will decline. C.children are economic assets in the IACs, but economic liabilities in […]

1) Refer to the above diagram for the Federal funds market. If the quantity of reserves falls from $150 billion to $125 billion, we can expect: A.the Federal funds rate to rise to 4.0 percent. B.the discount rate to rise […]

1) answer the next question(s) on the basis of the following national income data. all figures are in billions of dollars. refer to the above data. u.s. imports are: a.$26. b.$16. c.$24. d.$14. 2) A firm will find it profitable […]

1) the physical import of dvd players to the united states from japan best illustrates a: a.resource flow. b.financial flow. c.trade flow. d.technology flow. 2) The U.S. income maintenance program consists of two kinds of programs. They are: A.the minimum […]

1) where total utility is at a maximum, marginal utility is: a.negative. b.positive and increasing. c.zero. d.positive but decreasing. 2) (last word) which of the following statements is false? a.stock prices are one clue as to the future direction of […]

1) Stabilizing a nation’s price level and the purchasing power of its money can be achieved: A.only with fiscal policy. B.only with monetary policy. C.with both fiscal and monetary policy. D.with neither fiscal nor monetary policy. 2) Which of the […]

1) What will be the elasticity of resource demand in the following cases? (a)unit wages rise by 10% and the number of employed workers falls by 5% (b)unit wages rise by 4% and the number of employed workers falls by […]

1) Assumptions: These two graphs show two sectors of the labor market for a particular kind of labor. Relevant product markets are competitive. The two labor demand curves are identical and initially the quantities of labor employed in the two […]

1) Money market deposit accounts are included in: A.M1 only. B.M2 only. C.neither M1 nor M2. D.both M1 and M2. 2) refer to the above diagram. this firm will earn only a normal profit if product price is: a.p1 b.p2 […]

1) Most nations of the world are now IACs, not middle- and low-income DVCs. 2) costs can be defined as total payments made to workers, land owners, and capital suppliers less payments to the entrepreneur for organizing and combining the […]

1) The low per capita outputs of the DVCs are explained by: A.insufficient saving and investment. B.over investment in human capital. C.slow population growth. D.excessively rapid technological advance. 2) Suppose the firms in a five-firm industry have market shares of […]

1) Assume that, under a system of floating exchange rates, Mexicans decide to increase their investments in the United States. As a result: A.the peso and the dollar will both depreciate. B.the peso and the dollar will both appreciate. C.the […]

1) welfare reform in 1996 reversed the trend of growing welfare payments to immigrants. 2) In percentage terms, many of the 10 most rapidly declining U.S. occupations include jobs for which capital is readily substitutable for labor. Answer: TRUE 3) […]

1) Which of the following Gini ratios indicates the highest degree of income inequality? A.0.78 B.0.65 C.0.29 D.0.42 2) The basis of the following table shows market shares of firms in hypothetical industries. Assume these are distinct industries with no […]

1) if a profit-seeking competitive firm is producing its profit-maximizing output and its total fixed costs fall by 25 percent, the firm should: a.use more labor and less capital to produce a larger output. b.not change its output. c.reduce its […]

1) the personal distribution of income in the united states is such that the richest fifth receives about _____ percent of personal income. a.30 b.40 c.50 d.60 2) Refer to the above diagram that applies to a private closed economy. […]

1) Public choice theory focuses on the economics of: A.fiscal and monetary policy. B.the behavior of business firms. C.antitrust and regulatory policy. D.government decision making, politics, and elections. 2) The following information is for four highway programs of increasing scope. […]

1) other things the same, if a price change causes total revenue to change in the opposite direction, demand is: a.perfectly inelastic. b.relatively elastic. c.relatively inelastic. d.of unit elasticity. 2) suppose losses cause industry x to contract and, as a […]

1) if an economy produces its most wanted goods but uses outdated production methods, it is: a.achieving productive efficiency, but not allocative efficiency. b.not achieving productive efficiency. c.achieving both productive and allocative efficiency. d.engaged in roundabout production. 2) globally, on […]

1) Refer to the above table. If the full-employment real GDP is $40 the: A.inflationary expenditure gap is $20. B.inflationary expenditure gap is $10. C.recessionary expenditure gap is $30. D.recessionary expenditure gap is $10. 2) A demand curve for a […]

1) An increase in input productivity will: A.shift the aggregate supply curve leftward. B.reduce the equilibrium price level, assuming downward flexible prices. C.reduce the equilibrium real output. D.reduce aggregate demand. 2) Suppose population A, consisting of Al, Bob, Curt, Doris, […]

1) Monetarists and rational expectations theorists generally agree that: A.the Federal Reserve should adhere to a monetary rule. B.the rate of interest and the price of bonds are positively or directly related. C.the money supply cannot be measured and therefore […]

1) because of the recent productivity acceleration, the business cycle is dead. 2) Right-to-work laws prohibit the formation of labor unions. Answer: FALSE 3) choices entail marginal costs because resources are scarce. Answer: true 4) a vertically integrated firm is […]

1) the following information for a pure monopolist: if the above profit-maximizing monopolist is able to price discriminate, charging each customer the price associated with each given level of output, how many units will the firm produce? a.2 b.3 c.4 […]

1) Collective bargaining agreements usually cover: A.wages and hours. B.union status. C.seniority and job opportunities. D.all of these. 2) The legal cartel theory best describes the structure and economic outcomes of the: A.automobile industry. B.deregulated airline industry. C.airline industry before […]

1) refer to the above two diagrams for individual firms. in figure 2 the firm’s demand and marginal revenue curves are represented by: a.lines b and c respectively. b.lines a and c respectively. c.lines a and b respectively. d.line b […]

1) If monies added to, or subtracted from, the Social Security trust fund were excluded from Federal budget calculations, the current Federal budget: A.deficit would nearly disappear. B.deficit would be substantially larger. C.surplus would nearly disappear. D.surplus would be substantially […]

1) Suppose a commercial bank has checkable deposits of $100,000 and the legal reserve ratio is 10 percent. If the bank’s required and excess reserves are equal, then its actual reserves: A.are $30,000. B.are $10,000. C.are $20,000. D.cannot be determined […]

1) Process innovation can be depicted as: A.an upward shift in a firm’s total product curve. B.an upward shift in a firm’s marginal cost curve. C.a downward shift in a firm’s marginal revenue curve. D.an increase in product demand. 2) […]

1) Refer to the above labor market diagrams. The case of bilateral monopoly is represented by Figure: A.5 B.4 C.2 D.1 2) New classical economists say that a fully anticipated decrease in aggregate demand: A.shifts the long-run aggregate supply curve […]

1) The United States has had significant trade and current account surpluses in recent years. 2) if a good’s production creates substantial negative externalities, then too little of it will be produced unless firms are subsidized. Answer: false 3) Barriers […]

1) Small innovative firm X that has developed a new product, accepts an offer to be acquired by a larger firm. As it relates to new technology, this behavior or outcome is known as a: A.fast-second strategy. B.limit pricing. C.zero-sum […]

1) which of the following best defines national income? a.income received by households less personal taxes b.the before-tax income received by households c.incomes earned by u.s. resource suppliers plus taxes on production and imports d.the market value of the annual […]

1) when average fixed costs are falling: a.average total cost must be falling. b.average variable cost may be either rising or falling. c.marginal cost must be falling. d.average variable costs must be rising. 2) a person will be more likely […]

1) assuming no change in product demand, a pure monopolist: a.can increase price and increase sales simultaneously because it dominates the market. b.adds an amount to total revenue which is equal to the price of incremental sales. c.should produce in […]

1) given the annual rate of economic growth, the “rule of 70” allows one to: a.determine the accompanying rate of inflation. b.calculate the size of the gdp gap. c.calculate the number of years required for real gdp to double. d.determine […]

1) Which of the following was not a contributing cause of the decline in investment and thus the recessionary expenditure gap occurring during the U.S. recession of 2001? A.overcapacity in major industries B.pessimism relating to the stock market crash C.the […]

1) Explain the impact of each of the following upon commercial bank reserves: (a) the Federal Reserve sells government bonds in the open market to private buyers; (b) the commercial banks reduce their indebtedness to the Federal Reserve Banks; (c) […]

1) refer to the above diagram, in which solid arrows reflect real flows; broken arrows are monetary flows. flow (1) might represent: a.corporate income tax payments. b.government provision of highways for truck transportation. c.business property tax payments. d.transfer payments to […]

1) marginal revenue is the: a.change in product price associated with the sale of one more unit of output. b.change in average revenue associated with the sale of one more unit of output. c.difference between product price and average total […]

1) Economic profit is most closely associated with: A.the process of saving and investing. B.monopoly, innovation, and uninsurable risks. C.long-run competitive equilibrium. D.a static economy. 2) The following consolidated balance sheet of the commercial banking system. Assume that the reserve […]

1) if products c and d are close substitutes, an increase in the price of c will: a.tend to cause the price of d to fall. b.shift the demand curve of c to the left and the demand curve of […]

1) refer to the above diagrams. in diagram (b) the profit-maximizing quantity is: a.g and the profit-maximizing price is e b.h and the profit-maximizing price is e c.g and the profit-maximizing price is f d.g and the profit-maximizing price is […]

1) (Consider This) The story about economist Irving Fisher’s conversation with his masseuse illustrates that interest payments arise because of: A.the possibility of inflation. B.the reality of credit risk. C.imperfect information about the future. D.the time-value of money. 2) The […]

1) which of the following economic regions has experienced the most growth in real gdp per capita since 1820? a.japan b.united states c.latin america d.western europe 2) Consider the following situations and determine whether they exhibit simultaneous consumption, network effects, […]

1) suppose that a pure monopolist can sell 4 units of output at $2 per unit and 5 units at $1.75 per unit. the monopolist will produce and sell the fifth unit if its marginal cost is: a.$1 or less. […]

1) 2) (consider this) refer to the above diagram. the direct economic impact of the destruction and loss of lives caused by the terrorist attacks of september 11, 2001 is illustrated by the: a.shift of the production possibilities curve from […]

1) the above data illustrate the: a.law of comparative advantage. b.utility-maximizing rule. c.law of diminishing marginal utility. d.law of increasing opportunity costs. 2) refer to the above diagram for a pure monopolist. if a regulatory commission seeks to achieve the […]

1) Discrimination: A.affects the distribution of domestic output and income, but not its total size. B.is shown as some point outside of an economy’s production possibilities curve. C.places the economy at some point inside of its production possibilities curve. D.affects […]

1) introduction of the verson stamping machine helped firms in the automobile industry: a.eliminate diminishing returns in production. b.achieve greater economies of scale. c.reach their minimum efficient scale at a lower level of production. d.shift their avc, atc, and mc […]

1) assumptions: 1) employers in this market are willing and able to ignore minimum wage laws; 2) sd represents the supply of domestically-born (and legal immigrant) workers; 3) st represents the total supply of workers in this labor market (sd […]

1) Marginal resource (labor) cost will always exceed the wage rate when the employer is selling its product in an imperfectly competitive market. 2) if you pay a $2000 tax on $10,000 of taxable income and a $4000 tax on […]

1) Refer to the above diagrams. A decline in aggregate expenditures from AE2 to AE1 resulting from the real-balances, interest-rate effect, and foreign purchases effects would be depicted as: A.a movement from A to C along aggregate demand curve AD1. […]

1) refer to the above diagram for a pure monopolist. monopoly profit: a.cannot be determined from the information given. b.will be ae per unit sold. c.will be bc per unit sold. d.will be ac per unit sold. 2) the above […]

1) ticket scalping implies that: a.event sponsors have established ticket prices at above-equilibrium levels. b.an event is not likely to be sold out. c.event sponsors have established ticket prices at below-equilibrium levels. d.the demand for tickets has fallen between the […]

1) when a firm is maximizing profit it will necessarily be: a.maximizing profit per unit of output. b.maximizing the difference between total revenue and total cost. c.minimizing total cost. d.maximizing total revenue. 2) Which of the following statements is incorrect? […]

1) an increase in quantity supplied might be caused by an increase in production costs. 2) If the United States and France are both on the international gold standard and U.S. exports to France exceed United States imports from France, […]

1) Using income as the tax base, which of the following best illustrates a regressive tax? A.the Federal inheritance tax B.a 7 percent general sales tax C.the corporate income tax D.the personal income tax 2) the theory of consumer behavior […]

1) At the optimal quantity of a public good: A.marginal benefit exceeds marginal cost by the greatest amount. B.total benefit equals total cost. C.marginal benefit equals marginal cost. D.marginal benefit is zero. 2) If we plotted the above data on […]

1) Refer to the above data. Over the $10 to $8 range of wage rates, the demand for labor is: A.perfectly elastic. B.elastic. C.unit elastic. D.inelastic. 2) Refer to the above diagram, where Sd and Dd are the domestic supply […]

1) When the actual rate of inflation is less than the expected rate: A.the unemployment rate will temporarily rise. B.firms will increase their output to recoup their falling profits. C.the unemployment rate will temporarily fall. D.firms will experience rising profits […]

1) Demographers expect world population to decline in the next century. 2) Human capital investment refers to spending on education and worker training. Answer: TRUE 3) Kara’s Kettles, Inc. has developed a new and improved type of cookware. Alex, a […]

1) personal income usually exceeds disposable income. 2) oligopoly firms may produce either standardized or differentiated products. Answer: true 3) During the Great Depression most nations lowered tariffs and abolished import quotas to encourage the flow of trade. Answer: FALSE […]

1) full-employment output is also called: a.zero-unemployment output. b.equilibrium output. c.potential output. d.zero-savings output. 2) Below is a demand schedule facing an individual firm. Complete the table by computing average revenue, total revenue, and marginal revenue. Then answer the following […]

1) Answer the next two questions using the following information: The price of a bond with no expiration date is $1000 and its fixed annual interest payment is $50; bond annual rate of interest is 5%. (a)If the price of […]

1) Assume that the commercial banking system has checkable deposits of $10 billion and excess reserves of $1 billion at a time when the reserve requirement is 20 percent. If the reserve requirement is now raised to 30 percent, the […]

1) Upon learning that his auto transmission is about to fail, Ray Roma sells his car to an unsuspecting buyer. This circumstance illustrates: A.asymmetric information. B.the Coase theorem. C.the moral hazard problem. D.the principal-agent problem. 2) In a private closed […]

1) The M2 money supply is larger than the M1 money supply. 2) if all nations prohibited the international migration of labor, we would expect world output to decline. Answer: true 3) If the substitution effect outweighs the output effect, […]

1) Noncompeting groups of workers are the result of: A.differences in the age-earnings profiles of workers. B.differences in the “job tastes” of workers. C.differences in the innate and acquired abilities of workers. D.geographic immobilities. 2) net exports are: a.that portion […]

1) which of the following is least likely to be considered economic immigration? a.bob migrates to canada to improve his access to health care. b.manuela migrates to the united states to open an authentic italian cooking school. c.myklos migrates to […]

1) because of health insurance, resources are underallocated to the health care industry. 2) noncash gift giving involves value loss when the marginal utility of the gift to the receiver is less than the product price. Answer: true 3) labor […]

1) Professional buyers of antiques often have more information about the value of antique objects than do the sellers. This illustrates: A.the Coase theorem. B.the moral hazard problem. C.the free-rider problem. D.asymmetric information. 2) Refer to the above diagram where […]

1) The aggregate supply curve (short-run): A.slopes downward and to the right. B.graphs as a vertical line. C.slopes upward and to the right. D.graphs as a horizontal line. 2) In an aggregate expenditures diagram equal increases in government spending and […]

1) Statistical discrimination refers to: A.the crowding of women or minorities into low-paying occupations. B.significant differences in average levels of earnings by gender, race, and ethnicity, after accounting for nondiscriminatory factors. C.making individual hiring decisions on the basis of the […]

1) According to monetarists: A.changes in the money supply are the primary cause of changes in the price level. B.an expansionary fiscal policy will lower interest rates and overstimulate the economy. C.changes in the velocity of money are more important […]

1) assumptions: 1) employers in this market are willing and able to ignore minimum wage laws; 2) sd represents the supply of domestically-born (and legal immigrant) workers; 3) st represents the total supply of workers in this labor market (sd […]

1) According to the Taylor rule, if real GDP falls by 1 percent below potential GDP, the Fed should lower the Federal funds rate by one-half a percentage point. 2) Tax revenues automatically increase during economic expansions and decrease during […]

1) Suppose the price level is fixed, the MPC is .8, and the GDP gap is a negative $320 billion. To achieve full-employment output (exactly), government should: A.increase government expenditures by $320 billion. B.increase government expenditures by $80 billion. C.reduce […]

1) economists define saving as: a.that part of after-tax income which is not consumed. b.total income less taxes. c.bank accounts. d.purchases of stocks and bonds. 2) refer to the above graph. using qd for quantity demanded and p for price, […]

1) The marginal revenue product of any input is the: A.cost of an additional unit of that input. B.added profits resulting from the use of one more unit of that input. C.additional output resulting from the use of one more […]

1) Assumptions: These two graphs show two sectors of the labor market for a particular kind of labor. Relevant product markets are competitive. The two labor demand curves are identical and initially the quantities of labor employed in the two […]

1) The reserve ratio refers to the ratio of a bank’s: A.reserves to its liabilities and net worth. B.capital stock to its total assets. C.checkable deposits to its total liabilities. D.required reserves and vault cash to its checkable deposits. 2) […]

1) Movie producers A, B, and C secretly meet and agree to release their summer blockbuster films in sequence, rather than at the same time. The U.S. Justice Department learns of the agreement and files an antitrust suit. The Federal […]

1) One of the consequences of the U.S. trade deficit is that: A.domestic inflation has resulted. B.the accumulation of American dollars in foreign hands has enabled foreign firms to build factories in America. C.the distribution of income in the United […]

1) The effectiveness of the built-in or automatic stabilizers is limited because: A.the stabilizers produce budget surpluses during recessions. B.transfer payments and subsidies increase during inflation and decrease during recessions. C.the offset the stabilizers provide to a change in private […]

1) Which of the following does not explain what backs the money supply in the United States? A.It is back by gold. B.It is widely accepted in transactions. C.It is designated “legal tender” by the Federal government. D.It is relatively […]

1) refer to the above diagram for a natural monopolist. if a regulatory commission set a maximum price of p2, the monopolist would: a.produce output q1 and realize an economic profit. b.produce output q3 and realize an economic profit. c.close […]

1) output-per worker in the united states declined between 1995 and 2007. 2) Successful new products enable consumers to increase the total utility they obtain from a specific amount of their total spending. Answer: TRUE 3) toothpaste and toothbrushes are […]

1) on the basis of the above information it can be said that: a.no coincidence of wants exists between any two states. b.a coincidence of wants exists between michigan and washington. c.a coincidence of wants exists between texas and washington. […]

1) from the 1970s to 1998, immigrants’ use of the u.s. welfare system was greater proportionately than the use by natives. this occurred primarily because: a.the mix of immigrants shifted from relatively skilled to relatively unskilled workers. b.funding for the […]

1) The following table shows marginal costs and benefits of the optimal quantity of pollution abatement that will occur at a local factory. (a)What is the optimal level of pollution abatement? Why? (b)If the marginal benefit of pollution abatement were […]

1) refer to the above graphs. an increase in the economy’s human capital would: a.move the economy away from point a and toward point b. b.shift curve cd to ab. c.move the economy away from point b and toward point […]

1) suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at $3.90 per unit. the monopolist will produce and sell the sixth unit if its marginal cost is: a.$4 or less. […]

1) When economist John Maynard Keynes said “In the long run we’re all dead!” he meant that there was no point in the government engaging in stabilization policy. 2) the consumer demand curve for a product is downsloping because marginal […]

1) To say money is socially defined means that: A.money has been defined in a Constitutional amendment. B.whatever performs the functions of money extremely well is considered to be money. C.the money supply includes all public and private securities purchased […]

1) Which of the following groups has the lowest poverty rate? A.married-couple families B.whites C.foreign-born (not citizens) D.African-Americans 2) In 1993 the Federal government boosted income tax rates. In the seven years that followed: A.tax revenues fell slightly. B.productivity growth […]

1) Shirking refers to the behavior of workers who provide less-than-expected effort on the job. 2) the business cycle is so named because upswings and downswings in business activity are equal in terms of duration and intensity. Answer: false 3) […]

1) the law of diminishing marginal utility states that: a.total utility is maximized when consumers obtain the same amount of utility per unit of each product consumed. b.beyond some point additional units of a product will yield less and less […]

1) Refer to the above diagram. Which of the following would be consistent with a decrease in racial prejudice against African-Americans and thus in the discrimination coefficients of employers, taken as a group? A.a shift in the labor demand curve […]

1) refer to the above diagram. the slope of curve zz at point b is: a.infinity. b.zero. c.+1 d.-1 2) If actual reserves in the banking system are $40,000, excess reserves are $10,000, and checkable deposits are $240,000, then the […]

1) the largest component of total expenditures in the united states is: a.net exports. b.government purchases. c.consumption. d.gross investment. 2) Many economists are critical of the minimum wage because they believe that it: A.hurts the efforts of labor unions. B.reduces […]

1) The total demand for money is equal to the transactions demand plus the asset demand for money. (a)Assume that each dollar held for transactions purposes is spent on the average five times per year to buy final goods and […]

1) The equilibrium world price of a product equates the quantities of exports supplied and imports demanded. 2) the existence of “beaten paths” tends to discourage immigration because of the perception that job prospects have been exhausted. Answer: false 3) […]

1) (Last Word) Classical macroeconomics was dealt severe blows by: A.the Great Depression and Keynes’s macroeconomic theory. B.the Second World War and the writings of Milton Friedman. C.Adam Smith and his idea of the invisible hand. D. the strong recovery […]

1) As it relates to Federal Reserve activities, the acronym FOMC describes the: A.Federal Open Market Committee. B.Federal Options Market Committee. C.Federal Organization for Monetary Control. D.Federal Organization for Money Creation. 2) In the balance of payments of the United […]

1) other things equal, canadian imports of u.s. goods: a.create a supply of canadian dollars in the foreign exchange market. b.create a supply of u.s. dollars in the foreign exchange market. c.reduce the demand for u.s. dollars. d.have no effect […]

1) which of the following is a characteristic of pure monopoly? a.close substitute products b.barriers to entry c.the absence of market power d.”price taking” 2) households in the aggregate use the largest share of their total income to: a.pay taxes. […]

1) Overall, economists believe that deregulation of industries formerly subjected to industrial regulation: A.has been a clear failure. B.is neutral in its impact to society’s well-being, creating minimal net benefits at best. C.has produced large net benefits for consumers and […]

1) (last word) over the past twenty-five years, china has averaged annual growth rates of nearly: a.5 percent. b.9 percent. c.12 percent. d.15 percent. 2) Assume the current equilibrium level of income is $200 billion as compared to the full-employment […]

1) the demand curve faced by a pure monopolist: a.may be either more or less elastic than that faced by a single purely competitive firm. b.is less elastic than that faced by a single purely competitive firm. c.has the same […]

1) The Federal Reserve System: A.has the same status as the Supreme Court. B.is basically an independent agency. C.has the status of a Congressional committee. D.is an agency of the executive branch of the Federal government. 2) approximately what percentage […]

1) Public choice economists: A.analyze the incidence of taxes. B.are also known as Keynesian economists. C.use the tools of economics to analyze decision making, politics, and elections in the public sector. D.are, by definition, economists employed by Federal, state, and […]

1) the law of increasing opportunity costs is reflected in a production possibilities curve that is: a.an upsloping straight line. b.a downsloping straight line. c.concave to the origin. d.convex to the origin. 2) Suppose the full employment level of real […]

1) The demand for agricultural products is: A.relatively elastic with respect to price. B.relatively inelastic with respect to price. C.relatively elastic with respect to income. D.downward sloping to the individual farmer, but perfectly elastic to farmers as a group. 2) […]

1) which of the following statements is correct? a.between 1953 and 2007, all growth in u.s. real gdp can be attributed to increases in labor productivity. b.between 1953 and 2007, increases in labor productivity account for more of the growth […]

1) in which of the following industries or sectors of the economy will business cycle fluctuations likely have the greatest effect on output? a.military goods b.capital goods c.textile products d.agricultural commodities 2) All else equal, when the Federal Reserve Banks […]

1) refer to the above data. alpha has a comparative advantage in producing: a.neither steel nor wheat. b.both steel and wheat. c.steel. d.wheat. 2) Which of the following is not a feature of the Food, Conservation, and Energy Act of […]

1) In the market for loanable funds: A.an increase in bank lending will increase the interest rate. B.a decrease in saving will reduce the interest rate. C.an increase in borrowing for investment will increase the interest rate. D.a decrease in […]

1) Assume the demand for automobile tires is highly inelastic and that the supply is highly elastic. The burden of a $2 excise tax on each tire will be: A.borne by resource suppliers who provide the inputs for manufacturing tires. […]

1) the medicare prescription drug, improvement, and modernization act of 2003 established a system of national health insurance. 2) because the equilibrium position of a purely competitive seller entails an equality of price and marginal costs, competition produces an efficient […]

1) (Last Word) Which one of the following is one of the leading economic indicators? A.index of consumer expectations B.the unemployment rate C.the consumer price index D.Federal income tax collections 2) The change in a firm’s total revenue that results […]

1) Economists refer to a budget deficit that exists when the economy is achieving full employment as a: A.cyclical deficit. B.full-employment deficit. C.natural deficit. D.nonrecurring deficit. 2) A profit-maximizing firm will: A.expand employment if marginal revenue product exceeds marginal resource […]

1) Refer to the above table. In a choice between the highway and the lighthouse: A.a majority of voters favor the lighthouse. B.a majority of voters favor the highway. C.the voters are indifferent as between the two. D.no voter decision […]

1) (last word) which of the following is a source of data for the consumption component of the u.s. gdp? a.the census bureau’s retail trade survey b.the census bureau’s survey of government finance c.the conference board’s index of leading indicators […]

1) Which of the following are included and which are excluded in calculating this years GDP? Explain in each instance. (a)A monthly scholarship check received by an economics student (b)The purchase of a new truck by a trucking company (c)Government […]

1) if a nation’s real gdp increases from 100 billion to 106 billion and its population jumps from 200 million to 212 million, it real gdp per capita will: a.remain constant. b.fall by 6 percent. c.rise by 6 percent. d.fall […]

1) which of the following is most likely to be an inferior good? a.fur coats b.ocean cruises c.used clothing d.steak 2) Which of the above diagrams best portrays the effects of a decrease in the availability of key natural resources? […]

1) which of the following is real capital? a.a pair of stockings b.a construction crane c.a savings account d.a share of ibm stock 2) an owner’s liability for the debts of a business is: a.limited in a corporation to the […]

1) economic profit in the long run is: a.possible for both a pure monopoly and a pure competitor. b.possible for a pure monopoly, but not for a pure competitor. c.impossible for both a pure monopolist and a pure competitor. d.only […]

1) Refer to the above data. What will be the profit-maximizing selling price of the product? A.$1.40 B.$1.60 C.$1.80 D.$2.00 2) Refer to the above diagram. The change in aggregate expenditures as shown from (C + Ig + Xn1) to […]

1) answer the next question(s) on the basis of the following data. all figures are in billions of dollars. refer to the above data. disposable income is: a.$83. b.$73. c.$75. d.$77. 2) a demand curve which is parallel to the […]

1) Total Allowable Catch policies and Individual Transferable Quotas both: A.limit catch sizes and promote efficiency. B.limit catch sizes, but TACs promote inefficiency. C.promote efficiency, but only TACs limit catch sizes. D.promote efficiency, but only ITQs limit catch sizes. 2) […]

1) (Consider This) Which of the following nations has implemented policies that pay women to have additional children? A.Russia. B.France. C.Italy. D.All of these nations. 2) an industry comprised of a small number of firms, each of which considers the […]

1) 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. 2) in the above diagram curves 1, 2, and […]

1) “Government failure” is a prominent topic in: A.public choice theory. B.Keynesian economics. C.socialist theory. D.behavioral economics. 2) The political technique called logrolling: A.always increases economic efficiency. B.always decreases economic efficiency. C.involves trading votes to secure favorable outcomes that otherwise […]

1) the mr = mc rule: a.applies only to pure competition. b.applies only to pure monopoly. c.does not apply to pure monopoly because price exceeds marginal revenue. d.applies both to pure monopoly and pure competition. 2) assume that a consumer […]

1) The benefits-received principle of taxation is most evident in: A.inheritance taxes. B.excise taxes on gasoline. C.the personal income tax. D.the corporate income tax. 2) A patent on a new product benefits the firm securing it by: A.limiting the direct […]

1) import quotas are: a.maximum limits on the quantity or total value of specific products imported to a nation. b.excise taxes or duties placed on imported products. c.licensing requirements, unreasonable quality standards, and the like designed to impede imports. d.government […]

1) the following cost data for a purely competitive seller: refer to the above data. if product price is $60, the firm will: a.shut down. b.produce 4 units and realize a $120 economic profit. c.produce 6 units and realize a […]

1) which of the following nations is not a member of the european union? a.switzerland b.france c.germany d.italy 2) Price fixing is considered to be a per se violation of the antitrust laws because: A.a guilty verdict requires proof of […]

1) refer to the above diagram for a nondiscriminating monopolist. at output r economic profits will be zero. 2) the primary purpose of the “play or pay” reform proposal is to reduce aggregate health care costs. Answer: false 3) The […]

1) in moving along a stable supply curve which of the following is not held constant? a.the number of firms producing this good b.expectations about the future price of the product c.techniques used in producing this product d.the price of […]

1) over half of the legal immigrants to the united states in 2007 were family-sponsored. 2) government assumes some responsibility for providing a minimum standard of living for all citizens to compensate for the increase in income inequality caused by […]

1) refer to the above diagram for a purely competitive producer. the lowest price at which the firm should produce (as opposed to shutting down) is: a.p1. b.p2. c.p3. d.p4. 2) which of the following is a characteristic of pure […]

1) Assume that the firm is hiring labor in a purely competitive market. Refer to the above data. If the wage rate is $11, how many workers will the firm choose to employ? A.5 B.4 C.3 D.2 2) a college […]

1) Refer to the above information. The multiplier for this economy is: A.2. B.2.5. C.3. D.4. 2) Productivity measures: A.real output per unit of input. B.per unit production costs. C.the changes in real wealth caused by price level changes. D.the […]

1) immigration of workers is an example of a goods and services flow: 2) Advocates of the minimum wage argue that its effects should be analyzed within the context of a dynamic and imperfectly competitive labor market. Answer: TRUE 3) […]

1) pure monopolists always earn economic profits. 2) The short-run aggregate supply curve shifts to the left when nominal wages rise in response to price level increases. Answer: TRUE 3) monopolistic competition is more like monopoly than pure competition because […]

1) Union workers have higher rates of job turnover than do nonunion workers. 2) we would expect the coefficient of cross elasticity of demand for dvd players and dvds to be positive. Answer: false 3) The Americans with Disabilities Act […]

1) Refer to the above diagram for the Federal funds market. If the Fed wants the Federal funds rate to be i1, what quantity of reserves do they need to make available to banks? A.Qf1. B.Qf2. C.Qf3. D.It cannot be […]

1) money functions as a medium of exchange by eliminating the need for a coincidence of wants. 2) Anticompetitive mergers are illegal under provisions of the Clayton Act (as amended). Answer: TRUE 3) The World Trade Organization (WTO) is an […]

1) Commercial banks increase the supply of money when they purchase either personal IOU’s or government bonds from businesses and households. 2) Because families can afford to have more children, population growth is greater in the IACs than in the […]

1) Changes in the discount rate are: A.the most powerful and useful tool of monetary policy. B.less frequent than changes in the reserve requirement. C.more important than open-market operations. D.less important than open-market operations in implementing monetary policy. 2) a […]

1) The crowding-out effect of expansionary fiscal policy suggests that: A.tax increases are paid primarily out of saving and therefore are not an effective fiscal device. B.increases in government spending financed through borrowing will increase the interest rate and thereby […]

1) The antitrust laws are enforced by the: A.Federal Bureau of Investigation. B.Antimonopoly Court of Appeals. C.Federal Justice Department and the Federal Trade Commission. D.Department of Commerce. 2) which of the above diagrams correctly portray the demand (d) and marginal […]

1) although individual purely competitive firms can influence the price of their product, these firms as a group cannot influence market price. 2) specialized production and international trade increase a nation’s productivity and increase the availability of goods and services. […]

1) along a supply curve, product price and producer surplus are inversely related. 2) Noncompeting groups of workers are the result of geographic immobilities. Answer: FALSE 3) Present law forbids all trades or sales of pollution rights. Answer: FALSE 4) […]

1) which of the following will most likely cause backflows? a.poor information that leads a migrant to overestimate the net benefits of migration. b.high moving costs. c.falling wages in a migrant’s origin nation. d.high levels of skill transferability. 2) a […]

1) (Consider This) Governments’ main economic concern about low birthrates is that: A.in a few decades there will not be enough working age adults to support pension responsibilities to retirees. B.the smaller population makes the economy more vulnerable to foreign […]

1) which of the following is a supply factor in the health care market? a.defensive medicine b.the aging of the population c.slow productivity growth in the health care industry d.asymmetric information 2) A major purpose of usury laws is to […]

1) In recent years the United States has: A.exported more services abroad than it has imported. B.had a small goods trade surplus with Japan. C.had a large goods trade surplus with the rest of the world. Dfallen to third behind […]

1) suppose that, when producing 10 units of output, a firm’s avc is $22, its afc is $5, and its mc is $30. this: a.firm’s atc is $35. b.firm’s atc is $57. c.firm’s total cost is $270. d.firm’s total cost […]

1) (Advanced analysis) Refer to the above diagram, in which C1 is the before-tax consumption schedule. Other things being equal, the economy would enjoy the greatest built-in stability with consumption schedule: A.C1. B.C2. C.C3. D.C4. 2) In which of the […]

1) to achieve its full production potential, an economy must reach full employment. 2) illegal immigration has little effect on the average level of wages in the united states. Answer: true 3) When C + Ig = GDP in a […]

1) An international agreement reached in 1994 by the world’s trading nations provides for: A.an increase in export subsidies on agricultural products. B.an increase in agricultural price supports. C.a reduction of tariffs on agricultural products. D.an international research organization designed […]

1) We would expect a decline in personal and corporate income taxes to: A.shift the aggregate demand curve rightward. B.decrease consumption and investment spending. C.decrease real output. D.shift the aggregate supply curve leftward. 2) a pure monopolist is selling 6 […]

1) Refer to the above diagram, in which Qf is the full-employment output. If the economy’s present aggregate demand curve is AD2: A.the most appropriate fiscal policy is an increase of government expenditures or a reduction of taxes. B.the most […]

1) If country A can produce both goods X and Y more efficiently, that is, with smaller absolute amounts of resources, than can country B: A.mutually advantageous specialization and trade between A and B may still be possible. B.we can […]

1) normative statements are expressions of facts. 2) insurance companies use deductibles and copayments to control increases in the amount of health care demanded. Answer: true 3) Unlike most demand curves, the demand curve for loanable funds is upsloping. Answer: […]

1) Assume that a bank initially has no excess reserves. If it receives $5,000 in cash from a depositor and the bank finds that it can safely lend out $4,500, the reserve requirement must be: A.zero. B.10 percent. C.20 percent. […]

1) import quotas are taxes or duties on imported products. 2) real gdp = worker-hours labor productivity. Answer: true 3) purposeful behavior implies that everyone will make identical choices. Answer: false 4) The economic benefits of forests include provision of […]

1) Refer to the above diagrams. A decline in aggregate expenditures from AE2 to AE1 resulting from the real-balances, interest-rate effect, and foreign purchases effects would be depicted as: A.a movement from A to C along aggregate demand curve AD1. […]

1) The equilibrium interest rate: A.affects both the size of total output and its composition. B.falls when the demand for loanable funds increases. C.determines the composition of R&D spending but not its total amount. D.increases when the expected rate of […]

1) (Last Word) In recent years: A.significant changes in the price of oil have had much less effect on the U.S. economy than did similar changes in oil prices in previous decades. B.large increases in the price of oil have […]

1) The following domestic supply and demand schedules for a product. Suppose that the world price of the product is $1. Refer to the above data. If this nation were entirely closed to international trade, equilibrium price and quantity would […]

1) The following information is for a closed economy: Refer to the above information. If in addition to spending $80 billion at each level of GDP, government imposes a lump-sum tax of $100: A.equilibrium GDP will now be $350. B.equilibrium […]

1) roughly what portion of u.s. total health spending is paid for by private and public insurance? a.one-tenth b.one-fourth c.four-fifths d.one-half 2) In the table below are the demand and supply schedules for rum in thousands of liters in a […]

1) The idea that a person’s productive efforts and his or her economic rewards are unrelated: A.is the neocolonialism view of economic development. B.describes the vicious circle of poverty. C.is the surplus labor theory of economic development. D.is the capricious […]

1) in industrially advanced countries estimates suggest the income elasticity of demand for health care is about: a.+3. b.+6. c.-2. d.+1. 2) the following cost data for a firm that is selling in a purely competitive market: refer to the […]

1) 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 […]

1) (Advanced analysis) Refer to the above diagram, in which C1 is the before-tax consumption schedule. The consumption schedule represented by C4 reflects: A.a progressive tax system. B.a proportional tax system. C.a regressive tax system. D.a higher MPC than is […]

1) Determine whether the following statement is true or false and provide an explanation for your answer: An economy would adjust through changes in output if there are demand shocks and prices are flexible. 2) in the long run a […]

1) Refer to the above diagram showing the domestic demand and supply curves for a specific standardized product in a particular nation. If the world price of this product is $1, this nation will: A.export all of the product. B.import […]

1) price discrimination will result in consumers with more elastic demand purchasing more of the good than when a single price is charged to all consumers in the market. 2) Balance sheets always balance because reserves must always equal liabilities […]

1) The aggregate expenditures model is built upon which of the following assumptions? A.Prices are sticky downward. B.The economy is at full employment. C.Prices are fully flexible. D.Government spending policy has no ability to affect the level of output. 2) […]

1) the term quantity demanded: a.refers to the entire series of prices and quantities that comprise the demand schedule. b.refers to a situation in which the income and substitution effects do not apply. c.refers to the amount of a product […]

1) Answer the next two questions on the basis of the below diagrams which show identical marginal utility from income curves from person X and person Y. (a)If $80,000 in income is distributed such that person X has only $20,000 […]

1) Harry owns a barber shop and charges $6 per haircut. By hiring one barber at $10 per hour the shop can provide 24 haircuts per 8-hour day. By hiring a second barber at the same wage rate the shop […]

1) children are charged less than adults for admission to professional baseball games but are charged the same prices as adults at the concession stands. which of the following conditions of price discrimination explain why this occurs? a.the seller must […]

1) the misallocation of resources resulting from large positive externalities can best be corrected by levying a specific tax on the production of that good or service. 2) Energy demand is relatively stable over the course of a day. Answer: […]

1) the consumer price index was 177.1 in 2001 and 179.9 in 2002. therefore, the rate of inflation in 2002 was about: a.6.7 percent. b.3.4 percent. c.1.6 percent. d.4.1 percent. 2) In which of the following pairs of antitrust cases […]

1) answer the next question(s) on the basis of the following data. all figures are in billions of dollars: refer to the above data. ndp is: a.$116. b.$121. c.$125. d.$150. 2) Because government price supports cause surplus production, government policies […]

1) refer to the above graphs. assume that pizza is measured in slices and beer in pints. in which of the graphs is the opportunity cost of a pint of beer equal to one slice of pizza? a.graph a b.graph […]

1) Statistical discrimination: A.is malicious. B.is profitable, but not malicious. C.cannot persist because of competition. D.explains all occupational discrimination. 2) Firm X develops a new product and gets a head start in its production. Other firms try to produce a […]

1) Refer to the above diagram. The sizes of the multipliers associated with changes in investment and government spending in this economy are: A.2.5 and 1.5 respectively. B.3 and 2 respectively. C.both 2.5. D.2 and 3 respectively. 2) the price […]

1) the optimal or allocatively efficient point on a production possibilities curve is achieved where: a.the smallest physical amounts of inputs are used to produce each good. b.each good is produced at a level where marginal benefits equal marginal costs. […]

1) Use the below graphs to answer the following questions assuming the nominal GDP in the economy is given. (a)Look at graph A and suppose the supply of money increases from 100 to 200. What will be the equilibrium rate […]

1) Refer to the above diagram. Assume that the natural rate of unemployment is 5 percent and that the economy is initially operating at point a where the expected and actual rates of inflation are each 6 percent. If the […]

1) the marginal tax rate is: a.less than the average tax rate when a tax is progressive. b.calculated by dividing total taxes paid by one’s total taxable income. c.the percentage of one’s total income that is paid in taxes. d.the […]

1) Refer to the above table. A decrease in government purchases of $5 would: A.increase real GDP by $5. B.increase real GDP by $10. C.decrease real GDP by $5. D.decrease real GDP by $15. 2) if the consumer price index […]

1) in which of the following cases will total revenue increase? a.price falls and demand is inelastic b.price falls and supply is elastic c.price rises and demand is inelastic d.price rises and demand is elastic 2) if actual gdp is […]

1) refer to the above diagram. a surplus of 160 units would be encountered if price was: a.$1.10, that is, $1.60 minus $.50. b.$1.60. c.$1.00. d.$.50. 2) (last word) the immigration acts of 1921 and 1924: a.set annual quotas that […]

1) Refer to the above diagrams. Suppose that government undertakes fiscal policy designed to increase aggregate demand from AD1 to AD2 and thereby to increase GDP from X to Z. In terms of graph B, which of the following might […]

1) surpluses drive market prices up; shortages drive them down. 2) the production possibilities curve shows various combinations of two products that an economy can produce when achieving full employment. Answer: true 3) Proposed ergonomics regulations are an example of […]

1) (Advanced analysis) Answer the next question(s) on the basis of the following information for a mixed open economy. The letters Y, Ca, Ig, Xn, G, and T stand for GDP, consumption, gross investment, net exports, government purchases, and net […]

1) the expenditures and income approaches to gdp are expected to yield identical results because goods that are not sold in one year will be sold in some following year. 2) the marginal tax rate is the tax rate that […]

1) The Financial Services Modernization Act of 1999: A.set limits on the fees that banks can charge for automatic teller machine (ATM) withdrawals. B.established a new dollar coin that will replace the dollar bill in 2008. C.permitted banks, thrifts, pension […]

1) the united states, japan, and the western european nations are the major international traders in terms of overall volume. 2) if the demand for labor in a country receiving immigrants is inelastic, the immigration will increase the total wages […]

1) Rapid population growth since 1800 has occurred primarily because of: A.a significant increase in total fertility rates as living standards have risen. B.a significant reduction in death rates as living standards have risen. C.a significant increase in replacement rates […]

1) As it relates to international trade, dumping: A.is a form of price discrimination illegal under U.S. antitrust laws. B.is the practice of selling goods in a foreign market at less than cost. C.constitutes a general case for permanent tariffs. […]

1) The following data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity demanded. Refer to the above data. The equilibrium world price of steel must be between: A.$5 and $4. […]

1) Which of the following statements is consistent with evidence? A.It is widely accepted that central planning will accelerate a DVCs growth rate. B.It is generally agreed that a laissez-faire policy for government will maximize economic growth. C.The effectiveness of […]

1) If the amount of money in circulation is $180 billion and the value of the economy’s total output is $540 billion, then the: A.circulation period of money must be one-fourth of a year. B.velocity of money is 4 C.average […]

1) A positive externality or spillover benefit occurs when: A.product differentiation increases the variety of products available to consumers. B.the benefits associated with a product exceed those accruing to people who consume it. C.a firm produces at the P = […]

1) Refer to the diagram above, assuming that the firm represented is operating on curve TC0. What is the user cost of extracting a unit of this resource? A.$20. B.$40. C.$60. D.It cannot be determined with the information given. 2) […]

1) Answer the next three questions on the basis of the following production possibilities data for Francia and Galacia. All data are in tons. FRANCIA PRODUCTION POSSIBILITIES: GALACIA PRODUCTION POSSIBILITIES: (a) If trade occurs between Francia and Galacia, which nation […]

1) The law of increasing opportunity costs: A.applies to land-intensive commodities, but not to labor-intensive or capital-intensive commodities. B.results in straight-line production possibilities curves rather than curves that are bowed outward from the origin. C.refutes the principle of comparative advantage. […]

1) Rational expectations theory implies that the: A.aggregate demand curve is vertical. B.long-run aggregate supply curve is vertical. C.long-run aggregate supply curve is horizontal. D.long-run aggregate supply curve is quite flat. 2) suppose you have a money income of $10, […]

1) The following information is for a closed economy: Refer to the above information. If both government spending and taxes are zero, the equilibrium level of GDP is: A.$200. B.$300. C.$400. D.$500. 2) labor productivity is defined as: a.total output/worker-hours. […]

1) the following production possibilities tables for countries alpha and beta: refer to the above tables. the domestic opportunity cost of one unit of x in beta is: a.2 units of y b.4 units of y c.1 unit of y […]

1) for a progressive tax the: a.average tax rate exceeds the marginal tax rate as income rises. b.marginal tax rate declines as income increases. c.average and marginal tax rates are equal. d.marginal tax rate exceeds the average tax rate as […]

1) The benefits-received principle of taxation supports the case for highly progressive taxation. 2) refer to the above diagram for a nondiscriminating monopolist. at output m total cost will be 0chm. Answer: false 3) Barriers to free trade impair efficiency […]

1) A major difficulty with the argument that trade barriers are necessary because foreign workers are paid low wages is that: A.labor costs and product prices are not related. B.there is no discernible relationship between wage rates and labor productivity. […]

1) leader countries tend to have higher growth rates than follower countries. 2) The aggregate expenditures schedule in the mixed open economy has a negative slope. Answer: FALSE 3) If the demand for agricultural products is inelastic, a relatively small […]

1) refer to the above diagram. which of the following is a positive statement? a.a point inside the production possibilities curve is superior to a point on the curve because the former requires less work effort. b.because any society should […]

1) Using antitrust law to split up an unregulated natural monopoly into several competing firms: A.would reduce product price. B.would increase product price. C.might either increase product price or reduce product price. D.will reduce average total cost. 2) in determining […]

1) in the above diagram: a.the consumer is indifferent between points a and b, but neither point maximizes his utility. b.the consumer is indifferent between points a and b and either point will maximize his utility. c.any combination of x […]

1) The market system does not produce public goods because: A.there is no need or demand for such goods. B.private firms cannot stop consumers who are unwilling to pay for such goods from benefiting from them. C.public enterprises can produce […]

1) When investment remains the same at each level of GDP in a private closed economy, the slope of the aggregate expenditures schedule: A.exceeds the MPC. B.is less than the MPC. C.equals the MPS. D.equals the MPC. 2) Studies show […]

1) export subsidies are: a.maximum limits on the quantity or total value of specific products imported to a nation. b.excise taxes or duties placed on imported products. c.licensing requirements, unreasonable quality standards, and the like designed to impede imports. d.government […]

1) The aggregate expenditures model does not allow for cost-push inflation. 2) the largest source of local government’s revenue is the sales tax. Answer: false 3) If the real outputs per capita of a rich nation and a poor nation […]

1) Ignoring international trade, in a mixed economy aggregate expenditures are comprised of: A.Ca + S + G. B.Ca + Ig + G. C.Ca + S + Ig. D.Ca + T + Ig. 2) as it relates to economic growth, […]

1) Fisher Mike can catch salmon for $11 per ton and fisher Tony can catch salmon for $8 per ton. Both Mike and Tony have an individual transferable quota (ITQ) to catch 1000 tons of salmon. The market price of […]

1) The MC curves in the above diagram slope upward because of the law of: A.demand. B.conservation of matter and energy. C.diminishing marginal utility. D.diminishing returns. 2) refer to the above data. which of the following represents the demand schedule […]

1) a decreasing-cost industry is one in which: a.contraction of the industry will decrease unit costs. b.input prices fall or technology improves as the industry expands. c.the long-run supply curve is perfectly elastic. d.the long-run supply curve is upsloping. 2) […]

1) preferred provider organizations (ppos): a.charge a fixed amount per member, hire many of their own physicians, and provide health services only to members. b.require that their members give up the right to file medical malpractice suits. c.are illegal in […]

1) the first, second, and third workers employed by a firm add 24, 18, and 9 units to total product respectively. therefore, the: a.marginal product of the third worker is 9. b.total product of the three workers is 54. c.average […]

1) If the United States and France are both on the international gold standard and U.S. exports to France exceed United States imports from France, gold will flow from the United States to France. 2) The fact that most of […]

1) Refer to the above data. At the profit maximizing level of employment, this firm’s, total labor cost will be: A.$16. B.$30. C.$24. D.$32. 2) refer to the above data. the supply of this product is inelastic in the $6-$5 […]

1) economists would describe the u.s. automobile industry as: a.purely competitive. b.an oligopoly. c.monopolistically competitive. d.a pure monopoly. 2) which of the following is correct? a.if the demand for a product is inelastic, a change in price will cause total […]

1) In the above diagram, a substantial appreciation of the U.S. dollar with no immediate change in the U.S. price level would result in a: A.movement upward along an existing aggregate supply curve such as AS1. B.movement downward along an […]

1) what is the primary reason that changes in total spending lead to cyclical changes in output and employment? a.government is unable to respond by changing the amount of money in circulation. b.changes in total spending cause supply shocks that […]

1) Other things equal, a reduction in personal and business taxes can be expected to: A.increase aggregate demand and decrease aggregate supply. B.increase both aggregate demand and aggregate supply. C.decrease both aggregate demand and aggregate supply. D.decrease aggregate demand and […]

1) Saving is low in many DVCs primarily because income is very equally distributed. 2) The M2 money supply equals M1 minus small time deposits plus Money Market Mutual Fund balances held by individuals. Answer: FALSE 3) The banking system […]

1) if incomes rise rapidly in the united states and u.s. preferences for foreign goods strengthen, we would expect: a.the dollar to appreciate in value. b.the dollar to depreciate in value. c.the dollar price of foreign monies to decrease. d.u.s. […]

1) The following information about a banking system: new currency deposited in the system = $40 billion; legal reserve ratio = 0.20; excess reserves prior to the currency deposit = $0. Refer to the above information. The $40 billion deposit […]

1) It is impossible for a nation to have a comparative advantage in producing everything. 2) A decrease in per unit production costs will shift the aggregate supply curve leftward. Answer: FALSE 3) refer to the above diagram. at any […]

1) suppose that an economy’s labor productivity and total worker-hours each grew by 4 percent between year 1 and year 2. we could conclude that this economy’s: a.real gdp also increased by 4 percent. b.real gdp remained constant. c.production possibilities […]

1) In the above diagram, (1) is the: A.expected-rate-of-return curve and (2) is the average total cost curve. B.total revenue curve and (2) is the interest-rate-cost-of funds-curve. C.expected-rate-of-return curve and (2) is the interest-rate-cost-funds curve. D.marginal cost curve and (2) […]

1) Tax revenues automatically increase during economic expansions and decrease during recessions. 2) A firm should undertake all the R&D activity that it can afford. Answer: FALSE 3) Industrial unions are more likely to increase wage rates by restricting the […]

1) to be officially unemployed a person must: a.be in the labor force. b.be 21 years of age or older. c.have just lost a job. d.be waiting to be called back from a layoff. 2) which of the following is […]

1) what percentage of the u.s. adult population has a college or postcollege education (as of 2007)? a.8 percent b.29 percent c.41 percent d.75 percent 2) The total supply of land is: A.upsloping. B.perfectly elastic. C.perfectly inelastic. D.greater in the […]

1) the price elasticity of demand of a straight-line demand curve is: a.elastic in high-price ranges and inelastic on low-price ranges. b.elastic, but does not change at various points on the curve. c.inelastic, but does not change at various points […]

1) At equilibrium real GDP in a private closed economy: A.the MPC must equal the APC. B.the slope of the aggregate expenditures schedule equals the MPS. C.aggregate expenditures and real GDP are equal. D.planned saving and consumption are equal. 2) […]

1) Nearly all modern economists support the idea of a monetary rule. 2) in the long run a pure monopolist must produce at that output where average total cost is at a minimum. Answer: false 3) the increasing wealth of […]

1) a rational consumer will try to achieve the highest indifference curve that his or her income will allow. 2) Other things equal, an expansionary monetary policy will shift the economy’s aggregate demand curve to the right. Answer: TRUE 3) […]

1) For which of the following income-maintenance programs is aggregate spending the greatest? A.Medicare B.Social Security C.unemployment compensation D.TANF 2) which of the following definitions is correct? a.accounting profit + economic profit = normal profit. b.economic profit – accounting profit […]

1) Assumptions: These two graphs show two sectors of the labor market for a particular kind of labor. Relevant product markets are competitive. The two labor demand curves are identical and initially the quantities of labor employed in the two […]

1) the state legislature has cut gigantic state university’s appropriations. gsu’s board of regents decides to increase tuition and fees to compensate for the loss of revenue. the board is assuming that the: a.demand for education at gsu is elastic. […]

1) Demand is the active and supply the passive determinant of land rent. 2) Thomas Malthus argued that increases in living standards tend to reduce birthrates. Answer: FALSE 3) the existence of “beaten paths” tends to discourage immigration because of […]

1) The critical feature of a monopsonistic labor market is that the employer: A.has a perfectly elastic demand curve for labor. B.can hire any number of workers it chooses at the going wage rate. C.faces an upsloping labor supply curve. […]

1) If a firm is employing quantities of resources J and K so that MRPJ/PJ = MRPK/PK = 1, then: A.MPJ/PJ may either exceed or be less than MPK/PK. B.MPJ/PJ will be less than MPK/PK. C.MPJ/PJ will exceed MPK/PK. D.MPJ/PJ […]

1) refer to the above graphs. growth of production capacity is shown by the: a.shift from ab to cd. b.shift from cd to ab. c.movement away from point a and toward point b. d.movement away from point b and toward […]

1) Traveling sales representative Harold Hill only calls on clients four days a week rather than the five days expected by his employer. This is an example of: A.equalizing differences. B.a nonmonetary job disadvantage. C.shirking. D.the free-rider problem. 2) (consider […]

1) economy a: gross investment equals depreciation economy b: depreciation exceeds gross investment economy c: gross investment exceeds depreciation other things equal, the above information suggests that the production capacity in economy: a.b is growing more rapidly than either a […]

1) refer to the above information and assume the stadium capacity is 5,000. the supply of seats for the game: a.varies inversely with ticket prices. b.varies directly with ticket prices. c.is perfectly inelastic. d.is perfectly elastic. 2) Profit-maximizing extraction companies […]

1) refer to the above diagram. constant returns to scale: a.occur over the 0q1 range of output. b.occur over the q1q3 range of output. c.begin at output q3. d.are in evidence at all output levels. 2) college students living off-campus […]

1) The plus items below are “export-type” entries and the minus items are “import-type” entries in the balance of payments for the hypothetical country of Zippo. Refer to the above information. The current account items for Zippo are: A.1, 2, […]

1) which of the following definitions is correct? a.accounting profit + economic profit = normal profit. b.economic profit – accounting profit = explicit costs. c.economic profit = accounting profit – implicit costs. d.economic profit – implicit costs = accounting profits. […]

1) an effective ceiling price will: a.induce new firms to enter the industry. b.result in a product surplus. c.result in a product shortage. d.clear the market. 2) Other things equal, if the national incomes of the major trading partners of […]

1) which of the following statements is correct? a.supply is more elastic in the short run than in the long run. b.demand is more elastic in the short run than in the long run. c.demand is more elastic when a […]

1) The theory of rational expectations concludes that: A.the public’s expectations can influence the outcome of monetary policy, but not of fiscal policy. B.the public’s expectations can influence the outcome of fiscal policy, but not of monetary policy. C.the public’s […]

1) Refer to the above diagram and assume the economy initially is in equilibrium at point a. Suppose the aggregate demand declines from AD1 to AD2 and the economy moves from a to c. In the mainstream view, the resulting […]

1) 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. 2) Other things equal, an […]

1) the emigration of software designers from india to the united states best illustrates a(n): a.trade flow. b.resource flow. c.financial flow. d.information flow. 2) An increase in net exports will shift the: A.aggregate expenditures curve upward and the aggregate demand […]

1) Which of the following is an example of a capital-intensive commodity? A.clothing B.wool C.sunflower seeds D.chemicals 2) How many commercial banks are now operating in the United States? A.about 140,000 B.about 7,300 C.about 11,000 D.about 6,300 Answer: B 3) […]

1) As of 2008, the world’s population is approximately: A.6.6 billion. B.4.2 billion. C.10.8 billion. D.2 trillion. 2) suppose you find that the price of your product is less than minimum avc. you should: a.minimize your losses by producing where […]

1) Answer the next question(s) on the basis of the following table for a particular country in which C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports. All figures […]

1) a group of plants that is owned and operated by a single firm and that consists of oil fields, refineries, and gasoline stations best illustrates a: a.trust. b.holding company. c.vertically integrated firm. d.multinational corporation. 2) the three basic legal […]

1) symbols: q = number of workers demanded; w = wage rate; and vtp = value of the cumulative total product (output) of the particular number of workers. assumptions: (1) the current wage in zinnia is $20 and the current […]

1) in constructing models, economists: a.make simplifying assumptions. b.include all available information. c.must use mathematical equations. d.attempt to duplicate the real world. 2) which of the following is not correct? a.where marginal product is greater than average product, average product […]

1) The Federal funds rate is the interest rate that _______ charge(s) _______. A.banks; other banks. B.the Fed; commercial banks. C.banks; their best corporate customers. D.banks; on federal student loans. 2) search unemployment and wait unemployment are types of: a.frictional […]

1) “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 […]

1) which of the following is not a characteristic of pure competition? a.price strategies by firms b.a standardized product c.no barriers to entry d.a larger number of sellers 2) refer to the above diagram. the combination of computers and bicycles […]

1) Refer to the above labor market diagram where D is the labor demand curve, S is the labor supply curve, and MRC is the marginal resource (labor) cost curve. An inclusive union could increase the level of employment above […]

1) an unexpected increase in total spending will cause an increase in gdp: a.if prices are sticky. b.if prices are fully flexible. c.regardless of whether prices are sticky or fully flexible. d.only if prices are stuck in the long term. […]

1) with fixed money income, an increase in the price of one good and a decrease in the price of the other will cause the new budget line to intersect the original budget line. 2) rising health care costs have […]

1) economic profit is found by subtracting accounting costs from total revenue. 2) A curve showing the quintile distribution of a nation’s income is called the Gini Curve. Answer: FALSE 3) A contractionary fiscal policy shifts the aggregate demand curve […]

1) other things equal, and given that the elasticity of demand of health care is 0.2, a 10 percent increase in the price of health care in the united states will reduce the quantity of health care demanded by about: […]

1) (Consider This) The Consider This box “Of Catfish and Art (and Other Things in Common)” lists examples of recent antitrust cases involving: A.monopolization. B.tying contracts. C.price fixing. D.horizontal mergers. 2) The equality-efficiency tradeoff refers to: A.the conflict between risk […]

1) Suppose the reserve requirement is 20 percent. If a bank has checkable deposits of $4 million and actual reserves of $1 million, it can safely lend out: A.$1 million. B.$1.2 million. C.$200,000. D.$800,000. 2) (Advanced analysis) Answer the next […]

1) empirical studies suggest that: a.labor productivity has declined throughout u.s. history. b.technological advances account for about 40 percent of u.s. productivity growth. c.the achieving of economies of scale is the most important factor in u.s. economic growth. d.all u.s. […]

1) Infrastructure is best illustrated by: A.farm equipment. B.school buildings and highways. C.machinery and equipment for the production of consumer goods. D.government tax revenues. 2) Use the table below for the next set of questions. Column 1 shows the interest […]

1) specialized production and international trade increase a nation’s productivity and increase the availability of goods and services. 2) A nation’s export supply curve is downsloping and its import demand curve is upsloping. Answer: FALSE 3) proponents of economic growth […]

1) Which of the following is a tool of monetary policy? A.open market operations B.changes in banking laws C.changes in tax rates D.changes in government spending 2) Complete the accompanying table. (a)What is the break-even level of income? How is […]

1) continued losses in an industry will cause some firms to reduce output or eventually leave the industry. 2) the natural rate of unemployment in the united states is about 4 to 5 percent. Answer: true 3) increases in household […]

1) Refer to the above information. Money supply M1 for this economy is: A.$60. B.$70. C.$130. D.$140. 2) The bank panics of 1930-1933: A.resulted in the passage of the Smoot-Hawley Act. B.boosted the nation’s money supply, causing inflation. C.directly resulted […]

1) the larger the positive cross elasticity coefficient of demand between products x and y, the: a.stronger their complementariness. b.greater their substitutability. c.smaller the price elasticity of demand for both products. d.the less sensitive purchases of each are to increases […]

1) an example of a public good is cable television. 2) a decrease in supply of x increases the equilibrium price of x, which reduces the demand for x and automatically returns the price of x to its initial level. […]

1) resources are efficiently allocated when production occurs where: a.marginal cost equals average variable cost. b.price is equal to average revenue. c.price is equal to marginal cost. d.price is equal to average variable cost. 2) other things equal, the greater […]

1) Answer the next five questions on the basis of the following hypothetical data for a nation Malthusia. All numbers are in billions of dollars. (a)What was the balance on goods? (b)What was the balance on goods and services? (c)What […]

1) When a commercial bank has excess reserves: A.it is in a position to make additional loans. B.its actual reserves are less than its required reserves. C.it is charging too high an interest rate on its loans. D.its reserves exceed […]

1) A change in the price of an input will usually: A.shift a firm’s cost curves. B.cause the firm to alter the combination of inputs it employs. C.induce the firm to change its level of output. D.do all of these. […]

1) proponents of economic growth claim that growth leads to greater equality of income in an economy. 2) Successful new products enable consumers to increase the total utility they obtain from a specific amount of their total spending. Answer: TRUE […]

1) The following 2008 balance of payments statement for Transylvania. All figures are in billions of dollars. Refer to the above data. Foreigners made a smaller volume of asset purchases in Transylvania in 2008 than Transylvanians made asset purchases abroad. […]

1) The following table for a commercial bank or thrift: Refer to the above table. If the legal reserve ratio falls from 25 percent to 10 percent, excess reserves of this single bank will: A.rise by $6,000 and the monetary […]

1) The real-balances effect indicates that inflation makes the public feel wealthier and they therefore spend more out of their current incomes. 2) Marginal revenue product (MRP) is the change in total product (total output) associated with hiring an additional […]

1) consumer sovereignty means that legislation now protects the rights of consumers to dispose of their incomes as they see fit. 2) an economic model is an ideal or utopian type of economy that society should strive to obtain through […]

1) a purely competitive seller is: a.both a “price maker” and a “price taker.” b.neither a “price maker” nor a “price taker.” c.a “price taker.” d.a “price maker.” 2) the shift of the budget line from cd to ab in […]

1) Fish in the open ocean are protected by strong property rights. 2) the economy of 1995-2007 was characterized by greater productivity growth and greater economic growth than in the immediately preceding two decades. Answer: true 3) The Consumer Product […]

1) In saying that the present system of floating exchange rates is managed we mean that: A.countries that allow their exchange rate to move freely will lose their borrowing privileges with the IMF. B.the value of any IMF member’s currency […]

1) In a television advertisement for AFLAC supplemental health insurance, an ice skater says to his skating partner, “Do you want to try a triple jump?” She responds, “Why not, I have AFLAC.” This response illustrates the: A.principal-agent problem. B.Coase […]

1) refer to the above diagram. at the profit-maximizing output, total revenue will be: a.0ahe. b.0bge. c.0cfe. d.abge. 2) the law of diminishing returns results in: a.an eventually rising marginal product curve. b.a total product curve that eventually increases at […]

1) the main determinant of elasticity of supply is the: a.number of close substitutes for the product available to consumers. b.amount of time the producer has to adjust inputs in response to a price change. c.urgency of consumer wants for […]

1) Horizontal mergers may be anticompetitive because nonmerged firms are foreclosed from selling their products to the buying firm. 2) The basic function of profits and losses is to allocate society’s scarce resources to their highest valued uses. Answer: TRUE […]

1) The majority of union members in the United States belong to unions that are: A.affiliated with the United Workers of America (UWA). B.affiliated with the AFL-CIO. C.independent unions that are not affiliated with the AFL-CIO. D.growing rapidly in membership. […]

1) Landowners will not receive any rent so long as: A.there is any tax on land. B.the supply and demand curves for land intersect. C.the supply curve of land is perfectly inelastic. D.the supply curve lies entirely to the right […]

1) The DVCs are: A.located primarily in Northern Europe. B.located primarily in Western Europe. C.located primarily in Africa, Asia, and Latin America. D.more-or-less evenly distributed over the various continents. 2) The supply of land is: A.almost perfectly inelastic. B.negatively sloped. […]

1) 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 […]

1) Draw a graph that illustrates the dilemma of regulation for a natural monopoly. On the graph, show the: (a) socially optimal price; (b) fair-return price; and (c) profit-maximizing price for the unregulated monopolist. 2) The following table which indicates […]

1) refer to the above diagram. flow (2) represents: a.wage, rent, interest, and profit income. b.land, labor, capital, and entrepreneurial ability. c.goods and services. d.consumer expenditures. 2) Which of the following is correct? A.Government expenditures and taxes both increase GDP. […]

1) Assume there is an increase in government spending and a reduction in net taxes. With a specific money supply, the consequent: A.contractionary impact might be lessened by the resulting increase in the interest rate. B.expansionary impact might be lessened […]

1) Use the below graphs to answer the following questions assuming the nominal GDP in the economy is given. (a)Look at graph A and suppose the supply of money increases from 100 to 200. What will be the equilibrium rate […]

1) “economics is concerned with how individuals, institutions, and society make optimal choices under conditions of scarcity.” this statement is: a.positive, but incorrect. b.positive and correct. c.normative, but incorrect. d.normative and correct. 2) In the long run: A.attempts to “fine […]

1) money functions as a medium of exchange by eliminating the need for a coincidence of wants. 2) A recessionary expenditure gap in a mixed open economy can be measured as the extent to which aggregate expenditures (Ca + Ig […]

1) Which of the following has bolstered the case for active monetary policy? A.budget surpluses B.increasing globalization of financial markets C.the success of monetary policy in helping the economy emerge from the 1990-1991 recession and sustain economic growth through the […]

1) A restrictive monetary policy may be frustrated if the investment-demand curve shifts to the left. 2) An increase in imports (independent of a change in the U.S. price level) will increase both U.S. aggregate supply and U.S. aggregate demand. […]

1) the national income and product accounts (nipa) help economists and policymakers to: a.design and implement policies to improve the economy’s health. b.follow the long-run course of the economy to determine whether it has grown or stagnated. c.assess the health […]

1) diseconomies of scale: a.pertain to the long run. b.pertain to the short run. c.are synonymous with diminishing returns. d.are synonymous with increasing returns. 2) which of the following would not shift the demand curve for beef? a.a widely publicized […]

1) the following data confronting a firm: refer to the above data. at the profit-maximizing output the firm’s total cost is: a.$48. b.$32. c.$80. d.$64. 2) Answer: 3) the trade adjustment assistance act of 2002: a.enacts temporary tariffs to enable […]

1) The Federal Open Market Committee (FOMC) is made up of: A.the chair of the Board of Governors along with the 12 presidents of the Federal Reserve Banks. B.the seven members of the Board of Governors along with the president […]

1) as it relates to public goods, nonexcludability means that nonpayers cannot be barred from obtaining the benefits. 2) modern economic growth since the 1820s has widened wealth and income disparities between richer and poorer nations. Answer: true 3) The […]

1) ideally, value judgments are involved at the: a.levels of facts, theory, and policy. b.levels of facts and theory only. c.level of facts only. d.level of policy only. 2) Which of the following represents the most expansionary fiscal policy? A.a […]

1) refer to the above table. in relation to column (3), a change from column (5) to column (4) would indicate a(n): a.increase in demand. b.decrease in demand. c.increase in supply. d.decrease in supply. 2) Refer to the above diagrams. […]

1) Refer to the above diagram pertaining to two nations and a specific product. Lines FA and GB are: A.domestic supply curves for two countries. B.domestic demand curves for two countries. C.import demand curves for two countries. D.export supply curves […]

1) Commercial banks create money when they: A.accept cash deposits from the public. B.purchase government securities from the central banks. C.create checkable deposits in exchange for IOUs. D.raise their interest rates. 2) refer to the above long-run cost diagram for […]

1) To determine the velocity of money you would need to know: A.nominal GDP and real GDP. B.the money supply and the price level. C.nominal GDP and the money supply. D.nominal GDP and the interest rate. 2) since 1996, cash […]

1) refer to the above diagram for a nondiscriminating monopolist. the profit-maximizing price for this firm is j 2) Under the international gold standard, exchange rates fluctuate without restraint to correct any international disequilibrium by affecting the relative attractiveness of […]

1) the distribution of income among the owners of land, labor, capital, and entrepreneurial ability is known as: a.income differentials. b.the personal distribution of income. c.the functional distribution of income. d.the concentration ratio. 2) The commercial banking system borrows from […]

1) The labor supply curve for a particular occupation is upsloping because: A.higher wages will be needed to attract workers from other occupations. B.lower wages will be needed to increase employment. C.higher wages will enable some workers to afford more […]

1) refer to the above diagram. for output level q, per unit costs of a are: a.unattainable and imply the inefficient use of resources. b.unattainable, given resource prices and the current state of technology. c.attainable, but imply the inefficient use […]

1) A person arguing that income inequality is actually less than that described by the standard Census data might say that the: A.Census data fail to include cash transfers as income. B.Census data fail to include the value of noncash […]

1) The benefits-received principle of taxation is used to support corporate and personal income taxes. 2) although sleeping in on a work day or school day has an opportunity cost, sleeping late on the weekend does not. Answer: false 3) […]

1) A decrease in the reserve ratio increases the: A.amount of actual reserves in the banking system. B.amount of excess reserves in the banking system. C.number of government securities held by the Federal Reserve Banks. D.ratio of coins to paper […]

1) One of the implications of the supply-side anecdote is that: A.tax cuts distributed equally across all workers would result in some people being paid by the government to work. B.it is unwise to dine with supply-side economists if you […]

1) Refer to the above diagram for the Federal funds market. If the Fed supplies $200 billion in reserves, the equilibrium prime interest rate is: A.6.0 percent. B.5.5 percent. C.5.0 percent. D.undeterminable with the information given. 2) A deficit on […]

1) A Federal funds rate reduction that is caused by monetary policy will: A.increase the prime interest rate. B.decrease the size of the monetary multiplier. C.increase the Fed’s discount rate. D.decrease the prime interest rate. 2) The rule of reason […]

1) Which of the following is a tool of monetary policy? A.open market operations B.changes in banking laws C.changes in tax rates D.changes in government spending 2) Assume the legal reserve ratio is 25 percent and the Fourth National Bank […]

1) U.S. firms collectively devote the largest portion of their total R&D spending to: A.applied research (pursuing invention). B.basic scientific research. C.innovation and diffusion. D.financing startup firms. 2) In the table below are aggregate demand and supply schedules. (a)On the […]

1) in drawing a production possibilities curve we hold constant: a.the money supply. b.the consumer price index. c.both technology and resource supplies. d.resource supplies only. 2) Which among the following is the strongest determinant of an industry’s technological progressiveness? A.the […]

1) Refer to the above diagram for the Federal funds market. If the Fed supplies $300 billion in reserves, the equilibrium Federal funds rate is: A.6.0 percent. B.5.5 percent. C.5.0 percent. D.undeterminable with the information given. 2) Which of the […]

1) 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 […]

1) The above diagram is the basis for explaining: A.the traditional Phillips Curve. B.the long-run Phillips Curve. C.how central planning can make full employment and price level stability compatible goals. D.new policies for eliminating unemployment. 2) if both the real […]

1) a linear demand curve has a constant elasticity over the full range of the curve. 2) Checkable deposits are a liability on a bank’s balance sheet. Answer: TRUE 3) market economies use capital goods because they improve productive efficiency. […]

1) (Last Word) Construction of the first working computer “mouse” best exemplifies: A.invention. B.scientific determinism. C.diffusion. D.creative destruction. 2) graphically, consumer surplus is measured as the triangle: a.under the demand curve and below the actual price. b.under the demand curve […]

1) The first successful commercial introduction of a new product refers to: A.invention. B.innovation. C.diffusion. D.diversification. 2) If the demand for a product is perfectly inelastic, the incidence of an excise tax will be: A.entirely on the buyer. B.mostly on […]

1) which of the following has been an outcome of the north american free trade agreement (nafta)? a.a lower standard of living in canada, mexico, and the united states b.lower wages in the united states and canada c.increased trade among […]

1) refer to the above diagram. the base year used in determining the price indices for this economy: a.cannot be determined from the information given. b.is some year before 2000. c.is more recent than 2000. d.is 2000. 2) economists who […]

1) Assume that a firm’s production technique is such that varying combinations of labor and capital can be used to produce output. If the price of labor falls relative to the price of capital and the firm decides to use […]

1) if an economy is operating inside its production possibilities curve for consumer goods and capital goods, it: a.can only produce more consumer goods by producing fewer capital goods. b.can only produce more capital goods by producing fewer consumer goods. […]

1) refer to the above figure that shows the market for u.s. health care. other things equal, which of the following would shift the supply curve for medical care from s1 to s2? a.greater reliance on skilled nurses rather than […]

1) since 1941 personal taxes have: a.risen absolutely, but declined as a percentage of personal income. b.risen both absolutely and as a percentage of personal income. c.fallen absolutely, but risen as a percentage of personal income. d.fallen both absolutely and […]

1) Currently capitalist income, that is, corporate profits, interest, and rent, accounts for about what percentage of the income paid to American resource suppliers? A.10 percent B.20 percent C.50 percent D.80 percent 2) refer to the above diagram. total revenue […]

1) Consider the following payoff matrix in which the numbers indicate the profit in millions of dollars for a duopoly based either on a high-price or a low-price strategy. (a)What will be the result when each firm chooses a high-price […]

1) because of their large-scale level of production, pure monopolists overallocate resources to their industry by producing beyond the p = mc output. 2) refer to the above diagram for a nondiscriminating monopolist. at output q production will be unprofitable. […]

1) in 2006, some 45 million americans did not have health insurance. 2) The demand for labor is a derived demand whereas the demand for capital is not. Answer: FALSE 3) macroeconomics explains the behavior of individual households and business […]

1) if a demand for a product is elastic, the value of the price elasticity coefficient is: a.zero. b.greater than one. c.equal to one. d.less than one. 2) proponents of economic growth say that pollution: a.is an inevitable by-product of […]

1) Demand-pull inflation can be restrained by increasing government spending and reducing taxes. 2) Tying agreements are contracts by which retailers agree to charge the prices that manufacturers set on branded goods. Answer: FALSE 3) to achieve its full production […]

1) The following table shows the total costs and total benefits facing a city of five different potential baseball stadiums of increasing size. All figures are in millions of dollars. Refer to the above table. The marginal cost and marginal […]

1) studies of the minimum wage suggest that the price elasticity of demand for teenage workers is relatively inelastic. this means that: a.an increase in the minimum wage would increase the total incomes of teenage workers as a group. b.an […]

1) A fishery is a stock of fish or other marine animal thought of as a logically distinct group, and usually identified by its location and species. 2) a market that achieves productive efficiency is producing the quantity of goods […]

1) a firm’s total variable cost will depend on: a.the prices of variable resources. b.the production techniques that are used. c.the level of output. d.all of these. 2) Refer to the above diagram. Assume that nominal wages initially are set […]

1) Refer to the above data. If a lump-sum tax (the same tax amount at each level of GDP) of $40 is imposed in this economy, the marginal propensity to consume is: A..8 before taxes and .6 after taxes. B..8 […]

1) the problems of corporations such as enron and worldcom occurred because: a.they failed to offer stock to executives to encourage profit-seeking decisions. b.providing stock as part of executive compensation encouraged fraudulent practices designed to exaggerate profits and artificially inflate […]

1) (consider this) rising wages for women in the united states have: a.increased the proportion of women working part time compared to working full time. b.increased labor costs and thus shifted the nation’s production possibilities curve inward. c.increased average family […]

1) The interest-rate cost-of-funds curve is perfectly elastic because firms can borrow as much or as little as they want at market interest rates. 2) The interest rate is the price paid for the use of money. Answer: TRUE 3) […]

1) modern economic growth is defined as increases in real gdp over time. 2) When the Fed auctions reserves through the term auction facility, the interest rate is set by the rate offered by the lowest bidder whose bid is […]

1) Which of the following supports the contention that monopolistic competitors have a strong incentive to engage in R&D? A.Entry to monopolistic competitive industries is relatively easy and thus profit from innovation is quickly competed away. B.Most monopolistic competitive industries […]

1) suppose that steve heads to the local hamburger shop with $3, expecting to spend $2 for his favorite burger and $1 for french fries. when he gets there he discovers that his favorite burger is on sale for $1, […]

1) refer to the above diagram. at output c average fixed cost is gf. 2) A $10 billion decrease in taxes will increase the equilibrium GDP by more than would a $10 billion increase in government expenditures. Answer: FALSE 3) […]

1) the following cost data for a purely competitive seller: refer to the above data. if product price is $75, the firm will produce: a.3 units of output. b.4 units of output. c.5 units of output. d.6 units of output. […]

1) The following data for the hypothetical nations of Alpha and Beta. Qs is domestic quantity supplied and Qd is domestic quantity demanded. Refer to the above data. The equilibrium prices of steel in Alpha and Beta are: A.$5 and […]

1) Resource pricing is important because: A.resource prices are a major determinant of money incomes. B.resource prices allocate scarce resources among alternative uses. C.resource prices, along with resource productivity, are important to firms in minimizing their costs. D.of all of […]

1) To say that the Federal Reserve Banks are quasi-public banks means that: A.they are privately owned, but managed in the public interest. B.they deal only with banks of foreign nations and do not have direct business contact with U.S. […]

1) Checkable deposits are also called: A.checking accounts. B.high-powered money. C.savings balances. D.Federal Reserve Notes. 2) (Consider This) In 2005, the company Changing World Technologies: A.built a 100-square-mile solar collection station in the desert southwest of the U.S. B.began processing […]

1) the quantity demanded of a product increases as its price declines because the: a.lower price shifts the demand curve rightward. b.lower price shifts the demand curve leftward. c.lower price results in an increase in supply. d.demand curve is downsloping. […]

1) The benefits-received principle of taxation supports the case for highly progressive taxation. 2) in the short run a pure monopolist will maximize profits by producing at that level of output where the difference between price and average total cost […]

1) macroeconomics can best be described as the: a.analysis of how a consumer tries to spend income. b.study of the large aggregates of the economy or the economy as a whole. c.analysis of how firms attempt to maximize their profits. […]

1) Relative to 1800, today in the world there are: A.more people but lower per-capita consumption. B.more people but the same per-capita consumption. C.more people and higher per-capita consumption. D.the same number of people but higher per-capita consumption. 2) Refer […]

1) the following table applies to a purely competitive industry composed of 100 identical firms. refer to the above table. for each of the 100 firms in this industry, marginal revenue and total revenue will be: a.$4 and $400, respectively. […]

1) marginal utility is total utility divided by the number of units consumed. 2) refer to the above diagram. at output c production will result in an economic profit. Answer: true 3) A lump-sum tax causes the after-tax consumption schedule […]

1) which of the following holds true? a.there is no relationship between ap and avc. b.when mp is rising avc is falling, and when mp is falling avc is rising. c.when ap is rising avc is falling, and when ap […]

1) In which of the above market situations will the largest portion of an excise tax of a specified amount per unit of output be borne by producers? A.4 B.3 C.1 D.2 2) which of the following statements is most […]

1) 2) economists who believe that the recent productivity acceleration may be permanent claim that the above-normal economic growth in the united states between 1995 and 2007 was caused by: a.increases in the rate of personal saving. b.increased entrepreneurial activity, […]

1) if the equation y = 15 – 4x was plotted, the: a.vertical intercept would be -4 b.vertical intercept would be +4 c.vertical intercept would be +9 d.slope would be -4 2) The U.S. supply of Japanese yen is: A.downsloping […]

1) A decrease in per unit production costs will shift the aggregate supply curve leftward. 2) The supply of loanable funds is perfectly elastic. Answer: FALSE 3) The United States has experienced both budget surpluses and deficits over the past […]

1) in the long run: a.all costs are variable costs. b.all costs are fixed costs. c.variable costs equal fixed costs. d.fixed costs are greater than variable costs. 2) Which one of the following is presently a major deterrent to bank […]

1) which of the following statements is correct? a.the pure monopolist will maximize profit by producing at that point on the demand curve where elasticity is zero. b.in seeking the profit-maximizing output the pure monopolist underallocates resources to its production. […]

1) refer to the above diagram. the firm will realize an economic profit if price is: a.p1 b.p2 c.p3 d.p4 2) A negative externality or spillover cost occurs when: A.firms fail to achieve allocative efficiency. B.firms fail to achieve productive […]

1) under a system of national health insurance: a.the federal government would provide a basic health care package to all citizens at no direct cost. b.health care would be financed out of tax revenues. c.government could negotiate to reduce the […]

1) (consider this) refer to the above diagram. the u.s. response to the events of september 11, 2001, is illustrated by the: a.shift of the production possibilities curve from cd to ab. b.shift of the production possibilities curve from ab […]

1) the optimal level of immigration occurs where marginal benefit is at its greatest. 2) an increase in quantity supplied might be caused by an increase in production costs. Answer: false 3) economic models of illegal immigration suggest that domestic-born […]

1) In the above diagram, at $40 million of R&D expenditure, the expected rate of return: A.equals the interest rate cost of funds. B.is greater than the interest rate cost of funds. C.is less than the interest rate cost of […]

1) Per capita water use in the United States has steadily increased since 1973. 2) the federal government in 2006 enacted limits on “pain and suffering” awards on medical malpractice lawsuits against physicians. Answer: false 3) If the reserve requirement […]

1) Piece-rates may not be appropriate pay in some situations because they might reduce product quality. 2) graphically, the consumer maximizes total utility where the budget line is tangent to an indifference curve. Answer: true 3) if the nominal interest […]

1) If the nominal wage rises by 4 percent, and the price level rises by 7 percent, the real wage will: A.be unaffected. B.rise by 3 percent. C.fall by 3 percent. D.rise by 11 percent. 2) For which one of […]

1) The following data are for a series of increasingly extensive flood control projects: Refer to the above data. For Plan D marginal costs and marginal benefits are: A.$72,000 and $64,000 respectively. B.$28,000 and $12,000 respectively. C.$24,000 and $18,000 respectively. […]

1) (last word) critics of the 2006 massachusetts law requiring all residents to have health care insurance claim that: a.the law fails to address the problem of rising health care prices. b.the law will drive health care prices up faster […]

1) the expenditures and income approaches to gdp are expected to yield identical results because goods that are not sold in one year will be sold in some following year. 2) If the real outputs per capita of a rich […]

1) Rapid population growth can be an obstacle to economic development because: A.it can translate a relatively large increase in real output into a small increase in real output per capita. B.more investment will be required to simply maintain the […]

1) (Consider This) Which of the following nations has implemented policies that pay women to have additional children? A.Russia. B.France. C.Italy. D.All of these nations. 2) (Last Word) In The General Theory of Employment, Interest, and Money: A.Adam Smith stated […]

1) Refer to the above graph. An increase in labor demand is shown by the: A.shift from labor demand curve D1 to D2. B.shift from labor demand curve D3 to D2. C.move from a to b along labor demand curve […]

1) if the economy adds to its inventory of goods during some year: a.gross investment will exceed net investment by the amount of the inventory increase. b.this amount should be ignored in calculating that year’s gdp. c.this amount should be […]

1) According to international comparisons, which nation had the highest hourly wages in U.S. dollar terms in 2006? A.United States B.Germany C.Denmark D.Sweden 2) (consider this) the assertion by economists that “there is no free lunch” is: a.contradicted by the […]

1) Refer to the above diagram. If the supply of loanable funds is S0 and the demand for loanable funds is D0, the equilibrium interest rate and quantity of funds borrowed will be: A.G and A. B.F and A. C.F […]

1) to fully realize economic growth through the efficiency factor, an economy must increase its stock of capital goods and improve its technology. 2) The following information. Assume that by devoting all its resources to the production of X, nation […]

1) about three-fourths of all health care costs are paid out-of-pocket by patients. 2) Changes in the interest rate are more likely to affect investment spending than consumer spending. Answer: TRUE 3) Fisheries have been overexploited relative to forests primarily […]

1) Refer to the above diagram that applies to a private closed economy. If gross investment is Ig 1, the equilibrium GDP and the level of consumption will be: A.H and HB respectively. B.J and JI respectively. C.J and JK […]

1) A checking account entry is money because it: A.is ensured by the Federal Deposit Insurance Corporation. B.has been declared as such by the Federal government. C.performs the functions of money. D.can be sold for currency. 2) price discrimination is: […]

1) (Last Word) The rapid spread of ATMs has: A.resulted from changes in banking laws. B.increased the demand for bank tellers. C.reduced the demand for bank tellers. D.increased the hourly wage paid to bank tellers. 2) In 1985, the exchange […]

1) In terms of aggregate supply, the difference between the long run and the short run is that in the long run: A.the price level is variable. B.employment is variable. C.real output is variable. D.nominal wages and other input prices […]

1) In the absence of unexpected shocks, the economy will tend to experience: A.positive, non-inflationary growth. B.no changes in output or prices. C.positive growth with mild amounts of deflation. D.positive growth with mild amounts of inflation. 2) Refer to the […]

1) An increase in the money supply will: A.lower interest rates and lower the equilibrium GDP. B.lower interest rates and increase the equilibrium GDP. C.increase interest rates and increase the equilibrium GDP. D.increase interest rates and lower the equilibrium GDP. […]

1) Complete the following table, where L is the units of labor, TPL is the total product of labor, MPL is the marginal product of labor, P is product price, TR is total revenue, and MRPL is the marginal revenue […]

1) Most mainstream macroeconomists oppose a strict requirement to balance the Federal budget annually because they conclude that such a requirement would: A.increase real interest rates and drive out investment spending. B.eliminate monetary policy as a stabilization tool. C.force government […]

1) when an economy is operating under conditions of full employment, the production of more of commodity a will mean the production of less of commodity b because: a.of the law of increasing opportunity costs. b.economic wants are insatiable. c.resources […]

1) according to the office of immigration statistics, approximately what percentage of legal immigrants in 2007 were parents, children, siblings, or other qualified relatives of legal permanent u.s. residents? a.13 percent b.50 percent c.66 percent d.81 percent 2) Refer to […]

1) Marginal revenue product measures the: A.amount by which the extra production of one more worker increases a firm’s total revenue. B.decline in product price that a firm must accept to sell the extra output of one more worker. C.increase […]

1) Suppose the government purposely changes the economy’s standardized budget from a deficit of 3 percent of real GDP to a surplus of 1 percent of real GDP. The government is engaging in a(n): A.expansionary fiscal policy. B.contractionary fiscal policy. […]

1) because the equilibrium position of a purely competitive seller entails an equality of price and marginal costs, competition produces an efficient allocation of economic resources. 2) U.S. exports of farm products have generally declined as a percentage of U.S. […]

1) assume the above figure applies to a pure monopolist. if this firm is able to price discriminate between children and adults, its profit-maximizing level of output will be: a.q1a + q1c. b.q1c + q2. c.q1a + q2. d.q1a + […]

1) the advantages of the corporate form of business include: a.the ability to raise financial capital by selling stocks and bonds. b.the fact that owners are subject to unlimited liability. c.the elimination of the principal-agent problem. d.single taxation of corporate […]

1) refer to the above diagram, in which solid arrows reflect real flows; broken arrows are monetary flows. flow (8) might represent: a.personal income taxes. b.automobile purchases by the state of maine. c.the services of firefighters. d.subsidies to farmers. 2) […]

1) Present law forbids all trades or sales of pollution rights. 2) water has greater marginal utility than diamonds, yet diamonds have greater total utility than water. Answer: false 3) If you pay a $1,000 tax on $10,000 of taxable […]

1) In 2007, about ____ percent of employed wage and salary workers belonged to unions. A.20.3 B.6.8 C.10.4 D.12.1 2) a firm can sell more or less output at a constant price. demand is thus: a.perfectly inelastic. b.perfectly elastic. c.relatively […]

1) the following data confronting a firm: refer to the above data. this firm is selling its output in a(n): a.imperfectly competitive market. b.monopolistic market. c.purely competitive market. d.oligopolistic market. 2) assuming a pure monopolist’s demand curve is downsloping, its […]

1) All of the following can file antitrust charges under the Sherman Act except: A.the U.S. Justice Department. B.state attorney generals. C.injured private parties. D.the Federal Energy Regulatory Commission. 2) The demand for agricultural products rises less rapidly than income. […]

1) The creation of markets for pollution rights would provide: A.neither an incentive not to pollute nor revenue for environmental improvement. B.funds for environmental improvement, but would not provide an incentive to refrain from polluting. C.an incentive not to pollute, […]

1) Banks create money when they: A.add to their reserves in the Federal Reserve Bank. B.accept deposits of cash. C.sell government bonds. D.exchange checkable deposits for the IOU’s of businesses and individuals. 2) Refer to the above diagram. The production […]

1) Use the diagram below to answer the questions. (a)If the economys production possibilities curve is shown by curve AB, then draw in a new curve which indicates positive economic growth. (b)If the economy illustrated by production possibilities curve AB […]

1) The Federal funds market is the market in which: A.banks borrow from the Federal Reserve Banks. B.U.S. securities are bought and sold. C.banks borrow reserves from one another on an overnight basis. D.Federal Reserve Banks borrow from one another. […]

1) The movement of individuals and households from one income quintile to another over time is called: A.income averaging. B.wealth turnover. C.income mobility. D.the ratchet effect. 2) In the above diagram, the most favorable shift of the aggregate supply curve […]

1) Kodak introduced to the marketplace a digital camera which uses no film, but which takes photos that can be shown on personal computers. This is an example of: A.economies of scale. B.product innovation. C.process innovation. D.venture capital. 2) If […]

1) The demand schedule for the product produced by a monopolist is given in the table below. Complete the table by computing total revenue and marginal revenue. (a)What do the data in the table indicate about the relationship between total […]

1) Refer to the above diagram. The move of the economy from c to e on short-run Phillips Curve PC2 would be explained by an: A.increase in aggregate demand in the economy. B.increase in aggregate supply in the economy. C.actual […]

1) What are the relative values of price, ATC, and AVC when a monopolist experiences: a) a profit b) a loss but continues to produce c) a loss but ceases production 2) refer to the above data. if your taxable […]

1) A craft union attempts to increase wage rates by: A.equating the MRP and the MRC curves. B.shifting the labor supply curve to the left. C.shifting the labor supply curve to the right. D.shifting the MRP curve to the right. […]

1) the business-to-business (b2b) retrieval of prices of foreign resources via the internet best illustrates a(n): a.trade flow. b.capital and labor flow. c.financial flow. d.information flow. 2) refer to the above data. suppose quantity supplied declined by 23 units at […]

1) the trade adjustment assistance act of 2002: a.enacts temporary tariffs to enable firms hurt by foreign competition to transition to new industries or improve their international competitiveness. b.subsidizes firms for a maximum of 2 years as they try to […]

1) Which of the following is a true statement? A.Under normal conditions there is a short-run tradeoff between inflation and unemployment. B.There is a long-run tradeoff between inflation and unemployment. C.The short-run Phillips Curve is vertical. D.The long-run Phillips Curve […]

1) a manufacturer of frozen pizzas found that total revenue decreased when price was lowered from $5 to $4. it was also found that total revenue decreased when price was raised from $5 to $6. thus, a.the demand for pizza […]

1) an important outcome of the uruguay round of gatt negotiations was: a.a worldwide reduction of agricultural export subsidies. b.establishment of the european union. c.the elimination of all tariffs and quotas worldwide. d.establishment of the world bank. 2) if a […]

1) A monopsonistic employer’s marginal resource (labor) cost curve: A.is always more elastic than the labor supply curve. B.coincides with the labor supply curve. C.lies below the labor supply curve because the higher wage paid to an additional worker must […]

1) Refer to the above diagrams. Curve A: A.is an investment schedule and curve B is a consumption of fixed capital schedule. B.is an investment demand curve and curve B is an investment schedule. C.and B are totally unrelated. D. […]

1) Refer to the above diagram. If drawn, the long-run aggregate supply curve would include points: A.v, w, and u B.y, w, and u C.t, w, and z D.y, w, and x 2) from 1960 to 2004: a.follower countries such […]

1) Conspiracies to fix prices are: A.illegal under the Clayton Act. B.illegal under the Celler-Kefauver Act. C.per se violations of the antitrust laws. D.more tolerated by government today than two or three decades ago. 2) the two general types of […]

1) households spend a larger proportion of their incomes for services than for either nondurable goods or durable goods. 2) if market demand increases and market supply decreases, the change in equilibrium price is unpredictable without first knowing the exact […]

1) The basic issue in the DuPont cellophane case was: A.whether trade crossed state lines. B.defining the relevant market. C.structure versus behavior. D.the rule of reason. 2) the term “other things equal” means that: a.the associated statement is normative. b.many […]

1) The average person in the United States generates about 10 pounds of trash per day. 2) The regulation of natural monopolies has been criticized because it creates a tendency for regulated firms to use too much labor and too […]