1) Low rates of inflation are generally associated with
a. low rates of government spending.
b. small or nonexistent government budget deficits.
c. low rates of productivity growth.
d. low rates of growth of the quantity of money.
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2) The tradeoff between inflation and unemployment
a. implies that policies designed to reduce unemployment also reduce inflation.
b. was eliminated by improved economic policies in the 1900s.
c. is a long-run tradeoff, persisting for decades, according to most economists.
d. None of the above are correct.
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3) Almost all economists agree that rent control
a. has no effect on the rental income of landlords.
b. allows the market for housing to work more efficiently.
c. adversely affects the availability and quality of housing.
d. is a very inexpensive way to help the most needy members of society.
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4)
Refer to Figure 4-15. Equilibrium price and quantity are, respectively,
a. $15 and 200 units.
b. $25 and 600 units.
c. $25 and 400 units.
d. $35 and 200 units.
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5) Economists speaking like policy advisers make
a. positive statements.
b. descriptive statements.
c. claims about how the world is.
d. claims about how the world should be.
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6) The two basic reasons why economists often appear to give conflicting advice to policymakers are differences in
a. opinions and education.
b. opinions and values.
c. scientific judgments and education.
d. scientific judgments and values.
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7)
Refer to Figure 6-1. The price ceiling shown in panel (b)
a. is not binding.
b. creates a surplus.
c. creates a shortage.
d. Both a) and b) are correct.
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8) Table 3-6
Assume that Maya and Miguel can switch between producing mixers and producing toasters at a constant rate.
Hours Needed To Make 1 Amount Produced in 40 Hours
mixer toaster mixers toasters
Maya 8 5 5 8
Miguel 20 10 2 4
Refer to Table 3-6. The opportunity cost of 1 toaster for Miguel is
a. 1/2 mixer.
b. 2 hours of labor.
c. 2 mixers.
d. 20 hours of labor.
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9) A macroeconomist as opposed to a microeconomist might study
a. the effect of agricultural price support programs on the cotton industry
b. the effect on U.S. steel producers of an import quota imposed on foreign steel
c. the effect of an increasing inflation rate on national living standards
d. the effect of an increase in the price of imported coffee beans on the U.S. coffee industry
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10) If the government levies a $500 tax per car on sellers of cars, then the price received by sellers of cars would
a. decrease by less than $500.
b. decrease by exactly $500.
c. decrease by more than $500.
d. increase by an indeterminate amount.
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11) US citizens have better nutrition, better healthcare, and a longer life expectancy than citizens of Ghana. Which of the following conclusions can be drawn from this statement?
a. Average income in the US is higher than the average income in Ghana.
b. The US has a higher standard of living than Ghana.
c. Productivity in the US is higher than productivity in Ghana.
d. All of the above are correct.
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12) 
Refer to Figure 3-2. Suppose Peru decides to increase its production of emeralds by 2. What is the opportunity cost of this decision?
a. 30 rubies
b. 40 rubies
c. 60 rubies
d. 120 rubies
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13) The y-coordinate of an ordered pair specifies the
a. diagonal location of the point.
b. vertical location of the point.
c. horizontal location of the point.
d. quadrant location in which the point is located.
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14) Caroline eats two bananas during a particular day. The marginal benefit she enjoys from eating the second banana
a. can be thought of as the total benefit Caroline enjoys by eating two bananas minus the total benefit she would have enjoyed by eating just the first banana.
b. determines Carolines marginal cost of the first and second bananas.
c. does not depend on how many bananas Caroline has already eaten.
d. All of the above are correct.
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15) Workers at a bicycle assembly plant currently earn the mandatory minimum wage. If the federal government increases the minimum wage by $1.00 per hour, then it is likely that the
a. demand for bicycle assembly workers will increase.
b. supply of bicycles will shift to the right.
c. supply of bicycles will shift to the left.
d. firm must increase output to maintain profit levels.
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16) The following table contains a supply schedule for a good.
Price Quantity Supplied
$10 100
$20 Q1
If the law of supply applies to this good, then Q1 could be
a. 0.
b. 50.
c. 100.
d. 150.
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17) Table 3-1
Assume that Andia and Zardia can switch between producing wheat and producing beef at a constant rate.
Minutes Needed to Make 1
Bushel of Wheat Pound of Beef
Andia 20 12
Zardia 15 10
Refer to Table 3-1. Which of the following combinations of wheat and beef could Zardia not produce in one 10-hour day?
a. 10 bushels of wheat and 45 pounds of beef
b. 20 bushels of wheat and 30 pounds of beef
c. 25 bushels of wheat and 25 pounds of beef
d. 30 bushels of wheat and 15 pounds of beef
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18)
Refer to Figure 6-17. How is the burden of the tax shared between buyers and sellers? Buyers bear
a. three-fourths of the burden, and sellers bear one-fourth of the burden.
b. two-thirds of the burden, and sellers bear one-third of the burden.
c. one-half of the burden, and sellers bear one-half of the burden.
d. one-fourth of the burden, and sellers bear three-fourths of the burden.
Answer:
19) Table 3-18
Chris and Tonys Production Opportunities
Tomatoes Pasta Sauce
Chris 10 lbs 300 jars
Tony 14 lbs 280 jars
Refer to Table 3-18 Chris and Tony both produce tomatoes and pasta sauce. The table shows their possible production per month if both work the same number of 8 hour days. Which of the following statements is correct?
a. Tony has a comparative advantage in the production of sauce.
b. Chris has a comparative advantage in the production of tomatoes.
c. Tony has an absolute advantage in the production of tomatoes.
d. Chris has an absolute advantage in the production of tomatoes.
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20) The collapse of communism in the Soviet Union and Eastern Europe took place mainly in the
a. 1960s.
b. 1970s.
c. 1980s.
d. 1990s.
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21) Refer to Table 3-7. Assume that Japan and Korea each has 2400 hours available. Originally, each country divided its time equally between the production of cars and airplanes. Now, each country spends all its time producing the good in which it has a comparative advantage. As a result, the total output of cars increased by
a. 16.
b. 40.
c. 64.
d. 80.
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22) Which of the following is an example of using the scientific method with a natural experiment?
a. Measuring how long it takes a marble to fall from a ten story building.
b. Comparing plant growth with and without a soil additive.
c. Tracking the price of oil when a war in the Middle East interrupts the flow of crude oil.
d. Observing the reaction when two chemicals are mixed together.
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23) A likely example of complementary goods for most people would be
a. butter and margarine.
b. lawnmowers and automobiles.
c. chips and salsa.
d. cola and lemonade.
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24) 
Refer to Figure 2-13. Cups of coffee per day and the hours that someone can go without sleep appear to have
a. a positive correlation.
b. a negative correlation.
c. a random correlation.
d. no correlation.
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25) In a particular country in 1999, the average worker had to work 20 hours to produce 55 units of output. In that same country in 2009, the average worker needed to work 28 hours to produce 77 units of output. In that country, the productivity of the average worker
a. increased by 2 percent between 1999 and 2009.
b. increased by 5 percent between 1999 and 2009.
c. remained unchanged between 1999 and 2009.
d. decreased by 3 percent between 1999 and 2009.
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26) 
Refer to Figure 3-5. Hosne has a comparative advantage in the production of
a. purses and Merve has a comparative advantage in the production of wallets.
b. wallets and Merve has a comparative advantage in the production of purses.
c. both goods and Merve has a comparative advantage in the production of neither good.
d. neither good and Merve has a comparative advantage in the production of both goods.
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27) A nonbinding price floor
(i) causes a surplus.
(ii) causes a shortage.
(iii) is set at a price above the equilibrium price.
(iv) is set at a price below the equilibrium price.
a. (iii) only
b. (iv) only
c. (i) and (iii) only
d. (ii) and (iv) only
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28)
Refer to Figure 6-18. The amount of the tax per unit is
a. $1.
b. $1.50.
c. $2.50.
d. $3.50.
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29) A good will have a more inelastic demand, the
a. greater the availability of close substitutes.
b. broader the definition of the market.
c. longer the period of time.
d. more it is regarded as a luxury.
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30) Suppose that a worker in Freedonia can produce either 6 units of corn or 2 units of wheat per year, and a worker in Sylvania can produce either 2 units of corn or 6 units of wheat per year. Each nation has 10 workers. Without trade, Freedonia produces and consumes 30 units of corn and 10 units of wheat per year. Sylvania produces and consumes 10 units of corn and 30 units of wheat. Suppose that trade is then initiated between the two countries, and Freedonia sends 30 units of corn to Sylvania in exchange for 30 units of wheat. Freedonia will now be able to consume a maximum of
a. 30 units of corn and 30 units of wheat.
b. 40 units of corn and 30 units of wheat.
c. 40 units of corn and 20 units of wheat.
d. 10 units of corn and 40 units of wheat.
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31) The slope of a line that passes through the points (15, 10) and (7, 30) is
a. -5/2.
b. -2/5.
c. 2/5.
d. 5/2.
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32) A movement upward and to the left along a demand curve is called a(n)
a. increase in demand.
b. decrease in demand.
c. decrease in quantity demanded.
d. increase in quantity demanded.
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33) If the demand curve is very elastic and the supply curve is very inelastic in a market, then the sellers will bear a greater burden of a tax imposed on the market, even if the tax is imposed on the buyers.
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34) Communist countries worked on the premise that government officials were in the best position to allocate the economys scarce resources.
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35)
Refer to Figure 6-27. If the government places a $2 tax in the market, the seller receives $4.
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36) If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.
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37) In the circular-flow diagram, one loop represents the flow of goods, services, and factors of production, and the other loop represents the corresponding flow of dollars.
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38) In the short-run, society faces a tradeoff between inflation and unemployment.
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39) Choosing not to attend a concert so that you can study for your exam is an example of a tradeoff.
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40) The President counts among his economic advisors the Congressional Budget Office.
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41) Sellers respond to a surplus by cutting their prices.
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42) Recently, in Smalltown, the price of Twinkies fell from $0.80 to $0.70. As a result, the quantity demanded of Ho-Ho’s decreased from 120 to 100. What would be the appropriate elasticity to compute? Using the midpoint method, compute this elasticity. What does your answer tell you?
Answer: